Contents : Definition

3PL , 4PL

3PL Service offering

Logistics cost estimates in India

Why 3PL Value Proposition to the Customers

3rd party Logistics Provider (3PL):

functions across multiple links in logistics chain. The company thus acts as a third party facilititator between seller/manufacturer (the first party) and buyer/user (second party).

A 3PL provider is a company which supplies/coordinates logistics

4th party Logistics Provider (4PL):

An integrator that assembles the resources, capabilities and

technology of its own organisation and other organisations to design, build and run comprehensive supply chain solutions.
The role of the lead logistics provider is knitting together for a

manufacturer or distributing company the services of various transportation and warehousing companies and third-party service providers

4PL Lead Logistics Service Provider Super Manager

3PL Services Moving up in Value Chain

Primary Transportation Transportation

Kitting Repacking Stickering & labeling Cycle count Inspection & Designing Quality check WH / Depot Mngt. inventory policy Sales tax & WH Design Order processing Excise registration WH & Secondary Demand Mngt. & Return filing Inbound JIT Documentation Banking Hubbing & MIS transaction

4 PL / Consulting Logistics audit Logistics process design Logistics Performance improvement projects Integrated Logistics service (ILS)

Transportation Related

Warehouse Related

Inventory Management

Value Added Services Physical & Financial

Solution Development / Consulting

3PL Services : 1. Integrated Logistics Service / Outsourcing 2. Solution Development / Consulting 4PL / Consulting - Solution Design/Projects Logistics audit Logistics Process Design - for confirmation ot ISO, Corporate governance guidelines ) Logistics performance improvement projects, using Six Sigma Methodology (DMAIC)

3. Transportation Related
Primary Transportation Secondary Transportation

4.Warehouse Related Warehouse / Depot Management Warehouse Design Warehousing & Secondary Inbound - JIT Hubbing

5.Inventory Management Designing inventory policy, Cycle count Demand Management ,Order processing Distribution Planning & Execution Documentation & MIS
6.Physical Value Added Services Kitting,Repacking Stickering and labeling Repair center Inspection / quality checking Smart courier

7.Financial Value Added Services COD (Cash on Delivery),Banking transactions Sales tax and Excise Registration and return filing 8.IT / IS Value Added Services Operation Software's - WMS / IMS Decision Support Software's Software Package evaluation and Selection Software Vendor / Developer evaluation and Selection Software Design 9.Vehicle Tracking Solution 10.EXIM Related Steve dooring Custom clearance Cargo Consolidation CHA , CFS

Opportunities Unlimited Logistics Cost Estimates In India

Others 6% Losses 14% Transportation 35%

Warehousing & VAS 20% Inventories 25%

Source : CMIE, Published data / ET Knowledge series

Importance of 3PL Services to the Service Provider

low

high

Value Proposition to the Customer :

Cost reduction

Improved service levels

Reduced capital and assets Concentration on core business Improved service quality by adopting best practices Increased flexibility

Have a matured & understanding partner to

handle and innovate non-core activities

Defining Contract Logistics

Drivers of Logistics Outsourcing Debt reduction Strategic focus of ... Financial resources Human resources Information technology Competition Faster (agility) Better (quality) Cheaper (low cost provider)

Investment Rationing

Defining Contract Logistics

Advantages Disadvantages Switching costs Unseen hidden costs Less customer contact

Less asset investment

Lower operating costs Focus on core competence Gain management skills Provide higher service level

Increased flexibility
Entry mode to new markets

Dependency
Loss of control

Implementation
Steps to Outsourcing Strategic decision to outsource Determine the first impact area clearly Define the objectives of outsourcing activity Supplier selection process Contractual issues Work the project Review the operating plan and budget Implementation plan Frequent feedback - CIP Partnering