International Logistics & 3PLs

Contents

Basics of International Logistics Trends in International Logistics Case Study

International Logistics - Basics

Definition:

that part of the supply chain process that plans, implements, and controls the efficient & effective flow and storage of goods, services, and related information from the point of origin to the point of consumption in order to

meet customers requirements.

International Logistics - Basics Why is international Logistics necessary?

- Reducing Cost - Improving Service (adding value for

customers)- Competitiveness in Globalization

Positive result of a liberal market?

Difference int. Logistics & SCM

Logistics:

Focuses on transportation and storage of materials and final goods

The 7 R‘s: „ensuring the availability of the right product, in the right quantity and the right condition, at the right place, at the right time, for the right customer, at the right cost“

SCM:

Also includes the management of supplier and customer relations

International Logistics - Basics

The key to making a company’s international Logistics work is information -> how can this information in an MNE be provided and supervised?

International Logistics - Basics EDI (Electronic Data Interchange)

- standardized format & structure to exchange documents and financial flows

ERP (Enterprise Resource Planning)- every process of a company can be exercised via one integrated Information System (SAP, Baan, Oracle, MBS Navision Axapta)

e-Commerce / e-Procurement / IntranetEnterprise Portals for managing & controlling the flow and storage of goods from any place & at any time (part of ERP, or at least directly linked)

International Logistics - Trends

Government Trade Facilitation Systems

- new trade facilitation systems support globalization of internat. Logistics

Singapore -> trade permitting system allows traders to fill out one single form, a mainframe system routes form to 18 different agencies. Estimated savings for Traders: $ 1 billion per year

Mexico -> Computerization reduced steps for Traders from 12 to 4. Numbers of operations at 1 entry point from U.S. increased from 800 to 1200. The processing time was reduced from 3 days to 20 minutes!! Estimated savings for Traders: $ 2 billion per year

Globalization & Logistics Globalization drives Logistics outsourcing Public and private companies are offering logistic

services Complex business needs require specialization in

logistics (eg. hazardous cargo) Companies doing business globally can benefit from

outsourcing their logistics and supply-chain management needs

Logistics is becoming an important source of revenue for MNE’s (IBM offers IT Outsourcing since 1990, now shifting to logistics, takeover of PWC in 2002)

International Logistics - Trends The “extended Enterprise”

- Total real time connectivity between extended Enterprise Partners

Global Third Party Logistics Providers(3PL)- avoid costs in IT-Systems and warehouse capacity

- greater market leverage (air, ocean and surface transport)- volume purchasing discounts through aggregating its shipment base with those of the Providers other clients- higher flexibility in meeting customer needs because of access to more diverse channels

eLogistics = web based logistic portals which seek to bring together shippers, 3PL’s and other interested parties to provide more effective collaboration

Logistics Outsourcing – 3PL’s

The 3PL market will grow 5 to 10 times faster in the next decade then the traditional freight forwarding market

3PL’s include:

Engineers, business consulting, materials handling, material specific skills, change management, business modelling, IT and management consulting

3PL Trends ¾ of MNE’s use 3PLs

Most important feature of 3PLs is RFID (radio frequency identification) e.g.. Wal-Mart, US Dep. of Defense

Companies' willingness to spend more of their budget on 3PL's

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AsiaPacific

UnitedStates

LatinAmerica

Regions

3PL Trends

5 most frequently outsourced activities to 3PL

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Activities

3PL – Pros & Cons

+ downsizing to core business+ longer experience in internat. Logistics+ reduce cost of ownership+ increase flexibility

- Lack of core knowledge during outsourcing process

- open, honest communication necessary- Giving up of internal control of a business

function and trusting others

Case Studies

Examples of 3 PLs and Business Solutions

FILA / KUEHNE+NAGEL (K+N).

Situation. Increasingly complex supply chain ( Incr.

markets, product line and clients); Centralised supply chain management; PB:

delays and inaccuracy in customer order; Lack of visibility; Variety of product/services= additional

complexities.

FILA / KUEHNE+NAGEL (cont 1.).

K+N Solutions: Re-engineering supply chain model.

optimising transportation, merging shipment;

Improve inventory management and services;

Web-based data and documentation collection;

FILA / KUEHNE+NAGEL (cont 2.).

Results. Flexibility and visibility: forward planning; Cutting costs and increase space

utilisation; Adapting standard operating procedures

to local requirements; Build a direct info exchange with

partners; Automating massive amount of

documentation.

XEROX / K+N.

Situation: Xerox need 3PL Manage 6 of its District Parts Centres

(DPCs); Mobilise and assume operational control

of the 6 DPCs Provide accurate and reliable delivery of

parts to engineers; Maintain and improve defective material

processing time at the DPCs

K+ N solutions: Minimise service disruptions; Focuses on staff retention; Process improvement;

XEROX / K+N (cont. 1).

Results:

Improved service/shipping performance; Reduce order cycle time; Seamless logistics solutions

CARREFOUR / PENSKE

Situation: To centralise logistics network; Improve order accuracy; Reduce inventory; Increase stock assortment

CARREFOUR / PENSKE (Cont.1)

Penske Solutions: New distribution facilities; Warehouse technologies; Load planning

CARREFOUR / PENSKE (Cont.2)

Results: Single system:

ordering and shipping; Manage inventory flow Incr. supply chain visibility

Deliver value: company, store, consumer level;

Reduce distribution costs; Reduce delivery delays; Increase variety of products for stores.

General Motors Mexico (GMM)/ Penske.

Situation: 3 locations: Pb

Individual logistic decisions; Lack of collaborations; Complex transportation Network.

General Motors Mexico (GMM)/ Penske (Cont.1)

Penske Solutions: New procedure for inbound transportation

network; Logistics management system software; Establish accountability, procedures and

measures for GMM.

General Motors Mexico (GMM)/ Penske (Cont.2)

Results: (in the 3 plants) Transportation costs decr. 15%; Increase visibility throughout the supply

chain; Reduce inventory and freight premium

costs; Increase delivery of damage-free parts; Decrease carrier base from 100 to 20

carriers.

Thanks!

Bibliography “Logistics and the Extended Enterprise”, S. Boyson “TRANSPORT AND COMMUNICATIONS BULLETIN FOR ASIA AND THE PACIFIC”,

Report of UN “Freight and Logistics”, Dablanc, L. Gart “The Role of Logistics in Stimulating Economic Development”, The World Bank,

M.H. Juhel “Structuring Logistics Activities In Multinational Companies (MNCs)”, Yong Gao “Business Intelligence and Logistics”, Srinivasa Rao P. “Supplier partnership essential to make new logistic concept work” G. Butschek “Latin American booming Logistics”, InfoAmericas Report 10-06-2004 “Shaping tomorrows Logistics” The Air Force Journal http://logistics.about.com/b/a/117614.htm http://www.fool.com http://www.manufacturing.net http://usco.kuehne-nagel.com http://www.penskelogistics.com/casestudies/gm.html http://www.penskelogistics.com/casestudies/carrefour.html