4pls: worth the hype? - bdp international...bridgenet solutions specializes in advanced data...

4PLs: worth the hype?

There is no industry quite like logistics for inventing new acronyms, definitions and models which can confound and sometimes completely miss the point. In this co-authored white paper between Noah Cepela (President, BridgeNet Solutions) and Neil Wheeldon (Vice President Solutions, BDP International) we will break down what really matters to companies based on interviews, surveys and research.

www.bdpinternational.com © 2020 BDP International

The Council of Supply Chain Management Professionals (CSCMP) defines 4PL as a “supply chain integrator that assembles and manages the resources, capabilities, and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution.” In essence, an organization which is acting in a manner that leverages both its own resources as well of those of others to deliver supply-chain solutions. In many respects, therefore, the core capabilities of such a company is the ability to arrange, control, optimize and integrate across multiple companies. A slightly nuanced term is that of a Lead Logistics Provider (LLP) essentially. CSCMP defines a LLP as “an organization that organizes other 3rd party logistics partners for outsourcing of logistics functions.” Essentially a narrower scope to 4PL with the LLP focusing on the control aspects of logistics activities and not necessarily extending into areas such as procurement optimization and inventory management but acting predominantly as the “one throat to choke.”

Of course, as IT companies, consultancy organizations and logistics service providers try to position their products and offerings in the market, the definitions have been molded to fit their own capabilities. With this lack of clarity and distortion, have we missed the point? In reality, whatever label we put on the various value propositions companies promote, we have trapped ourselves into thinking that there is a one size fits all solution to address the various problems companies face. Instead, we should examine actual business needs, appropriate capabilities and maturity to deliver transformation.

What is a 4PL?

A 4PL is a… “supply chain integrator that assembles and manages the resources, capabilities, and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution.”

Council of Supply Chain Management Professionals 2017

Deconstructing the various PLs

4PL

LLP(3.5 PL)

3PL

2PL

1PL

4PLFourth Party Logistics

LLPLead Logistics Service Provider

3PLLogistics Service Provider

2PLCarriers

1PLCargo Owners

Coordinates activities across the entire value chain with a focus on

transparency, optimization, control and strategic development

Coordinates the logistics flow across multiple 3PLs

/ 2PLs to provide single integrated service

Focuses predominantly on specialized services, such as warehousing, transport,

freight forwarders

Serves specific segment of the transport chain, such as

airlines, shipping lines

Utlizes own resources and

capabilities

2

We interviewed a number of companies across different industries to understand what their key challenges are and how they rate their current 3PL’s performance. Based on the interviews conducted, supply chain visibility remained the key challenge, leading to higher inventories and service challenges across industries. Cost and service provider performance were regarded as a similar level of concern. When assessing service provider performance most service providers scored below average in the categories of performance and cost transparency responsiveness. A number of customers cited challenges with integration across providers and data quality within the supply chain which hamper their ability to move to a more predictive, consistent and effective way of operating.

Company Needs

What are the main challenges in your supply chain today?

50%

22%

21%

7%

Visibility Cost Service Provider Performance Lead-Time

Understanding service provider performance

2.3 2.52.8

0

1

2

3

4

5

PerformanceTransparency

Cost Transparency Responsiveness

We further asked what services companies believed were missing within the arena of supply chain management:

What are you missing from your service providers today?

A key finding was that most service providers lack true globalization- the ability to truly act and perform globally through cohesive and streamlined SOPs and technologies.

23%

8%

15%

8%

23%

23%

Integrator across providers Improved collaboration platforms

Predictive analytics Warehouse optimization

Cost visibility & management Improvement advice & standardization

What are key needs from service providers?

www.bdpinternational.com © 2020 BDP International3

It should come as no surprise that transparency in performance and costs remain the greatest challenge for companies in today’s supply chain. Key needs focused predominantly on better integration, enhanced support and cost visibility. If we revisit the LLP / 4PL world, better integration, data management and connectivity are imperative for executing and managing a seamless supply chain.

Conclusion

3.8

1.4

2.8

3.53.3

3.63.3

3.8

3.4

3.0

1.2

3.7

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Key Services

We asked companies what activities they would be likely to outsource to a 4PL using the following scale: ([1] Fully leverage internal capabilities [2] Mainly leverage internal capabilities [3] Balance between internal capabilities and outsourcing [4] Mainly outsource [5] Fully outsource).

What services would you need from a 4PL?

