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In fact, they also hold the trademark to the name 4PL. Accenture defines a 4PL in the following manner: "A 4PL is an integrator that assembles the resources, capabilities, and technology of its own organization and other organizations to design, build and run comprehensive supply chain solutions." The term 4PL is something that every organization has their own interpretation of and ideas on what exactly a 4PL should offer. To add more complexity to the interpretation, the following groups of service providers actually provide "4PL type" services: - Consultants - IT Service Providers - "E" Marketplaces - Financial institutions - Private Organizations - Logistics Service Providers (traditionally only known for 3PL activities) A true 4PL organization would then build a set of activities focused around a specific set of supply chain initiatives and goals, generally with the following attributes: - 4PL Common Services (invoice management, call centers, warehouse/distribution facilities, etc. - Implementation Center (the business process analysis/scoping, and development of all activities into an open systems framework) - Product/Skill Centers (supply chain engineering) - IT System Center (the pure IT selection for design and implementation/connectivity) - 4PL Back Office (administration, quality, finance, legal, etc.) Sitting above these functions would be a Controlling Interface, monitored by the hired 4PL party. This group would manage all the "blocking & tackling issues" related to daily business. The Controlling Interface would provide the customer-facing visibility, control, KPI/Metrics management, reporting, daily problem solving, etc. Additonally, surrounding these activity sets would be the following: + Knowledge Transfer + Business Development + Functional Support So, to give you a visual field, picture a dartboard. From the center outward, there would be a series of concentric circles. In the center would be the 4PL. The next outer circle would be the strategic partners. The next outer circle would be the preferred service providers, following by the larges outward circle which covers the project partners. The Business Ethics of a 4PL would contain the following ethos: - The 4PL organizaton focuses on the customer supply chain - All 4PL organization decisions are made towards managing the myriad of service providers, which are based on business rules. - All service providers are measured on a master single set of KPI's. Lastly, a recap of a 4PL Products, Services & Capabilities (visualize a triangle):
Relationship: CRM Know-How: Knowledge Management industry/supply chain Consulting: Supply chain reengineering, Process consulting (3PL), IT analysis/implementation Visibility: Supply chain visibility, communication and IT integration Operational: Accounting/invoice management, Event monitoring/exception management, RFP/RFQ management/execution, Carrier/3PL management.
Fourth-party logistics (4PL) has finally moved from concept to reality. Despite dramatic improvements in service offerings and systems, supply chain costs have continued to rise and manufacturers and distributors are constantly in search of new means to minimize these costs. With its ability to consolidate the management and control all aspects of a corporation s supply chain execution processes with a single resource, versus assembling and managing an array of warehouse operators, transportation providers, and related service providers, 4PL operations hold tremendous promise for cost-sensitive manufacturers and distributors of products. Moreover, shifting the entire logistics responsibility to an outside resource allows the manufacturer or distributor to focus fully on its core business. The 4PL movement also offers potential players third-party logistics (3PL) providers, consulting organizations, and entrepreneurs an opportunity to extend their business offerings and/or to create new business-to-business (B2B) ventures. And just as the emergence of the 3PL industry called for a new generation of software, 4PL operations also require an advanced engine suited to their specific requirements. It has often been said that a 3PL provider s software platform is the engine of its enterprise, and that is no less true in the 4PL environment.
In either case the requirements are identical: transportation resources to acquire and deliver the manufacturer s goods; warehouse facilities in which to store them and to fulfill orders; and a software platform that is capable of linking to the supply chain or ERP software of the manufacturer s facilities, the multiple in-bound and out-bound transportation providers, often multiple 3PL logistics providers, and ultimately to the final shipment destinations. In evaluating 4PL operations, companies and their potential providers should consider carefully several major factors, among them:
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Is there an existing design scheme that can be adapted or will the 4PL solution be designed and developed from scratch? Does the manufacturer have existing contract relationships with 3PL operators and transportation companies that it wishes to preserve or is the 4PL provider free to renegotiate these or to scout the field for best price-performance scenarios? What kind of ERP and logistics management platforms are in use and is the manufacturer willing to explore new solutions? How advanced is the manufacturer s B2B e-commerce capability? How far is the manufacturer willing to go with the 4PL solution, basic logistics only, or perhaps through the actual wholesaling and distribution of product?
