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New buzzwords are not welcomed by most people. Most often they are a reinvention of an existing term, a new way for consultants to generate interest in their services, and serve to complicate matters for the majority of professionals. They require the professional to read up in trade journals, attend industry conferences and seminars, and network with industry counterparts, for fear of falling a step behind their peers.
The newest buzzword is fourth party logistics[Symbol Not Transcribed]TM. You'll notice that, unlike most buzzwords, it's trademarked. Andersen Consulting has claimed it as its own, an attempt to corner the market on "the next evolution in logistics and supply chain outsourcing," according to Brian Youd, senior manager in Andersen Consulting's supply chain practice.
But how does it differ from third-party logistics, you ask? Says Youd: "A fourth-party logistics provider is by our definition an integrator in the truest sense of the word. It's someone who can assemble their own resources, capabilities, and technologies and put it together with the capabilities, technologies, and resources of another organization to run a comprehensive supply chain solution."
Sounds a lot like the original definition of a third-party logistics provider, or 3PLs as they're often called. But Youd says fourth parties fall into a broader definition of logistics than do 3PLs. "Third- party logistics has remained focused on warehousing and transportation, very asset intensive businesses. Their ability to truly deliver value to clients is limited as long as they're limited to those functions."
Youd explained the concept of fourth party at a luncheon hosted by the Canadian Association of Logistics Management in April. He defines a 4PL as a provider of global reach and supply chain expertise, with the ability to manage a host of service providers.
Andersen Consulting sees fourth party logistics[Symbol Not Transcribed]TM as an opportunity because it's an evolution of customer demand. "We trademarked it because it's something that we want to be involved in. We think that we have taken a leadership role in it," says Youd.
Why the need for new terminology, when there are some 3PLs that clearly match Andersen's definition of a fourth party? It's all made possible by the nature of the third-party supplier market. According to Mercer Management Consulting's latest provider and...