The key point to understand up front is that 4PL is a strategic activity which involves not only the management of a clients supply chain, but also the development of their supply chain strategy in alignment to their company vision.  3PL service providers, on the other hand, provide far more tactical services for their clients, usually limited to individual supply chain functions. 
 
But we should start with definitions. Third party logistics, or 3PL, is the outsourcing of a companys logistics operations to a specialised company. A third party logistics provider, according to US Web site Supply Chain Visions, providing a definition endorsed by the International Council of Supply Chain Management Professionals, is a company which provides multiple tactical logistics services for use by customers.

These firms aim to facilitate the movement of parts and materials from suppliers to manufacturers, and finished products from manufacturers to distributors and retailers. Some of the tactical services which they typically provide are transportation, warehousing, cross-docking, inventory management, packaging, or freight forwarding.
 
Fourth-party Logistics (4PL) differs from third party logistics, as we have mentioned, in that it is primarily a strategic partnership with the client rather than a tactical engagement with a supply chain function. 4PL differs from 3PL specifically in the following ways, according to Accentures supply chain guru, John Gattorna:

* The 4PL organisation is often a separate entity established as a joint venture or long-term contract between a primary client and one or more partners;
* The 4PL organisation acts as a single interface between the client and multiple logistics service providers;
* All aspects (ideally) of the clients supply chain are managed by the 4PL organisation.
 
Sometimes, and even more confusingly, 4PL companies are referred to as Lead Logistics Providers (LLP), the definition of which is an organisation that organises other third party logistics partners in fulfilling their outsourced logistics functions.
 
It is clear from these definitions that the 4PL role in logistics is a management one. Any or all of the physical logistics processes can be outsourced or sub-contracted to 3PL companies on a Service Level Agreement basis by the client company, according to the terms of which the 3PL is held responsible for fulfilment of these tactical goals.
 
The 4PL, on the other hand, adopts a specialised and strategic management role in the clients supply chain, one which concentrates on the improvement of overall supply chain and logistics processes and methodologies rather than the physical implementation of one or more logistics function.

This is why the definition above refers to a 'partnership' arrangement with the client company, since the 4PL service provider becomes an integral part of the clients business. This role may well extend to a re-organisation of the clients business and personnel if this is required by the supply chain reform process. Obviously, the 4PL company needs to have the skills and resources to manage this kind of change effectively and to the benefit of their clients business.
 
As part of this management process on its clients behalf, the 4PL company may therefore take over the management of one or more 3PL companies involved in the execution of the clients logistics functions. This is when the 4PL becomes a lead logistics provider. As part of fulfilling that role, it does sometimes happen that a 4PL company may deploy parts of its own organisation in a 3PL role within the clients supply chain network, if this is deemed the most efficient and effective solution for the client in the judgement of the 4PL service provider.
 
So, why SHOULD you care about the difference between 3PL and 4PL?
 
Contracting a 3PL service provider may realise some considerable benefits for individual supply chain functions. After all, these tactical supply chain activities are rarely core to the clients business, and are generally managed by sub-contracted or outsourced resources to provide as much value as they can to the organisation in terms of lowest cost. But managing individual tactical supply chain activities in order to reduce their costs might result in increased costs, or decreased service levels, elsewhere in the supply chain network.

The management of all the different activities in different supply chain silos across that network is therefore key to the value that 4PL companies provide to their clients. Seeing a holistic picture of the consequences that supply chain decisions in one area of the business will have on another for example, the stockpiling of inventory in one area to circumvent unreliable transportation systems is the strategic role that 4PLs can fill. The value they add impacts on the entire organisation, not simply in terms of quick cost benefits in one supply chain area.
 
Ultimately, to add this kind of value to their clients, both 3PL and 4PL companies need to have a holistic view of the supply chains they are involved in, and what the consequences of their planning and implementation decisions will be.