5 current Logistics service models: Features and applications

In the logistics industry, there are many diverse service models applied to manage and optimize a business's supply chain. Below are 5 popular and applied logistics service models today.

1. 1PL (First Party Logistics) model: Self-sufficient management in the supply chain

1PL is a type of self-sufficient logistics service, in which users or production organizations themselves manage and carry out logistics activities for themselves. This means they take care of transportation, storage, warehouse management, and other logistics activities themselves without having to rely on any third parties.
The 1PL model is often applied to small businesses or individuals with a small volume of transportation and warehouse management, and they find it more convenient and efficient to carry out logistics activities within their organization. .
For example:
You have a business A that sells frozen foods. You produce them yourself, check the quality and keep them in cold storage. When customers order, the business personally picks up the goods from the warehouse, packages them, and delivers them to them.
In this example, the business itself performs all activities related to the production, transportation, and management of goods from start to finish without having to rely on any third parties.

2. 2PL (Second Party Logistics) model: Partner cooperation in transportation

2PL is when a business or organization hires a second partner, this second party only undertakes one of the services such as warehousing, transportation, customs clearance, etc. and is not responsible for other activities. other. Instead of doing it themselves, they transfer part of this work to a second partner. Businesses will set requirements and agreements with the second partner to ensure these activities are carried out properly.
This model helps businesses not only ensure delivery time to partners but also optimize delivery costs.
For example:
Still business A above, however, they did not want to invest much in refrigerated trucks and they decided to apply the 2PL model. They hire a professional shipping company (second partner) to transport goods from the manufacturing plant to retail stores. This shipping company will take care of delivering the goods on time, guaranteed. quality and temperature.
Business A used the 2PL model to allow them to focus on production and product development instead of worrying about shipping and quality of goods. The second partner – the shipping company – was responsible for carrying out the above activities for them.

3. 3PL (Third-Party Logistics Provider) model: Cooperation with logistics service providers

3PL is when a business uses the services of an outside company, called a logistics service provider (3PL provider), to perform logistics activities for them. These activities can include transportation, storage, warehouse management, order management, and many other supply chain-related services.
For example:
Business A chooses a 3PL supplier, this supplier will be responsible for packaging and preserving frozen food in the freezer and then transporting it from the manufacturing plant to retail stores and supermarkets across the country. water. The 3PL provider will ensure both quality, quantity and delivery time.
With the 3PL model, businesses can focus on product development and market expansion, while the 3PL company takes care of implementing logistics activities to ensure your products reach the right location, ensuring Guaranteed quality and time.

4. 4PL (Fourth-Party Logistics Provider) model: Comprehensive management for the supply chain

4PL is a more advanced form of logistics services in which an organization or company specializes in providing comprehensive management services for a business's supply chain. 4PL not only performs specific logistics activities but also takes on a dominant role and optimizes the entire supply system.
In this model, the 4PL provider company stands between stakeholders in the supply chain to create efficiency and optimization. They manage 3PL partners and other logistics operations, while also optimizing routes, resources, and processes to ensure the best performance for the business.
For example:
Business A has now become a multinational corporation operating in the food industry and decides to implement a 4PL model to manage their entire supply chain. They hire a professional 4PL provider company to manage and optimize the supply chain from ordering raw materials, manufacturing, shipping, to distributing products to sales locations globally.
The 4PL model helps corporation A focus on product development and market expansion, while the 4PL provider company takes on the management of the entire supply system to ensure smooth and efficient operations.

5. 5PL (Fifth-Party Logistics Provider) model: Connection through information technology

5PL is a relatively new service model, it is the most popular and developed for e-commerce. The service provider will manage, coordinate and control all activities in the entire supply chain (including all 3PL and 4PL activities) through the application of information technology. 5PL has an order management system (OMS), warehouse management system (WMS), transportation management system (TMS).

For example:

Enterprise A and 5PL service company will be able to join as a member of the digital supply network, use e-commerce for sales, and be provided with a lot of information from market situation to product development. products, demand forecasting,..., using the results of artificial intelligence, digital transformation.

Above are some shares about 5 current Logistics service models. If you have questions that need answering or need to transport import and export goods, please contact Macsco Logistics immediately. With a team of many years of experience, we are ready to support you quickly and accurately.

For further information and questions, please contact:

MACSCO LOGISTICS LIMITED

Address: 64 Nguyen Dinh Chieu, Da Kao Ward, District 1, Ho Chi Minh City, Vietnam

Phone: (84 28) 6270 6576

Email: anna@macsclogistics.com

Website: https://macscologistics.com