Integrated logistics - definition
Fourth Party Logistics is an Integrator of Logistics Processes. This system is to be used for comprehensive coordination of all logistic stages, from suppliers of raw materials to final buyers. This type of integration means combining capabilities, resources and available technologies to design, build and implement the most optimal solutions for the entire supply chain. Simply put, it is total logistics outsourcing. Interestingly, companies dealing with 4PL do not physically carry out logistics processes, but only manage delivery processes using information processing. Their operation would not be possible without computer systems and the Internet.
How does 4PL integrated logistics work?
The operation of 4PL is easiest to explain in comparison with other models of logistics process management. The 2PL model assumes that the company's logistics partners perform individual services for the client, being responsible for the quality and timeliness of their - in this case narrow - part of the entire process. This includes, for example, carriers carrying out transport between points A and B according to contracted dates and frequencies.
3PL is a slightly more comprehensive solution - the operator can choose the types and number of means of transport for the ordered volume, including its employees (including the IT sector) and goods storage services. In turn, the 4PL model assumes complete outsourcing of logistics, i.e. putting it in the hands of the Leading Logistics Provider (LLP), whose task will also be to plan the entire process and find the best suppliers, as companies dealing with integrated supply chain management do not have means of transport, logistic centers and warehouses. This solution often allows to reduce the costs incurred by the customer. It also happens that cooperation with the 4PL operator is based on the "profit share" principle, in the name of which the operator's revenues depend on the savings obtained for the principal.
The use of Big Data in integrated logistics
Optimal management in modern logistics is increasingly based on new technologies. Interpreting the increasing amount of data sometimes forces companies to take a new approach to this issue. so-called big data, i.e. large, diverse and variable data sets are difficult to process and analyze, but at the same time they can be extremely valuable. Properly analyzed, they can bring many measurable benefits and competitive advantage, especially in such a complex and digitized logistics model as 4PL. The ability to forecast flows more effectively, manage human resources, inventory and transport, optimize routes and production - these are just some of the possible advantages of the extensive use of big data in logistics.
In what conditions does 4PL logistics work?
An integrated logistics solution in the form of 4PL works best in the case of transports covering operationally large geographical areas. In such situations, a highly personalized approach to the process is needed: choosing the most advantageous means of transport, volume of network flows and volume of shipments. In order to coordinate this, it is possible to create so-called central units (control tower), which will supervise the course of operations from several places.
The 4PL model uses state-of-the-art IT systems for optimization and productive management. This helps, among others, automation of routine activities, which allows for even more effective planning of loads and routes, selection of contractors, event management or smooth communication and continuous flow of information, e.g. through a platform integrating producers, recipients and logistics service providers.
Choosing an integrated logistics provider - what to look for?
For comprehensive logistics management to function flawlessly, a 4PL service provider must have experience and knowledge, have appropriate IT systems and tools to optimize transport processes, be able to strategically plan and coordinate and manage many elements of the process at the same time. If we find the right 4PL operator who will be able to coordinate a dynamic and well-functioning logistics chain, we can pave the way for building and maintaining a clear competitive advantage. A company using this type of service can count on savings while maintaining or even increasing the level of efficiency of its projects.