The Hindu Business Line : `Good scope for fourth party logistics services'

EVEN as the potential for third party logistics services remains largely untapped in our country, there is a trend towards shifting to fourth party logistics, says a recent study.

Though only 55 per cent of the Indian companies subscribe to third party services (3PL) against 75 per cent globally, the survey on `3PL logistics practices in Indian industry' conducted jointly by the Transport Corporation of India and Gurgaon-based Management Development Institute sees good scope for fourth party operator (4 PL).

The function of the fourth party logistics provider is to act as a single interface between the client and multiple logistics services providers so as to manage all aspects of the supply chain. Logistics, according to the survey, has emerged as a key component in the present scenario as it cost constitutes 14 per cent of the country's GDP as compared to eight per cent in advanced countries.

The companies subscribing to 3PL services do so as a strategic tool for the corporate growth, some for cost reduction, some others for achieving core competence and the rest for providing improved customer services. Currently, logistics services are outsourced for a variety of operations, but mostly for outbound transportation. Other activities include inbound transportation, customs and clearing and forwarding jobs, import/export management, outbound/inbound warehousing, labelling and packaging, fleet management and consolidation, order picking and inventory management. In the next five years, it is felt, the potential area for growth will be reverse logistics, inbound warehousing, inventory management, distribution, order processing, information technology and order picking. The performance metrics such as on-time delivery, no stock outs and back orders are critical parameters used for the evaluation of the 3PL providers.

Nearly 23 per cent of 3PL companies are IT-enabled providing services such as tracking and tracing. Also, it is usually the top management that is involved in any decision relating to 3PL, the survey adds.

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