www.emil.gatech.edu




                          WELCOME

      Moderator                              Speaker




    Dr...
www.emil.gatech.edu




For More Information

 Webinars
  −   Latin American Logistics Excellence – May 18, 2006
       • ...
www.emil.gatech.edu




“Tenth Annual Third Party Logistics Study:
       Views from the Customers”
         C. John Langl...
www.emil.gatech.edu




       Webinar Agenda

Introduction and 10-Year Perspective
Logistics Outsourcing Practices
3PL Se...
www.emil.gatech.edu




Introduction and 10-Year Perspective




                                       5
www.emil.gatech.edu




Tenth Annual Third Party Logistics Study Research Objectives

                                    ...
www.emil.gatech.edu




Industry Segments and Response Rates and Geographies Studied

        7.0%                       8...
www.emil.gatech.edu




Special 3PL Workshops and Focus Group Sessions

  Key Sessions Held With Industry Executives
   − ...
www.emil.gatech.edu




Factors Perceived Important by
Logistics Executives, 1996-2005

                              1996...
www.emil.gatech.edu




Logistics Outsourcing Practices




                                  10
www.emil.gatech.edu




Factors Responsible for Decision to Use 3PL Provider

                                            ...
www.emil.gatech.edu




Number of 3PL Providers Used
                                                   82
          80
  ...
www.emil.gatech.edu




Current (2005) vs. Projected (3-5 Years) Logistics
Expenditures Directed to Outsourcing

     100%...
www.emil.gatech.edu




Non-User Respondents:
Rationale for Not Using 3PL Services

          Logistics is a Core Competen...
www.emil.gatech.edu




3PL Service Offering and Capabilities




                                        15
www.emil.gatech.edu




  Outsourced Logistics Services
  (North America Results – 2005)
                                 ...
www.emil.gatech.edu




 Technology Enablement




                         17
www.emil.gatech.edu




3PL Technology Expectations and Perceptions

100                                                  ...
www.emil.gatech.edu




Management and Relationship Issues




                                     19
www.emil.gatech.edu




3PL Provider Roles

                                         3PL’s Mostly thought of as
        80...
www.emil.gatech.edu




 Two-Tiered Relationship Structure
Relationship             Relationship       Traditional        ...
www.emil.gatech.edu




Customer Value Framework




                           22
www.emil.gatech.edu




Customer Evaluation of Outsourcing Success

  100%



  80%



  60%



  40%



  20%



   0%
  ...
www.emil.gatech.edu




Quantifiable Measures of 3PL Success

                                       North         Western...
www.emil.gatech.edu




Areas for 3PL Provider Improvement


  Service level commitments not realized
  Time and effort sp...
www.emil.gatech.edu




 Future Industry Trends




                          26
www.emil.gatech.edu




Next Generation of Logistics Outsourcing Models

                              Key Attributes     ...
www.emil.gatech.edu




Future Industry Trends

Continued expansion, acquisition    Increased efforts to update,
and conso...
www.emil.gatech.edu




         Thank You Very Much !!!

“Tenth Annual 2005 Third Party Logistics Study:
         Views f...
www.emil.gatech.edu




                        For More Information


Webinars
 −   Latin American Logistics Excellence –...
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Emil Webinar Langley

