3PL vs 4PL: What’s the difference? And why we’re neither

As if the world of logistics and fulfillment wasn’t confusing enough with all its data, delivery services, and technology; now, just like algebra, we’re contending with alphabetical AND numerical acronyms. When will it end?!

Two of these acronyms are in a battle for supremacy titled: 3PL vs 4PL. 3PL (Third-Party Logistics) and 4PL (Fourth-Party Logistics) are often used interchangeably, but they represent distinct models with unique benefits and challenges. Understanding the differences between these two models is crucial for businesses looking to optimize their supply chain management and fulfillment processes. So what’s the big idea? And are they really all that different?

We’ll submerge you into the nuances of 3PL vs 4PL, explore the traditional perceptions of these models, and, most importantly, highlight how our hybrid approach offers a unique solution that combines the strengths of both.

What is 3PL?

Third-Party Logistics, or 3PL, is a service where an online business outsources part or all of its logistics operations to an external provider. This can include warehousing, transportation, order fulfillment, and distribution. The primary advantage of using a 3PL is that it allows businesses to focus on their core competencies while leveraging the expertise and infrastructure of a logistics provider. Basically, you hand over the keys and the 3PL provider takes care of the rest. 

They operate the warehouses, manage the inventory, and take care of getting your products to customers. You get to focus on what you do best, while your 3PL partner does the heavy lifting.

However, there are also some limitations to the 3PL model. While 3PLs can be fantastic at what they do, you might find yourself a bit out of the loop. They call the shots on processes and quality control, which can sometimes feel like being a backseat driver. And if something goes wrong, you might not have the visibility to figure out why. It’s all about trust – but sometimes in business, trust comes with a side of anxiety.

We’re not ones to criticize, but 3PLs can have their limitations (hey, we’re just being honest!), especially when it comes to supporting brand expansion into other territories. It also means online brands that require specialized or custom solutions for their shipments (think fragrances, food, and health and well-being for instance) can find themselves in a bit of a struggle.

What is 4PL?

While some might describe a 4PL as an overarching service provider managing the entire supply chain, our take is a little more precise. A 4PL model is when a 3PL provider outsources some parts of the logistics process to other specialized service providers: 4PL entities. These could be carriers, tech providers, or even other warehouses.

In essence, a 4PL model adds another layer of flexibility. When a 3PL needs additional resources or capabilities, they partner with external businesses to handle the tasks they can’t – or don’t want to – do themselves. This creates a dynamic network where different players contribute to a seamless logistics operation.

However, the traditional (keep this in mind, we’ll explain how our model works in a minute) 4PL model is often criticized for its lack of direct control over the logistics processes. Since 4PLs typically don’t own any assets, such as warehouses, vehicles, and even their own tech platforms (spoiler: we’ve created our own award-winning platform), they’re relying on others to deliver the goods – literally and figuratively. This can lead to concerns about quality control, consistency, and customer service. Plus, all those layers of outsourcing can create communication challenges and increase the potential for errors. But we’ve got the solution.

Why we’re neither: Our unique hybrid model

We’re not your typical logistics provider – we’re the best of both worlds, blending the brawn of 3PL with the brains of 4PL, while addressing the common criticisms associated with traditional 4PL services (so bringing the beauty, too).

Unlike most 4PL providers, we directly manage and own much of the logistics operations (bar some of the actual warehouse units, which we’ll come to later), including a huge array of technology and processes, such as product management, inventory planning, Delivery Assured, forecasting, integrations… we could go on. This ownership ensures a high level of control over quality and customer service, which are often areas of concern in a traditional 4PL model. By owning and operating the key parts of the logistics system, we can maintain the same high standards across all operations, ensuring consistency and reliability for our clients. We’ve broken this down into ‘The Three Cs’.

The Three Cs

Capabilities

First and foremost, it’s all about having the right capabilities. We don’t like to boast, but we really do have a broad range of services that cater to businesses of different shapes and sizes. By leveraging both our own infrastructure and network of 4PL partners, we provide world-class logistics solutions that scale with your business. Whether you need complex warehousing, intricate order fulfillment processes, or cutting-edge tech integration, our capabilities mean we’re ready to tackle any challenge.

Our advanced technology, innovative systems, and vast network allow us to meet any demand, whether it’s seasonal spikes, international expansion, or the latest eCommerce trends. It’s not just about offering logistics services – it’s about offering the right services, exactly when you need them.

Collaboration

Unlike traditional 3PL providers, we believe in working hand-in-hand with our partners. Our hybrid model is built on strong, collaborative relationships with our trusted service providers, all of whom integrate seamlessly with our processes and technology.

