Which logistics service provider (4PL) to select for your Supply Chain Control Tower (updated)?
- Rob van Doesburg
- 6 days ago
- 2 min read
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? What are the main market trends including the use of AI technology since 2022 when we first published this overview)?
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 (72%)
Dedicated 4PL providers specifically established to offer (independent) 4PL services (18%)
Providers of IT solutions like Transport Management Systems or AI solutions who offer control tower services using these systems (7%)
Consulting firms among others specialised in supply chain management adding 4PL services to their scope (3%)
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 (45%, was 62% in 2022), sometimes including order management (18%, was 21%) as their primary supply chain focus. Providers have been adding warehouse management (27%, was 13%), supply chain planning (4%, was 2%) to their scope or focus nowadays on end-to-end SC orchestration (6%, was 2%).
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. This year we have also added whether providers 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.
These are the main market trends since we first published this overview in 2022:
The number of 4PL providers has grown in particular by more 3PL providers who are now also offering 4PL service
4PLs are extending their SC scope by including order and warehouse management and are adding risk management and environmental impact related services
Hybrid solutions are proposed e.g. based on SC characteristics and regional differences
Use of AI technologies to improve productivity and to support forecasting, scenario analysis and decision making
This knowledge platform provides more information on SC Control Tower solutions in general and an updated overview and the main characteristics of more than 90 4PL providers.
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