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Third Party Logistics Providers (3PL)

Third Party Logistics Providers (3PL). Kyle Sera Amy Irvine Scott Andrew Carrie Schmidt Ryan Lancaster . Overview. What are 3PL’s Why use them Tips for implementation of 3PL’s 4PL’s. Types of 3PL Providers. Transportation Based

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Third Party Logistics Providers (3PL)

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  1. Third Party Logistics Providers (3PL) Kyle Sera Amy Irvine Scott Andrew Carrie Schmidt Ryan Lancaster

  2. Overview • What are 3PL’s • Why use them • Tips for implementation of 3PL’s • 4PL’s

  3. Types of 3PL Providers • Transportation Based • Services extend beyond transportation to offer a comprehensive set of logistics offerings. • Leveraged 3PLs use assets of other firms. • Non-leveraged 3PLs use assets belonging solely to the parent firm. • Examples: Ryder, Schneider Logistics, FedEx Logistics, UPS Logistics

  4. Types of 3PL Providers • Warehouse/Distribution Based • Many have former warehouse and/or distribution experience. • Examples: DSC Logistics, USCO, Exel, Caterpillar Logistics, IBM

  5. Types of 3PL Providers • Forwarder Based • Very independent middlemen with forwarder roles. • Non-asset owners that provide a wide range of logistics services. • Examples: AEI, Kuehne & Nagle, Fritz, Circle, C. H. Robinson, Hub Group

  6. Types of 3PL Providers • Financial Based • Provide freight payment and auditing, cost accounting and control, and tools for monitoring, booking, tracking, tracing, and managing inventory. • Examples: Cass Information Systems, CTC, GE Information Services, FleetBoston

  7. Types of 3PL Providers • Information Based • Significant growth and development in this category of Internet-based, business-to-business, electronic markets for transportation and logistics services. • Examples: Transplace, Nistevo

  8. Logistics? • Logistics: Managing the flow of information and goods inbound from suppliers and outbound to customers. • Why be good at this? • Core competency?

  9. Why Use 3PL’s? • Save time • Don’t need to invest in: • Trucks • Training • Development • Help expand • New markets • International • No roads

  10. Why Use Cont. • Narrow your focus • Allows you to focus on your strengths • Don’t get spread too thin • Reach more customers more effectively • Can ensure delivery times • can help a company run leaner

  11. Management Focus • Furthering your company • Consider potential benefits and drawbacks • 3pl’s can increase profitability • Can you be a 3PL to someone else?

  12. Levels of Outsourcing • Transactional Outsourcing: Based on transactions, with no long term contracts and no bonding between the 3PL and the outsourcing company. • Tactical Outsourcing: Outsourcing on a long term basis with negotiated contacts and integrated IT systems to facilitate free information flow and create supply chain visibility. • Strategic Outsourcing: Based on long-term relationships with successful outcomes, 3PL companies become partners in supply chain management and establish transactional transparency.

  13. 3PL Defined • Can be ambiguous as there are many definitions • Some say “all or a significant part” • Some say “at least one part” • Best definition is probably a combination: • Businesses that provide one or many of the following logistics services: • Transportation Management • Public/Contract Warehousing • Distribution Management • Freight Consolidation

  14. As a Manager…Which 3PL Provider Do I Choose? • Inbound Logistics recognizes top 10 • Uses its readers to conduct vote • Over 300 companies nominated with 3,000+ votes • Top 3 this year: • 1) UPS Supply Chain Solutions • 2) Schneider Logistics • 3) C.H. Robinson

  15. How is a 3PL Differentiated From a Transportation Provider? • Transportation provider gets product from point A to point B • Could be considered a 3PL • Just one function of logistics • 3PL provider assists in multiple functions

  16. Successful Implementation of 3PL • Why you want to select the right provider the first time • Only about 65% of companies believe their provider is doing a “good” job. • 55% of logistics outsourcing contracts end in 3-5 years • The source had a list of 14 key tips for success, but we are going to focus on the 5 most important issues.

  17. Tips for Successful Implementation 1) Have an outsourcing strategy. • Know what your outsourcing strategy is. It needs to be well thought out and measured against in house solutions and capabilities. • SWOT analysis. As a company you should understand the strengths, weaknesses, opportunities and threats of outsourcing logistics, rather than keeping them in house. 2) Do your homework. • Do a comprehensive study • Clearly document advantages, challenges, costs and benefits. • Document expectations • Set down expectations in clear terms and include current costs.

  18. Tips Continued… • Create a robust selection process. • Invite companies in to give a formal presentation without giving requirements. This can help document their strengths and weaknesses. • Make a site visit to the 3PL, and talk with its existing customer. 3)Measure and review performance • Have a efficient and accurate measurement system. • Qualitative measures that focus on effectiveness and quantitative measures that focus on efficient utilization. • Have an efficient costing system • This will help you to understand the costs involved in outsourcing. • “Are we making money doing this?”

  19. Tips Continued… 4) Create an Implementation Strategy • Create a project plan road map • Be clear who does what, create a project management team with members from both organizations and review progress vs. planned milestones. 5)Nurture the Relationship • Both Parties must nurture the relationship to make outsourcing successful. • Create mutual trust, respect and a sense of integrity.

  20. 4PL Providers • Manage and direct the activities of multiple 3PLs, serving as an integrator • Refinement on the idea of 3PLs • 4PLs are not asset based like 3PLs • Assembles and manages the resources, capabilities, and technology of its own organization and other organizations to design, build and run comprehensive supply chain solutions

  21. Transways Express 4PL • One stop transport and logistics supplier • Work with suppliers and customers

  22. Questions?

  23. Sources • 3PL definition: http://accuracybook.com/glossary.htm • Top 10 3PL providers: http://www.inboundlogistics.com/3pl/awards.shtml • Successful 3PL implementation: http://logistics.about.com/od/thirdparty/a/uc041805a.htm • Sangam, 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.htm • Red Prairie: http://www.redprairie.com/Industry%20Solutions/Third%20Party%20Logistics.aspx • Class lecture slides: http://logistics.about.com/od/thirdparty/a/uc041805.htm

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