Logistics outsourcing

1. ARAB ACADEMY FOR SCIENCE, TECHNOLOGY & MARITIME TRANSPORT Institute of International Transport and Logistics Logistics Outsourcing • By Marwan Bahgat Supervised by: Prof. Dr.Islam Al-Naqeeb

2. Chapter 1 Logistics and Supply Chain Management Logistics and supply chain definition • Logistics Management • Supply Chain Management (CRM) • Deference between logistics and supply chain

5. Chapter 1 Logistics and Supply Chain Management Conclusion • Logistics management is only an integral portion of supply chain but this is vary between organizations • We can say the supply chain and logistics is two terms if they combined in one sentence diverged in the meaning and vise versa • Finally, SCM is a business philosophy that enables individual companies and channel partners to achieve high levels of productivity, profit and growth.

6. Chapter 1 Logistics and Supply Chain Management Importance of logistics • Logistics as a percentage of GDP

7. Chapter 1 Logistics and Supply Chain Management Importance of logistics • Profit impact of logistics cost saving

8. Chapter 1 Logistics and Supply Chain Management Importance of logistics • Logistics Customer service Expectations Are Increasing • Supply and Distribution Lines Are Lengthening with Greater Complexity • Supply chain Is Important to Strategy

11. Chapter 1 Logistics and Supply Chain Management Case Study vs.

12. Chapter 1 Logistics and Supply Chain Management Importance of logistics • Supply Chain Adds Significant Customer Value • Supply chain provides competitive advantages • Supply chain Shifts in Channel Power

15. Chapter 1 Logistics and Supply Chain Management The main supply chain role and activities • Customer Service • Demand Forecasting • Inventory management • Materials Handling • Order Processing • Packaging

16. Chapter 1 Logistics and Supply Chain Management The main supply chain role and activities • Plant and Warehouse Site Selection • Parts and Service Support • Procurement • Reverse Logistics • Traffic and Transportation • Warehousing and Storage

17. Chapter 1 Logistics and Supply Chain Management Integration of logistics activity

18. Chapter 1 Logistics and Supply Chain Management Logistics activity Trade-offs • Inventory vs. Customer Service • Inventory and economies of scale • Going green in the supply chain

21. Chapter 2 Logistics Outsourcing Logistics Outsourcing Definition Key Element: • Deciding to obtain selected, recurring, non-core goods and services previously provided internally, from outside the company • Finding outside providers and new ways to secure the delivery of raw materials, goods, components and services, by • Utilizing the knowledge, experience, creativity and facilities or capabilities of new providers not used previously, thus • Handing over or transferring the planning, management and operation of certain functions to an independent third party, and • Using formalized agreements/contracts and payment.

22. Chapter 2 Logistics Outsourcing The development of the outsourcing concept • “Smaller is beautiful” concerns over conglomeration and vertical integration • The rise and rise of core competence thinking • The emergence of outsourcing as a key business practice • Primary supply chain outsourcing

26. Chapter 2 Logistics Outsourcing Why Outsourcing?

27. Chapter 2 Logistics Outsourcing Benefits of Business Process Outsourcing • Best in Class Capabilities • Better Use of Company Resources • Reduce Operating Costs • Reduce Business Risk • Company Lacks Necessary Resources

32. Chapter 2 Logistics Outsourcing Levels of logistics outsourcing • In-house logistics • Logistics service provider (LSP) • Third party logistics (3PL/TPL) • Fourth party logistics (4PL/FPL) • Fifth party logistics (5PL)

37. Chapter 2 Logistics Outsourcing IMPACT OF OUTSOURCING LOGISTICS Advantages of Logistics Outsourcing • Cost Reduction • Service and Technology Improvement • Strategic Flexibility • Capital Investment Saving • Focus on Core Competency • Sharing and Reducing Risks

38. Chapter 2 Logistics Outsourcing IMPACT OF OUTSOURCING LOGISTICS Disadvantages of Logistics Outsourcing • Loss of Control over the Supply Chain • Minimization of Cost Awareness • Lack of Improvement and Innovative Ability • Human Resource not adjusted to the new environment

39. Chapter 2 Logistics Outsourcing Logistics Outsource Process • System Takeover • Joint Ventures • System “Spin-off” • Management-only Contract

43. Chapter 2 Logistics Outsourcing SUCCEED IN LOGISTICS OUTSOURCING • Making the Decision • Evaluating the Operations and Developing Criteria and Objective • Making the List and Sending Letters • Beginning the New Partnership

44. Chapter 2 Logistics Outsourcing Myths of Logistics Outsourcing • If the outsourcing does not work you can always bring the activity back • The smartest people in the game work in 3PL • The smartest people in the game work on the customer side • Once you outsource, you can relax and let them handle all the work

45. Chapter 2 Logistics Outsourcing Myths of Logistics Outsourcing • If the outsourcing does not work you can always bring the activity back • The smartest people in the game work in 3PL • The smartest people in the game work on the customer side • Once you outsource, you can relax and let them handle all the work

46. Chapter 2 Logistics Outsourcing Myths of Logistics Outsourcing • It’s an equal win-win partnership • Your logistics service provider is responsible for their own mistakes • Lock it in a contract and squeeze the last penny out of your logistics service provider

47. Chapter 3 Procurement Outsourcing Introduction

48. Chapter 3 Procurement Outsourcing What is Procurement Outsourcing? Benefits of Procurement Out sourcing Procurement Outsourcing Disadvantage Procurement Outsourcing Risks

49. Chapter 3 Procurement Outsourcing Procurement Outsourcing Scope • Transactional Buying and Settlement • Measurement and Development • Selection and Contracting • Sourcing Strategy Development

53. Chapter 3 Procurement Outsourcing Implementation Implementation Approach • Consult, fix and outsource • Consult, outsource and fix

54. Chapter 3 Procurement Outsourcing Implementation key prerequisites for maximizing success • Managing risks due to reduced control over the process • Managing continuity of service delivery • Managing personnel and process transition issues

55. Chapter 3 Procurement Outsourcing Implementation key prerequisites for maximizing success • Managing technology integration issues • Managing expectations and consensus (HR, IT, Legal & Finance) • Joint governance and service innovation board • Measuring success

56. Chapter 3 Procurement Outsourcing Implementation Evaluating and selecting a procurement service provider (PSP) selection criteria • Category expertise • Sourcing Process Methodology • Operational Excellence • Experience and Customer References • Financial stability

57. Chapter 3 Procurement Outsourcing Future Growth • 45% pressures to lower procurement transaction costs • 41% increased global competition • 36% need to gain access to improved pricing • 34% pressures to re-focus personnel on more strategic activities.

58. Thank You Prepared by Under supervision of Prof. Dr. Islam Al Naqeeb Marwn Bahgat

Logistics outsourcing

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