1、Third-party Logistics,2,Services Offered by Third-party Providers,Basic Service Providers warehouse management order processing order fulfilment transportation carrier selection Value-added Service Providers: shipment/order consolidation import/export customs logistics information systems (EDI, repo
2、rting) fleet management/operations (e.g. cross-docking) product assembly/installation Logistics Integrators: full responsibility for key supply chain operations replenishment/order-filling policies product returns customer spare parts inventory replenishment rate negotiation,Contract Warehousing,Bul
3、k Warehouse,Distribution Center,Incoming Products,Customers Retailers,Outsourced,In-house,Activities: Labor & supervision Receiving, storage, shipping Value Added Services Traffic/transportation,Benefits: Lower capital investment Lower fixed/variable cost ratio Focus to the core Professional service
4、,Supplier Hub / Regional Fulfillment Center / Regional Distribution Center,Bonded Warehouse,Mfg site/ Point of Use,Incoming Materials Or Products,Outsourced,Activities: Same as contract warehouse Customs clearance Freight consolidation Shipment visibility Inventory ownership Order fulfillment Value
5、Added Services,Benefits: Lower capital investment Focus to the core Delayed payment of duties and taxes Pay (for material) on production Visibility of pipeline inventory,Shipment Consolidation and Transportation,Consol. Center,Point of Sale/ Point of Use/ Customers,Incoming Materials Or Products,Out
6、sourced,Activities: Transport arrangement Customs clearance Freight consolidation Shipment visibility Carrier mgmt / rate mgmt Merge in transit,Benefits: Shorter cycle time Lower freight costs Visibility of pipeline inventory Inventory consolidation,De-con Center,Customs,Product Returns / Technical
7、Services,Product Return Center,Repair centers,Customers,Outsourced,Activities: Testing / screening Warranty program mgmt Inventory ownership Warehousing and inv mgmt Fulfillment Depot repair mgmt,Benefits: Centralization of inventory Lower capital investment Focus to the core Reduced reverse logisti
8、cs costs Speedy response to customers,OEM Warranty Fulfillment,Critical Parts / Service Parts Logistics,Repair centers,Customers,Outsourced,Activities: Failed parts replacement Warranty program mgmt Inventory ownership Warehousing Depot repair mgmt Visibility and Track&Trace,Benefits: Centralization
9、 of inventory Lower transportation cost Improved visibility of inventory Lower capital investment Better after-sales service support,OEM Warranty Fulfillment,Logistics Financial Services,Manufacturers,Distributors,Supplier,Customers / Retailers,Activities: Inventory finance (factoring, LOC) Distribu
10、tion finance (asset basedlending, receivable finance) Payment solutions (COD) Leasing,Benefits: Reduced cost of capital Improved cash flow Reduced capital investment,Total Logistics Management,Bulk Warehouse,Distribution Center,Incoming Products,Customers Retailers,Outsourced,Activities: Logistics p
11、lanning Network optimization 3rd vendor mgmt Information technology Supply chain visibility,Benefits: Reduced total logistics costs Global visibility Single logistics solution and contact Focus to the core Reduced investment in logistics,10,Benefits of out-sourcing the logistics function,improve com
12、pany focus focus on core functions and core competencies cash infusion selling assets to 3PL provider access to world-class capabilities and new technology free-up resources no capital investments in logistics resource not available internally accelerated reengineering benefits reduce and control op
13、erating costs eliminate labor problems pushes risk to 3PL provider risk pooling cost of investment in technology by 3PL provider shared among clients achieves economies of scale and provides better service,11,Risks of Out-sourcing Logistics,Co-ordination costs Loss of internal logistics management c
14、apabilities Biased choice of service providers Leakage of sensitive data and information Service degradation Less reliable? Longer order cycle time? Emergency response? Loss of control and representation Reduced contact with final customer 3PL for outbound logistics interact with your customers, you
15、 become less visible to your customers,12,Why 3PL can achieve economy of scale & provide better service?,Consolidation is the key!,Example: 2 independent firms, 2 independent supply chains,Consider 2 scenarios,Scenario 1: The firms performs their own logistics functions,Scenario 2: A 3PL takes care
