With the rapid growth of e-commerce, with e-commerce sales in Canada growing from 4.44 trillion to an estimated 8.22 trillion by 2023 (Source), supply chain management and the logistics process have become increasingly complex. Customers expect a lot from logistics, most notably, fast and free shipping for their purchases and international delivery.
With all of this, companies are juggling a lot when managing their logistics and supply chain. All of these additional challenges have led to businesses seeking out external companies for their logistics solutions.
While there are services providers you can outsource your logistics needs to, like third-party logistics (3PL) and fourth-party logistics (4PL) when the supply chain becomes exceedingly complicated, fifth-party logistics (5PL) is the best choice.
Throughout this article, we will go over what functions 5PL have, the value 5PLs can have on your business and more.
What is Fifth-Party Logistics?
5PLs handle all of the logistics needs and supply chain processes of the company that has hired them. 5PLs plan, organize, and implement the logistics solutions to ensure that their client uses the most optimal and efficient solutions for their business.
5PLs use both 3PLs and 4PLs to manage all of their client’s supply chain networks, using the latest logistics technology to implement solutions and find the best rates. Like 4PLs, 5PLs offer their clients the ability to fully control and manage the operational process of their supply chain.
The Functions of a 5PL
To better illustrate what you can expect when partnering with a 5PL, we have highlighted the three key responsibilities they fulfill for their clients:
Gather Extensive Knowledge of Their Clients Logistics Needs
5PL will consistently find and understand the logistics needs of their company by analyzing their entire supply chain thoroughly. From here, the 5PL will find the best solutions for their client, implement them as efficiently as possible, and look for any way to optimize further to ensure their logistics process is continuously improving.
Plan Their Clients Entire Logistics Operations
By using their knowledge of their client’s logistics needs and extensive experience with supply chain management, 5PLs plan the entire supply chain and logistics process. They work closely with their clients and the logistics providers to plan the most optimal requirements according to the businesses’ needs.
Implement and Maintain the Entire Logistics Process
After researching and planning the most optimal logistics solutions for their client, 5PLs then implements and maintains this process to ensure it runs as efficiently as possible. 5PL outsources logistics solutions from 3PLs, airlines, warehouses, carriers, trucks, and more, which are used in their client’s supply chain. 5PLs act as a link between their clients and the logistics providers and overlook any issues to ensure the process runs as efficiently as possible. 5PLs will also use their knowledge and experience in the industry to find their clients the best possible deals.
How 5PL Work with 3PL and 4PL Networks
If your business is on the smaller side, you may outsource your logistics need to no more than three provides as with the fewer providers involved, the easier it is to collaborate and have your needs met. Also, smaller businesses have less complex and more manageable supply chains as they don’t move as many products as larger businesses.
However, logistics and supply chain processes become much more complex for larger businesses and require more management, causing them to start a partnership with a 3PL4PL.
For substantial businesses requiring the assistance of multiple 3PLs and 4PLs, 5PLs will seek out and manage the optimal partners for their clients. Using their resources and expertise, 5PLs will identify the best 3PL and 4PL partnerships for their client’s supply chain.
5PLs also handles logistics for other 3PLs that manage logistics for their own clients, allowing them to aggregate shipping demand from multiple sources - because of this, 5PLs can offer cheaper rates to their clients.
A 5PL partnership is ideal for large businesses that require multiple partnerships with 3PLs and 4PLs. Rather than attempt to analyze, plan, and implement their supply chain through numerous external resources, companies will call on 5PLs to manage their partnerships for them. Thanks to the vast knowledge, experience, and connections 5PLs have, they can create the most optimal and cost-efficient supply chain for your business.
At Flex Space Logistics, we partner with numerous 5PL providers across the country, offering solutions for any logistics or supply chain management needs your business may have. We ensure that your product is delivered and stored with care so you can get back to the more essential parts of your business.
If you’d like to get started, get a quote today, or contact one of our FlexSpace Logistics advisors to find the right solution for your business at 1-844-985-3539.
