Looking for a 4PL? Ask These Five Questions

The job of storing and transporting products has become increasingly challenging. Modern supply chains often span thousands of miles and involve dozens of suppliers — which means there are a lot of things that can go wrong every minute of every day. Adding to that complexity? Larger order volumes from e-commerce, new flexible fulfillment schemes, and growing customer expectations for fast, low-cost delivery. And let’s not forget demand volatility, labor shortages, route closures, natural disasters, and other disruptions.  

It's not surprising that more and more companies are turning to full-service fourth-party logistics providers, or 4PLs, to manage their end-to-end supply chains. Unlike third-party logistics providers (3PLs) — who excel at managing physical assets like inventory and trucks — 4PLs add an additional capability: They’re experts at managing both the physical and digital supply chains. 

4PLs maximize their customers’ returns on their investments in technology, product inventories, warehouses, trucking fleets, equipment, and labor resources. For example, a 4PL is specifically equipped to leverage advanced technology, like a transportation management system (TMS), to help shippers move products more efficiently, accurately, and cost-effectively — and aligning it with the needs of shippers, achieving optimal outcomes in cost, service, sustainability, and other metrics.  

With their unique combination of hands-on execution experience and technology mastery, 4PLs like Redwood exceed the capabilities of 3PLs. They seamlessly blend the right physical and digital solutions for each customer’s business and can align all assets, systems, and processes around the same objectives — providing all stakeholders with access to the same real-time data. The result? A dynamic and connected supply chain ecosystem that easily responds to new customer demands and physical disruptions like extreme weather.  

Working with a 4PL means companies can focus on their core business competencies. They can be confident that the end-to-end supply chain is being managed and optimized by experts with unparalleled knowledge, resources, and expertise. 

Find Your Perfect 4PL Match

Now comes the hard part: Choosing the right fourth-party logistics partner in a crowded industry. We recommend separating the true 4PL leaders from the followers by asking these five questions when you meet with a potential partner.  

By nature, a 4PL should be able to offer any supply chain capability your business might need — from freight brokerage and managed transportation to technology implementation, warehousing, strategic consulting, and network design. The right candidate will combine thought leadership and innovation with hands-on, real-world experience at the execution level. These broad capabilities ensure that your 4PL partner will have no vested interest in pushing a particular service, solution, or partner. Instead, they’ll be able to create a tailored logistics plan and footprint that address your specific challenges and objectives. Beware of any logistics provider that seems to impose the same “one size fits all” solution on every customer. Your business is unique — and it demands a unique approach, based on a wide range of available capabilities. Another red flag? A 4PL that focuses on serving a single industry or leveraging one transportation mode. That’s a sure sign you may get a generic, cookie-cutter recommendation. 

While it’s true that every supply chain has unique characteristics, demands, and objectives, don’t hesitate to ask for customer references. A successful 4PL will have hundreds of success stories, across multiple industries and business models. They should be able to demonstrate their proven ability to cut costs, improve service levels, increase speed and efficiency, and deliver other benefits. While 4PLs may be bound by customer confidentiality agreements, they should at minimum be able to share anonymous success stories and statistics. You don’t want a 4PL who applies the same approach to every customer engagement — but you do need proof that they’ve “been there and done that.” Your 4PL partner needs to understand logistics optimization at a deep level, spanning physical operations and digital transformation. Readily available customer success stories are a great measure of their knowledge and capabilities. 

The world of logistics never stands still, which means your 4PL partner needs to take a dynamic approach to growing its service and solution capabilities. For example, RedwoodConnect — our proprietary integration platform — was developed specifically to meet our customers’ need for tighter connectivity as they add new systems and tools to their stack. Redwood Hyperion is an innovative, cloud-native solution that helps shippers meet their sustainability goals, from automatically tracking emissions to purchasing carbon credits. We continually invest in leading technologies like artificial intelligence (AI) and machine learning (ML) to deliver practical value to our customers. And Redwood Mexico has quickly become a robust service capability — with 150 experts and six facilities — that addresses customers’ growing needs for cross-border logistics. Your 4PL partner should be similarly focused on forward-looking technology and facilities investments that maintain their modern logistics leadership. 

It’s impossible to achieve success alone in today’s complicated logistics landscape. Look for a 4PL that works closely with a range of software providers, as just one example. They’ll understand the differences among vendors like Oracle, MercuryGate, and Blue Yonder — and they’ll be able to match your specific needs with the right software features and functionality. You’ll also want to identify a 4PL partner with extensive carrier relationships across all modes. They’ll be able to achieve the best service at the lowest possible cost, simply because they have so many options. And when disruptions inevitably occur, they’ll have deep bench strength — and be able to offer a wide range of alternative carriers and shipping modes.  

While every customer engagement is different — and there are always unexpected roadblocks on the road to supply chain transformation — a qualified 4PL will be able to rapidly launch new technology solutions and institute new best practices. Your business should start seeing cost reductions, increased service levels, speed and efficiency improvements, and reduced resource demands in weeks or months, not years. The right 4PL partner will get new capabilities up and running quickly to seize some “quick wins” that energize your supply chain. But they’ll also create a strong foundation for long-term gains and a sustained competitive advantage. 

Begin Your Search Right Now

The benefits of collaborating with a 4PL have been proven over thousands of successful customer engagements. So why not start your own search today, by reaching out to Redwood?  

As a full-service 4PL, Redwood is qualified to manage all aspects of the supply chain on your behalf — allowing you to mix and match services, solutions, and partners with full flexibility. Find out why the world’s leading logistics teams rely on Redwood every day.