16、of both firms logistics functions,Firm 1,Firm 2,Firm 1,Firm 2,2 warehouses 2 separate distribution networks,1 warehouse 1 distribution network,3PL, Zhi-Long Chen,Shareholder Value,Revenue,Cost,Working Capital,Fixed Capital,Profit,Invested Capital,Service, Retention & market share,Cost of Goods Sold
17、Technology & Productivity Transportation/Warehousing/ Materials Handling/Distribution,Fewer physical assetsWarehouse, trucks,Transportation,Lower Raws & Finished Goods Inventory Shorter “Order to Cash” cycles,Value Propositions of 3PL,3PL Business Models,Transactional model Carriers per shipment, pe
18、r container unit, per weight / volume unit Freight forwarders per shipment, per weight / volume unit Public warehouse operators per weight / space area unit Contract logistics model Activity-based costing, i.e., Fixed management fee + variable charges based on volume Or, cost plus Or, gain sharing m
19、odel Total logistics management Fixed management fee + variable charges based on volume Or, cost plus Or, gain sharing model,CEO Perspectives on 3PL Industry,Industrys most significant revenue generators (ranked in order) Transportation management/services Warehousing management/operations Value add
20、ed services Dedicated contract carriage Fleet management/operations Logistics information services Top 3 most important opportunities in the industry Further integration of supply chain activities Transportation management Further information systems development,Source: Transport Logistics, Vol. 1,
21、No. 1, pp51-66 (1996),Globalisation,4-th Party Logistics,Challenges of 3PL,Setting up internal benchmarks and performance measures before finding a 3PL partner Development of appropriate and sustainable pricing systems Developing an interactive and collaborative partner relationship IBM: no more out
22、sourcing, but “optimized sourcing”Finding qualified people Development of systems which are flexible, adoptable and user-friendly Development of a global logistics infrastructure,17,Ten building blocks for a successful 3PL relationship,Carefully develop internal costs Develop key performance indicat
23、ors Seek broad company inputs at the Request for Proposal (RFP) stage Solicit multiple RFPs Only select the services you really need Make sure that you understand the technology issues before you sign a contract Prepare to change your assumptions after the start-up Avoid cost-plus contracts Find out
24、 if the cultures are similar Dont give up complete control of your supply chain,Source: Survey of Fortune 500 manufacturers by Accenture and Northeastern University.,European Logistics Market,Source: Deutsche Bank,Global Logistics Expenditures,Size of 3PL Industry In 1999, around $40-45 Billion 5% o
25、f the total logistics expenditures In US, the growth rate for 3PL market is estimated around 15% annually,Source: Bowersox and Calantone, CSFB Estimates.,11.4% of Global GDP,From Modern Material Handling, Nov. 2003,21,Major 3PLs,Source: Logistics Magazine (07/00),Major 3PL Operators in USA,Airborne
26、Americold APL Logistics Arnold BAX global Burnham Services Corp. Caterpillar Logistics Services Circle International Cardinal DSC Logistics Eagle Global Logistics EXEL Logistics, Inc. Expeditors Federal Express Logistics Services J.B. Hunt Logistics, Inc. HUB Group Logistics Services Leaseway Logist
27、ics Services, Inc.,Maersk Logistics Menlo Logistics North American Penske Logistics Power Roadway Logistics Systems C.H. Robinson Company Ryder Dedicated Logistics Schneider Logistics Standard T& B TLC TNT Contract Logistics, Inc. UPS Logistics USF Logistics USCO Distribution Services Yellow Logisti
28、cs Services, Inc.,Source: CSFB Industry Report, Sept. 2000, Zhi-Long Chen,23,93 companies Covering automotive, chemical, computer, consumer products, & electronics 52% with sales revenues over $1B, 10% between $500M to $1B,How many companies use 3PL?,From “3PL Study: Results and Findings of 2001 Ann
29、ual Study” by Cap Gemini Ernst & Young, Zhi-Long Chen,24,What 3PL functions do companies use?,From “3PL Study: Results and Findings of 2001 Annual Study”by Cap Gemini Ernst & Young, Zhi-Long Chen,25,Benefits of 3PL,From “3PL Study: Results and Findings of 2001 Annual Study”by Cap Gemini Ernst & Youn
30、g,26,Ten Top reasons Companies Outsource,Source: Fifth Annual Outsourcing Index Deloitte Consulting, January 2003,Leading Global Air Freight Forwarders 1998,Source: Stinnes, MergeGlobal, IATA figures and Deutsche Bank,Leading Global Sea Freight Forwarders 1998,Source: Stinnes and Drewry,29,Growth of
