Why choose fourth-party logistics (4PL)?
When it comes to logistics, building and maintaining an in or out-of-house solution can be a real challenge – we’ve all heard the phrase ‘logistical nightmare’.
However, as one of the most crucial aspects of your supply chain and business as a whole, a logistics solution should be something you put time and consideration into getting right.
So, if building a logistics solution from the ground up doesn’t seem feasible for your business, or if you’re looking to improve upon your existing one, it might be time to consider a fourth-party logistics (4PL) provider.
Throughout this article we’ll discuss just what a 4PL is, as well as the benefits of a 4PL solution for businesses of all sizes and specialisms.
What is a 4PL?
Before we talk about some of the advantages of a 4PL for your business, we first need to clarify exactly what that entails.
A 4PL, or Fourth-Party Logistics provider, is a company which provides external supply chain support for a business. Not limited to facilitating the movement of cargo, a 4PL can also take on a range of logistical responsibilities including managing infrastructure and systems, as well as providing strategic counsel and management.
This supply chain co-ordination and management is fulfilled by an organisation that does not supply asset-based logistical services. Rather it is an “integrator that assembles the resources, capabilities, and technology of its own organisation and other organisations to design, supply chain solutions”. 4PL’s are non-asset based, as far as logistics, transportation, and supply chain management assets are concerned. 4PL’s use 2PL’s and 3PL’s to supply service to customers, owning only computer systems and intellectual capital.
As an extension of your business, a 4PL will provide a single point of contact for a streamlined and pain-free collaboration, giving many businesses the opportunity to leverage a much larger, more established network of logistical support.
Factor #1 – Time expenditure
So, now we know ‘what’, you’re probably wondering ‘why’? The first of many benefits of a 4PL we will cover is a much-reduced strain on your time.
As businesses continue to feel the squeeze following the events of recent years, having a deep enough body of staff to cover all bases can be an ongoing challenge for many.
Building an effective in-house logistics system takes considerable time to get right and even if you have one already in place, with so many moving parts to oversee, the to-do list can continue to grow before you have the time or resource to work through any existing issues.
So, do you take staff off other important business responsibilities, or do you recruit new staff to deal with issues which may only arise sporadically? With a 4PL, you don’t need to do either.
With a large team of support staff and robust network of partners behind them, a 4PL is perfectly positioned to deal with the day-to-day management of your logistics, as well as any reactive issues which may arise.
As part of the 4PL model, providers offer each client a single point of contact, making the monitoring and maintenance of your logistics network as fast and straight forward as possible. Spend less time managing vehicles, personnel and tracking shipments, and spend more
Factor #2 – Budget expenditure
Going hand-in-hand with time as a crucial business resource is budget.
With vehicles, insurance, staffing and system maintenance, the cost of building a logistics network which can handle the strain of your business can quickly add up. At a time where company budgets are stretched thin, finding opportunities to cut costs can be few and far between.
A 4PL doesn’t only help you save on setup and maintenance costs associated with in-house logistics, it also provides you with access to a team of experts with extensive experience in streamlining transport processes.
By maintaining relationships with hauliers nationwide, one of the benefits of a 4PL is the ability to tie transport movements together to increase cost-efficiency and add real value to your supply chain. Less drivers returning from a delivery with empty vehicles is just one of the ways a 4PL can help to dramatically reduce your transport costs.
Factor #3 – Versatility
From sprinter vans to 44-ton artic lorries, there may come a time where you require a host of different vehicles to fulfil your commercial obligations.
Purchasing and insuring a new commercial vehicle can easily run into the tens of thousands of pounds, and if you only require a specific vehicle for a short period of time, rental fees can quickly minimise your profit margins.
With a 4PL on board, you have access to an extensive fleet of vehicles to call on at a moment’s notice. Unlike a 3PL, 4PLs work with a large network of vehicle providers to offer vehicles of all sizes and capabilities through one single point of contact.
A 4PL ensures you can complete consignments of any size or complexity without incident.
Factor #4 – Scalability/reactivity
Scaling a business is always front of mind for business owners and managers, but with scaling comes commitment, and with commitment comes the opportunity for damaging changes of circumstance.
It’s no secret that we currently live within a very volatile marketplace. With major world events past and present continuing to influence the global economy and business performance in particular, it can be a daunting prospect to commit to scaling up on your logistical support.
With a 4PL in tow, scaling your logistical support is as easy as turning a dimmer switch. Looking to increase your haulage capacity in the run-up to a busy festive season? Want to minimise your expenditure to match an unexpected downturn in orders? One of the main advantages of a 4PL is the ability to accommodate shifts in support levels with ease.
Factor #5 – Safety and consistency
Every industry is feeling the pinch when it comes to the economy and workforce, but the logistics industry is preparing for another sizeable threat of its own.
Recent ONS data revealed that the next driver shortage was years away, but with several major world events shown to have a direct impact on consumer demand and trade supply chains, we believe this crisis could rear its head much sooner.
If your business relies on ad hoc vehicle hire from a small number of providers, a dramatic upturn in demand could see competition for drivers reach unsustainable levels. As a 4PL, X2 maintains a network of 1,000+ hauliers to offer businesses access to a comprehensive body of drivers, wherever you are in the country.
We are stronger as a collective and can offer levels of safety and consistency unachievable outside of a 4PL network, whatever the future may bring.
With many answers to the question ‘why choose a 4PL?’, the crux of it is this – gain access to a single point of contact without a single point of failure.
From reducing the strain on your time and budget, to adding enhanced fluidity to your business model, a 4PL provider could be the perfect choice for your organisation.
If you’re interested in finding out more about X2, our range of logistical solutions, and the countless advantages of a 4PL, get in touch today to discuss how we can help streamline and safeguard your business.
To learn more about how our 4PL solution can help you, get in touch.