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New logistical challenges are practically an everyday occurrence because of complex global supply chains, changes in statutory requirements and technological advances. In order to cope with them, more and more corporations are outsourcing work-intensive and time-consuming fulfilment processes related to warehousing and transport operations to specialist providers of 4PL services.
The benefits of outsourcing operations in logistics
- Reducing costs: Corporations can achieve significant savings in costs by outsourcing logistics processes. They benefit from the scalability and the network effects achieved by the service provider without having to invest in their own warehouses or means of transport.
- Scaling processes: Corporations can adapt their logistics to changes in market demands and business volumes in a flexible manner. This is particularly beneficial for corporations if their business is seasonal.
- Focusing on core areas of expertise: By outsourcing their logistics operations, corporations can focus more intensely on their core areas of expertise like product development, marketing and customer services.
- Pressing ahead with market development: Service providers can help corporations to tap into new markets by overcoming the logistical and administrative obstacles that arise during the expansion of their business.
4PL vs. 3PL – a comparison
What does 3PL mean?
Third Party Logistics (3PL) describes a type of logistics service, where corporations outsource one or several fields of their logistics processes to outside specialists. 3PL providers concentrate on particular operative parts of the logistics operations. They may include warehousing, transport, packaging, dispatch or even elements in the field of customer services. They normally own and operate their own physical resources like warehouses, fleets of vehicles and distribution facilities.
Strategic value added from 4PL solutions
Managing a supply chain in an integrated way
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The provider of 4PL services is the central coordination point within any supply chain. It connects all the acting parties and logistical processes to form a coherent network. This central role turns the 4PL operator into the sole contact partner for all those involved. This significantly reduces the complexity for the corporation that places the order. Thanks to constant checks and adaptation of the logistical processes through advanced data integration, the efficiency and sustainability of the entire supply chain are continually being improved.
Increasing efficiency using technologies
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The 4PL provider maximizes the automation of processes and improves the decision-making procedures by introducing and using advanced IT systems. If big data analyses are used, it is possible to effectively process and use complex quantities of data from different sources. These technological solutions are essential for any rapid and well-founded response to changes in the marketplace. They also optimize the efficiency of the supply chain as a result of using precise forecasts and strategic planning.
Sustainable processes and cost reductions
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There is one major benefit of 4PL services: the provider is able to both implement sustainable practices along the supply chain and reduce costs at the same time. Optimizing transport routes and minimizing empty runs lead to reductions in operating costs and improve the corporation’s environmental record too. This sustainable approach is reflected in reductions in the CO2 footprint and increasing efficiency in the logistical processes.
A best practice example: Rhenus 4PL solutions
As an experienced service provider, Rhenus handles 4PL services during every phase of processing any order:
The Online Supply Chain Accelerator (OSCA) is the software for supply chain management and it represents the digital core and the integration gateway for organizing all the partners and services. OSCA is a centralized tool that makes it possible to have end-to-end transparency, data centralization and optimization in order to coordinate several suppliers and logistical activities along the entire supply chain. The software can be easily connected to all common systems in your IT landscape or those of your partners through interfaces, either manually or using existing APIs.
The Rhenus Control Tower is a central node for monitoring and managing all the logistical processes and activities covering different transport channels. The system provides end-to-end transparency about all the movements of pallets, packages and express deliveries that use air, road and ocean transport services. The central aggregation and distribution of data improve the flows of information between all the trading partners involved and ensure standardized communications beyond national and corporate boundaries. As a result, it is possible to manage all the logistical processes more efficiently and deliveries can be made precisely according to set schedules.
Step by step to smoothly integrate the 4PL solution
Rhenus 4PL Services takes over the logistics services in several carefully planned stages in order to guarantee seamless integration that poses no risks:
- An analysis of the current situation: A thorough analysis of the existing cooperation with current 4PL providers is performed in order to obtain a detailed and comprehensive overview of all the activities that need to be integrated within the supply chain.
- Risk-free transfer: Specialists from Rhenus assess all the relevant requirements and structures to ensure that the business processes are continued without any disruption.
- IT connectivity: IT experts establish bidirectional connections between existing systems such as the OSCA and the corporation’s SAP system; their many years of experience in developing supply chain software proves a real benefit here.
- Implementation to meet every need: The implementation is specially customized to meet the corporation’s needs and focuses on the outsourced activities in specific markets and sectors in order to offer a scalable and effective 4PL solution.
Conclusion: 4PL logistics as the key to having viable supply chains for the future
Fourth Party Logistics provides a strategic solution to enable corporations to comprehensively optimize their supply chains in a fast-moving market environment where flexibility and efficiency are absolute key factors. Corporations are not only able to concentrate on their core areas of expertise by outsourcing their logistics to a 4PL specialist, but they also benefit from lower costs, improved fulfilment processes and a stronger market position. In the end, 4PL services are more than just a logistics model – they are a crucial factor for sustainable corporate success.