Questions

Submitted to:

Mr. Zeeshan Khan

Group Members:

Junaid Khalid 19205

Syed Ali Kazmi 14157

Anam Sabar 18032

Natasha Nasir 20466

Dated: 09-Jan-2015
Question # 1

Outsourcing, in general, has been a hot topic in worldwide business for the past several years.
And the debate only heats up when the outsourcing discussions start focusing on supply chain
functions.
One of the most important reasons why companies outsource their logistics functions is the need
to decrease the number of warehouses, vehicles and excess inventories and to reduce shrinkage,
and labor costs. Such moves bring down fixed and working capital investment. Companies can
therefore focus on their core business activities and share the risks.

1PL: First Party Logistics

A first-party logistics provider (1PL) is a firm or an individual that needs to have cargo, freight,
goods, produce or merchandise transported from a point A to a point B. The term first-party
logistics provider stands both for the cargo sender and for the cargo receiver.
A 1PL can be a manufacturer, trader, importer/exporter, wholesaler, retailer or distributor in the
international commerce field. It can also be institutions such a government department or an
individual or family removing from one place to another. Anyone having goods moved from
their place of origin to their new place is considered to be first party logistics provider. First
party logistics accounts for the two parties benefiting from the transaction, but mainly the
vendor/supplier. A First party logistics provider is specifically the consignor of goods, the
transaction party that has organized transport to the receivers chosen destination.

2PL: Second Party Logistics

Second party logistics involve specifically the carriers of goods for the transaction, which can be
rail, road, sea and/or air. A second party logistic provider specializes in the transport area of the
supply chain, getting goods from one point to another. A second-party logistics provider (2PL) is
an asset-based carrier, which actually owns the means of transportation They can be an asset
based carrier and own the means of transportation, for example shipping lines which charter or
lease their own ships, or airlines that are contracted to use their passenger flights to transport air
freight from origin A to destination B.

3PL: Third Party Logistics

Third Party Logistics still primarily concerns goods transportation from a supplier/consigner to a
buyer/consignee, but includes additional services involved in the supply chain. These services
can include warehousing, terminal operations, customs brokerage, supply chain management, IT
analysis and track and trace.
Third party Logistics Provider (3PL) performs logistics services on behalf of another company.
3PLs provide the management skills along with the physical assets, labor, and systems
technology to provide professional logistics services, relieving companies of the responsibility of
performing these services themselves. 3PL's typically can provide transportation, warehousing,
pool distribution, management consulting, logistics optimization, freight forwarding,
transportation management, rate negotiations, cost evaluations, and contract management
services.
3PL is the function by which the owner of goods outsource various elements of the supply chain
to one 3PL company that can perform the management function of the clients inbound freight,
customs, warehousing, order fulfillment, distribution, and outbound freight to the clients
customers. 3PL is a service provider who gives service for one or more portfolios of services in
stand alone or integrated manner with own or leased or contracted assets or services. A 3PL can
also be described as a contract logistics service provider who manages inventory/material flow
between companies and encompasses all processes and activities a 3PL logistics provider
supplies all or some of these services and manages the obligations of each party from goods
departure to destination. For example, BCR is a 3PL service provider specializing in freight
forwarding and customs brokerage, but also provides e-fulfillment services, warehousing and
other supply chain management services for your business.
4PL: Fourth Party Logistics

Information technology plays a key role in logistics and supply chain management. In fact
logistics integration, which is a complex exercise, is completely dependent on IT support. Third
party logistic suppliers provide logistics solutions to clients on the basis of their domain
knowledge they have acquired over the years. 4 PL companies provide logistics solutions built
around the domain knowledge provided by third party logistics companies.Thus 4 PLs have
emerged out of the vacuum created by 3PLs.

Fourth party logistics is essentially employing an overseer for a company’s entire or certain parts
of the supply chain, while also managing 3PL’s that are already in place. They must have an
integrated electronic interface system that address the requirements of all logistic sections and
allow measurement of established KPIs. Fourth party logistics providers act as the head
administrator for all or some aspects in the supply chain of a company. They manage any other
contracted 3PLs and provide neutral management, feedback to the company about the state of
their supply chain, recommendations and solutions to increase efficiency. In saying this, a larger
3PL can also become a company’s overarching 4PL or display the same characteristics as a 4PL
player today.

Fourth Party Logistics (4PL) is the integration of all companies involved along the supply chain.
4PL is the planning, steering and controlling of all logistic procedures (for example flow of
information, material and capital) by one service provider with long term strategic bobjectives.
Fourth party logistics (4PL) has evolved as a breakthrough supply chain solution
comprehensively integrating the competencies of third party logistics (3PL) providers, leading
edge consulting firms and technology providers. 4 PLs see the process and what is required for
the process to succeed. A 4PL is a supply chain manager & enabler who assemblies and manages
resources, build capabilities and technology with those of complimentary service providers. They
act as the first point for delivering unique and comprehensive supply chain solutions. 4PL
leverages combined capabilities of management consulting and 3PLs. They act as an integrator
assembling the resources, capabilities, and technology of their own organization and other
organizations to design, build and run comprehensive supply chain solutions. 4 PL is an
emerging trend and it is a complex model and offers greater benefits in terms of economies of
scale.

