While 3PL outsourcing is accepted business practice corporations are now looking to outsource to a single partner who will assess, design, build, run and measure integrated comprehensive supply chain solutions on their behalf. This evolution in supply chain outsourcing is Fourth-party Logistics or 4PL. A 4PL provider is a supply chain integrator. The 4PL assembles and manages all resources, capabilities and technology of an organisation’s Supply Chain and its array of providers.

1. A guide to formation of 4PL Services
by Ranjan Sinha
LinkedIn profile : https://om.linkedin.com/in/ranjansinha11
Twitter : https://twitter.com/RanjanSinha_

2. Definition of 4PL
The term Fourth Party Logistics (4PL) companies refers to a
business strategy of outsourcing all or much of a company’s
logistics operations to a specialized company. These companies
are independent, singularly accountable, non-asset based
integrator who will assemble the resources, capabilities and
technology of their own organization and other organizations,
including 3PLs, to design, build and run comprehensive supply
chain solutions for clients.
Services offered by 4PLs include providing transportation
arrangements, warehousing, cross-docking, inventory
management, packaging, freight forwarding, and other services to
support the end-to-end supply chain.

3. Benefits of 4PL
Improved Customer Service
Reduced Capital Requirements
Increased Flexibility
Economies of Scale
Reduced Supply Chain Costs
Increased Flexibility
Combines the Advantages of in- and outsourcing
Manufacturers can focus on Core Competencies

4. STAKEHOLDERS of 4PL
SMT’s – Small to Medium Transport
Providers
Warehouse Lessees/Owners
Retail Companies
International Retail Companies
International Transportation
Companies
International Marine Companies
Future Railroad Customers
4PL
Provider

5. Services Deliverables by 4PL provider
Provide Transportation Management Services
Business-to-Business Engine Electronic Data
Communications
Customer Service Management (CSM)
Alert management System
Tracking and Visibility
Supply Chain Transparency
Risk Management Capabilities
Strategic Network Design
Tactical Planning Capability
Inventory Planning (Tactical and Operational)
Logistics Management System
Levels of opportunities for SMTs
Training for External and Internal Users
Dashboard for KPI and Cost Management
Monitoring

6. Proposed KPIs
The 4PL provider shall measure and report the
availability of servers and applications. The KPI
acceptance criteria will be 99% availability.
4PL provider shall not have backlog work such as
tasks to complete e.g. help desk list issues, rate
quotes, and client trouble tickets over 24 hours.
4PL provider shall maintain a customer
satisfaction level of not less than 95% over the
period of the contract.
4PL provider recovery time from system down
time shall not be more than 15 minutes per
incident.

7. Proposed KPIs
The application performance for logistics services
provided by the 4PL to the clients shall meet the
business requirements and attain an adoption rate of
95% by the client users.
The 4PL Provider shall train 100% of the 4PL staff to
be a level of proficient for the implementation of the
4PL. Training personnel shall follow up to achieve
100% training of all personal every quarter.
The 4PL shall train all of external users prior to
implementation of the 4PL. A web portal shall be
created to support additional follow up training.
Training personnel shall follow up to achieve 100%
training of external personal each year of operation
of this contract.

8. Evaluation Criteria
The 4PL Provider shall
Present a knowledge of local
transportation experience with
previous experience working in that
country
Present a key personnel such as a
Certified Logistics Professional (CLP)
Present how their organization meets
the definition of a 4PL as outlined in
the above section titled “Definition of
the 4PL services”.
Technology system must be sized to
support customers with backup power
and redundant operational systems.
Deliver the required KPIs with a virtual
dashboard as provided in the “Key
Performance Indicators”.

9. Sample of Way Forward – Process Flow
Conceptualization
Jan’00-Apr’01
Issuance of RfP
May’00-Sep’00
Finalization of Contract
Oct’00-Jan’01
Commencement of
Operations
Feb’01-April’01
Months Months Months Months
ConceptualStudywork 1 ConceptualisationofBusinessModel 1 ClarificationSumissionDeadline 1 Mobilizationofresources 2
Preliminarystudyreport 0.5 ConceptualizationofFinancialModel 1 BidSubmissionDeadline 1 EstablishPhysicalOperations 1
WorkshopwithKeystakeholders 0.5 EvaluationCriteriasforSelectionof4PLOperators 0.5 NotificationofAward 1 - -
DevlopFramework 0.5 Shortlistingof4PLoperators 1 SigningofContract 1 - -
DevlopProcesses 0.5 CreationofRfPdocuments 1 - - - -
InformationExchange 0.5 IssueofRfPdocuments 0.5 - - - -
BuilddataIntelligence 0.5 - - - - - -
Total 4 5 4 3
Oct'16-Jan'17Jan'16-April'16 May'16-Sep'16 Feb'17-April'17
ConceptualizationoftheProject IssuanceofRfP FinalizationofContract CommencementofOperation

10. Proposed Expected Timeline for formation of an
4PL Operation
30
15
15
15
15
15
15
30
30
15
30
30
15
30
30
30
30
60
30
Study work
Preliminary study report
Workshop with Key…
Devlop Framework
Devlop Processes
Information Exchange
Build data Intelligence
Business Model
Financial Model
Evaluation Criterias
Shortlisting of 4PL…
Creation of RfP…
Issue of RfP documents
Clarification Sumission
Bid Submission…
Notification of Award
Signing of Contract
Mobilization of…
Operations…
4PL Formation Schedule