4PL logistics providers — Scaling up supply-chain efficiency
|About 75 per cent of the Fortune 100 companies and about 45 per cent of Fortune 500 companies have now gone in for 4PLs. |
The term "4PL" was actually coined by the consulting group Accenture. In fact, they also hold the trademark to the name 4PL.
Accenture defines a 4PL in the following manner:
"A 4PL is an integrator that assembles the resources, capabilities, and technology of its own organization and other organizations to design, build and run comprehensive supply chain solutions."
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In the last five-six years, some of these firms introduced 3PL (third party logistics providers) in India and have now gone a step further by introducing 4PL (fourth party logistics providers). The latter, the most sought after by firms abroad, are slowly becoming popular among large Indian firms, say logistics experts.
In 4PL, logistics is controlled by a service provider that does not own the assets to carry out logistics activities but outsources to subcontractors, the 3PL.
Leading Indian firms in various sectors no doubt have huge outlays on logistics. Sectors such as cement, FMCG, electronics, consumer durables, and automobiles spend over Rs 2,000 crore each every year, says Mr V. Sanjeevi, Director of the Chennai-based e-Logistics Private Limited, a consulting firm on logistics, which is a 4PL.
Other major industries with a sizeable logistics cost include pharmaceuticals (Rs 700 crore), food processing (Rs 200 crore) and paints (Rs 250 crore).
While the 3PL concept has around been in India for some time, MNC and large companies are now going a step further and want to outsource their entire logistics to a 4PL. "To cut the logistics cost, Indian companies in many sectors would be forced to go for a 4PL," say experts.
Globally, about 75 per cent of the Fortune 100 companies and about 45 per cent of Fortune 500 firms have now gone in for 4PLs.
This trend is fast catching up in India too, says Mr Sanjeevi.
In India, IBM, Dell, Nike and Philips have handed over their logistics operations to 4PLs. Much of the 4PL service includes execution of activities directly or through 3PL service providers. e-Logistics has been involved with a few leading multinational companies on the strategy to be adopted for Indian operations, Mr Sanjeevi said.
According to him, the 4PL service seeker looks for logistics solutions from 3PL service providers which, in turn, could engage other service providers.
The logistics activities and solutions cover order compilation and despatch planning, physical transportation,...