5PL: Fifth Party Logistics

Much the same as 4PLs, and a new term circulating within the supply chain industry. They plan,
organize and implement logistics solutions on behalf of the contracting company. They have
widespread end-to-end tracking of containers which allow customers and the contractor to
receive constant updated information on the container shipment process. Essentially, a 5PL
manages networks of supply chains with an extensive e-business focus across all logistic
operations, other than 3PLs and the parent company. A fifth party logistics provider (5PL) will
aggregate the demands of the 3PL and others into bulk volume for negotiating more favourable
rates with airlines and shipping companies.

Non asset based, it will work seamlessly across all disciplines. A fifth party logistics provider
(5PL) will aggregate the demands of the 3PL and others into bulk volume for negotiating more
favorable rates with airlines and shipping companies. Non asset based, it will work seamlessly
across all disciplines. A fifth party logistic service provider guarantees the management of
networks of supply chains. The industrial actor hires third parties for the supply of strategic,
innovative logistical solutions and concepts. A fifth party logistic service provider develops and
implements, preferably in close consultation with the client, the best possible supply chains or
networks. Fifth party logistic is often linked to E-business.
Uses

Most small businesses buying and selling in the same location are 1PL. As the Business expands
geographically, the manufacturer’s logistics border grows, a 2PL provider is generally a
commodity capacity provider, such as a trucking company or a warehouse operator, a 2PL
provides service for a single or a small number of functions in the supply chain. They face low
returns, with high levels of asset intensity but low barriers of entry. Next come the distributors,
who through a dense network or legislative protection have achieved higher returns, albeit on a
sizeable cost base. Examples are the express parcel operators that charge premium pricing for
timely delivery, and the postal operators.

With the increasing demand for one-stop solutions, many 2PLs have evolved into 3PLs by
adding new logistics capabilities and integrating their operations. It may or may not involve asset
ownership. 3PL is a broader term that is frequently used to cover businesses in freight
forwarding or contract logistics. It performs all or a large portion of a client’s supply chain
logistics activities and its value adding is based on information and knowledge versus a non
differentiated transportations service at the lowest cost. 3PL tends to be asset light with high
returns. The 4PL provider is essentially a logistics integrator or a one-point contact for the
manufacturer’s logistics outsourcing requirements.
They are responsible for contracting various 2PL and 3PL providers, and for assembling and
managing those end-to-end solutions. The 4PL provider, with its complete overview of the
supply chain as well as strong logistics and IT capabilities, can also offer high value added
advisory services to the manufacturer.

Examples

1PL or First Party Logistics: A First party logistics provider is a company or an individual that
need a product to be transported from a point A to a point B.

Example: Company A needs its product to be transported to the company B. They are both 1PL.

2PL or Second Party Logistics: A Second party logistics provider specializes in one particular
area of the supply chain, usually transporting goods from one point to another. This company
owns the means of transportation.

Example: Company A delivers company´s B merchandise with its own means of transportation,
Company A is a 2PL. DHL or UPS are 2PL.

3PL or Third Party Logistics: A Third party logistics provider is a company that can be used to
satisfy most or all the logistics needs of a company. Things that can be outsourced are
transportation, warehousing, packaging, distribution and so forth. 3PL companies usually hold
and transport goods without actually owning them.

Example: Company A outsources part or all its logistics to a Company B which takes care of the
whole process. Company B is a 3PL. Agility Logistics is a 3PL.
4PL or Forth Party Logistics: A Fourth-party logistics provider don´t necessarily provides
logistics services itself but rather gives advice and solutions to other companies regarding their
logistics. This service might include the use of multiple 2PL and 3PL providers to build and run
the most successful supply chain solutions

Example: Company A advises Company B to use Company C for their supply chain and logistics
needs, Company A is a 4PL. For example Deloitte and Accenture are 4PL.

Question #2

PAK STEEL MILL CONVEYOR BELT

The Longest Conveyor belt system in Pakistan

Conveyor Belt Weighing Scales (Online weighing of raw materials Transported through
conveyor be transported through conveyor belts. Maximum weighing capacity is 1000 capacity
is 1000tones/hours.) Tones/hours.)

Conveyor belt of Pak Steel Mill has a start from Pak Steel which is Point “A” and its unloading
point where the conveyor belt ends is PORT QASIM which is Point “B”. Length of conveyor
belt system in Pak steel mill is almost 80 km