3PL vs 4PL vs 5PL: What is the difference?
Are you looking for a professional logistics provider? Then you’ll likely have come across many terms, such as 3PL, 4PL and 5PL. In this blog, we’re going to look into 3PL vs 4PL vs 5PL: What is the difference?
Having a high-quality logistics provider on hand has so many important benefits. It can help you save money, increase efficiency, access specialist expertise and improve customer satisfaction.
What is 3PL?
Third-party logistics (3PL) refers to the outsourcing of logistics and supply chain management functions to a third-party provider. 3PL companies specialise in integrated operations of warehousing, fulfilment and transportation services. All of these services can be scaled and customised to meet client needs based on market conditions and delivery service requirements.
It’s common for businesses to look for 3PL providers as they can help take the pressure off the company in question by acting as an intermediary. Read our blog on understanding third-party logistics.
What are the key components of 3PL?
- Warehousing: They offer warehousing solutions that include the storage of goods in strategically located facilities to reduce shipping times and costs.
- Transportation: 3PL companies manage the transportation of goods, whether by land, sea, or air, ensuring timely delivery.
- Order fulfilment: This involves picking, packing and shipping orders to customers. 3PL providers often use advanced technology to streamline these processes.
- Inventory management: 3PL providers manage the storage of products, ensuring that inventory levels are optimised to meet demand without overstocking.
- Reverse logistics: Handling returns efficiently is crucial for customer satisfaction. 3PL providers manage the entire returns process, from receiving returned items to restocking or disposing of them.
What is 4PL?
Fourth-party logistics (4PL) is an advanced logistics model where a business outsources its entire supply chain management to a single external service provider. Unlike 3PL, which focuses on specific logistics functions, 4PL providers offer a comprehensive, strategic oversight of the entire supply chain.
Usually, a 4PL company won’t have their own transport or storage space, which means its main focus is to improve results for its customers. They do this by closely monitoring performance and identifying strategic recommendations for implementation.
What are the key components of 4PL?
- Supply chain management: 4PL providers manage the entire supply chain, from procurement to delivery, ensuring seamless integration and optimisation of all logistics activities.
- Strategic planning: They offer strategic insights and planning to improve supply chain efficiency.
- Coordination of multiple 3PLs: 4PL providers often coordinate multiple 3PL services to ensure smooth operations across different logistics functions.
- Technology integration: Advanced technology solutions are used to provide real-time visibility and analytics, enhancing decision-making and operational efficiency.
What is 5PL?
Fifth-party logistics (5PL) is a logistics model that focuses on managing and optimising entire supply networks rather than individual supply chains. 5PL providers handle all aspects of supply chain management, often leveraging advanced technologies and analytics to enhance efficiency.
What are the key components of 5PL?
- Supply network management: 5PL providers manage complex supply networks, coordinating multiple 3PL and 4PL services.
- Advanced technology: 5PL companies utilise technologies like blockchain, robotics and artificial intelligence to optimise logistics operations.
- Strategic planning and execution: Provides strategic planning and execution across the entire supply network.
- Data analytics: Uses data analytics to provide insights and improve decision-making.
What are the advantages of 3PL?
There are many benefits of using a third-party logistics company; here are just a few of them.
Cost savings
Making the decision to outsource logistics can help businesses save money. It is a more cost-effective method than having your own in-house team. It can be particularly beneficial for small to medium-sized businesses.
Makes business scaling easier
Having an external 3PL provider that is an expert in their field means that they can help you scale your business. They will take the time to understand your business and how the logistics change based on periods of growth or during peak seasons.
Access expert logistics services
High-quality third-party logistics companies will have access to specialised knowledge that can help you advance your business operations without spending more time and money on training and other resources.
Focus on business operations
Logistics can take up a lot of time for businesses, so by working with an external company, you can relieve your business of this pressure, allowing you to concentrate on core business activities and strategic initiatives.
What are the advantages of 4PL?
Holistic management approach
A 4PL provider will focus on improving your business’s logistics as a whole rather than on individual elements. They will act as a single point of contact for all of your needs, simplifying management and communication.
Enhanced business efficiency
A 4PL provider will work on optimising your entire supply chain, which helps to save money and improve service levels. It also means that you don’t need to worry about hiring someone in-house, saving you money, resources and time.
Scale your business with ease
A professional, highly trained 4PL company should be able to adapt to the changing demands of your business, allowing you to scale with ease. This also means that you can focus on the general operations of your company rather than the supply chain.
