Apr 23 2018

Which logistics provider will get you to the top?

Which logistics provider will get you to the top?

There are numerous paths that lead to the top of a mountain. Some routes are more efficient than others; however, it’s easy to get lost trying to locate the right one. Similar to climbing a mountain, searching for the best possible logistics partner can be a challenging process -- but with proper knowledge and assistance, it doesn’t have to be.

Logistics has been implemented within supply chain management to help businesses plan, ship, distribute, and store various products. Depending on the scope of your business, it’s crucial to choose a partner that fits your supply chain needs. However, before selecting a logistics provider, it’s best to know all your options when it comes to how your products will be handled. Who will transport your goods and how will they reach end users? There are several different types of logistics partners to consider that can help optimize your specific supply chain process.

First-Party Logistics (1PL)

First-party logistic providers transport their own cargo from one destination to another. These individuals carry out all activities involved with supply chain by utilizing their own assets and equipment to move freight. The various types of 1PLs include exporters, importers, traders, retailers, manufacturers and wholesalers.

Pros
• In-house control
• No third party expenses

Cons
• Expensive to maintain
• Best practices myopia
• Lack of partnerships

Second-Party Logistics (2PL)

Second-party logistic providers lease their own equipment, such as trucks, ships and planes, to businesses that need to transport goods. Any company that provides transportation services in which products are moved across a singular discipline of supply chain is considered as a 2PL.

Pros
• Reduced overhead costs 
• External support

Cons
• Still responsible for organization and tracking 
• Highly transactional environment 
• Short term solution

Third-Party Logistics (3PL)

3PLs are providers that offer transportation services as well as packing, freight-forwarding, cross-docking, warehousing, distribution, fulfillment, and inventory management. Businesses that utilize 3PLs are provided with unique services for all functions of supply chain management.

Pros
• Warehousing and distribution infrastructures
• Reduced costs with long term partnership
• Accelerate processing, which in turn, boosts consumer satisfaction 
• High level of order customization

Cons
• Businesses directly oversee less of their operations
• Upfront investment 

Fourth-Party Logistics (4PL)

Fourth-party logistic providers are usually non-asset-based companies that will handle all the elements of your supply chain process. They accumulate the necessary resources, technologies, and capabilities in order to make your shipping process as seamless as possible. 

Pros
• Reduced management burden 
• Shared rewards
• Higher return on investments 
• Stabilized operations 
• Increased asset utilization 
• Comprehensive cost savings

Cons
• Sharing internal data with 4PL partner
• Extensive time and energy to identify the right partner

Logistics is essential to any supply chain process as it will help your business optimize its end-to-end solutions. It’s best to match your business’s structure to an appropriate partner in order to get the most out of a logistics service. Understanding how each provider operates will put you one step closer to reaching the top of the logistics mountain. So, incorporating a logistics plan that has more pros than cons into your business will optimize your supply chain management and put you ahead of competition.

To learn more about how Seldat is becoming the global leader in technology-driven supply chain solutions, reach out to our team today:
Phone: 646.517.6767 x100
Email: Global Sales 
Or fill out this form: Contact Us

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