Logistics is simply a procedure that deals with the management of goods. It includes processes such as; acquiring, storing and transporting goods to their designated areas. It is a complex process with many complexities, so the purpose of a supply chain is to make things easier and there are different types of logistics providers. A supply chain is a web of companies and suppliers that create a cycle that enhances the operations through mutual connections, helping provide services such as production, merchants, warehousing, transportation, and retail outlets.
WHAT’S A PL SCALE?
So, now that we know about supply chain and logistics let’s discuss PLs. PL is a supply chain method used by logistic professionals. it stands for “Party-Logistics Provider.” There are 5 main PLs, namely 1PL, 2PL, 3PL, P4L, and 5PL. PLs are measured through numbers, and different levels are based upon those numbers. This article will analyze each of them and see their characteristics.
TYPES OF PL SCALES
1PL: 1ST PARTY LOGISTICS:
The term “1PL” or “First-party logistics service provider” refers to a company or an individual that requires the services to ship cargo, goods, or freight from point A to B. It is used for both the parties, the one sending the goods and the other party who receives them. Manufacturers, wholesalers, traders, and companies or individuals working in similar directions mostly use 1PL. In other words, anyone moving their goods from one place to another falls into the First-party logistics provider.
2PL: 2ND PARTY LOGISTICS:
For 2nd Party logistics, an outside agent or a company has to be involved. Whether your product is shipped through a boat, truck, or plane, it doesn’t matter; as long as an external agent ships it, it’s 2PL.
It is usually used to ship products internationally, all the cargo you see on planes, and trains is considered 2PL. All the huge logistic companies moving cargo can be c0onsidered a part of 2PL.
3PL: 3RD PARTY LOGISTICS:
Third-party logistics is not just about picking up the cargo from A and dropping it at point B. It’s an intricate procedure, involving multiple parties and companies forming a network, where roles are defined for everyone. 3PL operations require multiple workers and operators. Their job is not only to pick orders, they also carry out warehouse tasks such as inventory update, arrangement of orders, as well as packaging and transportation. It is entirely different from the first two. It’s a whole new world of logistics, offering diverse services with an organized workflow.
4PL: 4TH PARTY LOGISTICS:
After the 3PL provider, we enter into new territory and the 4PL provider is one step further. 4PL includes a whole supply chain, focused on providing customers with the best services. 4PL is when a company outsources its logistics to someone else. 4PL includes overseeing the operations and management of the entire supply chain.
From keeping inventory tracking to managing warehouses and reviewing the insights from retail stores, 4PL manages all of it. Along with managing the procedures, experts that are a part of 4PL also recommend the manufacturers and retailers what to do next, based on the data and information they have gathered and processed.
It’s an advanced level of logistics, so it includes all the high-technology services such as tracking the orders, updating inventory promptly, maintaining the production and sales ratio to ensure seamless delivery of products to the customers, the safety of the product and many others.
5PL: 5TH PARTY LOGISTICS:
5 PL provider offers advanced logistics solutions and creates a supply chain network that is consistent and seamless. It combines all of the Party-logistic providers and is also known as a “logistic aggregator.”
Utilizing all the latest technology such as blockchain, artificial intelligence, and specifically machine learning expedites the whole supply chain. It is the latest logistic provider method and is gaining popularity around the globe at a rapid pace.
Each party-Logistics provider is significant and has something unique to offer, and all hold their importance in the global supply chain. Different PLs are suitable for different situations, considering the magnitude of your business operations.