Don’t you just hate starting a new job and getting assaulted by a never ending stream of acronyms? I know when I started my supply chain career; it took me a while to sort out the difference between WMS solutions (warehouse management systems), WCS (warehouse control systems, TMS (transportation management systems), MES (manufacturing execution system software), etc.
If you are new to outsourced logistics, the bevy of terms can be equally confusing and overwhelming. Below is some clarification about some common terms you will see as you start to explore this area:
• Third party logistics (3PL): Organizations that provide outsourced logistics services, typically specializing in integrated warehousing and transportation services, although the portfolio of services offered continues to expand and can include additional services, such as freight forwarding and customs brokerage.
• Logistics Service Providers (LSPs): An umbrella term for independent organizations that provide, for a fee, various logistics services, such as shipping, forwarding and contract warehousing. Can include 3PLs, 4PLs, freight forwarders and carriers.
• Fourth-Party Logistics (4PL)/Lead Logistics Provider (LLP): In practice, this is a 3PL comprised primarily of computer applications and knowledge workers that manages other 3PLs and logistics service providers that supply logistics services to customers. A 4PL is often viewed as the same as a non-asset-based 3PL or lead logistics provider. A 4PL also can manage other 3PLs to provide a global solution to customers.
• Non-Asset Based: Provides logistics services, such as coordinating transportation, tendering/booking, routing and freight auditing/payment, but these firms do not typically own the warehouses, vehicles or other forms of transportation assets. These firms typically only have applications/systems, operational best-practice methodologies and logistics expertise in areas such as logistics operations, freight negotiations and customer service.
Hopefully this can help mitigate some of that initial frustration of outsourced alphabet soup.
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