4PL Logistics: IT Problems and Solutions. The Matter of 4PL Technology
- An intro into 4PL logistics and 4PL providers
- What is 4PL logistics in simple words?
- What is a 4PL logistics provider?
- 4PL IT problems
- 4PL technology solutions
- Coreteka’s expertise in logistics solutions
Smart and innovative IT solutions drive the logistics industry forward and transform the business future. Developers can create unique and cost-effective platforms to achieve an improvement in effectiveness and increase productivity.
Business IT solutions include a huge range of services like web designing, software, and mobile application development (learn more about the software development life cycle). These solutions allow for controlling the reliability of management information in key business processes. The popular technology solutions are designed for convenient provision of access to services and data.
An intro into 4PL logistics and 4PL providers
While third-party logistics (3PL) implies outsourcing supply chain activities to another company, 4PL, or fourth-party logistics, shapes a so-called superstructure over this concept. 4PL businesses integrate multiple carriers and service providers to deliver a tailored solution to their customers. Therefore, the focus of 4PL logistics is management and coordination.
The chart below visualizes the fundamental levels in the logistics and supply chain industry, which would help us describe the role of 4PL logistics and service providers.
What is 4PL logistics in simple words?
4PL is an advanced form of logistics outsourcing where an external company manages an entire supply chain on behalf of the client organization. In a 4PL arrangement, the logistics provider acts as a single interface between the client and multiple logistics service providers, coordinating and overseeing the entire supply chain process.
Fourth-party logistics, or 4PL, controls all subcontracted logistics providers, shipping companies, and freight forwarders through the maintenance of information systems as a primary coordinator of the supply chain. It can also be a provider of outsourcing operations which has a broader responsibility to reach the strategic goals of a client in supply chain management.
In a nutshell, 4PL logistics meaning is performing a strategic function, often optimizing the supply chain, implementing technology solutions, and providing data analytics to improve overall efficiency and performance.
What is a 4PL logistics provider?
A fourth-party logistics provider is a company that offers 4PL services to its clients. The primary role of these companies is to become an outsourced logistics partner for client organizations, handling end-to-end supply chain management. This includes coordinating various logistics activities, managing relationships with numerous logistics service providers, such as 3PLs, carriers, and warehouses, and providing strategic insights and optimizations to enhance supply chain operations.
4PL IT problems
Management of 4PL requires a centralized software platform that provides positive control over all potential activities. A challenge for logistics is to find a technology solution that can regulate all business requirements. 3PL systems control current warehouse processes while 4PL software tools have to gather data from customers and other collaborators.
Software companies should be advanced enough to handle big data and integrated IoT. 4PL solutions aim to manage different perspectives and projects. The largest companies like Amazon and UPS take ownership of the entire supply chain without third-party support to reduce shipping expenses and act like 4PL providers. Their shipping and ordering systems are integrated. Other companies have resources for 4PL strategic development.
4PL providers typically need to overcome the following IT problems:
- Integration issues. As mentioned earlier, one significant challenge is integrating different stakeholders’ IT systems in the supply chain. The process involves aligning data formats, protocols, and communication standards between the 4PL provider and various logistics service providers, suppliers, and clients.
- Data security and privacy concerns. Managing sensitive and confidential data related to multiple clients and their supply chain operations requires robust data security measures. Data breaches or unauthorized access can lead to severe consequences, including loss of trust and legal liabilities.
- Software compatibility. Different stakeholders in the supply chain might use diverse software systems. Ensuring compatibility and seamless data exchange between these systems can be a major hurdle for 4PL providers.
- Real-time visibility and tracking. Providing real-time visibility and tracking shipments, inventory, and other logistics processes is crucial in modern supply chains. The challenge lies in having accurate, up-to-date information available to all stakeholders at any given time.
- Obsolete technologies. The logistics industry is constantly evolving, and technologies become outdated quickly. 4PL providers need to keep up with the latest IT advancements to maintain a competitive edge.
- Scalability challenges. As the client base and supply chain complexity grow, 4PL providers must ensure that their IT infrastructure can handle increased demands without compromising performance or data accuracy.
- Costs and ROI. Investing in advanced IT solutions can be costly for 4PL providers. Ensuring a positive return on investment (ROI) and cost-effectiveness of IT initiatives becomes a critical concern.
4PL technology solutions
The 4PL solution is the effective management of all logistics processes that will give you more sense of control over your business.
3PL provides feature logistic services in storage and transportation, but 4PL controls the whole supply chain system – packaging, warehousing, product delivery, forwarding, and storage services. While 3PL may work with many companies at the same time, 4PL will focus on a smaller group of clients or form joint ventures with customers. A manufacturer signs preferably a long-term contract with a provider. Additionally, 4PL takes full responsibility for inventory management data, network analysis, planning, and project management, analysis of transport expenditures, order fulfillment, returns management, supply chain design, and so on.
4PL logistics software is focused on leaner production and inventory management, so web integration of data helps organizations to direct their activities. Companies can minimize inefficiencies in their supply chain with 4PL IT solutions and pay more attention to their product. It becomes easy and possible to manage the delivery time and order fulfillment which decreases unnecessary costs for the customers and the companies.
