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Integrated logistics - 4PL

2022.05.02

4PL is a value-added service which provides customers with the design, management and oversight of the entire supply chain. Such comprehensive solutions have been known around the world for over 20 years and are gaining popularity in Poland. Raben Group, has also decided to implement this solution. 

The 4PL concept was introduced in 1996 and it was defined as follows: 4PL is an integrator that brings together own resources, technologies and capabilities as well as those of other organizations in order to design, build and launch end-to-end supply chain solutions. And it is undoubtedly one of the most important revolutions in supply chain management.

4PL solutions will work for businesses of all sizes. They are especially useful in organizations that do not have sufficient resources, experience in designing logistics processes, and knowledge in this area. A dynamically changing partner base and the resulting new logistics needs often make it difficult for logistics departments to maintain the expected efficiency, especially when it comes to designing solutions and sourcing the right logistics operators specialized in specific markets and services. This is prompting company boards to restructure logistics departments in order to reduce costs, save time and streamline processes.

The combination of advancing technology and the rapid acceleration of digitization and automation in recent years have steadily increased market demand for an integrator of supply chain operations around the world. Today, companies outsourcing their logistics (i.e., all types of transport, warehousing, etc.) with third-party logistics providers commonly referred to as 3PLs, often see the need to improve the process.

The current situation in the maritime transport market, the emerging challenges resulting from the implementation of the Mobility Package in road transport, and the large increase in volumes make supply chain management very costly and unpredictable without in-depth knowledge and experience. Consequently, this can be a very serious business risk.

Advanced outsourcing and entering into long-term partner collaboration contributes to increasing the value of the company, reducing costs, intentional transformation, overcoming internal shortcomings, reducing inventory, accelerating turnover, improving liquidity and many other benefits (both tangible and intangible). It is also important that well-profiled 4PL services will further enhance the above effects. This is the next level which allows large entities to focus even more on their core business. For smaller organizations, with small logistics departments that lack the knowledge and resources, 4PL services will allow for keeping up with the changing logistics market. 4PL integration can also play an important role in integrating the various distribution channels so important today in the rapidly emerging omnichannel strategy.

Raben Group has carefully analysed the needs and expectations of market participants in the context of 4PL services in recent years. As one of the European leaders in 3PL services, we cooperate with many companies that are also leaders in their markets. And that has helped us a lot in understanding the need and the direction of the concept. The first step was the launch of the Lead Logistic Provider service. As part of this service, we focused primarily on finding alternative logistics models for our customers that generate operational optimization and cost savings. It was also key for us to stay ahead of our customers' questions and propose alternative solutions before we were asked to do so.

However, we have noticed that in the current logistics environment, even such industry “best practices” are still struggling to overcome rising customer expectations. Especially the last two years of the pandemic we all faced have shown that the world of logistics and therefore the needs of our customers are changing dynamically. When manufacturing companies face all the challenges of disrupted global supply chains (such as the semiconductor shortage in the automotive industry), the role of the 4PL integrator becomes even more apparent, and focusing on one's core business is now crucial for many companies.

Therefore, there is a tendency to systematically expand the range of offered services, e.g. domestic and international transport, warehousing, a wide range of value-added services, i.e. increasing the value of products, sea and air freight forwarding, customs services, specialized services for individual markets or for individual products requiring dedicated solutions, and their combination in the hands of a single operator very realistically translates into optimization of the customer's supply chain.

The operator often assists its customers in creating and integrating a vision and concept for the entire supply chain by analysing and modelling the optimal solution for the analysed area. In doing so, it draws on its vast knowledge and experience gained while serving many customers and many industries.

Finally, security is also a very important consideration as outsourcing logistics processes outside of an organization can involve customer concerns about losing control.

The key, therefore, to ensure that any doubts about outsourcing are not confirmed, is to choose the right partner which is able to meet one’s expectations. One which is competent and experienced and can deliver on the promises it makes. Indeed, partnership is key in day-to-day collaboration. In the case of outsourcing, the transition from a conventional customer-supplier relationship to a closer partnership characterized by trust and a focus on joint search for solutions is of great importance. It translates almost immediately into flexibility and faster responses to each other's needs. And this is and will continue to be necessary in a reality where the increasing complexity of logistics operations will require constant change and dynamism.

Therefore, Raben Group has decided to launch a new segment, 4PL, which is a natural result of the development and improvement of the Lead Logistic Provider service.

As a 4PL service provider, we provide logistics, transport and supply chain management services. We use 2PL and/or 3PL services to enable integration of supply chains and customer demand.

One of our customers is a global company that has been present on the international market for over 40 years.

It is a leading manufacturer of environmentally friendly labels.

As part of this project, we provide a comprehensive Logistics Management Services including:

  • Operations: planning, customer service, 24/7 stand-by service,
  • Procurement & Supplier Management, transport network management and optimization,
  • Business support: reporting of key performance indicators (KPIs), reporting and control of all logistics costs,
  • Finance and administration: billing and controlling freight costs,
  • Implementations & IT: implementation projects, IT systems & TMS solutions.

In our collaboration, we focus primarily on the strategic goal of designing, managing and continuously improving the transport network. Therefore, we constantly strive to:

  • Create a flexible, responsive, modular Pan-European distribution network,
  • Standardize production and distribution planning processes,
  • Optimize distribution costs and inter-plant flows,
  • Reduce lead times,
  • Improve administration and communication.

Advanced outsourcing and entering into long-term partner collaboration contributes to increasing the value of the customer's company, reducing costs, intentional transformation, overcoming internal shortcomings, reducing inventory, accelerating turnover, improving liquidity and many other benefits, both tangible and intangible.

It can be said that well-profiled 4PL services will further enhance the above effects. This will be the next level which allows large entities to focus even more on their core business. For smaller organizations, with small logistics departments that lack the knowledge and resources, 4PL services will allow for keeping up with the changing logistics market.

Verfasser
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Sebastian Gryszkiewicz

Group Business Development Director

Raben Group