Evolution of Supply Chain and Logistics Services - Different Layers:

In the recent past, the functions of logistics and Supply Chain Management have become very specialized management tools.  With the globalization of markets, brands have found it imperative to connect the right product to the right customers, at the right time.

Among the various layers of evolution, two stand out:  3PL & 4PL

THIRD PARTY LOGISTICS (3PL)

3PL is an executional partnership that drives operational excellence and efficiency through economies of scale.  Though it provides minimal value added or customized services, it opens tremendous opportunities by virtue of being an asset based model.

FOURTH PARTY LOGISTICS (4PL)

4PL partnerships are consultative in nature, and work towards developing supply chain models that are best designed to suit the business needs of the client.  Typically these are long term engagements where the 4PL partner builds and tests a supply chain model for a client.  However, being consultative in nature, they are not involved in the executional aspects, and are hence, non-asset based in nature.

4.5PL - A HYBRID SOLUTION

4.5PL is a hybrid system that combines the best of what both 3PL and 4PL have to offer.  In essence, it combines the technical expertise that a 4PL partner provides, along with the operational excellence that a 3PL partner brings to the table. 

It has the long term and consultative characteristics of a 4PL, and the operational and asset-based logistics support of a 3PL.  In other words, 4.5PL partners play the role of a one-stop supply chain knowledge and executional solutions provider.