But collaboration isn’t just about working with our network – it’s also about our relationship with our customers. We view ourselves as an extension of your business, not just a service provider. We work closely with you to understand your needs, creating tailored solutions that reflect your business goals. It’s a partnership, not a transaction.

Control

While many 4PL models tend to suffer from a loss of control over quality and process, we’ve built a system that keeps us firmly in the driver’s seat. Our tech-driven approach ensures that all processes, whether in-house or through our partners, adhere to the same high standards. From order accuracy to customer communication, we maintain control over every aspect of the supply chain.

By integrating our technology across the entire network and working with partners who meet our exacting standards, we provide the kind of consistency and reliability that businesses crave. You get the flexibility of a 4PL model, but with the assurance that everything is running according to the fulfilmentcrowd blueprint.

But we don’t just stop there. These partnerships aren’t just transactional; they're built on strong, long-term relationships where our 3PL partners integrate our very own technology and processes into their operations. This approach allows us to maintain a high level of control over the logistics network, even when working with external partners.

Our partners use our tech, follow our processes, and meet our exacting standards. So, while we might orchestrate the entire supply chain, we’re more like a logistics hybrid that’s as unique as it is effective. We keep everything running seamlessly, without the usual 4PL headaches. We’re super involved in these processes too – don’t think we’re leaving anyone to their own devices. Our Network Operations Team continuously supports our fulfillment network partners to build solid relationships, both in-person and remotely. Likewise, when it comes to support tickets or customer service queries, it’s the fulfilmentcrowd team you’re dealing with; we never outsource.

This hybrid model offers several key advantages:

• Quality control: Because we have strong partnerships with other 3PL providers and we maintain a high degree of control and involvement, we can ensure that all operations adhere to the same high standards. This addresses one of the common gripes with traditional 4PLs – that they’re a bit hands-off. This can lead to those dreaded logistics nightmares: late deliveries, damaged goods, and unhappy customers.
• Customization: We understand that one size doesn’t fit all. Our hybrid model allows for greater customization of logistics processes to meet your specific needs, no matter how often they might need to change. Our technology and processes are implemented across our entire network, ensuring that every aspect of the supply chain aligns with your needs. And because our partners are handpicked by yours truly, we ensure that the customization you need doesn’t get lost in translation (particularly if you’re planning on expanding overseas…). 
• Flexibility: By operating as both a 3PL and a 4PL, we offer a level of flexibility that’s difficult to achieve with a traditional logistics model. You’re able to benefit from the efficiency and scalability of 4PL services, while still enjoying the control and reliability of a 3PL provider.
• Consistency: The integration of our technology across our entire logistics network ensures consistency in operations, regardless of whether the services are provided by fulfilmentcrowd’s own warehouses or our 3PL partners. With our hybrid model, you really do get the best of both worlds – consistent quality and service that doesn’t stop when you want to grow.
• Expertise: While we operate as a 4PL in terms of coordinating a network of 3PL providers, we also maintain the highest level of control over the logistics processes by owning key assets and implementing our own tech and processes across the entire network. This includes a dedicated Network Team, Account Management Team, Operations Team, and Customer Service Team (and a whole load more behind the scenes). Basically, we’ve cracked the code on combining the strengths of 3PL and 4PL, creating a model that’s not just efficient, but also reliable, flexible, and tailored to your needs. This level of collaboration and expertise isn’t typically found in traditional 4PL models, where the relationship between the 4PL and its 3PL providers is often more transactional and less integrated. We’re all about getting close with one another. 

Why our hybrid model matters

We can all feel a change happening. From industries becoming increasingly competitive to the logistics landscape becoming more and more complex, you need more than just a standard 3PL or 4PL service. You need a partner who can offer the best of both worlds – control and reliability, along with flexibility and scalability.

Our hybrid model is designed to meet – and exceed – these needs. It’s also completely unique to the fulfillment market, because we take the best bits from both 3PL and 4PL services (with a hybrid twist). By combining the strengths, we can offer a fulfilment solution that’s both comprehensive and tailored to your needs. This unique approach ensures that businesses can benefit from the efficiency and cost-effectiveness of outsourcing, while still maintaining the control and quality that are essential for success.

The differences between 3PL and 4PL models are significant, but they don’t have to be mutually exclusive. Whether you’re looking to scale or have complex logistics needs, our hybrid model offers a solution that’s as innovative as it is effective. After all, we’re not just another logistics provider. Speak to one of our experts today to find out why.