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There are certainly many other considerations, but these few should demonstrate how 4PL initiatives can remain at the fundamental level and that they can also extend deep into the corporate structure.
Workflow Management This capability supports management of the flow of goods within the entire supply chain lifecycle. It can be managed by shipper, customer, and consignee and can contain all of the business rules for B2B communications with partners as well as specific business and operational rules by shipper, customer, and consignee. Billing and Auditing Billing and auditing of carriers and logistics service providers is a fundamental element of the product suite. Manufacturers can audit all invoices from execution providers within the suite, and 4PL providers can audit their 3PL resources as well as generate invoices within this module. Since carriers normally perform such audits, this capability represents an additional service on the part of the 4PL provider. Tracking and Visibility All customers and carriers have full 24/7 access to key data across the entire supply chain. Viewable electronic copies of documents include signed bills of lading, inbound paper work, and track and trace information on key events. Freight Planning and Execution Key components include load building and planning, rating, quoting, trip planning, dispatch, carrier audit, shipment tracing, billing, and settlements. Logistics planners can build loads for each specific execution facility, with access to all inbound and outbound shipments, and can optimize loads at best cost within service levels as well as monitor profitability by load, lane, and customer. Reverse Service Logistics Special processes for managing returned goods include validation of returns against returned material authorization numbers and managing inspection and disposition of returns. Inventory Allocation Engine The complex task of allocating orders (order parsing) under multiple 3PL/4PL scenarios is simplified with automation of the process by category, such as vendor management inventory processes (third party fulfillment) and consigneebased allocation rules (e.g., picking orders by shelf life data). Standard allocation procedures can be applied within single or multiple facilities under userdefined rules. Business-to-Business Engine Electronic data communications are critical, and three basic data formats currently are in use: traditional electronic data interchange (EDI) using ANSI X.12 document sets; XML, which is a flexible Internet-oriented plain language format that is both human and machine readable; and flat files, which are typically generated and exchanged directly by ERP systems. Customer Relationship Management CRM employs business processes that are defined within the system. It provides customer service with the means to track issues such as claims management, special requests, and service issues, and it also can provide visibility of events outside normal business processes. Order Entry Management OEM deals with issues beyond the normal scope of an ERP order management system, allowing logistics operators to create manual orders as well as to edit ERP- or Internet-based orders. Receipt Management This feature provides users with the ability to create receiving information when B2B purchase order/receiving information is missing. It can also edit ERP or Internet-based purchase orders. Costing This feature allows reporting for costs of handling and transportation to whatever level is specified within the execution system. Data Warehouse (Data Mart) This serves as a repository for the data required to fully service the various ERP systems and to manage the execution sites that comprise the operating elements of the 4PL solution. The Data Warehouse is also an integral part of the historical reporting and business intelligence components.
partners are purchase orders, advance ship notices, invoices, inventory inquiry/advice; and in warehouses: shipping orders, stock transfer shipment advice, shipping advice, and inventory adjustment advice. In Brampton, Ontario, Hopewell Logistics is providing ambient warehouse space at its own multibuilding complex, as well as both ambient and temperature-controlled space through independent 3PL warehouse operators under contracts previously put in place by its customer. Using Delfour s WarehouseLogic warehouse management system in a networked environment as the facilitating software platform, Hopewell collects data for storage, retrieval, and distribution control from the production facilities and distribution centers on the system as well as from the customer s national distribution center. For movement of goods between the various production and distribution centers, Hopewell utilizes multiple carriers, coordinating shipping, tracking, and delivery through Delfour s SmartFreight2 application. While removed from the day to day execution of the logistics processes, Hopewell s customer maintains access and management ability through the e-Vista Web-based supply chain online order management and visibility application. Tibbett & Britten Group Americas (TBG) is using a similar implementation in a different way serving as a true wholesaler for the expanding Canadian operations of a large U.S. retailer. Tibbett & Britten is one of the world s largest 3PL providers, with 40 percent of its business done by the Americas group. A WarehouseLogic user for five years, TBG is acting in a true wholesaler capacity for the first time with this implementation, taking actual ownership of inventory from frozen and refrigerated food vendors, subcontracting inventory storage and management to a 3PL logistics provider partner, receiving and fulfilling orders, and billing the individual retail outlets for product shipped.