4PLs ( Fourth Party Logistics providers) are billed as integrators, optimizers and visionaries for your supply chains and management networks. They are there to make and remake deals with your suppliers to deliver continuous innovation. At the heart of their capability is technology and knowledge—and they deliver it to you without disruption to business as usual.
It’s a huge promise, isn’t it? So how do you know if your 4PL provider will actually deliver?
Asking a few key questions is a good start, and perhaps the most important is this: “What mechanisms are in place to ensure that what begins as an efficiency and productivity measure doesn’t end up adding to the bureaucracy of the organization?” Everything else aside, this is the question that should keep your prospective 4PL provider up at night. It’s not an easy balance to get right.
The reality is, as you begin to integrate the resources, capabilities and technology of two or more organizations in order to design, build, and run supply-chain solutions, things can get messy. Doing this will seriously blur the lines between your organization and theirs, and it will open up new risks. It’s fine to focus on the benefits of 4PLs over 3PLs, and there are many, but knowing the pitfalls is just as important. For some organizations, moving to a 4PL arrangement simply won’t add up.
We see organizations the world over grappling with the increasing complexity of their supply chains, so it’s no wonder they’re looking to 4PLs for help.
We’re all looking for supply chain optimization, but before you jump on board with yet another provider, you will need to answer some key questions.
This post belongs to the new white paper, 4PLS: More Bureaucracy or Strategic Change Agent?. A free copy is available here.