Companies are gradually realizing the importance of an efficient supply chain mechanism for all their products. The primary aim of 3PL service providers in India was to help companies outsource their entire ambit of logistics related activities apart from ensuring that the company's products get maximum presence across the country's vast retail network.

Today, 90% of 3PL companies only integrate 2-3 services. One of them is warehousing and second if value added services within the warehouse. They sometimes thirdly integrate distribution services which includes primary and secondary transportation. However, not many 3PL's are able to integrate services like freight forwarding, customs clearance, warehousing, transportation, in-plant logistics, supply chain consultancy, packaging, sub assembly, line feeding, C-form collections, returns management etc.

4PL, on the contrary, can completely amalgamate all these services and offer them from a single window perspective. It is supposed to be service and supplier exhaustive. Benefits of 4PL's are manifold. One is that of single point contact ensuring hassle-free operations and seamless information for the customer. The other is value addition for each of the activities resulting in cost savings. Lastly, because of its strong analytical approach, it has a huge market and gathers operational experience.

Accenture first coined the term 4PL and defined it as a supply chain integrator that assembles and manages resources, capabilities and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution.

Accenture first coined the term 4PL and defined it as a supply chain integrator that assembles and manages resources, capabilities and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution.

Despite being in its infancy stage, 4PLs have massive potential and will grow over the next few years. Having said that, there are significant challenges ahead. By recognizing what is driving and restraining the market, companies can take full advantage of the strategic opportunities on offer. Automotive, FMCGs along with electronics, chemicals and pharmaceuticals and retail sectors are expected to fuel the growth of 4PLs in the country as logistics forms a major business area for them. Using this concept will play a key role in reducing their cost and further improving their operations.

4PL have emerged as the ideal answer for companies belonging to a wide range of industries to have access through a single window across the entire supply chain.

The future of 4PL companies in India is highly dependent on their ability to knowledge base, exhibit, skill and competence to their customers and their ability to integrate and show the solutions in a single platform which will reduce the cost incurred and further improve the service levels.

My experience so far gives the confidence to say that 4PL will soon be the future of the logistics industry.

(Mr Gupta is director, Total Logistics (India) Pvt Ltd. The views expressed are personal)