One customer said: “Neutral / Control over the flow / Benchmarking over the other providers - to see what we do “You execute but we have the governance,” through very strong elegant / lean interfaces”

Clearly, services that support procurement benchmarking, visibility and customer service follow-up were more likely to be considered for outsourcing than procurement and end-customer facing activities. However, there was a general desire to outsource many functions in some capacity to enable companies to focus more on core competencies.

Conclusion


Much of what we discovered in our analysis was that companies were less concerned with “packaged” solutions in this space, but more interested in tailored capabilities or tools which could be deployed to create a more unique offering relevant to the specific customer or industry needs. So, what capabilities can we utilize to support company’s supply chain objectives?

Capabilities not definitions

Capability Does What? Advantages Disadvantages

Control Tower

A centralized planning, control and optimization function with the tools and capabilities to manage multiple flows and companies to provide visibility to the supply-chain, optimize costs whilst supporting agility and control.

Capabilities • Resources to manage

execution• Performance management

teams• Visibility and optimization

tools • Simplified customer interface

and communication approach• Contingency management

• Leverages technology and processes to create an integrated picture

• Employs responsive capabilities to react quickly to events

• Consolidates performance and cost information

• Provides a simplified interface and rapid decision making

• Offers the ability to optimize across providers, modes and flows

• Extends to an organization leveraged to support specific supply-chain objectives

• Requires change management approach in implementation

• Adds a layer in supply-chain which may not be required in simple flows

• Provides efficiency only if empowered to execute and aligned with business strategy

Integration Hub

Offers integration of data across providers

• Provides a simplified integration hub

• Supports data quality and management

• Provides the ease to add new providers

• Should agree and align on standards from outset

• Change efforts in consolidating information

Procurement Provides procurement support, benchmarking and freight bill audit support

• Integrates procure to pay with operational data

• Provides access to comprehensive market data and logistics know-how

• Utilizes boilerplates and sourcing tools of LSP

• Integrates freight audit with operations, reducing cost and improving control

• Requires neutral approach from LSP

• Provides opposition in implementing procurement support / audit approaches

Optimization / Consulting

Provides strategic support for improvement initiatives as well as continuous improvement approaches

• Utilizes existing data • Leverages insights across

provider base • Provides ease

of implementing recommendations

• Requires neutral approach from LSP

Think of the various capabilities required to support your business objectives; there is not a one-size fits all approach here. Even with a capability such as a control tower, there are many sub-offerings and processes that could add value or simply reduce cost if considering the full scope and need while incorporating the necessary change management in any such implementation / transition.

Conclusion


Let’s move beyond the misused definitions and focus on the clear needs which from a company perspective still revolves around data management, performance and visibility. With a streamlined focus on capability and business needs, we can examine an approach based on necessity. This model allows us to align directly with the needs of the business while also considering the angle of capability. From there, we can develop a tailored solution to meet business demands that complement and enhance existing capabilities.

In Summary


BDP has a long track record of collaborating with customers to drive development and support capabilities in order to enhance global execution to deliver the world what matters, safely. It provides a range of services, including ocean, air and ground transportation; lead logistics process analysis, design and management; export freight forwarding; import customs clearance and regulatory compliance; project logistics; warehousing, consolidation and distribution; and its web-based BDP Smart Suite® of shipping transaction/tracking management and visibility applications.For more, visit www.bdpinternational.com.

About BDP International

BridgeNet Solutions specializes in advanced data analytics and value generation for global supply chains. Powered by Xonar, its cloud-based business intelligence application enables real-time and predictive analytics, and visibility, enabling companies to control and reduce costs. Its capabilities span across all modes of transportation; Full Truckload, Less than Truckload, Ocean Freight, Air Freight, Intermodal, Parcel, and Courier. BridgeNet is based in Chicago, IL. For more, visit www.bridgenetsolutions.com.

About BridgeNet Solutions

Noah CepelaPresident, BridgeNet Solutions

Noah Cepela is an expert in advanced data and analytics for global supply chains and has played a critical role in developing and implementing data and business processes to help customers achieve their strategic, financial and operational goals.

Contact: [email protected]

Co-Author

Neil WheeldonVice President Solutions, BDP International

Neil Wheeldon is an experienced supply chain management practitioner having worked across numerous industries supporting customers in supply chain and digital transformation initiatives to drive growth.

Contact: [email protected]

Co-Author


4pls: worth the hype? - bdp international...bridgenet solutions specializes in advanced data...

Documents