Small and medium-sized enterprises (SMEs) are the backbone of any global economy. Europe’s economy is no different. In Europe, SMEs account for over 99.8% of all businesses and employ 66 to 75% of the workforce.
While these SMEs help the economy in terms of operations, they have limited best-in-class execution capabilities. Thus, many SMEs lack world-class execution, particularly in supply chain management. They lack resources, supply chain talent, and infrastructure to compete with bigger businesses.
This is exactly where Fourth-Party Logistics (4PL) providers come in. 4PL Supporting SMEs in Europe is essential for ensuring that SMEs can concentrate on their core business while 4PLs manage logistics operations.
We will discuss how 4PLs can help SMEs in Europe. How 4PL providers assist small and medium-sized companies in resolving logistics challenges, driving down costs, optimizing efficiency, and enhancing agility to industry changes.
What Is a 4PL and How Is It Different than a 3PL?
Before getting into benefits for SMEs, we must understand 4PLs and how they compare to third-party logistics providers (3PLs).
A 4PL is the integrator and coordinator of the whole supply chain. Rather than a 3PL, which usually deals with just particular logistics functions like transportation or warehousing, a 4PL handles the entire logistics operation from start to finish. This might involve managing several 3PLs, customs, freight forwarding, warehousing, transportation, etc.
For SMEs lacking the workforce to handle these challenging tasks internally, a 4PL offers one point of contact for the whole supply chain to maximize efficiency and alignment with company goals.
6 benefits of the 4PLs for the European SMEs
1. Cost Efficiency and Economies of Scale
The cost of running a supply chain ranks high amongst the major challenges for SMEs in logistics. Recently, there have already been huge challenges in the European supply chain. Energy cost hikes, labor shortages, and increasing shipping costs have caused headaches for the supply chain managers of European SMEs’ supply chain teams. For example, a 40-foot container costs over 200% more than an average 5-year period.
European SMEs usually have smaller volumes and lack the bargaining power of larger companies. They struggle to secure competitive rates from logistics providers, warehouses, or customs agents. This is where a 4PL can be invaluable in optimizing costs for them.
4PLs could use their relationships with service providers and include them in their existing economies of scale to get better offers for their SME clients. By aggregating the requirements of several clients, a 4PL can obtain better rates and provide SMEs with the logistical benefits that large businesses enjoy. This leads to substantial bottom-line savings, particularly for freight, warehousing, and last-mile delivery.
For example, in markets like Germany or France, where fuel prices and labor costs have been consistently high for multiple years now, SMEs can benefit from the cost optimization strategies that 4PLs offer. Through dynamic route planning, load consolidation, and efficient distribution networks, 4PLs can help reduce costs that might otherwise burden smaller businesses.
2. End-to-End Visibility and Control
While visibility is crucial for managing supply chains, it is hard for SMEs to get an end-to-end real-time status of their operations. They usually lack the analytics muscle and can’t afford expensive in-house expertise to evaluate their supply chain gaps. A 4PL resolves this gap with advanced visibility solutions that provide SMEs with complete visibility of their supply chain.
4PLs track goods throughout the supply chain using technologies like IoT systems, control towers, and big data analytics. SMEs can access 4PLs’ dashboards that provide real-time inventory, shipment status, and disruption risk insights. This visibility enables smaller companies to make educated choices, predict delays, plan for them proactively, and act fast to correct issues before they become major customer issues.
3. Access to Global Markets
When SMEs try to enter the international market, they face multiple challenges. Their entry can be tough due to issues ranging from customs compliance issues to overseas logistics providers to understanding the local industry’s ways of working. A 4PL with a strong international network can do this with great ease and provide worldwide reach while saving substantial reworks, cost, and time-to-market.
For instance, a small fashion retailer in Italy may want to expand its e-commerce presence into the UK but struggle with understanding post-Brexit customs rules, local delivery preferences, and warehousing in the UK. A 4PL can manage these challenges by taking care of customs documentation, partnering with local 3PLs, and even managing returns, making it easier for the SME to enter new markets.
4PL Supporting SMEs in Europe enables these businesses to punch above their weight in international trade, offering them access to the same logistics networks that larger companies use, without the overhead or complexity. Agility and Flexibility
4. Agility and Flexibility
The biggest advantage of dealing with a 4PL is the flexibility for SMEs. Demand patterns and sector shifts are usually unpredictable and unpredictable for smaller businesses, making managing a limited budget challenging.
4PLs offer the scale and agility required to react quickly to market changes. Whether boosting operations during the peak holiday season or even lowering operations when demand slows, a 4PL can adjust logistics services to meet demand. With 4PLs, there is no tension of shelling out fixed costs every month. This enables SMEs to maintain operational efficiency without long-term contracts or huge investments in infrastructure.
For example, an SME selling consumer electronics in France may see increased demand in the US during Black Friday preparations. A 4PL handling its supply chain means the company does not require capital investments or additional staffing to quickly ramp up warehouse capacity, transportation, and last-mile delivery to meet the surge.
5. Compliance and Regulatory Expertise
Interpreting European logistics, transportation, and trade laws could be challenging for SMEs without dedicated compliance teams. Compliance is both time-consuming and costly, whether managing brand-new customs needs after Brexit or meeting green requirements like the European Union’s Emissions Trading System (ETS).
A 4PL handles these compliance issues for SMEs and keeps abreast of new regulations. This helps keep SMEs compliant without investing in costly legal teams or in-house regulators.
For instance, a small furniture producer in Poland may find it hard to grasp just how sending goods to Europe with different environmental standards. A 4PL can manage all deliveries to meet local laws, minimizing the possibility of delays, demurrages, or fines at customs.
6. Technology and Innovation
Staying ahead in logistics requires constantly adopting new technologies. Nevertheless, many SMEs lack the focus, energy, or knowledge to constantly adopt advanced logistics solutions. Every year, new innovations in the supply chain get added, like AI-enabled demand forecasting, automation, or blockchain for supply chain transparency.
4PLs provide these technologies to SMEs. By offering tech-driven solutions, 4PLs help improve forecasting, inventory management, and order fulfillment precision.
With the arrival of e-commerce, integration with internet marketplaces, like Shopify or Amazon, and fast and transparent shipping tracking is needed. 4PLs offer the tech infrastructure SMEs need to compete in this dynamistic market and remain ahead of the curve.
Choose WIIMA: Your perfect 4PL Partner in Europe
Managing the complexities of European supply chains might be tough for SMEs when competing against bigger players.
WIIMA, as your 4PL partner, provides expertise, leading technology, and a network adapted to Europe’s logistics landscape. WIIMA’s full-stack solutions provide accountability, cost savings, and agility, allowing your business to tackle logistic problems while focusing on core competencies. From compliance to last-mile delivery,
WIIMA helps you keep your supply chain running smoothly, resiliently, and sustainably.
Partner with WIIMA and let us help you develop new choices for growth, success, and efficiency in Europe and beyond.
