Presentation Logistics Class

8/8/2019 Presentation Logistics Class

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Group Memebers:

Ritesh KumarRajesh Kr MishraPrashant goyalNitin


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W hat is 3PL

3PL is the function by which The Client Company outsourcesvarious elements of the supply chain to one 3 PL companythat can perform the following management function of theclients :

Inbound freightCustomsW arehousingOrder fulfilmentDistributionOutbound freight to the clients customers.


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A ctivities involved..

Transportation: Tendering, Tracking/Tracing,Mode conversion, Dispatch, Freight Pay, ContractManagement etc..

W arehousing: Cross Dock, In-transit merge,Pooled distribution, Inventory control, Labeling,Order fulfillment etc..Info Tech: Network modeling, Site selection, BillPayment, Forecasting, EDI, Track/Trace etcReverse Logistics: Recycling, Used assetdisposition, Customer Returns, Repair/Refurbishetc..


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Need of 3PL

Outsourcing non-strategic activitiesFocus on core competenciesExploit external logistics expertiseA chieve superior logistics performanceLess investment in assets and new capabilitiesrelated to logisticsControl costsMeans of differentiationA ccess to international distribution networksimproving customer satisfaction


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H ow 3PL creates value for the firm

Increased economies of scaleRisk sharing

Volatility smoothingA dditional clients helps to improve efficiencyMore customized and value-added services

Innovation and new service development


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Types of 3PL Providers

Leveraged 3PLs use assets of other firms.Non-leveraged 3PLs use assets belonging to the parentfirm.

Transportation based

Many have warehouse experience and/or distribution

experience.

W arehouse/Distribution

Based

Independent middlemen with forwarder roles.Non-asset owners that provide a wide range of logisticsservices.

Forwarder Based

Provide freight payment and auditing, cost accounting

and control, and tools for monitoring, booking,tracking, tracing, and managing inventory.Financial Based

Internet-based, business-to-business, electronicmarkets for transportation and logistics services.Information Based


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Levels of OutsourcingTransactional Outsourcing:Based on transactions, with no long term contracts andno bonding between the 3PL and the outsourcingcompany.

Tactical Outsourcing:Outsourcing on a long term basis with negotiatedcontracts and integrated IT systems to facilitate freeinformation flow and create supply chain visibility.

S trategic Outsourcing:Based on long-term relationships with successfuloutcomes , 3PL companies become partners in supplychain management and establish transactionaltransparency.


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Tips for Successful Implementation

1) H ave an outsourcing strategya) Know what your outsourcing strategyb) SW OT analysis

2) Do your homework.a) Do a comprehensive studyb) Document expectations

3) Measure and review performancea) H ave a efficient and accurate measurement systemb) H ave an efficient costing system

4) Create an Implementation Strategya) Create a project plan road map

5) Nurture the Relationshipa) Create mutual trust, respect and a sense of integrity.


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CA SE-Dimerco Express Group(DEG)

A bout DEG Established in 1971 A

ir freight forwarder inA

sia Pacific and GreaterChina Offers global logistics services to the upstream

and downstream supply chain firms Only logistics company listed on the Taiwan stock

market


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Contemporary Industry Scenario

Client Profile A re from the electronics industry

Use air freight service Operations in mainland China

The Situation Shipping capacities in china was lagging Bottlenecks for logistics operations Queuing in the airport for air freight space


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DEG s Offerings (The Solution)

The Solution :Developed new service products based on

E-chain system,The platform for communication,Operation, andService

Moved products from departure cities in China either via H ong Kong orTaipei.DEG established several joint ventures with local 3PL players, such as inIndia and Indonesia

Innovated in areas such as customs clearance services and air cargoinsurance selectionResults :

Decreased the arrival time uncertaintyH elped customers to apply accurate import tariffs and/or enjoy deferredduty assessment


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EVOLUTION OF LOGISTIC SERVICE PROVIDERS(LSP s)

Piecemeal Logistics/ 2 nd

Party Logistics (2PL)Third Party Logistics(3PL)

Fourth Party Logistics(4PL)


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4PL

The term "4PL" was actually coined by the consulting groupA ccenture. In fact, they also hold the trademark to thename 4PL.

Accenture defines a 4PL in the following manner:"A 4PL is an integrator that assembles the resources,

capabilities, and technology of its own organization andother organizations to design, build and run comprehensivesupply chain solutions."

Key Points:Outsourcing the componentsInvolving the supplier of external sourcesSharing of potential risks


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3PL V/S 4PL

Risk FactorInvolvement in

strategic decisions


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4PL Greater functional integrationBroader operational autonomy

Internal Logistics Operations

Client 3PL Providers

CLIENT

CLIENT

CLIENT

Business Process Management

3 PL Providers

IT Service Providers

4PL

CLIENTINS OURCING

OUTS OURCING


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2PL V/S 3PL V/S 4PL

Contract/TransportDistribution

Logistics Outsourcing 3PL Integrated Supply ChainManagement 4PL

Services Single Functions Multi-Functions Integrated multi-functions,increased breadthcomplexity

R elationships Transactional Longer Term arrangements Strategic partnerships, megasized contracts

R each Local, regional Multi regional Global, door to door service

CompetitiveLandscape

Fragmented Consolidation/alliance building Small set of large alliances andniche providers

Competencies Asset heavy, processexecution

Shift from asset based toinformation based

Information/knowledge focus,integrated IT solutions

Buyer Value Cost reduction Cost avoidance, geographicexpansion enablement

Optimized cost and service


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STA GES OF 4PL

Reinvention

Transformation

Implementation

Execution


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COST EFFECTIVENESS OF 4PL

Revenue GrowthReduction in Operation CostsReduction in Fixed Capital


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ase orus s ra eg cpartnership

A bout Corus:One of the largest steel producers in the worldSpends in excess of 76 million per year moving steel around theUK.

Vital supplier to the construction, engineering, automotive andmetal goods industriesA bout TDG:

Major European logistics company with extensive experience inretail, FMCG, industrial and chemical markets.Creates value by aligning its customers supply chains to theirbusiness strategyProvides chemicals ,paper and packaging and temperaturecontrolled services where it can offer capability, flexibility andimproved service


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The situation

In 2005, Corus began looking for a logistics solutionsprovider who could build their vision of improvedsafety, service levels and efficiency

Strong relationship with existing 30 lead haulagecontractors.Good track record of controlling cost at local level.

Lack of centralised view of operations.Expensive empty miles.


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The solution

4PL transport management platform helped creation of a live window on Corus logistics across the UK.Built in optimisation software ensures maximum

efficiencies are gained during the planning andallocation process.Ensures maximum efficiencies are gained during theplanning and allocation process

Linking multiple Corus sites, customers and all existingthird party hauliers.Increased efficiency by linking outbound journeys withreturn legs


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The result

Gross savings through reduction in emptymileagesSaved a million vehicle miles in one year aloneSeamless transition to the new IT systemsresulted in consistent service performancelevels of 99%.

Strengthened health and safety best practiceacross sitesImproved service levels to Corus customers


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NEXT REVOLUTION OF LSP s

7PL=3PL+4PL

Presentation Logistics Class

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