NIls Peters 4PL: The Evo lu t i on o f Supp ly Cha in Ou t sou rc ing

Fourth Party Log i s t i c s : The Evo lut ion o f Supply Chain Outsourc ing
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4PL: The Evo lu t i on o f Supp ly Cha in Ou t sou rc ing

Out l ine
1 . Outsourc ing: Thi rd Party Logi s t i c s W hy outsourc ing Outsourc i ng log i s t i c s funct ions , but which? 2 . Fourth Par ty Log i s t i c s(4PL) Def in i t ion Example 3 types o f4PL

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4PL: The Evo lu t i on o f Supp ly Cha in Ou t sou rc ing

Out l ine
3 . Techno logy in t he next generat ion of Supply Chain Out sourc ing 4 . Supply Cha in Value Propos i t ion Revenue Enhancement Operat ing Cos t Reduct ion W orking Capi ta l Reduct ion Fixed Capi ta l Reduct ion 5 . Potenti a l s and Cons tra ins
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4PL: The Evo lu t i on o f Supp ly Cha in Ou t sou rc ing

1 . Outsourc i ng: Third Par ty Log i s t i c s W hy outsourc ing

Advantages expected from outsourcing

Share risks Make capital funds available Improve company focus Increase productivity and efficiency Gain resources not available Improve Customer service Reduce Operating Costs 0% 10% 20% 30% 40% 50% 60% 70% 80%

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4PL: The Evo lu t i on o f Supp ly Cha in Ou t sou rc ing

2 . Fourth Party Log i s t i c s Def in i t ion

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4PL: The Evo lu t i on o f Supp ly Cha in Ou t sou rc ing

2 . Fourth Party Log i s t i c s Example

4PL only work wirth interlectual capital and computers Birds eye view of supply chain to seek integration to minimize inventory costs to improve efficiency and to reduce lead times
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4PL: The Evo lu t i on o f Supp ly Cha in Ou t sou rc ing

2 . Fourth Party Log i s t i c s 3 Types o f 4PL

Synergy Plus operating model Solution Integrator model Industry Inovator model

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4PL: The Evo lu t i on o f Supp ly Cha in Ou t sou rc ing

2 . Fourth Party Log i s t i c s 3 Types o f 4PL

Synergy Plus operating model Partnership between 4PL 3PL to market supply chain solutions Capabilities and market reach of both partners are combined The 4PL provides: technology, supply chain strategy skills, capability to go to market, and program management expertise
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4PL: The Evo lu t i on o f Supp ly Cha in Ou t sou rc ing

2 . Fourth Party Log i s t i c s 3 Types o f 4PL

Solution Integrator model

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

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4PL: The Evo lu t i on o f Supp ly Cha in Ou t sou rc ing

2 . Fourth Party Log i s t i c s 3 Types o f 4PL

Industry Innovator model

4PL develops and runs a supply chain solution for multiple industry players with focus on sychronization and collaboration this model provides the greatest benefits, however it is complex and a great challange

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4PL: The Evo lu t i on o f Supp ly Cha in Ou t sou rc ing

Technology

3 . Techno logy i n the next generat ion of supply cha in outsourcing

Outsourcing logistics functions requires intensified communication and information exchange between the parties involved. This virtual business environment enables companies to optimize forecasting, order processing, production and distribution collaboratively with suppliers and service providers in the sense of integrated supply chain management.

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4PL: The Evo lu t i on o f Supp ly Cha in Ou t sou rc ing

4 . Supply cha in va lue propos i t ion

The key distinction between 4PL and current approaches to supply chain outsourcing is a unique ability to deliver value to client organizations across the entire supply chain.

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4PL: The Evo lu t i on o f Supp ly Cha in Ou t sou rc ing 4 . Supply cha i n va lue propos i t ion Revenue Enhancement Profitability Enhancement

Supply Chain Value Enhancement Invested Capital Reduction

Operating Cost Reduction Working Capital Reduction Fixed Capital Reduction

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4PL: The Evo lu t i on o f Supp ly Cha in Ou t sou rc ing

Revenue Enhancement

Revenue Enhancement

Profitability Enhancement Operating Costs Reduction Supply Chain Value Enhancement

Driven by enhanced product quality, availability and improved cutomer service

Working Capital Reduction Invested Capital Reduction Fixed Capital Reduction

With the 4PL focusing on the entire supply chain dramatic customer service improvements can be attained.

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4PL: The Evo lu t i on o f Supp ly Cha in Ou t sou rc ing

Revenue Enhancement

Operating Costs Reduction

Profitability Enhancement Operating Costs Reduction Supply Chain Value Enhancement

Driven through operational efficiencies, process enhancement and procurement savings

Working Capital Reduction Invested Capital Reduction Fixed Capital Reduction

Savings will be reached through economies of scale by outsourcing the complete supply chain.

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4PL: The Evo lu t i on o f Supp ly Cha in Ou t sou rc ing

Revenue Enhancement

Working Capital Reduction

Profitability Enhancement Operating Costs Reduction Supply Chain Value Enhancement

Realized through inventory reductions and reduced order to cash times

Working Capital Reduction Invested Capital Reduction Fixed Capital Reduction

The proactive use of technology to manage orders throughout the pipeline will minimize the amount of inventory required

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4PL: The Evo lu t i on o f Supp ly Cha in Ou t sou rc ing

Revenue Enhancement

Fixed Capital Reduction

Profitability Enhancement Operating Costs Reduction Supply Chain Value Enhancement

Will result from capital asset transfer and enhanced asset utilization (by shifting the supply chain to the 4PL)
This will allow the client to invest in its core competencies.

Working Capital Reduction Invested Capital Reduction Fixed Capital Reduction

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4PL: The Evo lu t i on o f Supp ly Cha in Ou t sou rc ing

Benefits of the 4PL Concept Improved customer service

5 . Potent ia l s and cons tra i ns Benef i t s

Reduced capital requirements Economies of Scale Increased flexibility Manufacturers can focus on core competencies Reduced Supply Chain costs Combines the advantages of in- and outsourcing
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4PL: The Evo lu t i on o f Supp ly Cha in Ou t sou rc ing

Problems of the 4PL Concept

5 . Potent ia l s and cons tra i ns Problems

Loosing sight of original core-concept of SCM due to loss of controll Customer relationships should not be dismissed on basis of efficiency Resistance to change the biggest obstacle to implementation of new approaches Strict functional organization structure hinders integrated Supply Chains
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4PL: The Evo lu t i on o f Supp ly Cha in Ou t sou rc ing

Presentation by Nils Peters

e-Business Seminar Prof. Dr. H. H. Siedentopf University of Applied Sciences Hamburg Resources soon available at:

Discussion

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