The robustness of supply networks has been a major concern during the Covid-19 crisis. The media has questioned existing processes while also highlighting areas that need to be improved. Nonetheless, there is a considerable misunderstanding concerning the function of outsourced logistics. end to end logistics services are classified into several tiers so, let’s see some of them.
- 1PL- The first-party logistics: In this situation, the manufacturer handles its shipping and warehousing. 1PL firms will have their fleet of vehicles. Few businesses rely on this strategy these days since outsourcing enhances flexibility.
- 2PL- Second-party logistics: The supplier solely handles the transportation element of the supply chain in this scenario. Shipping and transportation firms are two examples of this technique.
- 3PL-Third-party logistics: This category handles outward and incoming transportation requirements, as well as warehousing. These service companies frequently lease warehouse space and do not own a vehicle fleet. Instead, they outsource these components to other carriers for shipping and freight purposes. This technique is common among both small and large organizations today.
- 4PL- Fourth-party logistics: In this arrangement, the firms do not have any physical assets to employ for product transportation. Instead, they advise their clients on how to manage the process. They will hire third-party logistics (3PLs), freight firms, and other organizations to provide the essential assistance. Because of their experience in constructing and maintaining an outsourced supply chain, several clients regard them as fulfillment concierges.
- 5PL – Fifth-party logistics: This is just an upgrade to the 4PL consulting level. In this scenario, the supplier combines the shipping requirements of many 3PLs. This enables the use of market dominance to negotiate advantageous carrier prices. Some businesses, for example, utilize 5PL to manage all parts of the supply chain. Under this arrangement, the provider sources services and negotiate relevant contracts on your behalf.
Hope you understood the different types of logistics and this must have the help you to choose the correct type of logistics.