The e-commerce world is now dominating the landscape, with products being purchased, packaged, and shipped all around the globe without a second thought. The devil resides in these second thoughts, and with so many options on the table for party logistics. We understand it can get confusing to know what you’ll ever need for your business. For instance, will you need a 3PL or only a second party logistical service? What are the differences between them?
Well have no fear, we’re going to differentiate the differences that reside in the various forms of party logistics on offer with an easy-to-follow example and go with our pick for the best way forward.
The Base Situation
For the interests of explaining the differences between the levels of party models, we’ll use the hypothetical of a farmer selling his wares to consumers. The way he gets his products to the market is where the party logistics come into play and the options he has at his disposal for the approach.
This is the base model for a lot of startups and very small businesses. It entails that goods are manufactured in one location and transported by the manufacturer to a marketplace or storefront for sale.
First-party logistics for the farmer is presented in the concept of him transporting the milk he cultivates from the farm directly to a marketplace for sale to the consumer or even to individual consumers directly.
The second-party logistics extend a little further from the first-party alternative. Utilising a 2PL company involves the establishment of a secondary party for the transportation of goods from the manufacturer – similar to the manner in which a courier will in many respects. This transportation could be determined as either air, rail, road, or sea.
Second-party logistics for the farmer in this regard would extend to him hiring a 2PL company to transport a variety of wares from his farm to the marketplace for sale in a more effective and covered manner.
3PL or third-party logistics is more or less the dominant model that dominates more people’s preferences, and for good reason. There are just enough benefits without losing any sense of control for the company. 3PL is the integration of an outside company for management supervisory responsibilities who might outsource the transportation and secondary logistics to a subcontracted provider or provide the service themselves. A 3PL may also incorporate additional storage and packaging of merchandise for transportation.
3PL for the farmer would be the integration of the 3PL company into the packaging and delivery of the whole range of the farmers manufactured goods, eggs, milk etc, safely storing the goods as well as transporting them to the marketplace.
Fourth-party logistics are a little more involved and can get into confusing territory for businesses employing the services on a larger scale and can hinder businesses looking for their own path forward. The fourth-party logistics model entails that the provider effectively outsources the management of the logistics in order to have a communicative stream with the manufacturer.
For the farmer, hiring a fourth-party logistics company would effectively render a new communications channel from the logistics company to produce a higher degree of certain products or suggestions and implementations of new supply chains for new marketplaces.
So, Which One Is Best?
While we don’t know your particular business model of course. In terms of logistical control and ease of stress for a business of any size – there’s no question that the 3PL model is popular for a very good reason. The combination of 3PL being able to package, track and effectively manage your warehousing needs without interfering with your vision or succession with your business is a no brainer. 3PL has more than the lower logistical options which entail a lot more stress with packaging and tracking taken care of already. 3PL also handles the often time-consuming warehousing processes so that you can focus on growing your business without undue influence.