Trends and Challenges of Implementing 4PL in Australia

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Supply Chain Information System
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Question 1
Fourth party logistics (4PL) is a logistics model in which 4PL service provider does not
own physical infrastructure (transport and warehouses). Instead, they manage the outsourcing of
logistics to a third party (3PL) providers on behalf of the client.
Chose a company who implemented fourth party logistics (4PL) in Australia and discuss
trends and challenges of implementing 4PL?
The operations of logistics companies have changed significantly in the last few decades.
The operations of logistics were initially one of the core functions for businesses but in recent
time the supply chain that encompasses logistic functions is widely outsourced by companies to
external logistics service providers. This has led to the emergence of new logistics operations
models known as the lead logistic partner, or simply fourth party logistics.1 This operation model
designs plans and monitors the logistics networks. The 4pl also introduces models of
synchromodality or big data which cannot be achieved by the conventional approaches of earlier
logistics providers.
The change of supply chain models has seen an increase in global competition, the rapid
development of information technology and a change of consumer requirements to enable the
operations to be lean and agile. The outsourcing of logistics function to logistics service provides
has become more of a necessity for global companies in their end-to-end supply chain
1 Marek, Kasperek. "Operating model of a 4PL provider." Journal of Economics &
Management 12 (2013): 30.

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operations.2 Additionally, the increase in business operations is not only limited to just cost and
price reduction but more on a higher value of goods and services, flexibility in adapting to
changing operational circumstances and effective and efficient performance service. The success
of a business is now dependant on mutual sharing of risks, investments, and fostering
cooperation among different players in the supply chain process. Fourth party logistics service
providers are different from the traditional models, whose focus was only on cost reduction, and
increase in profit.
DHL is a global logistics company that has its operations in Australia. The company
specializes in a wide range of services including, supply chain management, express mail, and
global freight forwarding. DHL is a lead adopter of the 4pl operation model.3 The company
applies the concept of 4pl to coordinate the activities of 3pl. additionally, DHL does not only
provide logistic services but also consultations services to help client operationalize the concept
of effective supply chain operations. DHL company the can offer their own logistics services but
first, they compare the services of other players in the market and when another 3pl company is
best suited to provide the service, they outsource the services to them.4 DHL is aware of the
significance of logistics in the operations of companies. In this view, the company establishes
good partnership with global industries to deliver value in the supply chain and this requires
2 Laurence, Saglietto. "Towards a classification of fourth party logistics (4PL)." Universal
Journal of Industrial and Business Management 1, no. 3 (2013): 110.
3 Silvia, Cosimato and Orlando Troisi. "Green supply chain management: Practices and
tools for logistics competitiveness and sustainability. The DHL case study." The TQM
Journal 27, no. 2 (2015): 265.
4 Jens, Mehmann and Frank Teuteberg. "Process reengineering by using the 4PL approach: A
case study on transportation processing in the agricultural bulk logistics sector." Business
Process Management Journal 22, no. 4 (2016): 890.