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.
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.
However, what I continue to find strange from a packaging and packaging perspective is that the functions of such a 4PL’er are often still preferred to be performed in-house. Perhaps it is because the role of the 4PL is not yet completely clear, or there is still too little awareness within companies about the advantages of leaving your logistics to one external party.
Achieving Service Level Agreements (SLAs) and Total Cost of Ownership are becoming increasingly important topics within manufacturing companies. Not only to reduce costs and optimize profits, but also to keep your customers happy. You can read more about SLAs and their relationship to packaging here.
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 see it more and more in companies in the high-tech sector; there is a shift from a product-centric business model to a product-service system. Also called servitization. These companies have a broader scope than just the physical product. They focus on “total-delivery” where the product is a resource and the service adds value.
Even though not every company works with an (external) 4PL’er yet, the term is now fairly well known and more and more companies see its usefulness. When you understand the term 4PL properly, the step to 4PP is a lot smaller. Nevertheless, many companies still hesitate to choose Fourth Party Packaging. A shame, because these two roles – just as logistics and packaging are fundamentally so – are strongly linked. And yet a 4PL’er doesn’t necessarily understand packaging. A 4PP’er does. And not only about physical packaging, but also about packaging processes within companies (and how to optimize them).
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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