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arun palanisamyI MBA, TNAU. 15/28/2014
arun palanisamyI MBA, TNAU. 2
1.Logistics outsourcing
2. Third party logistics
3.fourth party logistics
4.Difference betwe...
arun palanisamyI MBA, TNAU. 3
Logistics is the management of the flow of goods between the
point of origin and the point o...
arun palanisamyI MBA, TNAU. 45/28/2014
Outsourcing - Industry Trends
Avoid Capital Expenditures
Increase Flexibility (service/financial)
Focus on Core Business
I...
arun palanisamyI MBA, TNAU. 65/28/2014
Third-party logistics
(3PL) involves using external organizations to execute logistics
activities that have traditionally ...
The evolution of 3PL market is explained with reference to three distinct
phases
In 1980's many transportation and warehou...
arun palanisamyI MBA, TNAU. 95/28/2014
Service
Category
Basic Service Some specific value
added services
Transportation Inbound, outbound by
ship, truck, rail, a...
Services Provided By 3PL’s
arun palanisamyI MBA, TNAU. 115/28/2014
Hertz and Alfredsson (2003) describe four categories of 3PL
providers
Standard 3PL Provider: this is the most basic form o...
Service Developer: this type of 3PL provider will offer their
customers advanced value-added services such as:
tracking a...
The Customer Adapter:
arun palanisamyI MBA, TNAU. 145/28/2014
1. integrated logistics service provider
2. contract-based service provider
3. consulting service provider
3PL (or 3PL pro...
 Asset-based - provider owns some assets, particularly transport-
related assets such as trucks, warehouses, etc.,
 Non-...
Buyers of 3PL Services
Customer # of 3PL’s Used
General Motors 37
Wal-Mart Stores 33
Ford Motor, HP 27
Procter & Gamble 20...
arun palanisamyI MBA, TNAU. 185/28/2014
arun palanisamyI MBA, TNAU. 195/28/2014
arun palanisamyI MBA, TNAU. 205/28/2014
The partnership between Ryder Dedicated Logistics and
GM Saturn division is a good example of 3PL. Saturn
focuses on autom...
 3PL is more complex than normal outsourcing of logistics activates
.When speaking of 3PL a true partnership condition is...
The concept of a fourth-party logistics (4PL) provider was first
defined by Andersen Consulting as an integrator that asse...
arun palanisamyI MBA, TNAU. 245/28/2014
arun palanisamyI MBA, TNAU. 255/28/2014
Synergy Plus operating model
Solution Integrator model
Industry Innovator model
arun palanisamyI MBA, TNAU. 265/28/2014
1. Partnership between 4PL – 3PL to market supply chain solutions
2. Capabilities and market reach of both partners are co...
Core Model: 4PL operates comprehensive supply chain
solutions for a single client.
 Solution encompasses resources,
 cap...
 4PL develops and runs a supply chain solution for multiple industry
players with focus on synchronization and collaborat...
 Procurement
 Storage
 Distribution
arun palanisamyI MBA, TNAU. 30
4pl providers
UPS,
CMA
CGM
5/28/2014
arun palanisamyI MBA, TNAU. 31
1.Higher order-to-delivery cycle times, and order-to-cash cycles that are
increasing in len...
3.Global growth, more inventory in more places, and a shifting
revenue recognition point. Companies often lack the ability...
 Economies of Scale
 Reduced Supply Chain costs
 Increased flexibility
 Combines the advantages of in- and outsourcing...
 Loosing sight of original core-concept of SCM due to loss of
control
 Customer relationships should not be dismissed on...
 An example here would be a bicycle importer. The main function is to
import bicycles however, they need to have spare pa...
Difference between 3PL and 4PL
FPL differs from TPL in several respects
 FPL organization is often a joint venture betwee...
 ALL THECOMPANYS WOULD LIKE TO PROVIDE AN BETTERTHING IN
BETTERMANNER TO STABLIZE AND INCREASE THEIR EFFECTIVENESS AND
EF...
Thank uarun palanisamyI MBA, TNAU. 38
The supply chain integration The raise of 4pl : gail dutton
Third party logistics by...
