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Definition of logistic. Definition of 3PL. Objectives of 3Pl. Advantages and Disadvantages of 3PL. Key Drivers of 3PL. Services provided by 3PL. 4th Party logistic. How 4th party differs from 3pl. 4 PL set up Role of 4PL Future of 4Pl. Conclusion.
LOGISTICS
Logistic is the flow of goods, services, information, etc from point of origin to the point of consumption (at a specified time ) to meet the requirement of consumers. It involves integration of information , transportation, inventory, ware housing, material handling, packaging and occasionally the security. Logistic is the channel of supply chain which adds the value of time and place utility.
Third-party Logistics is simply the use of an outside company to perform all or part of the firms materials management and product distribution function.
-- Simchi-Levi
OUTSOURCED OPERATION
FIRMS
TRANSPORTATION
WAREHOUSE
FIRMS FIRMS
IN-HOUSE LOGISTIC FIRMS IN-HOUSE LOGISTIC FIRMS DEPARTMENT IT SUPPORT OTHERS
3PL
IT SUPPORT
SC INTEGRATION
OTHERS
WAREHOUSE
TRANSPORTATION
OBJECTIVES OF 3PL
Reduction in Risk and Liability. Value added services to Customers. Source of process improvement. Wider market coverage.
80% 70% 60% 50% 40% 30% 20% 10% 0% North America Western Europe Asia-Pacific Latin America
2006 2009-2011
Advantages
Reduction in Logistic Cost By 7 to 10% Reduction in Logistic assets By 20 To 25%. Reduction of the order cycle time. Focus on core competency Improved efficiency, service and flexibility Industry-specific application buildto-order systems and e-merchants.
Drawbacks of 3PL
Still requires top management's time to manage relationships & resources Unable to cover full range of SC requirements e.g. logistics information, tech development... Lack of shared goals... Loss of control. Impact on in-house workforce
Core Competencies of 3PL Provider Cost of 3PL Services Information Handling Capability / Compatibility Breadth of Services Provided Past Experience of your Industry Technological Competencies of the Provider System Flexibility & Capacity Safety & Insurance Cover / Programs Geographical Location & Spread Company Reputation Responsiveness & Service Quality Management Structure & Quality of Workforce
It is outsourced for a total cost effective and time effective supply chain activities. It provide service for both forward and Reverse logistic. Aware of rule of the country in in total global scenario . Perfection about visibility of the consignment with knowledge domain of GPS , RFID , etc. Awareness of IMO codified hazardous Goods . Aware of EPA and Green planet (environment protection act.
WEBSITE
ONLINE BANKING
DISTRIBUTION CHANNEL
INWARD STORES
GLOBAL SUPPLIER
Indigenous Supplier
LOCAL SUPPLIER
F.G STORES
FINAL ASSLY
3PL Providers
O R G A N I Z A T I O N
3PL Providers
4PL Provider
IT Service Providers
3PL Providers
Models of 4PL A) Lead logistics provider: The 4PL provider acts as an in house freight management company, it might or might not have a role in the selection of 3 PL partners. It takes care of transport invoicing and the monitoring of the performance of the 3 PLs. B) Solution Integrator: In this variant of the model, the 4PL acts as the integrator of various 3PLS and as a single window for freight negotiations, 3PI selection and freight management on behalf of its client. C) Industry Innovator: Under this model the 4PL uses its expertise and resources to create a solution not for any single client, but for offering 4PL services to a number of clients in an industry.
Insourcing
The 4PL organization is often separate entity established as a joint venture or long term contract between a primarily client and one or more partners. It acts as single interface between the client and multiple logistics service providers. All aspects of the clients supply chain are managed by the 4PL organization. It is also possible for a major 3PL provider to form a 4PL organization within existing structure
4PL Set-up
Primary Client Contribution
Start-up equity Assets Working capital Operational expertise Operational staff
Primary Client's)
Partners Contribution:
Set-up equity Logistics strategy IT development Customer service management Supplier management Logistics consultancy Best practices
4PL Organization
Partners
Hiring of Freight Forwarders and Custom House Agents in cases of exports and imports. Doing all the above for multiple clients to reduce the cost to individual manufacturing organizations. Hiring the services of 3PL agencies
Understand the transport/handling needs within the premises of the manufacturing organization and outsourcing these to small transporters.
Advantages of 4pl.
Additional benefits.
-provision for supply chain accountability for achieving desired performance , -the provider assumes risk on behalf of the user in return for a share of profit.
2. TECHNOLOGY - Global positioning system - Swipe card system - Bar coding -Packaging 3. IT - Specialized software's (e.g.. Fleet Management) -Tailor-made software's. 4. STATUTORY INFORMATION - Road permits - Central Govt./ State Govt. taxation - Overloading rules - Pollution control rules
5. REFERENCE DOCUMENTS - Cabot age laws - Service tax manuals - Concor manuals -ICD/ CFS manuals 6. All other information regarding host of related subjects - Banking and bill discounting - Financing - Warehousing
CONCLUSION
55% companies use 3PL services in India one form or the other compared to 75% globally 3PL And 4pl are the future, should be seen as a support to corporate growth Close to 60 % of 55% uses transportation and custom clearing & forwarding Of the rest 45%, 75% do not use 3PL services because they are not sure of providers capability Company should focus on outsourcing 3PL services like inventory management, order processing, labeling & packaging and reverse logistics Use of IT in 3PL services is very low both by user and provider
3PL and 4PL providers feel that Users are unwilling to share information Do not show commitment towards the relationship. Do not want to share rewards Do not show interest in continuing the relationship Contracts are used more to avoid risks rather than to develop relationship Today in India, the 3 PL concept is getting established, the 4 PL agencies are just coming up and 5 PLs are on the horizon.