Third Party LogisticsAnwar Mohamed

31 October 2008

DefinitionsThird Party Logistics (3PL): Outsourcing all or much of a companies logistics operations to a specialized company.

Third Party Logistics Provider: A firm which provides multiple logistics services for use by customers. Preferably, these services are integrated or bundled together by the provider. These firms facilitate the movement of parts and materials from suppliers to manufacturers and finished products from manufacturers to distributors and retailers. Among the services which they provide are transportation, warehousing, cross-docking, inventory management, packaging and freight forwarding.

Source: Council of Logistics Management

How to works

SIZE AND SCOPEContributes well over 5% of the GDP National Statistics,20065th Largest Industry in the UK Prospects,2006Employs over 1.7 million people Skills for Logistics , 2006Involves with over 65000 organisations Insidecareers,2006

WHY OUTSOURCE?

Cost & Time effectivenessFreeing resourcesTechnical expertise Asset ReductionFocus on corporate core competitiveness

% of 3PL Providers UsedSource: Focus 06

Globalization80% of the top 200 UK companies operate on a global scale

Top Ten 3PLs Customers

Industry Global GlobalCostsDomestic CostsAutomotiveTechnologyRetailingConsumer ProductsFood and GroceryHealthcareMetal IndustryOther$98.2 $156.4$98.6$13.6$32.2$38.4$179.7$63$37.4$77.4$67.2$13.3$27.8$34.0$84$25.3Total Costs$678.3$366.3

Costs stated in Billion's of Dollars

Clients of 3PL Providers

Services Provided By 3PLs

Source: Armstrong and Assoc 2004

Top 3PL Providers Est. Rev. (M)

Rank (2003)Provider Revenue1Excel8,3002Kuehne & Nagel6,9003Schenker6,4004DHL5,7005P&O Nedlloyd4,800

For a Successful 3PL

Develop an Outsource StrategyMeasure PerformanceCreate a Project Plan / Road Map

Source3PL definition:http://accuracybook.com/glossary.htmTop 10 3PL providers:http://www.inboundlogistics.com/3pl/awards.shtmlSuccessful 3PL implementation:http://logistics.about.com/od/thirdparty/a/uc041805a.htmSangam, VK. (2006). Implementing Third Party Logistics. Retrieved May 5th, 2006. From Massey University, About Business and Finance website:http://logistics.about.com/od/thirdparty/a/uc041805a.htmRed Prairie:http://www.redprairie.com/Industry%20Solutions/Third%20Party%20Logistics.aspxClass lecture slides:http://logistics.about.com/od/thirdparty/a/uc041805.htm

CILT uk

Logistics and Transport Focus Magazines

Many 3PLs grow from a single discipline, but the buyers want turn key, multi functional capabilities. It is no longer valuable to simply manage the truck linehaul. 3PLs are supply chain managers who move and monitor goods from Asia to Alpheretta, GA, managing cost, service and information, every step of the way. Source Armstrong and AssociatesThis list of 10 ten providers is interesting in that Ryder may be the largest but their revenues are not from trucking alone. Excel is dominent in the warehouse and value added area, but they must also package the movement of goods from start to finish. While UPS may be the largest carrier in the shipping business, they are not the largest 3PL