Lesson 5 – Unit 2

1. Lesson 5 – Unit 2 Mgr. Erika Konupčíková 2011/2012

2. Situation at Logistics market • The reduction of trade barriers, both on the domestic as well as international front,has led to a rapid growth of the logistics market throughout the world. Items such as Swiss cheese, Chinese gadgets and Italian fashion goods that were earlier limited only to the place of manufacture have now crossed the geographical boundaries to take their place in the international market. • Nowadays the manufacturers feel free in outsourcing and adding value to the functions performed by logistics much above the normal functions of delivery, warehousing, storage and distribution of goods. Globalisation

3. Situation at Logistics market • Global logistics management is considered to be highly integrated and therefore requires a thorough knowledge of materials management, customs regulations, foreign exchange, purchasing, supply-chain management, transportation and information technology. • This trend is quite visible throughout Americas and Europe and is slowly getting its importance in Asia Pacific countries like China and India. • These days the logistics manager assumes one of the most important and complex jobs in the organization. The profitability of a business, along with consistent levels of customer satisfaction depends to a great deal on the skills of the logistics manager. • Developed nations like the United Kingdom and the United States already have strong logistics policies and are keen to outsource from China, India and Asia-Pacific due to the cost factor. Competition

4. New trends in Logistics • Supply Chain Integration • Flexibility and Speed – Complex services of Logistic companies • Optimization Technologies – Intermodal transport, JIT JIS • Growth and expansion of 3PL and 4PL services • Track and Trace Capabilities • Collaborative Logistics • Reverse Logistics

5. Supply Chain Integration • Supply chain management is the systematic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole (Mentzeret al., 2001).

6. Collaborative logistics • Collaborative logistics is said to be achieved when two or more organizations enter into a partnership for the purpose of optimization of operations related to transportation by sharing of equipment, vehicles, information or carriers to reduce the costs and overcome situations when the carrier that contains their concerned shipment is almost empty or at less-than-usual capacity. It is also beneficial for controlling inventories and thereby eliminating stock-outs that are likely to impact customer service. • This approach to logistics is slowly and steadily becoming the perfect choice to doing business for many organizations formerly involved inthe traditional logistics approach. • win – winapproach

7. 3PL • 3PL is defined as a firm thatprovides logistics services for customers. Preferably, these services are integrated, complexor bundled together. • Among the services 3PLs provide are transportation, warehousing, cross-docking, inventory management, packaging, and freight forwarding. • Third-party logistics providers include freight forwarders, courier companies, as well as other companies integrating & offering subcontracted logistics and transportation services • Standard 3PL provider: this is the most basic form of a 3PL provider. They would perform activities such as, pick and pack, warehousing, and distribution– the most basic functions of logistics. • Service developer:offer their customers advanced value-added services such as: tracking and tracing, cross-docking, specific packaging, or providing a unique security system. • The customer adapter: this type of 3PL provider comes in at the request of the customer and takes over complete control of the company's logistics activities. The 3PL provider improves the logisticsprocesses, but do not develop a new service. • The customer developer: this is the highest level that a 3PL provider can do with respect to its processes and activities. The 3PL provider integrates itself with the customer and takes over their entire logistics function. These providers will have few customers, but will perform extensive and detailed tasks for them. Hertz and Alfredsson (2003)

8. 4 PL • Arrangement in which a firm contracts out (outsources) its logistical operations to two or more specialist firms (the third party logistics) and hires another specialist firm (the fourth party) to coordinate the activities of the third parties. • Nowadays advisors, consultants, software companies and even 3PLs lay claim to being a 4PL. This is because any company advising a customer on logistics, transportation, and supply chain matters feels it may somehow claim to be a 4PL. This is effectively the case only when the principle of neutrality is respected, and that any conflict of interest is avoided. • A fourth-party logistics provider must also offer services considering a 360 degree view, which is not focused on its ability to implement the recommendations it gives, but on all the options available in the market. • A 4PL is a consultant, and cannot be an operator (3PL).This is to respect the principle of neutrality. Typicalpure and neutralfourth-party logisticsproviders • SCMO, CPCS, BMT, Deloitte, LOC, Capgemini, 3t Europe, Morpheus, GL Noble Denton, Brookes Bell, T&MC, GlobalMaritime, WSL Procurus Ltd, AMA - Andrew Moore & Associates, and Accenture.

9. Value added services PanalpinaValue-AddedLogisticsServices Nexus Value-AddedLogisticsServices Kitting& FinalAssembly Polybagging & ShrinkWrapping Pick/Pack Labeling Facilities • ordermanagement • vendormanagedinventorycapabilities • repacking • kitting • specialisedlabelling • reverse logistics • swap service • cleaning and disposal management • returnablepackaging management