Modern logistics and shipping are more complicated than ever, and due to their global nature, often affected by factors far beyond the control of shippers or even their transportation partners. We saw this during the major pandemic disruptions of 2020-21, as global supply lines faltered, and economic activity was inhibited around the world.
However, as the modern world creates new challenges, modern technology offers ways to overcome those challenges. “Industry 4.0” style technologies have enabled the rise of 4PL solutions, the next evolution of traditional third-party logistics (3PL) solutions.
In this article, we’ll look at the technology which makes up Industry 4.0 processes, and how the resulting 4PL service providers have leveraged it to improve your operations.
I. What Is Industry 4.0?
According to most business historians, the world has undergone four major industrial revolutions in its history.
The first and most famous, retroactively called Industry 1.0, was the Industrial Revolution of the 18th-19th century when companies and countries first invested in large-scale industrial equipment for manufacturing. The rise of railroads providing fast transportation of vast amounts of materials contributed.
Industry 2.0 was the rise of the assembly line, and the use of locally generated electricity to power manufacturing systems, enabling fast and standardized assembly.
Industry 3.0 was the rapid adoption of ‘dumb’ robotics in the 1970s-80s, as well as the first uses of pre-programmed computer systems to automate basic repetitive activity such as product assembly.
Today, Industry 4.0 builds on Industry 3.0 by leveraging the Internet and near-universal connectivity between devices. It consists of several different parallel developments:
- Easy wireless online connectivity and standardized information-handling protocols.
- Connected digital monitors capable of overseeing specific elements of an operation at a granular level.
- Smart(er) AI systems capable of some level of autonomous decision-making, regulating industrial processes with minimal human oversight via information delivered from monitoring systems.
- Centralized databases taking in vast amounts of data from across an operation and presenting it in human-friendly formats for high-level oversight.
Taken together, these new Industry 4.0 technologies are quickly revolutionizing how we do business and enable a much more granular and all-encompassing view of operations in a way previously impossible. In turn, transportation and shipping companies are also coming to leverage these same advances, allowing 3PL solutions to become 4PL solutions.
II. 4PL Solutions: How They Improve Upon 3PL Services
“Third Party Logistics,” or 3PL solutions, have existed since last century. In the broad view, they simply involve third parties taking over aspect of transportation and logistics management. 3PL services were typically able to provide superior cost-savings by leveraging large networks of partners and economies-of-scale which benefit their customers.
For example, a typical 3PL could take over a company’s shipments and utilize Less-Than-Load (LTL) strategies to combine those shipments with those of other companies, filling up trucks more efficiently, and creating cost savings for all involved. Their focus was specifically on logistics, with the hiring company typically still handling management-level decisions such as choosing suppliers and supply line locations.
However, as the global shipping market has grown so vast and complicated, it has become difficult for non-experts to fully understand their options in shipping, or effectively minmax for the most important factors that affect their business. This led to the creation of 4PL solutions.
4PL service providers go beyond the logistics-only focus of 3PLs to potentially take over all aspects of a company’s shipping and logistics. While this may seem like a huge amount of work to outsource, 4PLs can leverage Industry 4.0 solutions to provide superior across-the-board management.
Additional functions typically provided by 4PL solutions include:
- Warehouse management.
- Choosing sources, shippers, and shipping routes.
- Seeking better partners.
- Reverse logistics such as post-sale product returns.
- Development and implementation of computer networking and data delivery systems.
- Coordination between different suppliers and shippers.
- Business planning services.
- Overall high-level optimization of global shipping lines.
These solutions are enabled by the vast amounts of data generated by Industry 4.0 technologies, which the 4PL providers collate and crunch to discover optimized solutions. In most cases, this data is also made available to the hiring company. Aspects of the data can even be presented in customer-facing portals, allowing shippers to provide their customers with necessary data for improving their own operations.
Are 3PL or 4PL Solutions Right for You?
In most cases, 4PLs are also 3PLs, offering different levels of services to companies based on their individual needs.
4PL services are not necessarily needed by all companies, particularly smaller operations. 4PLs typically bring the most benefit to large organizations looking at huge logistical challenges, or whose supply lines are unavoidably global. 4PL services, unsurprisingly, are also going to be significantly more expensive than 3PLs.
In addition, many companies are hesitant to give up complete control of their shipping operations. This can occasionally lead to conflicts with customers if the customers’ needs and 4PL solutions do not align.
In other cases, they may have enough entrenched technology solutions already in place that an all-at-once overhaul is impractical. That said, these changes are being rapidly adopted across industry at all scales. A wise company will be looking to move towards Industry 4.0 adoption sooner, rather than later, even if it has to be rolled out in slow phases.
The overall trends are still clear: the benefits offered by Industry 4.0 automation and data tracking are simply too overwhelming to stick with traditional Industry 3.0 systems and 3PL providers, at least at a large scale.
US Logistics Solutions Is Your All-In-One 4PL Solutions Provider
We are America’s leaders in integrated 4PL systems and solutions, with a focus on helping even the largest of operations to get a handle on their logistics. We have deep industry experience, a vast network of partner companies, and the technological investments necessary to make the most of Industry 4.0 innovations.
If your logistics have become a nightmare to manage, or if you’re certain you’re losing money on your shipping but don’t know where, why, or how, US Logistics Solutions can be your cost-cutting partner.Contact us for a consultation.