7PL is a Deliberatey False Concept

Note to readers. A more updated version of this article will be kept here…

http://www.scmfocus.com/fourthpartylogistics/2010/02/7pl-is-a-deliberatey-false-concept/

What is 7PL?

7PL is a concept that combines the 3PLs with 4PLs to make what they refer to as 7PLs. The advantages of this concept are the following:

One service provider can now provide a client with both 3PL and 4PL services with a complete 7PL solution to clients and can undertake turnkey projects for its clients where all services and activities are provided for under one roof. - http://www.chillibreeze.com/articles/logistics-management.asp

The Failure of 3PLs

There is a major problem with this concept, it simply co-opts the concept of 4PL, which was originally envisioned to intermediate between different 3PLs and different carriers, and places it back with the 3PL. This entirely negates the concept of an asset independent 4PL before the idea has even had a chance in the market.

And what can customers expect from this “new” concept. Clearly, nothing more than they were getting from their 3PL.

Its important to understand the history of the 3PL market. 3PLs promised shippers that they were going to receive all types of benefits through having 3PLs manage their freight and in many cases their warehouses. The 3PLs were going to invest in all types of information technology that would keep their shippers up to date. What did shippers actually get? They got a glorified carrier or low cost outsource shipping department. Many more 3PL arrangements were motivated by reducing the headcount at the shipper than any 3PL would like to admit. 3PLs dropped the ball on their information systems implementation, on their integration with carriers and on their ability to provide “a seamlessly integrated freight network.”

Currently, the only 3PL that even meets the original definition of a 3PL is UPS. For this reason it makes sense for the 3PL concept to go away and be replaced by something else. By doing this its important to properly interpret what undercut the 3PL concept. My view is that 3PLs were really just a marketing term that carriers and outsourced warehouses used to increase the cache of their services. They simply were not interested in building the information system platforms to ever be true 3PLs, and they were unable to interoperate with other carriers and warehousing firms because the industry is overly focused on getting freight to move through their proprietary network.

The Promise of 4PLs

4PLs have much more conceptual logic to them than 3PLs as non asset based firms, such as software firms do have the ability to build platforms and do have the ability work with various carriers and warehouses in order to stitch together integrated supply chains. However, I doubt it will be consulting companies that will ever be competent in this market, and this was an original idea why Accenture introduced the concept. Generally, Accenture can barely implement large systems at clients, much less build a platform and take the entrepreneurial leap to create this market. (Accenture does not do much of anything but grow fat off of large IT projects and rich off of low cost offshore labor.) 4PL is a good idea, but Accenture will never have anything to do with it.

What is the 7PL Concept

The 7PL concept is not a real concept at all, but simply propaganda disseminated by 3PLs that think they are best positioned to build virtual supply networks. The problem is that they are not, and they have had ample opportunity to prove themselves, and have failed to make a go of the 3PL concept. 3PLs have been hostile to the concept of 3PLs from the beginning. However, creating a false concept is not the way to address the idea of the 4PL.