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Home » 4PLs Make the Final Move

4PLs Make the Final Move

March 16, 2015
SupplyChainBrain

Heavy goods have been the first to see 4PL organization in the final delivery service. Consumers often have the inability to transport heavy goods such as furniture and appliances. There is an increasing trend for retailers, distributors, and manufacturers to outsource final delivery services traditionally completed by an in-house delivery staff. 4PLs provide technology and visibility across a network of regional service providers. Consider companies such as XPO Last Mile, Last Mile Home, MXD, and Installs Inc. Service providers are effectively serving retailers and manufacturers for delivery and installation of large goods. These companies combine a network of regional contracted service providers to do local delivery.

The next wave is the ship-from-store method by retailers to customers for online orders. As retailers turn their backrooms into fulfillment centers, service providers are needed to coordinate the delivery from the store to the final destination. Same-day delivery is hot right now, and it provides the ability for traditional brick-and-mortar retailers to compete with pure online retailers. But providing this service with in-house capabilities is not cost-effective.

The 4PL service provider that can offer a nationwide network of final delivery companies with technology and visibility will be in high demand. Add the capability for the customer to identify the time and place of delivery at the time of ordering, and the retailer will have a significant competitive advantage in their market.

4PLs have a lot to offer, including best-in-class customer service interactions relating to the final delivery of products. Technology that tracks the last-mile process through order entry, scheduling, and service completion is now needed to play in the game. Standardization of delivery processes and protocol assure the consistency of quality deliveries. The ability to monitor and qualify local agents is also critical.

Strategic companies are starting to see 4PLs' value proposition as consolidation. XPO acquired Optima in 2013. Optima had revenue of $35.7m and adjusted EBITDA of $3.7m, with a 16 percent compound annual growth rate over the past five years. In addition, private equity has jumped into the game. Platinum Equity acquired MXD (formerly Exel Direct) and further made an acquisition in 2013 of HomeDirect.

The Outlook

Whether it is a distributor, manufacturer or retailer, the final interaction that a company has with its customer is by the final delivery. As consumers continue to buy larger items online, companies need local quality, professional local service providers, and customer service for deliveries—and 4PLs are the key providers of this value. In the future, we see more 4PLs serving the ship-from-store space. Today's 4PLs have established relationships with large retailers and can leverage this to offer services for non-heavy products.

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Logistics Logistics Outsourcing Transportation & Distribution Consumer Packaged Goods Retail
KEYWORDS 3PL consumer packaged goods distribution strategy last-mile delivery Lisa Kennedy Logistics Logistics Management: Third Party Logistics Logistics Outsourcing logistics services logistics services provider Project Manager Retail retail supply chain Tompkins International Transportation & Distribution
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