DEPARTMENT OF LEADERSHIP AND MANAGEMENT STUDIES
FINAL PROJECT REPORT
INSTRUCTOR: SIR MEHMOOD ASLAM
COURSE: SUPPLY CHAIN MANAGEMENT
TEAM MEMBERS:
FAISAL HAYAT
SAQLAIN SIDDIQUE
SHEHRYAR HASSAN
ALEEN MISHAL ROBERT
Comparing 3PL and 4PL in Supply Chain Management: A Case Study of
Maersk
Done By Faisal Hayat
[Link] to 3PL and 4PL
What is 3PL (Third-Party Logistics)?
3PL (Third-Party Logistics) means the use of third party logistics provider to
assume control and management of logistics activities. Functions which are
commonly associated with logistic providers are transportation, storage, ordering,
customs and clearing agencies, and shipment.
In the typical 3PL relationship, the provider manages one or more logistics
operations but is not be held accountable for the general supply chain scheme of
things. This model when employed is useful for strategic business that need to
downsize their operating units and outsource their logistics operations as a way of
cutting costs.
Key Functions of 3PL:
Transportation Management: It involves arranging the conveying of products
by different forms of transport including sea, air, road or rail.
Warehousing and Distribution: Satisfactory handling of the storage and
inventory and, most importantly, inventories that can address future growth.
Freight Forwarding:Producing and implementing a plan of transporting
goods across international borders and making arrangements with carriers.
Customs and Compliance: Assurance that consignments conform to
import/export requirements, clearance of customs.
Global 3PL Market Overview: The 3PL market size was $1.1 trillion 2022 and is
expected to grow at the CAGR of around 7% from 2023 to 2030 as the result of
online shopping, cost reduction, end-to-end visibility, and integration needs.
What is 4PL (Fourth-Party Logistics)?
4PL (Fourth-Party Logistics) This developing of the 3PL concept comes as far as
implementing not only the mere management of logistics operations but the
direction of the overall supply chain. 4PL provider is actually a facilitator who
interfaces with multiple 3PL providers and directs the entirety of the logistics chain
while also providing extra targeted and consultative services. While a 4PL is
expected to perform activities on behalf of a supply chain that doesn’t involve them
directly, they are also expected to design, build and manage those activities,
frequently using technology and advanced data methodologies.
Key Functions of 4PL:
End-to-End Supply Chain Management: Managing everything from
procurement to production and distribution.
Vendor Management: Coordinating activities across multiple service
providers, suppliers, and vendors to ensure optimal performance.
Supply Chain Optimization: Implementing strategies to reduce costs,
improve lead times, and enhance customer satisfaction.
Technology Integration: Using platforms for real-time tracking, data
analytics, and seamless information sharing across the supply chain.
Global 4PL Market Overview:
The market size of 4PL service providers was estimated to be slightly over USD 2
billion globally. of $ 65 billion in 2023, for it expected to grow at the rate of 9%
from 2024 to 2032. This rapid growth is attributed to the globalisation and
fragmenting of supply chains and the need for integration and technology
solutions.
Difference Between 3PL and 4PL:
Scope: 3PLs typically handle specific functions such as transportation or
warehousing, while 4PLs manage the entire supply chain, from strategy to
execution.
Level of Integration: 4PLs integrate multiple 3PLs and other service
providers, offering a holistic, coordinated approach.
Technology: 4PLs tend to offer more advanced technological solutions,
such as predictive analytics, real-time tracking, and AI-driven optimization.
Done By Shehryar Hassan
[Link]: Company Overview and Operations
Maersk which is among the largest international shipping and transportation firms
around the globe. Maersk is a Danish company based in Copenhagen, started off
with basic carrier services that included container ships, but in the last few
decades, has evolved into more of a logistics supplying company. The firm is now
in 130 countries with a network of over 700 vessels and it is the largest container
shipping company in the world.
