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Core SCCT capabilities needed, outsource to a 4PL?

Organisation design: Supply Chain Control Capabilities, outsourcing and 4PL selection

The Control Tower can be insourced and operated by the SC organisation of the shipper, can be outsourced to a 4PL or a hybrid set-up can be implemented. How to decide which solution best fits your objectives and requirements and when outsourced, which 4PL to select?.

Organisation & People

For designing, implementing and running SC Control Towers the following capabilities are needed:

  • Best-practice processes for each control tower function like network design, procurement, planning, execution management, finance and analysis/reporting

  • Capable staff like planners, customer service employees, controllers, carrier managers, engineers and analysts to conduct planning, execution and optimisation tasks  

  • State-of-the art technology to support the CT functions with OMS, TMS, BI, design and/or sourcing systems and tools  

  • Project and change management expertise to design, implement and optimise the control tower solution.

Benefits and risks of outsourcing a control tower to a 4PL logistic service provider

The decision to outsource a SC Control Tower will be the outcome of a trade-off between the advantages of outsourcing and the related risks. The outcome could well be a hybrid model were for example the operational processes and supporting technology is outsourced and strategic/tactical process and local staff tasks are kept in-house. The outcome of this decision also depends of course on the complexity of the supply chain and maturity of the current supply chain organisation. For this reason the decision should be made for each region and supply chain function (sourcing, delivery and service) separately.

​Providers offering supply chain control tower services, also known as fourth-party logistics service providers (4PLs), have emerged in several ways:

  • Third-party logistics service providers (3PLs) who added 4PL services to their portfolio

  • Consulting firms among others specialised in supply chain management, sometimes also offering business process outsourcing services, adding 4PL services to their scope

  • Providers of IT solutions like Transport Management Systems or AI solutions who decided to also offer control tower services using these systems

  • Dedicated 4PL providers specifically established to offer (independent) 4PL services

Overview of the supply chain scope and capabilities of more than 90 4PL logistic service providers

A provider's origin will affect its overall service portfolio, industry and geography focus, which are the first criteria to look into when selecting a 4PL. Subsequently, the supply chain focus and core capabilities are key criteria to take into consideration. Many 4PLs started with and still have transport management, sometimes including order management as their primary supply chain focus. Providers have been adding warehouse management, supply chain planning to their scope or focus nowadays on end-to-end SC orchestration.

 

Another dimension to examine are the capabilities of the providers in these supply chain areas. Almost all 4PLs mention reporting, operational, tactical planning and supply chain optimisation/transformation services on their website. Some also mention the use of AI agents and/or digital twins as part of their service offering. In real life, the actual capabilities of providers regarding the services vary widely and should be subject of a more detailed analysis based on your requirements.

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