Logistics is a detailed organization involves in transportation of goods from point of origin to the destination. Logistics management is the part of supply chain management (SCM) system that plans, implements and control forward and reverse flow of goods and services to meet customer’s requirements. Logistics are differentiated into five categories.
1PL stands for first party logistics. It can be a company, trader, manufacturer, importer/exporter, wholesaler, retailer or an individual in the commerce who handles transportation and logistics activities themselves and doesn’t outsource it to third party.
A Second party logistics provider refer to an asset-based carrier which owns means of transportation. They have their own ships, trucks, airlines. They are used for delivery and transportations. If a service provider moves goods from point A to point B it could be categorized as a second party logistics provider.
A third-party logistics provider can help manufacturer with their supply chain and distribution needs. Manufacturer outsources their logistics activities to a 3PL Logistics provider. 3PL Logistics providers handles transportation, warehousing, packing, inventory management, shipment forwarding till it reaches to consumer.
A fourth party logistics provider is an independent, non-asset based, singularly accountable coordinator who is responsible for managing entire functions in supply chain like procurement, storage of goods, distribution, processes where as 3PL only concentrate on single function. Its main role is to provide a broad range of services with comprehensive management of supply chain.
Fifth party logistics are usually linked to E-Commerce, it is not asset-based. It guarantees the management of networks of the supply chain by aggregate the demands of 3PL logistics and other into bulk volume for negotiating more favorable rates with shipping and airline companies.