Maersk has evolved from a mere ocean carrier to an integrated supply chain
solutions firm delivering transport and storage solutions, shipment management,
and even consultancies, and innovative systems. C.H. Robinson is 3PL and 4PL
providers and essential in global business logistic supply chain services provider
specializing in consumer goods, automotive, and electronics industries.
Maersk’s Expansion into 3PL and 4PL
The change of strategy that Maersk started using integrated logistics solutions
was initiated when they acquired Hamburg Süd (a shipping company) and
acquired Mercer International in early 2010. Moving to the land-based
logistics services and supply chain management has aligned Maersk as a
market leader 4PL company.
The company wants to be the fulfillment and solution provider in which
clients can get all their logistics and supply chain requirements from the
acquisition of digital platforms and consultation from a company which the
business establishment wants to attain. Acquisitions of new technology
companies and stake in digital platforms have seen Maersk introduce solutions
that include Maersk Flow, which entails visibility into the supply chain, while
Remote Container Management is for real time tracking of containers.
Maersk's Market Share:
Maersk transports about one fifth of the world cargo and is thus considered the
largest container shipping company.
Logistics and services in 2022 brought Maersk $16.4 billion in revenue, which
22% of its total revenue.
Currently, the company uses very many vehicles to transport its products from
the manufacturing centres to the markets and is committing very many of its
resources in achieving a better share of the supply chain management
business.
Done By Saqlain Siddique
[Link]’s 3PL Services
Maersk provides every aspect of logistics services in third-party logistics solutions
to enable companies achieve their goals faster and at lower price. The company
operates through a dense network of ports, warehouses and transportation means, it
can be a suitable supply chain partner for businesses of different kinds.
Key 3PL Services Offered by Maersk:
1. Multimodal Transportation:
The company, Maersk, also includes solution to several modes of transport
including ocean, rail, road and even air. It becomes convenient for the
businesses to select the cheapest and the quickest means of transferring or
shipping their products.
Example: Maersk transports Coca-Cola products from Pakistan to the
Middle East and Asia. This is important since the multimodal transport of
Coca-Cola products makes it possible to achieve strict delivery deadlines
and make optimal costs on shipping.
2. Warehousing and Distribution:
Maersk warehouse service currently has over 300 warehouses in the
strategic locations of the global market to offer short-term warehousing
services and long-term inventory solutions. It is useful for those businesses
who have to make frequent changes with the demands or when there is a
need to restock stock.
Example: Nike stores its merchandise in Maersk’s facilities, mainly in
Europe and Asia to enable it to supply retailers quickly. Nike dependent on
Maersk in warehousing hence the company is able to limit incidences of
stockouts hence boosting customer satisfaction.
3. Freight Forwarding:
Maersk’s freight forwarding services include the ability to transport product
through various modes of transport. Through the linear control of shipping,
the various problems involved in international shipping logistics are
effectively solved by Maersk.
Example: For instance, a retailer who sells electronics may be importing
goods from China to Europe depending on his stock, might approach
Maersk to help him in freight forwarding of the commodities and make sure
they get delivered on time.
4. Customs and Compliance: It is worth pointing out that various legal
aspects related to international business are always controversial. Maersk
also make sure that its shipment meets the customs requirement and assist
its customers when it comes to customs clearance.
Example: Maersk is indispensable for managing customs clearance on
shipments arrived in the European Union checkinganke the
[Link] proper papers and delivering products without
delays, as Apple knows.
Challenges Faced in 3PL Operations:
Capacity Management: This has led to the growth of transport demand and
variable transportation needs, which can cause problems of capacity defect
due to variations in seasons and global events.
Technology Integration: This is because even the third party logistics firms such
as the Maersk company is able to incorporate their sophisticated logistics technology in
the platforms a client has and ensure efficient supply of recipes and other items.
Service Reliability: If the organization is indeed operating in a diverse
global network it can be difficult to maintain high service levels and even
more so when dealing with multiple carriers, ports and warehouses.