The specific examples of 4PL solutions that address the respective challenges in operations are the following:
- Transportation Management System. This system automates supply chain distribution. Its components include shipment data, route planning and optimization, carrier audit, and freight management. Data warehouse and analytics, order entry management, tracking, and visibility management tools interact with systems in the supply chain network to measure the quality of service and to report delivery incidents. With the integrations within the system, a load location can be monitored. It is possible to automatically calculate a profit from the expenses.
- Warehouse Management System. The solution uses a barcode, scanning, and electronic data interchange to optimize inventory storage and order fulfillment processes. This software application is designed to optimize warehouse functionality and improve inventory accuracy. Cloud software provides low-cost options for clients and convenient data access in this real-time environment. Sensors, scanning devices, and real-time GPS are used in the Internet of Things to track assets at any point. The customers are automatically notified of their order delivery status. 4pl also provides data collection to model industry trends and demand forecasting.
- Cloud-based solutions. Cloud-based platforms allow for easier scalability, flexibility, and accessibility. Cloud 4PL solutions enable real-time data sharing and collaboration among all stakeholders in the supply chain, regardless of their geographic location.
- Data security measures. Robust data security protocols and encryption techniques safeguard sensitive client and supply chain data. Regular security audits and assessments should be conducted to identify vulnerabilities and address potential risks.
- Data analytics and business intelligence. Advanced data analytics and business intelligence tools aid in gaining insights from the vast amounts of data generated in the supply chain. Predictive analytics can help optimize inventory levels, route planning, and demand forecasting.
- Standardization and data formats. Implementing standardization in data formats and communication protocols ensures seamless data exchange and integration between different systems.
- IoT (Internet of Things) technology. The technology implies utilizing IoT devices and sensors to gather real-time data from shipments, warehouses, and other supply chain elements. IoT technology enhances tracking, improves asset management, and provides valuable data for decision-making.
- APIs (Application Programming Interfaces). Developing APIs facilitates seamless communication and data exchange between different software systems used by various stakeholders in the supply chain. Read more about how this works in logistics in another article.
- Mobile Applications. Mobile applications amplify supply chain visibility, enabling clients and stakeholders to access real-time data, track shipments, and receive alerts on the go.
Businesses tend to apply for 4PL technology solutions to increase profitability through back-end system integrations, standardization, automation of order placement, and reduced procurement costs. They often use an integrated electronic interface to manage all service providers and address the requirements of all logistic sections. The ideal 4PL supply chain solutions are connected with warehouse management, revenue and expense management, process automation, freight tracking, customer relationship management, and supplier tracking systems.
Coreteka’s expertise in logistics solutions
Logistics is a sector where Coreteca boasts its core domain expertise. This means we offer not only technical excellence in this sphere but also competent business recommendations that can boost the outcomes of your project.
We have already executed over 35 successful projects in logistics and strive to grow this number exponentially.
We empower our clients to implement innovations in their logistics and make the logistics process more intelligent. As a result, businesses can minimize their expenditures and make data-driven decisions.
We approach every project with a deep understanding of the industry and select the most appropriate tech stack. Our proven solutions guarantee superior performance and maximize business value.
Here are several of Coreteka’s cases in the logistics sector. You can explore them in more detail and familiarize yourself with the other winning case studies.
- Digital Freight Platform. We developed a comprehensive platform specializing in the transportation of goods. The platform functions by connecting customers with carriers. The primary business problem we aimed to address was the lengthy and tedious process of finding the right vehicle for cargo transportation. With this challenge in mind, we developed the application providing all vital information about registered carriers, their fleet, and documentation. Therefore, we granted customers a convenient tool for choosing the optimal transportation opportunity without extra hassle.
- Coreteka DriverApp. DriverApp streamlines the communication between a dispatch and a driver. Thus, an operator can interact with a driver in real-time, updating routes, providing actual addresses and contacts, and more. Our fundamental goal was to help companies effectively handle the delivery of goods and optimize logistics activities. Ultimately, the app allows customers to address the problem of proper communication with the drivers, minimize the number of accidents on the route, get access to real-time data about cargo delivery, and provide a driver with all the necessary information instantly.
- Transport Management System. Coreteka’s platform allows for observing the location of all the client’s trucks and cargo in real-time, calculating ETA, and getting multiple additional benefits. Thanks to the EDI communication protocol, this Transport Management System is connected with other client applications to achieve seamless data exchange. Moreover, by utilizing this 6-role system, customers can get rid of excess paperwork and elaborate on real-time data and information exchange. During the business analysis phase, we revealed a significant empty truck mileage in Ukraine that led to high CO2 emissions and increased expenditures. Our solution allows optimizing logistics processes by 2%. A TMS tracker helps to reduce CO2 emissions by 1.2%. Ultimately, companies can save costs while minimizing the harmful environmental effect. The system empowers customers to create a request, select a carrier, set up the route, and interact with the chosen transporter. A transportation company can see actual requests, choose the appropriate one, discuss the route and price with the customer, and assign a transporting vehicle.
Also, you can read an interesting article about what the primary business benefits of an ERP system are.
To sum up, logistics 4PL solutions function at the optimization level while 3PL focuses more on daily logistic operations. 4PL software generally offers effective management to customers that allows manufacturers to outsource their operations to third-party professionals. It manages the groups of warehouses, carriers, and trading partners, and helps the global shippers with the execution of transactions, inventory, and shipments.