Logistics is a field that deals with the organization and management of the supply chain. It is a complex process, therefore several types have been distinguished to facilitate its management. There are three types of logistics: 1PL logistics, 2PL logistics and 3PL logistics. In this article, we will focus on 3PL logistics and compare it to other types.
1PL logistics
The first type of logistics worth paying attention to is First Party Logistics (Logistyka 1PL), in which the company itself organizes and manages its supply chain. This means that the company is responsible for planning, coordinating and controlling the processes related to the procurement, production and distribution of its products. For example, a car manufacturer may have its own warehouses, production lines and a fleet of delivery trucks, which allows it to control the entire process of delivering its products to customers.
2PL logistics
A slightly different type is 2PL Logistics (Second Party Logistics), in which the company outsources certain tasks related to supply chain management to an external company. Such a company, specializing in logistics services, deals with, among others, transport, storage and supply. For example, a pharmaceutical company may hire a logistics company to transport its products to pharmacies and medical facilities, but also to store them. Thanks to this, it can resign from the need to have its own warehouse, while reducing its maintenance expenses.
3PL logistics
3PL (Third Party Logistics) is currently the most advanced type of logistics. In this system, the company uses comprehensive logistics services of an external company. In simple terms, a company entrusts all or part of its supply chain to an external logistics company. To better illustrate this – a food company can commission a logistics company to manage the entire process of delivering its products to stores. From procurement, through production, storage, transport, to distribution.
The essence of 3PL logistics lies in the fact that an external company deals with comprehensive management of the supply chain, which allows the company to focus on its main activity, i.e. on the production and sale of its products. The 3PL company offers services such as: warehousing, transport, distribution, co-packing, fulfillment.
What’s next?
The next stage of logistics development is 4PL (Fourth Party Logistics) – a solution in which not only the company outsources its entire supply chain to an external company, but also manages and coordinates the work of other subcontractors. In this 4PL model, the third party is called a supply chain integrator. The integrator connects suppliers, manufacturers and service providers and ensures the coordination, planning and monitoring of the supply chain. For example, a pharmaceutical company may commission a 4PL company to comprehensively manage the entire production and delivery process of its products, and the 4PL company, in turn, will coordinate the work of suppliers, manufacturers, warehouse operators and transport companies.
5PL Logistics (Fifth Party Logistics) is the latest supply chain model based on the use of modern technologies and artificial intelligence. In the 5PL model, an external company uses advanced IT systems to manage the supply chain and optimize processes. 5PL uses data and algorithms to perform predictive supply chain analysis and provide process data such as stock levels and delivery times. For example, a logistics company may commission a 5PL company to optimize its supply chain using advanced IT systems. Thanks to this, 5PL will be able to provide predictive analytics that will help reduce costs and improve the quality of customer service.
Solutions between 1PL, 2PL, 3PL, 4PL and 5PL logistics differ in the scope of responsibility and the degree of involvement of the external company in the supply chain. In 3PL logistics, an external company deals with comprehensive supply chain management, in 4PL logistics, an external company coordinates the work of other subcontractors, and in 5PL logistics, it uses advanced IT systems to optimize processes. Each of these models can be used depending on the needs of the enterprise, and the selection of the appropriate model can contribute to improving the efficiency and quality of the supply chain.