Done By Aleen Michelle Robert
[Link]’s 4PL Services
Compared to traditional 3PL providers, Maersk delivers a higher layer of
strategic outsourcing known as 4PL. Not only does the company perform
numerous logistics operations but assumes responsibility for all aspects of the
supply chain that are critical in relative effectiveness.
Key 4PL Services Offered by Maersk:
1. End-to-End Supply Chain Management: Maersk is involved in every
activity of the supply chain process right from purchasing of materials to delivery
of the product to final consumer. Maersk connect logistics services and
implement technology solutions that assist businesses to enhance supply chain
visibility, drive down costs and mitigate disruption.
Example: Maersk takes full responsibility of managing Procter & Gamble’s
supply chain, supplying raw materials, production and distribution of final
product to customers. Maersk manages its operations involving various 3PL
providers and suppliers, subordinate to its supply chain requirements.
2. Supply Chain Optimization and Consulting: This company also applies
consulting services whereby it advises organizations on how to create optimal
supply chains. The company applies data analytics in order to analyse areas of
low productivity and possibly provide solutions concerning possible
improvements.
Example: To implement logistics strategy Ford Motor Company
collaborates with Maersk where the key objectives are the reduction in
transport cost and better inventory management. This leads to risk
management within supply chains, and an increase in supply chain
functionality or general functionality.
3. Technology and Data Integration: Through platforms like Maersk Flow
and Remote Container Management, Maersk offers business people an
opportunity to have an overview of the business processes that make up the supply
chain operations. These platforms incorporate the use of IoT sensors, big data and
even artificial intelligence to track and actual location, preferred temperature, and
physical state of products in transit.
Example: The company use the technology of Maersk to track the stocks,
follow the containers, and plan delivery schedules to minimize time wastage
and therefore products delivery is well done.
4. Vendor Management: Maersk is a 4PL provider expect with vendors
offering services in logistics and supply chain the firm leads contractual
relationships and forms expect that the their performance as agreed on will be
met. This reduces operational risks and makes the supply chain as effective as it
can be for ANY organization using it.
Example: Nestlé works with Maersk in handling third-party logistics
providers since delivery is one key area of focus and concern while
seeking to manage operation costs across global markets.
Challenges Faced in 4PL Operations:
Complexity in Coordination: End user complexities: Having to work with
multiple vendors and logistic partners across geography and functions presents
some form of co-ordination issues.
Resistance from Clients: The involvement of some companies in the Automotive
Industry Partnership means that it is sometimes hard for this it to go in for a full
4PL because some companies would prefer to hold onto some aspects of their
supply chains.
Technology Integration: The integration of Maersk’s sophisticated applications
with the client’s existing systems is often costly and time-consuming.
[Link]
Global supply chains have become more extended gradually put forward higher
demand for the integrated and efficient logistics solutions by businesses. The major
difference between 3PL and 4PL models is in the range of activities performed by
the logistics provider. 3PL providers are simply providers of individual logistics
services, including transportation, warehousing, and freight forwarding services as
well as freight management, while 4PL providers are solution based supplying a
mixture of services arranged in a coordinated manner with strategic management.
At present, Maersk has been working efficiently to be a global service provider for
both 3PL and 4PL services. Known for its vast network, and cut edge technology,
the company also boasts of a supply chain knowledge that is second to none;
giving clients unbeaten supply chain solution transport services and beyond.
With an increasing global logistics market highlighted by e-commerce business
models, the need for cost efficiencies, and changes in technologies, players like
Maersk will become a core player in the future of logistics. 3PL and 4PL also
depends on the size and nature of the business of the firm and whether or not it
needs strategic supply chain management.
In future, flexibility in adopting new innovative technologies and excellent
management of the complicated Supply Chain is one of the added advantages that
Maersk unveils to effectively support the growing need of various enterprises and
companies as they venture into the ever complex global market.
References:
[Link]
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[Link]
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[Link]
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4pl-services/#::text=Phoenix%20Freight:%203PL%20and%204PL,of
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[Link]
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[Link]
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