Logisticsoutsourcing 130223013115-phpapp02

Logistics Outsourcing• By Marwan Bahgat

ARAB ACADEMY FOR SCIENCE, TECHNOLOGY & MARITIME TRANSPORTInstitute of International Transport and Logistics

Supervised by:Prof. Dr.Islam Al-Naqeeb

Chapter 1Logistics and Supply Chain

Management

Logistics and supply chain definition

• Logistics Management

• Supply Chain Management (CRM)

• Deference between logistics and supply chain

Management

Conclusion• Logistics management is only an integral portion

of supply chain but this is vary between organizations

• We can say the supply chain and logistics is two terms if they combined in one sentence diverged in the meaning and vise versa

• Finally, SCM is a business philosophy that enables individual companies and channel partners to achieve high levels of productivity, profit and growth.

ManagementImportance of logistics

• Logistics as a percentage of GDP

ManagementImportance of logistics

• Profit impact of logistics cost saving

Management

Importance of logistics

• Logistics Customer service Expectations Are Increasing

• Supply and Distribution Lines Are Lengthening with Greater Complexity

• Supply chain Is Important to Strategy

Management

Case Study

Management

• Supply Chain Adds Significant Customer Value

• Supply chain provides competitive advantages

• Supply chain Shifts in Channel Power

Management

The main supply chain role and activities

• Customer Service• Demand Forecasting• Inventory management• Materials Handling• Order Processing• Packaging

Management

The main supply chain role and activities

• Plant and Warehouse Site Selection• Parts and Service Support• Procurement• Reverse Logistics• Traffic and Transportation• Warehousing and Storage

Management

Integration of logistics activity

Management

Logistics activity Trade-offs• Inventory vs. Customer Service

• Inventory and economies of scale

• Going green in the supply chain

Management

Chapter 2Logistics Outsourcing

Logistics Outsourcing DefinitionKey Element:• Deciding to obtain selected, recurring, non-core goods and

services previously provided internally, from outside the company• Finding outside providers and new ways to secure the delivery of

raw materials, goods, components and services, by • Utilizing the knowledge, experience, creativity and facilities or

capabilities of new providers not used previously, thus• Handing over or transferring the planning, management and

operation of certain functions to an independent third party, and• Using formalized agreements/contracts and payment.

The development of the outsourcing concept• “Smaller is beautiful” concerns over conglomeration

and vertical integration

• The rise and rise of core competence thinking

• The emergence of outsourcing as a key business practice

• Primary supply chain outsourcing

Why Outsourcing?

Benefits of Business Process Outsourcing

• Best in Class Capabilities

• Better Use of Company Resources

• Reduce Operating Costs

• Reduce Business Risk

• Company Lacks Necessary Resources

Levels of logistics outsourcing

• In-house logistics

• Logistics service provider (LSP)

• Third party logistics (3PL/TPL)

• Fourth party logistics (4PL/FPL)

• Fifth party logistics (5PL)

IMPACT OF OUTSOURCING LOGISTICS

Advantages of Logistics Outsourcing

• Cost Reduction• Service and Technology Improvement• Strategic Flexibility• Capital Investment Saving• Focus on Core Competency• Sharing and Reducing Risks

IMPACT OF OUTSOURCING LOGISTICS

Disadvantages of Logistics Outsourcing

• Loss of Control over the Supply Chain

• Minimization of Cost Awareness

• Lack of Improvement and Innovative Ability

• Human Resource not adjusted to the new environment

Logistics Outsource Process

• System Takeover

• Joint Ventures

• System “Spin-off”

• Management-only Contract

• System Takeover

• Joint Ventures

• System Takeover

• Joint Ventures

• System Takeover

• Joint Ventures

SUCCEED IN LOGISTICS OUTSOURCING

• Making the Decision

• Evaluating the Operations and Developing Criteria and Objective

• Making the List and Sending Letters

• Beginning the New Partnership

Myths of Logistics Outsourcing

• If the outsourcing does not work you can always bring the activity back

• The smartest people in the game work in 3PL

• The smartest people in the game work on the customer side

• Once you outsource, you can relax and let them handle all the work

• If the outsourcing does not work you can always bring the activity back

• The smartest people in the game work in 3PL

• The smartest people in the game work on the customer side

• Once you outsource, you can relax and let them handle all the work

• It’s an equal win-win partnership

• Your logistics service provider is responsible for their own mistakes

• Lock it in a contract and squeeze the last penny out of your logistics service provider

Chapter 3Procurement Outsourcing

Introduction

What is Procurement Outsourcing?

Benefits of Procurement Out sourcing

Procurement Outsourcing Disadvantage

Procurement Outsourcing Risks

Procurement Outsourcing Scope

• Transactional Buying and Settlement

• Measurement and Development

• Selection and Contracting

• Sourcing Strategy Development

Implementation

Implementation Approach

• Consult, fix and outsource

• Consult, outsource and fix

Implementationkey prerequisites for maximizing success

• Managing risks due to reduced control over the process

• Managing continuity of service delivery

• Managing personnel and process transition issues

Implementationkey prerequisites for maximizing success

• Managing technology integration issues

• Managing expectations and consensus (HR, IT, Legal & Finance)

• Joint governance and service innovation board

• Measuring success

ImplementationEvaluating and selecting a procurement service provider (PSP)

selection criteria• Category expertise• Sourcing Process Methodology• Operational Excellence• Experience and Customer References• Financial stability

Future Growth

• 45% pressures to lower procurement transaction costs

• 41% increased global competition

• 36% need to gain access to improved pricing

• 34% pressures to re-focus personnel on more strategic activities.

Thank You

Prepared by Marwn Bahgat

Under supervision ofProf. Dr. Islam Al Naqeeb

Logisticsoutsourcing 130223013115-phpapp02

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