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  • Writer's pictureMicha Veen

From 1PL to 6PL and Beyond

Over the last 20+ years, Unique Excellence specialists have been running, innovating, and improving all aspects of the end-to-end Supply Chain Management Model. Additionally, the core team has been imperative to introduce sustainable operations and supply chain which have short, medium and long-term financial benefits.

This has led to Unique Excellence introducing a new, value-add service-line called Supply Chain as a Service (or 5PL or Fifth Party Logistics). 5PL is a "new" concept that we currently extending towards 6PL.

The journey from 1PL to 6PL explained...

1PL (1st Party Logistics) is a standardised service with its own or external resources as a hauler, warehouse operator, etc. It is a company or individual that transports and delivers their own goods, using their own vehicles. It is a first-party logistics provider that refers very simply to any organisation that needs to move goods from point A to point B.

  • There will be no other companies involved in any way in the movement of the goods. For example, a manufacturer makes the consumer goods and delivers the consumer goods on their own vehicles directly to retail shops for sale. All operational and supply chain activities are done ‘in-house’

  • Both the sender and receiver of goods are called a 1PL, and the action of moving products is carried out by their own internal departments with no service provider used for transportation

2PL (2nd Party Logistics) is either an individual or systemised service with its own or external resources, e.g. national/ international logistics providers and/ or forwarders. It involves a businesses using a separate/ external transport company, a subcontractor, to move their goods.

  • As businesses grew, companies transformed from 1PL into 2PL by appointing a "subcontractor" to perform logistics activities on their behalf

  • A 2PL logistics provider will be ‘"asset-based" and will own the means of transport. This would have been the first concept of a "man in a van" as an individual or company transports other companies’ goods in their vehicles

3PL (3rd Party Logistics) provide outsourced warehouse, distribution and/ or logistics services to companies for an aspect, or sometimes all of their operational SCM functions. 3PL providers typically specialise in an integrated warehousing, distribution and transportation model through which it serves its customers with its own or inbuilt resources as contract logistics organisation.

3PL was first introduced in the early 1970's to identify intermodal companies in transportation contracts. Now, 3PL is the first solution that includes outsourcing a large part of the end-to-end supply chain. A 3PL logistics provider will offer first-stage supply chain integration in the forms of:

  • Transport and freight forwarding

  • Warehousing incl. inventory management and cross-docking

  • Bulk warehousing and short/ medium/longterm storage of goods

  • Receiving and processing of domestic and internationally imported goods

  • Inbound inspection and quality assurance for goods

  • Distributed order management and fulfillment of customer/ consumer orders

  • Managing shipments to distributors and big-box retailers incl. compliance, packaging and labeling

  • Inventory management for all goods incl. cycle counting, serialisation, lot tracking, and expiration date management

  • Returns processing for customer orders (also called reverse logistics)

  • Advance Shipping Note (ASN) or Electronic Data Interchange (EDI) requirements

So, manufacturers, suppliers and/ or resellers are able to outsource all their transport, storage, packing, and distribution of their goods using a single 3PL company. Most 3PL companies are flexible in their supply chain service model, so you can select to use as many or as few of their services depending on your requirements

4PL (4th Party Logistics) are supply chain integrators that assemble and manages the resources, capabilities, and technology of its own organisation with those of complementary service providers to deliver a comprehensive supply chain solution. It employs 3PL providers to service supply chain services to customers through proprietary computer systems and intellectual capital. A 4PL provider supplies outsourced or third-party logistics services to provide certain aspects, or sometimes all, of their SCM functions.

  • A fundamental feature of a 4PL provider - which is considered a ‘non-asset’ - is in the principle of being ‘neutral’ in selecting shipping partners. The goal of 4PL is to achieve operational and financial benefits beyond the one-time operating cost through continuously reducing asset transfers gained from a traditional outsourcing relationship

  • A 4PL provider will liaise and coordinate with one, or more, 2PL or 3PL providers in order to tailor the best supply chain service. Therefore, 4PL providers will often incl. all the benefits of 3PL providers and;

    • Project Management, sourcing/ procurement, and negotiation

    • Logistics strategy, enablement and analytics

    • Impartial supply chain service advice, and

    • Act as a single point of contact

5PL (5th Party Logistics) - Unique Excellence SCaaS/ 5PL - looks beyond individual supply chains, focusing instead on wider supply networks. A 5PL service provider plans, organises and implements a client’s end-to-end supply chain solutions, taking all elements of supply chain management out of their hands. The focus on supply networks means that a 5PL providers oversees every single supply chain from origin to the customer, servicing the client organisation.

5PL providers specialise in combining physical supply chain activities with leveraging data/ information, fit-for-purpose technologies and innovations to drive supply chain resilience, traceability at a reduced cost.

  • A 5PL provider manages and aggregates the needs of 2/3/4PL providers to extract maximum value from supply chain partners through enabling bulk volume

  • A fully integrated supply chain management solution, with dashboard capability, enables the 5PL provider to encompass the end-to-end supply chain from origin to the consumer through multiple outsourced service providers

  • 5PL providers focus on physical and technology integration to provide full "real-time" visibility, traceability and transparency throughout the multiple supply chains, and would need to control the entire supply chain regardless of how many different service providers were involved

  • A 5PL provider creates the best supply chain network and offers creative and innovative supply chain, warehouse, distribution and logistical solutions through embedding technologies like; blockchain, robotics, process automation, bluetooth beacons, and Radio Frequency Identification (RFID) devices.

Unique Excellence (as a 5PL provider) aims to boost supply chain resilience, efficiency/ effectiveness and value from Start to the Finish

6PL (6th Party Logistics) and beyond is a fully integrated, and partly automated supply chain solution, monitored and driven by Artificial Intelligence (AI), often defined as: ‘an artificial intelligence-driven supply chain management model'. 6PL providers are characterised as offering the 5PL services with an additional focus on sustainable supply chain management (ESG). It involves adding services like; supply chain auditing, supply chain ESG compliance, etc. centered on the use of Artificial Intelligence for the aggregation and analysis of data presented in heavy volumes for a robust progression across the end-to-end supply chain management model.

Unique Excellence truly believes in continuously supporting its clients on their operations and supply chain maturity journey, delivering continuous innovative operational, supply chain, sustainability and financial benefits through operating as a long-term supply chain partner.

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