This article explains how Fourth Party Packaging (4PP) is an extension of Fourth Party Logistics (4PL). By strategically managing packaging, a 4PP provider prevents waste and optimises costs, materials and processes in line with the supply chain.
Summary of this article
From my field, I visit many high-tech companies. Many of them are already used to working with so-called 4PLs (Fourth Party Logistics). A 4PL is the first and only contact regarding all logistics activities within the supply chain. They provide integrated direction and communication across the entire chain. With 100% focus and expertise, often aided by ICT solutions, they have a complete picture of all information flows. This allows them to continuously improve the chain and implement optimizations in areas such as integrations, inventory costs, availability, efficiency and lead times.
From a packaging perspective, however, I still find it surprising that companies often prefer to manage these activities in-house. Perhaps this is because the role of a 4PL provider is not yet entirely clear, or because companies are still insufficiently aware of the benefits of outsourcing their logistics operations to a single external partner.
Meeting Service Level Agreements (SLAs) and managing Total Cost of Ownership are becoming increasingly important for manufacturing companies. This is not only about reducing costs and optimising profits, but also about keeping customers satisfied. You can read more here about SLAs and their relationship with packaging.
In addition, with increasing globalization and the complexity of today’s supply chain, it is increasingly difficult to manage. Outsourcing various activities within the supply chain (such as logistics) to a 4PL, then, offers a host of advantages:
I am seeing this increasingly often among companies in the high-tech sector: a shift from a product-oriented business model to a product-service system. This is also known as servitisation. These companies have a broader scope than the physical product alone. They focus on providing a fully managed solution, in which the product is the means and the service adds value.
Although not every company currently works with an external 4PL provider, the term has become relatively well known, and more companies are recognising its value. Once you understand the concept of 4PL, the step towards 4PP becomes much smaller.
Nevertheless, many companies are still hesitant to adopt Fourth Party Packaging. This is unfortunate, because these two roles are closely connected, just as logistics and packaging are fundamentally linked. However, a 4PL provider does not necessarily have specialist packaging knowledge. A 4PP provider does. This expertise covers not only physical packaging, but also a company’s packaging processes and how they can be optimised.
I recently came into contact with a company that needed to ship a specific, terribly sensitive and very expensive part. All the requirements and specifications for if it had to be sent by air freight to the other side of the world had been very well thought out. Therefore, in the spirit of “better safe than sorry,” an extremely good but also expensive packaging was developed. But what turned out? Nine out of ten shipments containing this component were shipped locally by road transport. Moreover, this was also a one-way trip, so the instruction was to shred the packaging after arrival. This had been going on for some time, so quite a bit of capital had already been destroyed before this came to light….
The above was a good example showing that, unfortunately, in practice there is often no real integrated supply chain approach or policy. The functionally built-up structure of most organizations means that packaging can unwittingly be a real value drain because no one has over-all process responsibility. And this while the strategic importance of sound and integrated packaging management is only increasing for many companies. In many cases, a 4PP person – like a 4PL person – could lead to greater efficiency, higher customer satisfaction and reduction of costs throughout the chain.
My colleagues at Faes and I are packaging experts. That means we go beyond just designing and developing the best custom packaging. We look at your entire supply chain and advise and relieve you of everything to do with packaging. If you would like to know more about this, please fill out the form below, or contact us directly.
Thijs Canjels is Business Innovation Manager at Faes and specializes in packaging management and supply chain optimization. In his blogs, he shares insights on efficiency improvements, cost savings and the strategic role of packaging in modern supply chains.
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