International Logistics &

3PLs

Contents

Basics of International Logistics

Trends in International Logistics
Case Study

International Logistics Basics

Definition:
that part of the supply chain process that
plans, implements, and controls the efficient &
effective flow and storage of goods, services,
and related information from the point of
origin to the point of consumption in order to
meet customers requirements.

International Logistics Basics

Why is international Logistics necessary?

- Reducing Cost
- Improving Service (adding value for
customers)
- Competitiveness in Globalization

Positive result of a liberal market?

Difference int. Logistics &

SCM
Logistics:
Focuses on transportation and storage of materials and final
goods
The 7 Rs: ensuring the availability of the right product, in the right
quantity and the right condition, at the right place, at the right time,
for the right customer, at the right cost
SCM:
Also includes the management of supplier and customer relations

International Logistics Basics

The key to making a companys international
Logistics work is information -> how can this
information in an MNE be provided and supervised?

International Logistics Basics

EDI (Electronic Data Interchange)

- standardized format & structure to exchange documents
and financial flows
ERP (Enterprise Resource Planning)
- every process of a company can be exercised via one
integrated Information System (SAP, Baan, Oracle, MBS
Navision Axapta)
e-Commerce / e-Procurement / Intranet
Enterprise Portals for managing & controlling the flow and
storage of goods from any place & at any time (part of ERP,
or at least directly linked)

International Logistics Trends

Government Trade Facilitation Systems

- new trade facilitation systems support
globalization of internat. Logistics
Singapore -> trade permitting system allows traders to fill out one single
form, a mainframe system routes form to 18 different agencies.
Estimated savings for Traders: $ 1 billion per year
Mexico -> Computerization reduced steps for Traders from 12 to 4.
Numbers of operations at 1 entry point from U.S. increased from 800 to
1200. The processing time was reduced from 3 days to 20 minutes!!
Estimated savings for Traders: $ 2 billion per year

Globalization & Logistics

Globalization drives Logistics outsourcing

Public and private companies are offering logistic
services
Complex business needs require specialization in
logistics (eg. hazardous cargo)
Companies doing business globally can benefit from
outsourcing their logistics and supply-chain
management needs
Logistics is becoming an important source of revenue
for MNEs (IBM offers IT Outsourcing since 1990, now
shifting to logistics, takeover of PWC in 2002)

International Logistics - Trends

The extended Enterprise

Total real time connectivity between extended Enterprise
Partners

Global Third Party Logistics Providers

(3PL)
-

avoid costs in IT-Systems and warehouse capacity

greater market leverage (air, ocean and surface transport)
volume purchasing discounts through aggregating its
shipment
base with those of the Providers other clients
higher flexibility in meeting customer needs because of
access
to
more diverse channels

eLogistics = web based logistic portals which seek to

bring together shippers, 3PLs and other interested parties
to provide more effective collaboration

Logistics Outsourcing
3PLs

The 3PL market will grow 5 to 10 times faster in the

next decade then the traditional freight forwarding
market
3PLs include:
Engineers, business consulting, materials handling,
material specific skills, change management, business
modelling, IT and management consulting

3PL Trends

of MNEs use 3PLs

Most important feature of 3PLs is RFID (radio frequency
identification) e.g.. Wal-Mart, US Dep. of Defense

3PL Trends

3PL Pros & Cons

+
+
+
+

downsizing to core business

longer experience in internat. Logistics
reduce cost of ownership
increase flexibility

Lack of core knowledge during outsourcing

process
open, honest communication necessary
Giving up of internal control of a business
function and trusting others

Case Studies
Examples of 3 PLs and
Business Solutions

FILA / KUEHNE+NAGEL
(K+N).

Situation.

Increasingly complex supply chain ( Incr.

markets, product line and clients);
Centralised supply chain management;
PB:

delays and inaccuracy in customer order;

Lack of visibility;
Variety of product/services= additional
complexities.

FILA / KUEHNE+NAGEL (cont 1.).

K+N Solutions: Re-engineering

supply chain model.

optimising transportation, merging

shipment;
Improve inventory management and
services;
Web-based data and documentation
collection;

FILA / KUEHNE+NAGEL (cont 2.).

Results.

Flexibility and visibility: forward planning;

Cutting costs and increase space
utilisation;
Adapting standard operating procedures
to local requirements;
Build a direct info exchange with partners;
Automating massive amount of
documentation.

XEROX / K+N.

Situation: Xerox need 3PL

Manage 6 of its District Parts Centres

(DPCs);
Mobilise and assume operational control
of the 6 DPCs
Provide accurate and reliable delivery of
parts to engineers;
Maintain and improve defective material
processing time at the DPCs

K+ N solutions:

Minimise service disruptions;

Focuses on staff retention;
Process improvement;

XEROX / K+N (cont. 1).

Results:

Improved service/shipping performance;

Reduce order cycle time;
Seamless logistics solutions

CARREFOUR / PENSKE

Situation:

To centralise logistics network;

Improve order accuracy;
Reduce inventory;
Increase stock assortment

CARREFOUR / PENSKE (Cont.1)

Penske Solutions:

New distribution facilities;

Warehouse technologies;
Load planning

CARREFOUR / PENSKE (Cont.2)

Results:

Single system:

ordering and shipping;

Manage inventory flow
Incr. supply chain visibility

Deliver value: company, store, consumer

level;
Reduce distribution costs;
Reduce delivery delays;
Increase variety of products for stores.

General Motors Mexico

(GMM)/ Penske.

Situation:

3 locations: Pb

Individual logistic decisions;

Lack of collaborations;
Complex transportation Network.

General Motors Mexico (GMM)/ Penske

(Cont.1)

Penske Solutions:

New procedure for inbound transportation

network;
Logistics management system software;
Establish accountability, procedures and
measures for GMM.

General Motors Mexico (GMM)/ Penske

(Cont.2)

Results: (in the 3 plants)

Transportation costs decr. 15%;

Increase visibility throughout the supply
chain;
Reduce inventory and freight premium
costs;
Increase delivery of damage-free parts;
Decrease carrier base from 100 to 20
carriers.

Thanks!

Bibliography

Logistics and the Extended Enterprise, S. Boyson

TRANSPORT AND COMMUNICATIONS BULLETIN FOR ASIA AND THE PACIFIC,
Report of UN
Freight and Logistics, Dablanc, L. Gart
The Role of Logistics in Stimulating Economic Development, The World Bank,
M.H. Juhel
Structuring Logistics Activities In Multinational Companies (MNCs), Yong Gao
Business Intelligence and Logistics, Srinivasa Rao P.
Supplier partnership essential to make new logistic concept work G. Butschek
Latin American booming Logistics, InfoAmericas Report 10-06-2004
Shaping tomorrows Logistics The Air Force Journal
http://logistics.about.com/b/a/117614.htm
http://www.fool.com
http://www.manufacturing.net
http://usco.kuehne-nagel.com
http://www.penskelogistics.com/casestudies/gm.html
http://www.penskelogistics.com/casestudies/carrefour.html