One of the biggest challenges that local and regional 3PLs face is acquiring and sustaining customers with broad or expanding geographical distribution needs. In order to overcome such a challenge many 3PLs have chosen to provide lead logistics provider or 4PL collaboration services to their clients.
4PL collaboration is commonly defined as a joint venture or contract between you, your client and one or more 3PLs operating in different areas of the country. Think of it as a horizontal collaboration.
The first thing you might think is…..why would you want to collaborate with potential competition?
Let’s break it down. Say your warehouse is based on the East Coast and a prospect comes around that has bi-coastal and quick shipping needs. Historically you might either walk away from the business or attempt to open a ‘branch location’ if the potential revenue was high enough. Today’s alternative is to initiate a collaborative (4PL) relationship with a provider in the location needed. When the business engagement has been defined, 3PL’s use 4th party collaboration solutions to manage inventory and data flow across warehouse systems thus providing visibility, order management, and analytics across the entire network. This not only solves your customers challenge but also provides the 3PL with a highly valuable, long term solution that promotes customer retention and higher margins.
Collaboration brings upfront and long lasting value to 3PLs and their customers.
There are many benefits that come with 4PL collaboration that also provide great value in attracting new customers, including:
- Faster shipping and delivery times by expanding geographic reach via partners
- Visibility between both warehouses if using the same software
- Lower shipping costs
- Strategic geographic positioning
- Expanded service levels
Supply Chain Management and Inventory Control Systems can help you with this collaboration.
A cloud-based inventory control system empowers companies to successfully aggregate, monitor and analyze shipments and inventory from the cloud across a broad spectrum of business units, suppliers and enterprises. So essentially you can connect with another warehouse entity to control, track and analyze your customer’s entire inventory under one solution.