31、 3PL Industry,In US, the growth rate for 3PL market is estimated around 15-20% annually. In Asia and the rest of the world, the growth rate is estimated to be even higher in the range of 20-30% annually. China: 2001 Transport and logistics expenditure is US$230 billion (20 % of GDP), with only $4.7
32、billion on outsourcing. Key factors for stimulating growth: Increased operations of multi-national firms in China Cost pressures Government support in establishing national logistics centres Reduced regulations; Chinas entry to WTO,30,Mercers 3PL Survey in China (2002),20 logistics providers and 50
33、shippers in 8 sectors 85% of providers revenue comes from basic services such as transportation, management and warehousing Nearly 70% of providers believe clients are not ready for outsourcing, while almost half of the shippers surveyed cite obstacles for outsourcing, especially 3PL service quality
34、 The market is very fragmented: No 3PL provider interviewed has a market share over 2%. About 80% of providers revenues come from the Yangtse River and Pearl River Delta regions MNC shippers prefer MNC providers for their IT systems, industry/operational expertise, and standardized operations Chines
35、e shippers prefer Chinese providers for their lower prices, local knowledge and national network coverage,Hong Kong Logistics Industry and Major Local Players,Container throughput in 2001: 17.9 million TEUs Air cargo throughput in 2001: 2.1 million tonnesMajor Local 3PL Players OOCL and Cargo System
36、s Kerry Logistics Jardine Logistics IDS Logistics Seapower Resources Intl SUN Logistics LINE Power Logistics TradePort,Some Major Chinese 3PL Players COSCO China Shipping SinoTrans EAS China Merchant,10/6/2018,36,Course Review Topics Covered,37,Topics Covered,Introduction to logistics management wha
37、t is logistics management importance of logistics management Supply Chain Structures Modularization, postponement Strategic orientation: market, product or process focussed Site competence vs. process technology complexity Transportation strategy Transport modes and cost components Tradeoffs in tran
38、sportation design Transportation costs vs. inventory Transportation costs vs. responsiveness and service Transportation Network Design Pros and Cons of Direct Ship, centralized DC, etc.,38,Vehicle routing and scheduling Shortest path Dijkstras algorithm Travelling salesman problem Heuristics Vehicle
39、 routing Clarke-Wright savings methods Gillette & Millers Sweep Method Generalized Assignment Model for Vehicle Routing Set Partitioning Model for Vehicle Routing Optimization-based heuristics techniques Full truckload vs. LTL,39,Location strategy factors to consider quantitative models for analysis
40、 Center of Gravity Method Heuristics p-median problem, p-center problem network optimization models Location-allocation models supply chain network design: selective evaluation heuristic, guided linear programming, multi-echelon multi-product networks Covering models other approaches Regression anal
41、ysis Factor rating system, Delphi method AHP dynamic location models,40,Process Choice and Facility layout strategy Process flow analysis Critical Path method Process types: project, job, batch, line Layout planning Product vs. process layout Assembly line balancing CRAFT (Computerised Relative Allo
42、cation of Facilities Technique) Systematic Layout Planning Matching products and processes Storage and Material Handling Order picking Warehouse layout and stock location Cross docking,41,Global logistics Drivers and challenges How leading edge companies manage logistics New organizational paradigm
43、for the supply chain of the future E-logistics Internet impact on logistics E-logistics services; market opportunities Achieving Strategic Fit Competitive dimensions: cost, quality, speed, flexibility Order qualifiers and order winners Efficient vs. responsive supply chains Benchmarking the supply c
44、hain Supply chain mapping and throughput efficiency Supplier and distributor benchmarking Supply Chain Operations Reference Model (SCOR),42,E-fulfilment Online retailing Bricks-&-mortar stores vs. e-tailers Acceptance Sampling (not covered in the final) E-procurement On-line auctions and exchanges Quick response logistics Apparel industry and Quick Response Grocery industry and Efficient Consumer Response Automotive industry and Lean Manufacturing Reverse logistics 3rd party logistics Services offered Benefits and risks, Growth and challenges 3PLs in China,
