LOG490 CA2

3PLs and 4PLs These acronyms stand for Third Party Logistics (3PLs) and Fourth Party Logistics (4PLs). 3PLs are companies that offer services that are logistical in nature, but with value added tax due packaging and other expenses. On the other hand 4PLs are those companies that manage one or two other companies (Branch 2008). The major differences between the two companies are as follows: The first is the issue of neutrality whereby the 4PLs are not considered part of larger logistics provider. This means the 4PLs are independent to work with the buyer to design and manage supply chains. On the other hand, 3PLs are considered part of a family that provides services like warehousing, transport among others. They are obliged to seek services of the parent company whether they like it or not. The next difference lies with the management of the supply chain. The 4PLs are basically supply chain management service providers while the 3PLs are logistics service providers. The interaction between these services and the 3PLs provides a total supply chain. (Button 2011) The process involved also gives some difference as in the 4PLs crosses departments and functions where they extend past the corporate level. They value technology as a process enhancer. On the contrary, 3PLs are transaction and not process driven. They aim at the work of orders and shipments which means they can not create a value proportion with the customer and thus low turn out. The 4PLs are both strategic and tactical as opposed to the 3PLs who are basically strategic. This is because 4PLs work with clients in developing supply chain strategy. They understand time market cycles. The 4PLs do not own assets as opposed to the 3PLs who must own a variety of assets to survive in the market. (Button 2011) More and more companies are relying on the services of the 4PLs. This could be as a result of the following: The companies suffer high levels of order - delivery cycle times and cycles for order - cash. This pushes them to seek for research and development. Continued advancement in technology as with the IT has forced the companies to look for the IT infrastructure. The global growth leads to much more inventory and in very many places. This leads to a revenue shifting point for the company. Most companies want to venture into businesses they never tried before and this brings the need for the 4PLs to help in finding the right sector to venture in (Gattoma 2003) The need for more supply agencies to cater for the growing number of clients also influences the companies to seek information on the available suppliers from the 4PL company. The continued dire need by companies to out source clearly summarizes the...