We recently mentioned what dropshipping and the service of fulfillment. Now it’s time to introduce other logistics models, namely to introduce 3PL logistics.
What is 3PL logistics?
At the outset it is worth deciphering the abbreviation “PL”, the expansion of which is Party Logistics, and the number put next to this abbreviation indicates the number of elements that make up the model. We can encounter 1PL, 2PL, 3PL, 4PL and 5PL logistics, the development of which will be presented later in the article.
First Party Logistic is based on the fact that the company carries out the order process itself, thanks to the sufficient resources it has. Having a warehouse, for example, it does not need to use an external company, as it is able to take care of every element on its own within its own resources and structure. In Second Party Logistic, on the other hand, a transportation company is responsible for delivering the product to the buyer.
Third Party Logistic here the logistics operator is responsible for receiving the goods, storage, packaging and shipping. This is the basic scope of services, of course, in this model the number of responsibilities can be expanded to include marking products or repackaging them. Such a measure reduces costs and optimizes processes. Companies don’t have to focus all their attention on warehousing, complimenting or shipping the product, and can devote all their energy to, for example, improving and expanding their offerings. A very important aspect is that the company still has a real influence on, for example, inventory and its management.
How does a 3PL differ from a 4PL and 5PL?
Fourth Party Logistic and Fifth Party Log istic operators focus on managing the processes carried out throughout the supply chain, which is mainly based on experience and expertise and sharing. In these cases, the company has a very limited field of action, as it is the outside company that takes control of the elements that make up the supply chain. These two models in Poland are not yet, so popular, but looking at what benefits the use of a logistics company gives, they will certainly gain supporters.
Which logistics operator to choose?
Now that we know what the different models are about and what the logistics operator is responsible for in them, the question arises as to which one to choose. There is no definite answer, it all depends on the company. A very important element that will hint at which model to choose is the amount of resources available to the company. Small companies will consider handing over the management of the supply chain to an external company, because it reduces for them the costs associated with hiring additional employees or maintaining a warehouse. On the other hand, a large company with significant resources will be able to take care of all stages of the order themselves.
When deciding to use the services of a logistics operator, you should pay attention to several important aspects, which you can read about in a previous post – Choosing a Logistics Operator – What to Pay Attention to? However, unquestionably, the experience that the operator has in managing the supply chain will bring many benefits to the company itself and to customers, who will receive a correctly complimented order at the right time.