The terms 5PL, 6PL and 7PL are surfacing in various logistics and supply chain publications.
7PL is being used to describe a turnkey solution where instead of dealing with several people for various services like inbound, outbound and warehousing, The concept is ‘one contract, one bill’. 7PL is the combination of 3PL and 4PL into one (3PL + 4PL = 7PL). One logistics service provider provides a client with both 3PL and 4PL services under one roof. 7PL is referred to as a turnkey solution where instead of dealing with several people for various logistics services like inbound, outbound and warehousing, clients deal with one person under the ‘one contract, one bill’ concept.
The concept of 7PL stems from the very simple notion of amalgamating the well-established 3PL domain with the concept of 4PL, originally coined and trademarked by Accenture. Its representation does NOT connote the over-complication of the Supply chain with 7 other intermediary levels or seconded entities. In fact, 7PL serves to optimize and rationalize the new economy Supply chain partners. In the simplest manner of comprehension for 7PL, it is the effective fusion of physical and process expertise of 3PLs, with the enhanced knowledge-based macro-strategic consulting and IT capabilities of 4PLs. 7PL essentially materializes the long-standing need for a comprehensive and holistic approach to the fulfillment of the most intricate and complex Supply chain requirements for the entire spectrum of logistics. Many debates have risen on the roles and capabilities of the different players in the industry, largely because of disparate definitions of scope and varying degrees of depth of expertise.
More so, the complexities and permutations of the new global economic framework has not only created numerous niche silos of specialized logistics segments, it has also created a vacuum for a truly scaleable and optimal Supplychain partnership integrating the various relationships into a web of synchronized, and streamlined networks of intelligent and collaborative organic Supplychains. This is also partly caused by the multiple platforms of technological disparity with all the entities in the Supply chain equation, which complicates matters with the need for further intermediation. Hence, this hybrid we call 7PL is not just about the definitive “playing field”, beyond just managing Supply chains, but the consolidation and collaboration of all value-creating segments of knowledge, technology and best-of-breed disciplines (such as quality management, human capital enrichment, and entrepreneurial modelling), to truly achieve the utopian fulfilment of seamlessly integrating the physical, information, and financial flows in the most optimum manner for all entities.
Difference between 3PL and 4PL: Understanding the role and competencies of each entity is necessary so as to truly appreciate the kind of “hyper-value” created by 7PL. Many 3PLs have claimed to offer integrated or total logistics, but have only succeeded with showcasing the inability to truly understand or appreciate the complexity and the competency required, albeit the expertise in real execution, does enable a 3PL to ‘feel the pulse’ of the Supply chain. As well, many 4PLs claim to be able to offer a more strategic management objective, which also raises concerns over live operational, implementation, and execution expertise, as well as further inter mediation or dilution of the client from its Supply chain pulse. However, the proposition of the 4PL brings into question the viability, and rapid obsolescence of comprehensive supply-chain re-engineering plans that require at least 1-2 years to deploy, within an environment that needs to cater to demand dynamics which are ever-changing within a radically shortened business cycle.