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3patry and 4 party logistics

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3patry and 4 party logistics

  1. 1. arun palanisamyI MBA, TNAU. 15/28/2014
  2. 2. arun palanisamyI MBA, TNAU. 2 1.Logistics outsourcing 2. Third party logistics 3.fourth party logistics 4.Difference between the TPL and FPL. 5/28/2014
  3. 3. arun palanisamyI MBA, TNAU. 3 Logistics is the management of the flow of goods between the point of origin and the point of consumption in order to meet some requirements. information flow, material handling, production, packaging,  inventory,  transportation,  warehousing, and often security 5/28/2014
  4. 4. arun palanisamyI MBA, TNAU. 45/28/2014
  5. 5. Outsourcing - Industry Trends Avoid Capital Expenditures Increase Flexibility (service/financial) Focus on Core Business Improve Service Lack of Scale Acquire Talent Avoid Labor Problems Cut Costs Source: A.T. Kearney Findings of a Survey : Why company's Outsource arun palanisamyI MBA, TNAU. 55/28/2014
  6. 6. arun palanisamyI MBA, TNAU. 65/28/2014
  7. 7. Third-party logistics (3PL) involves using external organizations to execute logistics activities that have traditionally been performed within an organization itself. arun palanisamyI MBA, TNAU. 7 For example, if a company with its own warehousing facilities decides to employ external transportation, this would be an example of third- party logistics. 5/28/2014
  8. 8. The evolution of 3PL market is explained with reference to three distinct phases In 1980's many transportation and warehousing firms developed into 3PL providers ( e.g. Exel Logistics and Frans Maas ) In the early 1990's firms that specialized in express parcel deliveries entered the markets ( e.g. DHL, TNT , UPS and FedEx ) In the late 1990's , companies originally specializing in financial services , I.T. services and management consulting entered the market by developing competence in information systems and supply chain planning arun palanisamyI MBA, TNAU. 85/28/2014
  9. 9. arun palanisamyI MBA, TNAU. 95/28/2014
  10. 10. Service Category Basic Service Some specific value added services Transportation Inbound, outbound by ship, truck, rail, air Track/trace, mode conversion Warehousing Storage, facilities management Cross-dock, in-transit merge, inventory control Information technology Provide and maintain advanced information systems Transportation management systems, warehousing management Reverse logistics Handle reverse flows Recycling, customer returns, repair/refurbish Other 3PL services Customs brokering, hazardous material, order taking, consulting, port services, etc. 5/28/2014 10arun palanisamyI MBA, TNAU.
  11. 11. Services Provided By 3PL’s arun palanisamyI MBA, TNAU. 115/28/2014
  12. 12. Hertz and Alfredsson (2003) describe four categories of 3PL providers Standard 3PL Provider: this is the most basic form of a 3PL provider.  pick and pack, warehousing, distribution arun palanisamyI MBA, TNAU. 125/28/2014
  13. 13. Service Developer: this type of 3PL provider will offer their customers advanced value-added services such as: tracking and tracing cross-docking specific packaging unique security system Service Developer arun palanisamyI MBA, TNAU. 135/28/2014
  14. 14. The Customer Adapter: arun palanisamyI MBA, TNAU. 145/28/2014
  15. 15. 1. integrated logistics service provider 2. contract-based service provider 3. consulting service provider 3PL (or 3PL provider) has the following features at present arun palanisamyI MBA, TNAU. 155/28/2014
  16. 16.  Asset-based - provider owns some assets, particularly transport- related assets such as trucks, warehouses, etc.,  Non-asset-based -does not own such assets, and usually relies on sub-contractors arun palanisamyI MBA, TNAU. 165/28/2014
  17. 17. Buyers of 3PL Services Customer # of 3PL’s Used General Motors 37 Wal-Mart Stores 33 Ford Motor, HP 27 Procter & Gamble 20 General Electric 17 Georgia Pacific, IBM 16 PepsiCo, Sears 13 Coca-Cola, Sara Lee, Target, Xerox 12 General Mills 11 Delphi, Safeway 10 GREATER THE NUMER OF COMPONENTS INVOLVED IN MANUFACTURING MORE 3PL ACTIVITES WILL BE OUTSOURCED Source : international logistics arun palanisamyI MBA, TNAU. 175/28/2014
  18. 18. arun palanisamyI MBA, TNAU. 185/28/2014
  19. 19. arun palanisamyI MBA, TNAU. 195/28/2014
  20. 20. arun palanisamyI MBA, TNAU. 205/28/2014
  21. 21. The partnership between Ryder Dedicated Logistics and GM Saturn division is a good example of 3PL. Saturn focuses on automobile manufacturing and Ryder manages most of Saturn other logistics considerations. Ryder deals vendors, delivers parts to the Saturn factory and delivers finished vehicles to the dealers . Saturn Orders parts using Electronic Data Interchange ( EDI ) and sends same information to Ryder. Ryder makes all the necessary pickups from 300 different suppliers in the U.S., Canada and Mexico using special decision-support software to effectively plan routes to minimize transportation costs. arun palanisamyI MBA, TNAU. 215/28/2014
