4pl Logistics – Why it is beneficial for E commerce companies

For e-commerce companies like Amazon, Snapdeal, etc., 4PL is one of the most profitable and cost-cutting decisions they can take.

Under a 4PL organization or branch of functioning within a bigger company like Amazon, all aspects of the supply chain are undertaken by the organization.

The 4PL concept began in 1996 when Accenture, the management firm, was having a multinational company as its client and tried to consolidate the company’s freight forwarder base. Now 4pl logistics services has become  known concept for any company that manages the entire supply chain process of the client company, giving the client company an opportunity to view and operate the process of complex supply chains, involving freight forwarders, warehouses, shipping companies, and agents.

For example, Amazon in the US carried in its catalogues around 480 million products in 2015. Having this immense size and scale of inventories, the ecommerce giant had to evolve into a logistics entity to cut down on the costs and increase profitability. The company even developed a strategy for having an international shipping and logistics company dedicated all to itself.

The 4PL strategy works for the e-commerce companies as it helps them cut logistics costs. The process may involve buying 3PL companies and their own fleets of trucks, and then directly managing the cargo planes. This way it essentially takes ownership of the entire supply chain and doesn’t have to rely on the services of third-party logistics company.

This strategy of owning your own entire supply chain for logistics works well for e-commerce companies but may not work for other industries. It works for e-commerce companies because they are already dealing in tons loads of products that they have to move around. But that’s not to say that small-scale businesses cannot benefit from having their own supply chain for logistics.For more information please visit partnerloggroup

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