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Last mile delivery – Comparison between 3PLs and 4PLs

The last mile leg of fulfilling online purchases to the final destination poses complex logistics challenges. Cost efficiency and customer satisfaction depend on this final handoff. Retailers and e-commerce enterprises increasingly rely on third-party logistics providers (3PLs) to manage last-mile delivery. However, as omnichannel operations and supply chains become globalized and sophisticated, even 3PL capabilities have limitations. 4PLs are increasingly seen as strategic partners that improve agility, efficiency, and control with intricate last-mile fulfillment.

End-to-end visibility and orchestration

3PLs focus narrowly on providing operational execution of last-mile delivery using their assets and staff. They have limited visibility before receiving the shipment or into broader supply chain flows. In contrast 3pl vs 4pl, 4PLs provide an integrated command center with end-to-end visibility across multiple 3PLs, carriers, inventory systems, etc. It enables 4PLs to orchestrate the entire supply chain including last-mile handoffs for streamlined, optimized fulfillment.

Focus on optimization vs. Execution

While 3PLs concentrate on effective tactical execution of last-mile routes, 4PLs leverage data and analytics to optimize the broader ecosystem. Deliveries are optimized, handovers are streamlined, warehouse orders are processed more quickly, and delays are predicted. Reduce costs and increase delivery speed. Supply chain performance is enhanced by 4PLs.

Agility and innovation

3PLs have robust but relatively fixed operating processes and delivery assets like vehicles, and warehouse infrastructure. Operations cannot be reshaped to meet dynamic customer needs. 4PLs intentionally maintain asset-light flexible models. They orchestrate diverse partners, delivery modes, technologies like bots/drones, and alternative pickup points in constant evolution to meet the needs of the business.

Leveraging technology

Many 3PLs still rely on legacy systems like phone-based dispatch, paper processes, and spreadsheet trackers resulting in delays, lack of visibility, and limited optimization. Technologies like Internet of Things, predictive analytics, digital freight marketplaces, tracking sensors, proof of delivery automation, and machine learning are extensively utilized by 4PLs.

Global scale and reach 

While large 3PLs have significant capabilities, many operate in limited regions. As supply chains and e-commerce become global, significant last-mile delivery gaps emerge. Leading 4PLs brings global scale and the ability to coordinate last-mile handoffs across continents consistently. They work with regional/local delivery partners filling geographical gaps in 3PL networks.

Customer experience focus

3PLs concentrate primarily on basic metrics like on-time delivery and route costs with limited emphasis on CX. They have a minimal impact on post-purchase experiences. 4PLs enable integrated CX management across order tracking, self-service portals, branded handoffs, proof of delivery, instant notifications, and return processing. Customers can track and control their last-mile journey online.

Strategic business insights

Most 3PLs focus on execution with limited insights into strategic factors like emerging customer segments, market trends, innovations, etc. Their analytics are restricted to delivery KPIs. 4PLs combine aggregated data across clients, regions, and carriers to identify strategic opportunities – white space markets, new competitive threats, delivery tech, etc. They bring enterprise-level intelligence.