  22. 22.  3PL is more complex than normal outsourcing of logistics activates .When speaking of 3PL a true partnership condition is usually assumed because  Strategic nature of services purchased  Buyer of 3PL realizes that synergies can be achieved by exploiting the logistics provider distinct competencies TPL vs OTHER ACTIVITIES arun palanisamyI MBA, TNAU. 225/28/2014
  23. 23. The concept of a fourth-party logistics (4PL) provider was first defined by Andersen Consulting as an integrator that assembles the resources, planning capabilities, and technology of its own organization and other organizations to design, build, and run comprehensive supply chain solutions. fourth-party logistics (4PL) arun palanisamyI MBA, TNAU. 235/28/2014
  24. 24. arun palanisamyI MBA, TNAU. 245/28/2014
  25. 25. arun palanisamyI MBA, TNAU. 255/28/2014
  26. 26. Synergy Plus operating model Solution Integrator model Industry Innovator model arun palanisamyI MBA, TNAU. 265/28/2014
  27. 27. 1. Partnership between 4PL – 3PL to market supply chain solutions 2. Capabilities and market reach of both partners are combined 3. The 4PL provides: Technology supply chain strategy skills capability to go to market by program management expertise arun palanisamyI MBA, TNAU. 275/28/2014
  28. 28. Core Model: 4PL operates comprehensive supply chain solutions for a single client.  Solution encompasses resources,  capabilities and  technology of the 4PL with complementary service providers arun palanisamyI MBA, TNAU. 285/28/2014
  29. 29.  4PL develops and runs a supply chain solution for multiple industry players with focus on synchronization and collaboration  This model provides the greatest benefits, however it is complex and a great challenge arun palanisamyI MBA, TNAU. 295/28/2014
  30. 30.  Procurement  Storage  Distribution arun palanisamyI MBA, TNAU. 30 4pl providers UPS, CMA CGM 5/28/2014
  31. 31. arun palanisamyI MBA, TNAU. 31 1.Higher order-to-delivery cycle times, and order-to-cash cycles that are increasing in length. Order-to-cash cycles affect other areas of the company and can be one big area where improvement can free up cash for important enterprise initiatives such as research and development 2.The need and demand for IT resources. Lack of IT infrastructure to support an expanding global supply chain can inhibit growth. 5/28/2014
  32. 32. 3.Global growth, more inventory in more places, and a shifting revenue recognition point. Companies often lack the ability to generate substantive supply chain performance improvement on their own. 4.Global expansion. Companies wanting to get into markets they have not been in before need flexible, effective supply chain processes to be successful SOURCE: Carl Fowler, senior director of operations, and leader of Menlo Logistics’ 4PL practice arun palanisamyI MBA, TNAU. 325/28/2014
  33. 33.  Economies of Scale  Reduced Supply Chain costs  Increased flexibility  Combines the advantages of in- and outsourcing  Manufacturers can focus on core competencies  Improved customer service  Reduced capital requirements arun palanisamyI MBA, TNAU. 335/28/2014
  34. 34.  Loosing sight of original core-concept of SCM due to loss of control  Customer relationships should not be dismissed on basis of efficiency  Strict functional organization structure hinders integrated Supply Chains  Resistance to change – the biggest obstacle to implementation of new approaches arun palanisamyI MBA, TNAU. 345/28/2014
  35. 35.  An example here would be a bicycle importer. The main function is to import bicycles however, they need to have spare parts for these unique bikes. A 4PL would manage the total logistic operations for the spare parts business. arun palanisamyI MBA, TNAU. 355/28/2014
  36. 36. Difference between 3PL and 4PL FPL differs from TPL in several respects  FPL organization is often a joint venture between a primary client and one or more partners;  FPL organization acts as a single interface between the client and multiple logistics service providers;  The major part, of the client's supply chain is outsourced to the FPL organization. arun palanisamyI MBA, TNAU. 365/28/2014
  37. 37.  ALL THECOMPANYS WOULD LIKE TO PROVIDE AN BETTERTHING IN BETTERMANNER TO STABLIZE AND INCREASE THEIR EFFECTIVENESS AND EFFECIENCY IN THIS COMPETITATIVE WORLD arun palanisamyI MBA, TNAU. 375/28/2014
  38. 38. Thank uarun palanisamyI MBA, TNAU. 38 The supply chain integration The raise of 4pl : gail dutton Third party logistics by C. John Langley Jr., Ph.D. Logistics outsourcing and selection of third party logistics service provider (3pl), erdal çakir 2009. Fourth party logistics a study of modern logistics Paulo Bragança 2009 http://www.cquential.co.za/industries/3pl-4pl/ REFERENCE 5/28/2014
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