Logisticsoutsourcing 130223013115-phpapp02

58
Logistics Outsourcing By Marwan Bahgat ARAB ACADEMY FOR SCIENCE, TECHNOLOGY & MARITIME TRANSPORT Institute of International Transport and Logistics Supervised by: Prof. Dr.Islam Al-Naqeeb

Transcript of Logisticsoutsourcing 130223013115-phpapp02

Page 1: 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

Page 2: Logisticsoutsourcing 130223013115-phpapp02

Chapter 1Logistics and Supply Chain

Management

Logistics and supply chain definition

• Logistics Management

• Supply Chain Management (CRM)

• Deference between logistics and supply chain

Page 3: Logisticsoutsourcing 130223013115-phpapp02

Chapter 1Logistics and Supply Chain

Management

Logistics and supply chain definition

• Logistics Management

• Supply Chain Management (CRM)

• Deference between logistics and supply chain

Page 4: Logisticsoutsourcing 130223013115-phpapp02

Chapter 1Logistics and Supply Chain

Management

Logistics and supply chain definition

• Logistics Management

• Supply Chain Management (CRM)

• Deference between logistics and supply chain

Page 5: Logisticsoutsourcing 130223013115-phpapp02

Chapter 1Logistics 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.

Page 6: Logisticsoutsourcing 130223013115-phpapp02

Chapter 1Logistics and Supply Chain

ManagementImportance of logistics

• Logistics as a percentage of GDP

Page 7: Logisticsoutsourcing 130223013115-phpapp02

Chapter 1Logistics and Supply Chain

ManagementImportance of logistics

• Profit impact of logistics cost saving

Page 8: Logisticsoutsourcing 130223013115-phpapp02

Chapter 1Logistics and Supply Chain

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

Page 9: Logisticsoutsourcing 130223013115-phpapp02

Chapter 1Logistics and Supply Chain

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

Page 10: Logisticsoutsourcing 130223013115-phpapp02

Chapter 1Logistics and Supply Chain

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

Page 11: Logisticsoutsourcing 130223013115-phpapp02

Chapter 1Logistics and Supply Chain

Management

Case Study

vs.

Page 12: Logisticsoutsourcing 130223013115-phpapp02

Chapter 1Logistics and Supply Chain

Management

Importance of logistics

• Supply Chain Adds Significant Customer Value

• Supply chain provides competitive advantages

• Supply chain Shifts in Channel Power

Page 13: Logisticsoutsourcing 130223013115-phpapp02

Chapter 1Logistics and Supply Chain

Management

Importance of logistics

• Supply Chain Adds Significant Customer Value

• Supply chain provides competitive advantages

• Supply chain Shifts in Channel Power

Page 14: Logisticsoutsourcing 130223013115-phpapp02

Chapter 1Logistics and Supply Chain

Management

Importance of logistics

• Supply Chain Adds Significant Customer Value

• Supply chain provides competitive advantages

• Supply chain Shifts in Channel Power

Page 15: Logisticsoutsourcing 130223013115-phpapp02

Chapter 1Logistics and Supply Chain

Management

The main supply chain role and activities

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

Page 16: Logisticsoutsourcing 130223013115-phpapp02

Chapter 1Logistics and Supply Chain

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

Page 17: Logisticsoutsourcing 130223013115-phpapp02

Chapter 1Logistics and Supply Chain

Management

Integration of logistics activity

Page 18: Logisticsoutsourcing 130223013115-phpapp02

Chapter 1Logistics and Supply Chain

Management

Logistics activity Trade-offs• Inventory vs. Customer Service

• Inventory and economies of scale

• Going green in the supply chain

Page 19: Logisticsoutsourcing 130223013115-phpapp02

Chapter 1Logistics and Supply Chain

Management

Logistics activity Trade-offs• Inventory vs. Customer Service

• Inventory and economies of scale

• Going green in the supply chain

Page 20: Logisticsoutsourcing 130223013115-phpapp02

Chapter 1Logistics and Supply Chain

Management

Logistics activity Trade-offs• Inventory vs. Customer Service

• Inventory and economies of scale

• Going green in the supply chain

Page 21: Logisticsoutsourcing 130223013115-phpapp02

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.

