Tag Archives: definitions

4PL definitions

4PL box
What makes a good definition?  Take a look at a good dictionary and you’ll see plenty of examples.  Even complex ideas can be summarised succinctly.  This definition of relativity comes from the Oxford English Dictionary:

The dependence of various physical phenomena on relative motion of the observer and the observed objects, especially regarding the nature and behaviour of light, space, time, and gravity.

Now that’s not going to help you get a first in physics but it is a good general definition for the educated layman.  It is:

  • concise
  • simple
  • unambiguous
  • complete

So why does defining 4PL give so many such difficulty?  A quick trawl of the net produces the following examples (there are many more).

Accenture

Everybody seems to start with Accenture’s landmark 1996 version:

A 4PL is an Integrator that assembles the resources, capabilities and technology of its own organisation and other organisations to design, build and run comprehensive supply chain solutions.

As I have already said, I can’t find the original but this is the most often quoted version.  As far as it goes it’s fine, but I think the problem we logisticians have with it is the same as a physicist would have with the relativity definition above; it might be good enough for the layman but for the practitioner it just doesn’t go into enough detail.

I think there are a couple of problems with it, though.  First, it uses the word ‘integrator’.  Using the conventional definition of the term (a person or thing that combines things to make a whole – thanks again Oxford) that’s OK, but in logistics integrator has another connotation, the parcels carriers like UPS, Fedex and DHL.  It therefore potentially fails the ambiguity test.

Second, it doesn’t address what for me is a fundamental issue.  A 4PL doesn’t execute the physical storage or movement of product.  Were it to do so it would be a Lead Logistics Provider (‘LLP’) wouldn’t it?  This makes it difficult, but not impossible, for third-party logistics operators to run 4PLs and, I suspect, was in the minds of those at Accenture that came up with the concept.  They are not in the business of coming up with great ideas for which they don’t get paid.

Council of Supply Chain Management Professionals

This august body chooses not to define 4PL but to distinguish the concept from that of third-party logistics (3PL):

Differs from third party logistics in the following ways; 1) 4PL organization is often a separate entity established as a joint venture or long-term contract between a primary client and one or more partners; 2) 4PL organization acts as a single interface between the client and multiple logistics service providers; 3) All aspects (ideally) of the client’s supply chain are managed by the 4PL organization; and, 4) It is possible for a major third-party logistics provider to form a 4PL organization within its existing structure.

Hmmm.  Let’s go through those one by one:

  1. .…often a separate entity … joint venture or long-term contract  it might be a JV and I’m not sure an entity can be a contract
  2. … single interface between the client and multiple logistics service providers.  Tick that one.
  3. All aspects (ideally) … of the client’s supply chain are managed … No, that doesn’t follow.  There are plenty of inbound 4PLs, or finished goods examples.
  4. … possible for a major 3PL to form a 4PL … Tick that one too, but it needs explanation.

Other contributions

The award for chutzpah goes to Concargo, who explain that they ‘conceptualised and envisioned this initiative as early as 1988’.  Shame they kept it to themselves.

And Logistics List only adds to the confusion with the statement: ‘That said a 4PL (also sometimes called a lead logistics provider) …’  Sorry guys but 4PL and LLP are very different things, as I hope to explore real soon.