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Fourth Party Logistics ■
The fourth way
Is 4PL the 3PL of the 21st Century, asks Jeremy Clarke, principal solicitor of leading
London logistics specialist LLC Law.
From an operational perspective, its vacuum as far as the management of
important to understand terminology, their supply chains were concerned.
especially given the extent of supply chain’s Global users with sufficient volumes
love of mnemonics. requested international supply chain
To a layman, 3PLs provide services on the solutions from larger international
ground, from transport to warehousing providers, who did their best to meet
through to other value adding activities their conventional supply chain
packaged around the movement of goods requirements.
between user customers’ upstream Where global providers were
manufacturing and downstream sales constrained by sporadic reach, global
operations. contracts were awarded to multiple
Whilst it’s sometimes hard to pin down a providers around the world, driven by
commonly accepted definition of 4PL activity, geography and the user’s
it seems to centre on realising efficiencies determination to understand, control
through the better management, supervision and reduce costs at reviews and periodic propositions whilst at the same time closely
and coordination of 3PL services on the competitive tenders. aligning and integrating such expanded
As larger international providers have service propositions into their user customers’
As larger international
expanded their service menu and taken on operations.
providers have expanded
more value generating (and in turn profitable) For the SME provider organisations, their
their service menu and
activities, we can see the supply chain market market in outreach and niche activity has
taken on more value
evolving into a much more sophisticated always been reasonably safe. Threatened by
science. Going forward, the demand for competition, they have fought hard to retain
generating activities, we can
service level improvements and cost control mainstream supply chain activity from the
see the supply chain market
combined with innovations in IT, heightened larger international players. More and more
evolving into a much more
environmental awareness and open book this is being facilitated by the growing ability
sophisticated science
operating will be the catalyst for multi- of SME providers to re-engineer themselves
provider solutions centred not just on into loose networks of integrated service
ground. In reality, the distinction isn’t so geographical constraint and cost, but rather on providers and to package the same into
sharp and whilst one is basically physical and the need to understand, drill into and capture seamless solutions.
the other organisational, both services seem to best practices, creativity and value. Simply look at the pallet networks and the
have a legitimate role to play. In fact, the self-same aspirations of the role they have played in the past five years.
But in today’s highly cost-driven market original 4PLs… These developments have been made possible
the appetite for the 4PL as an independent In the past few years this has created a by leveraging increased access to,
add-on has diminished markedly by contrast wealth of opportunity, in part because the improvements in and the lower cost of, supply
to the steady growth of its 3PL cousin. Given starting gun had only just stopped smoking. chain IT previously the preserve of larger
the common sense aspirations of the 4PL For international provider organisations bent players and users. Armed with a competitive
model, its important to understand whether on geographic coverage, this has meant menu of services and support networks, the
4PL has gone altogether or whether it’s acquiring niche enterprises, developing SME providers have been effective in meeting
evolved into something new and if so, what? internal capability and, where necessary, users’ lower volume, outreach and niche
Historically, at both the domestic and collaborating more effectively with niche requirements. The same or arguably greater
international level, user and provider outreach providers. In so doing the larger value is created, but by means of a different
organisations typically operated in a virtual players have created improved service strategy.
www.PressOnShD.com May 2007 ShD 17
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