Page 22: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics Outsourcing

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

Page 23: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics Outsourcing

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

Page 24: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics Outsourcing

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

Page 25: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics Outsourcing

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

Page 26: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics Outsourcing

Why Outsourcing?

Page 27: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics 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

Page 28: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics 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

Page 29: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics 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

Page 30: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics 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

Page 31: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics 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

Page 32: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics Outsourcing

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)

Page 33: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics Outsourcing

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)

Page 34: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics Outsourcing

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)

Page 35: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics Outsourcing

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)

Page 36: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics Outsourcing

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)

Page 37: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics Outsourcing

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

Page 38: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics Outsourcing

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

Page 39: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics Outsourcing

Logistics Outsource Process

• System Takeover

• Joint Ventures

• System “Spin-off”

• Management-only Contract

Page 40: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics Outsourcing

Logistics Outsource Process

• System Takeover

• Joint Ventures

• System “Spin-off”

• Management-only Contract

Page 41: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics Outsourcing

Logistics Outsource Process

• System Takeover

• Joint Ventures

• System “Spin-off”

• Management-only Contract

Page 42: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics Outsourcing

Logistics Outsource Process

• System Takeover

• Joint Ventures

• System “Spin-off”

• Management-only Contract

Page 43: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics Outsourcing

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

Page 44: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics Outsourcing

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

Page 45: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics Outsourcing

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

Page 46: Logisticsoutsourcing 130223013115-phpapp02

Chapter 2Logistics Outsourcing

Myths of Logistics Outsourcing

• 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

Page 47: Logisticsoutsourcing 130223013115-phpapp02

Chapter 3Procurement Outsourcing

Introduction

Page 48: Logisticsoutsourcing 130223013115-phpapp02

Chapter 3Procurement Outsourcing

What is Procurement Outsourcing?

Benefits of Procurement Out sourcing

Procurement Outsourcing Disadvantage

Procurement Outsourcing Risks

Page 49: Logisticsoutsourcing 130223013115-phpapp02

Chapter 3Procurement Outsourcing

Procurement Outsourcing Scope

• Transactional Buying and Settlement

• Measurement and Development

• Selection and Contracting

• Sourcing Strategy Development

Page 50: Logisticsoutsourcing 130223013115-phpapp02

Chapter 3Procurement Outsourcing

Procurement Outsourcing Scope

• Transactional Buying and Settlement

• Measurement and Development

• Selection and Contracting

• Sourcing Strategy Development

Page 51: Logisticsoutsourcing 130223013115-phpapp02

Chapter 3Procurement Outsourcing

Procurement Outsourcing Scope

• Transactional Buying and Settlement

• Measurement and Development

• Selection and Contracting

• Sourcing Strategy Development

Page 52: Logisticsoutsourcing 130223013115-phpapp02

Chapter 3Procurement Outsourcing

Procurement Outsourcing Scope

• Transactional Buying and Settlement

• Measurement and Development

• Selection and Contracting

• Sourcing Strategy Development

Page 53: Logisticsoutsourcing 130223013115-phpapp02

Chapter 3Procurement Outsourcing

Implementation

Implementation Approach

• Consult, fix and outsource

• Consult, outsource and fix

Page 54: Logisticsoutsourcing 130223013115-phpapp02

Chapter 3Procurement Outsourcing

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

Page 55: Logisticsoutsourcing 130223013115-phpapp02

Chapter 3Procurement Outsourcing

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

Page 56: Logisticsoutsourcing 130223013115-phpapp02

Chapter 3Procurement Outsourcing

ImplementationEvaluating and selecting a procurement service provider (PSP)

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

Page 57: Logisticsoutsourcing 130223013115-phpapp02

Chapter 3Procurement Outsourcing

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.

Page 58: Logisticsoutsourcing 130223013115-phpapp02

Thank You

Prepared by Marwn Bahgat

Under supervision ofProf. Dr. Islam Al Naqeeb