LONDON--(EON: Enhanced Online News)--According to the latest procurement intelligence report from Technavio, the global 4PL market is expected to grow at a CAGR of 13.5% over the next five years due to an increase in the need for expertise to provide cost-effective logistics solutions.
“The growth of the 4PL market is driven by the need to reduce operational cost, which is capable due to the sophisticated supporting IT infrastructure”
The research report titled ‘Global 4PL Market: Procurement Market Intelligence Report 2017-2021’ provides an in-depth analysis of category spend, best procurement practices, and cost saving opportunities, aimed at helping organizations achieve superior business performance. The report also provides insights on pricing, supplier positioning, and top companies, enabling sourcing professionals to improve their competitive advantage through procurement excellence.
“Buyer firms opt for 4PL service providers capable of offering a comprehensive portfolio for managing logistics services,” says lead Technavio procurement specialist Angad Singh for category spend intelligence. “The growth of the 4PL market is driven by the need to reduce operational cost, which is capable due to the sophisticated supporting IT infrastructure,” adds Angad.
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Cost saving opportunities in the global 4PL market
The adoption of various cost-optimization levers helps buyers of the global 4PL market realize direct cost savings and enhance category management and value benefits (including reduced procurement complexities).
Technavio procurement experts have segmented the cost saving opportunities in the global 4PL market into the following value-enhancement opportunities:
- Adoption of technology
- Supplier Competition
- Adoption of negotiation strategies
- Optimization of procurement practices
- Bundling of services
Adoption of technology saving aspects
4PL service providers adopt advanced logistics software (such as WMS, TMS, YMS, and WFM facilities), allow real-time information sharing, integrate barcodes and RFID, and offer cloud-based solutions to their buyers.
With increasing globalization, buyers consider the complexity of the technology as a key factor in choosing a supplier. An advanced technology system ensures that there is an efficient flow of goods, digital real-time visibility, tracking, and reporting.
Supplier Competition saving aspects
Suppliers of 4PL compete based on experience, expertise, value-adds, and transparency in pricing. Suppliers who can support supply chain planning and execution, trading partner integration, information management, and end-to-end tracking and reporting will thrive in the 4PL market. These strategies can save up to 10% of the total category spend to the suppliers.
Bundling of services saving aspects
The adoption of bundling strategies by 4PL suppliers can result in significant cost savings. The effective execution of this strategy can save up to 15% of the total category spend for the vendors.
4PL suppliers bundle services such as packing, kitting, light manufacturing, and reverse logistics. The combined provision of these services is not only beneficial for both the vendors and buyers but also reassures the buyer of the supplier’s expertise.
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Technavio is a leading global technology research and advisory company. The company develops over 2000 pieces of research every year, covering more than 500 technologies across 80 countries. Technavio has about 300 analysts globally who specialize in customized consulting and business research assignments across the latest leading edge technologies.
Technavio analysts employ primary as well as secondary research techniques to ascertain the size and vendor landscape in a range of markets. Analysts obtain information using a combination of bottom-up and top-down approaches, besides using in-house market modeling tools and proprietary databases. They corroborate this data with the data obtained from various market participants and stakeholders across the value chain, including vendors, service providers, distributors, resellers, and end-users.
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