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Which logistics service provider (4PL) to select for your Supply Chain Control Tower?

Shippers are using Supply Chain Control Towers to orchestrate and improve their supply chain. A Control Tower can be insourced and operated by the shipper’s SC organisation or can be outsourced to a logistics service provider (4PL). The demand for this type of logistic services and the number of 4PLs is growing and providers are extending and optimising their Control Tower services. How to select a provider that best fits your objectives and requirements when you decide to outsource your Supply Chain Control Tower?

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 (74% of the more then 70 providers in the updated overview on this knowledge platform)

  • Consulting firms among others specialised in supply chain management, sometimes also offering business process outsourcing services, adding 4PL services to their scope (1%)

  • Providers of IT solutions like Transport Management Systems or AI solutions who decided to also offer control tower services using these systems (7%)

  • Dedicated 4PL providers specifically established to offer (independent) 4PL services (17%)

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 as their primary supply chain focus (61%). Only a few providers added order management (21%), warehouse management (13%) and/or supply chain planning (3%) to their scope or focus on end-to-end SC orchestration (only 1%).

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 transformation services on their website. In real life, the actual capabilities of providers regarding these services vary widely and should be subject of a more detailed analysis based on your actual requirements.

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