What are the advantages of 5PL?
Comprehensive logistics management
A dedicated 5PL company can work with you to analyse and manage the entire supply network, rather than focusing on individual aspects. They will act as your single point of contact for all of your logistical needs.
Optimises your processes
Quality 5PL companies will have access to some of the most advanced technologies in the industry, meaning that they can make strategic recommendations to optimise logistics operations and improve efficiency.
Increases visibility
Using a 5PL company means that you’ll have access to real-time analytics, allowing you to increase visibility across the entire supply network.
3PL vs 4PL vs 5PL – which one should I choose?
The right choice for you depends on the needs of your business. If you need some simple logistics support, then 3PL services might be suitable. However, a 5PL provider might be the right choice if you need more advanced support.
How can we help?
At Granby, we are passionate about supporting businesses and can be your dedicated 3PL provider. We have extensive experience in 3PL and can add value to your business operations.
We understand that every brand and organisation has different and often specific challenges, so we create 3PL solutions that are unique to your needs. Think of us as your integrated core fulfilment team, focused on achieving the best outcomes.
Find out more about our 3PL services, where we can support you with your supply chain management, warehouse management and much more.
We hope this blog has been helpful regarding 3PL vs 4PL vs 5PL: What is the difference? Please feel free to contact us if you need any support with outsourced logistics services. Our friendly and professional team will be more than happy to help.
3PL FAQs
We’ve already covered what 3PL is and how it can benefit your business, so let’s take a look at some frequently asked questions about it.
What 3PL services do we offer?
- eCommerce fulfilment & reverse logistics
- Public sector storage & distribution
- POS kitting & collation
- Order fulfilment & returns handling
- Pick & pack services
- Sampling solutions
- Brochure fulfilment & membership packs
- Subscription fulfilment
- Customer services
- Fulfilment & logistics
- Warehousing & distribution
- Digital services
- Shopify, Magento & WooCommerce integrations
- Reverse logistics
- Confidentiality is guaranteed on all campaigns
- Secure storage
- Asset tracking & batch control
How do I choose the right 3PL provider for my business?
To get the best results from your 3PL, you must conduct thorough research into the companies offering the services. Here are some of the most important things to consider.
- Company experience & expertise
- Technological capabilities
- Location & network capabilities
- Costs
- Ability to scale
- Company reputation
- Ability to meet compliance requirements and ensure best practices
Read our blog on tips for getting the most out of your 3PL partnership.
Can 3PL be integrated with my existing systems?
We have an expert 3PL team that can manage all integrations with your existing systems, including Shopify, Magento and WooCommerce.
How can 3PL companies ensure security?
Granby’s site is secure and meets Cabinet Office standards for physical security due to the work we undertake on behalf of the Department for Education. The site has manned security guards and access is controlled via the security gates.
Granby’s secure storage requirements include the following.
- An Intruder Alarm System installed and certified to PD 6662:2017 (which is the UK Scheme for the application of the European Standard EN 50131) at Grade 3, BS 8243, and our management system, which complies with BS EN ISO 9001:2015 Standards.
- An Access Control System installed and certified to NSI Code of Practice NCP 109.3.
- All visitors must be pre-notified and are escorted at all times
- Staff members have ID badges to swipe into buildings to record access on-site
- CCTV on site
- Cyber security standards – ISO 27001 and Cyber Essentials Plus, Cyber Essentials and are ICO registered
Is 3PL suitable for all business sizes?
Businesses of all sizes can use 3PL, and it’s an excellent way to optimise your supply chain and streamline your business processes. As your dedicated 3PL partner, we’re here to listen to your unique needs and provide effective solutions. Read our blog on how integrating 3PL solutions can elevate your business’s logistics operations.
| Name | What is it? | What does it cover? | What are the benefits? |
| 3PL | Third-party logistics | A company contracts a logistics provider to help with a broader range of services, including warehousing, fulfilment & transportation of goods. | Cost savings Makes business scaling easier Access expert logistics services Focus on business operations |
| 4PL | Fourth-party logistics | A company contracts a logistics provider to manage the entire supply chain. | Holistic management approach Enhanced business efficiency Scale your business with ease |
| 5PL | Fifth-party logistics | A company contracts a logistics provider to manage and optimise supply networks rather than individual supply chains. | Comprehensive logistics management Optimises your processes Increases visibility |