In the rapidly advancing logistics industry, party logistics (PL) services are continuing to evolve. Many customers are still just becoming familiar with 4PL and 5PL as workable supply chain solutions – let me introduce 7PL.
7PL, like 4PL, is a management service but it can also incorporate 3PL services. So it is in essence the combination of the two services – 3PL + 4PL = 7PL.
So, a 7PL provider can provide both the services of a 3PL provider, offering their own warehousing and transport solutions, and the consultation services of a 4PL. For the customer they have the advantage of a one-stop shop – dealing with one company and receiving one invoice.
So is it new?
Although the term ‘7PL’ is new, the concept is not. In a previous article ‘Can a 3PL provider be a 4PL?’ I discussed the potential pit-falls of working with a 3PL service providing company who also sub-contracts to other 3PL providers on your behalf (similar to the concept of 7PL). The problem with this method is its lack of structure, transparency and customer communication. It can expose the customer’s supply chain to unnecessary risk and exploitation.
A structured 7PL service provider is a genuine evolution – advancing beyond 3PL without being limited by the 4PL service provider model. A 7PL would focus on active customer relationship management (CRM) and provide transparency. It could even incorporate existing 3PL service providers for a company and manage them as part of their services.
So, what is the difference between 4PL and 7PL?
A 4PL is a non-asset based consultant and can only act as a neutral lead logistics provider. They are independent and therefore they have no services of their own to provide. They can only act on your company’s behalf to source and provide services. Whereas 7PL service providers can provide a complete turn-key solution with their own 3PL type services, such as:
- Inventory management
- Customs clearance
- Transport services
And also provide:
- Existing 3PL Service management
- Project management, sourcing and negotiation
- Logistics strategy and analytics
- A single point of contact
Is there a need for 7PL? Well, being a combination of 3PL and 4PL it has the potential to provide the best of both worlds and I am in no doubt there are customers that would benefit from this type of service. Will all 3PL providers evolve into 7PL service providers? I doubt it – each PL service is suited to a different business model. As businesses and their supply chains evolve I am sure PL services will continue to evolve to accommodate them.