4PL - On The Up?
A very interesting supply chain and logistics supplement in the Daily Telegraph yesterday. The immediate eye-catching statistic according to a report produced by the Management Consultancies Association is that, so far, “40 per cent of companies have failed to adapt their supply chains in response to changing economic conditions”. This is a staggering figure considering what’s at stake.
As a company we are not insensible to the huge resistance to change that permeates British management and it is almost depressing to see it on such a scale. Fortunately there are companies who can see through the current fog and are positioning themselves ready for the upturn; how? Well, they’ve realised that on the other side of this economic malaise lies a new commercial world where risks will need to be better understood, quantified and carefully managed given the dearth of easy money, and to ride this roller coaster they’ll need to be lean and flexible and much better able to adapt to a rapidly changing environment. These people readily understand that “big” does not necessarily equate to “better” and new supply chain models that offer a high degree of flexibility, better risk quantification/control and business support within dynamic and aggressive markets is the route to take. It is gratifying to watch their growing success as they scoop market share away from those who will not change the way they do things.
Aceona celebrated its third birthday last month and we could not have asked for a better birthday present than to read the outright vindication of the 4PL model in the DT supplement. For three years it seems we have been doing exactly the right thing!
4PL of course means many things to many people but whichever definition you prefer the bottom line is that the 4PL operator retains independence of assets and therefore the ability to be far more creative. The 4PL feature was interesting in that the commentators invariably applied the model only to road transport and the savings (vehicles, fuel and carbon) that can be achieved if an independent approach is taken to the loading and controlling of such. We believe however that true 4PL goes way beyond this and should be looking more at elements such as centres of manufacturing, modal choice, port choice, equipment choice etc. and our experience suggests that previous savings can be magnified when this, more holistic, approach is adopted.
Only by taking this holistic approach can true creativity and risk quantification/qualification/management occur on a scale that will support businesses in the post-credit crunch world. It is a fact of life that oil prices will inexorably rise; with every Dollar on a barrel comes a need to review supply chain strategy (unless of course you’re one of the 40% with a death wish!) and this means high flexibility - the ability to switch manufacturing locations, change stock locations/levels, switch modes, change port of import/export etc. etc. and whilst 3PL goes a long way to supporting this it cannot divorce itself from the fact that asset ownership requires a return on such; road miles/shed fill = revenue, simple fact.
Environmental pressures will likewise ratchet upwards; whether scientists are right or wrong about global warming or whether warming is indeed down to human activity the (cynical) fact remains that it is a convenient bandwagon for people to jump onto whether it be from a marketing perspective or a simple excuse to pump up taxation. Either way the pressure is on to look at more carbon friendly way of moving materials through supply chains and whilst gains have been made in terms of engine technology, trailer design and 4PL fleet management, people are still struggling to understand how best to make use of the alternatives i.e. short sea shipping, rail, inland waterways etc.
Also of interest in the supplement was the mention of an “online platform” to enable the exchange of information between retailer and supplier linked in to the carrier. Is this 4PL or does this stretch across its boundary into another dimension - 5PL, the ultimate in strategic supply chain planning and control? Take a look at www.5pl-uk.com and decide for yourself.
If you’d like to know more about the advantages of 4PL then please give us a call; alternatively you are cordially invited to an inspiring event organised by the Chartered Institute of Logistics & Transport and hosted by Nene Storage Ltd. at their Watford Village (Northants.) site on 23rd April. For more details visit our events page or call 07799 410050.
Looking ahead, and returning to the 4PL debate, Aceona are currently working on a number of rail based solutions for UK domestic distribution; it does not surprise us that the demand is as high as it is but nonetheless concerns us that so many companies have no idea how to make this work. Watch this space for an update on this and other examples of true 4PL at work!