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Emil Webinar Langley

  1. 1. www.emil.gatech.edu WELCOME Moderator Speaker Dr. John Vande Vate C. John Langley Jr., Ph.D. Executive Director, EMIL Prof, of Supply Chain Management Georgia Institute of Technology Georgia Institute of Technology 1
  2. 2. www.emil.gatech.edu For More Information Webinars − Latin American Logistics Excellence – May 18, 2006 • Register at www.emil.gatech.edu − Managing Asian Logistics – July 2006 − A True Life Story from the RFID Frontline – September 2006 EMIL Program Information & Deadlines − Information: www.emil.gatech.edu − Application Deadline: August 2006 Manufacturing Business Technology (MBT) − http://www.mbtmag.com 2
  3. 3. www.emil.gatech.edu “Tenth Annual Third Party Logistics Study: Views from the Customers” C. John Langley Jr., Ph.D. Professor of Supply Chain Management Georgia Institute of Technology March 21, 2006 3
  4. 4. www.emil.gatech.edu Webinar Agenda Introduction and 10-Year Perspective Logistics Outsourcing Practices 3PL Service Offerings and Capabilities Technology Enablement Management and Relationship Issues Customer Value Framework Future Industry Trends 4
  5. 5. www.emil.gatech.edu Introduction and 10-Year Perspective 5
  6. 6. www.emil.gatech.edu Tenth Annual Third Party Logistics Study Research Objectives 3PL Study Sponsors Strategic Assessment of Use of 3PLs Understand Customer Perspectives Investigate Leading Topics 3PL Industry Assessment for the Future 6
  7. 7. www.emil.gatech.edu Industry Segments and Response Rates and Geographies Studied 7.0% 8.4% 13.6% Automotive Automotive Chemical Chemical Consumer Products Consumer Products 13.9% 20.9% 6.1% Food and Beverage Food and Beverage High-Tech/Electronics High-Tech/Electronics Industrial Mfg. Industrial Mfg. 6.7% 4.1% 4.3% Pharma and Medical Pharma and Medical Retail and Apparel Retail and Apparel Telecommunications Telecommunications 7,775 Companies e-Mailed – Spring/Summer 2005 Sent to Chief Logistics Executive 1,091 Surveys Returned - 14% Response Rate 7
  8. 8. www.emil.gatech.edu Special 3PL Workshops and Focus Group Sessions Key Sessions Held With Industry Executives − Boston, Massachusetts – session at Capgemini’s Accelerated Solutions Environment − Western Europe – two focus groups held with key European logistics executives − Asia-Pacific – workshop held in Singapore for Asian executives having logistics responsibilities Purposes of ASE, Workshop, and Focus Group Sessions − Individual perspectives relating to the 3PL industry − Identify and discuss key industry themes, trends, and issues − Use feedback from executives to help with interpretation of 2005 study results − Incorporate findings into study publication 8
  9. 9. www.emil.gatech.edu Factors Perceived Important by Logistics Executives, 1996-2005 1996 2005 Factor North America North America All Regions Pressure to reduce cost 87% 96% 91 - 100% Pressure to enhance 65 80 74 - 84 customer service Globalization 58 80 63 - 90 Develop new information 47 82 81 - 96 technologies 9
  10. 10. www.emil.gatech.edu Logistics Outsourcing Practices 10
  11. 11. www.emil.gatech.edu Factors Responsible for Decision to Use 3PL Provider North Western Asia- Latin Factor America Europe Pacific America Cost 72% 74% 71% 65% Service 61 55 51 64 Focus on corporate core competencies 29 40 43 38 Industry experience 27 16 20 26 Unique services available from 3PL provider 24 14 17 10 Asset reduction 22 30 31 30 Access to capable information technologies 16 10 20 9 Seasonality or surges in logistics activity 16 21 9 20 Corporate philosophies encourage outsourcing 12 10 17 16 Need for “change agent” 3 4 3 3 Labor problems 2 7 6 7 11
  12. 12. www.emil.gatech.edu Number of 3PL Providers Used 82 80 73 Most Users Involve 70 67 64 From One-Five 3PLs 60 50 40 30 Percent of Respondants 20 17 16 14 15 12 10 8 8 10 6 6 2 0 0 One to Five Six to Ten Eleven to More than Fifty Fifty North America Western Europe Asia-Pacific Latin America 12
  13. 13. www.emil.gatech.edu Current (2005) vs. Projected (3-5 Years) Logistics Expenditures Directed to Outsourcing 100% 2005 77% 2008-2009 80% 69% 70% 63% 59% 63% 51% 53% 60% 52% 44% 40% 20% 0% North Western Asia-Pacific Latin America South Africa America Europe 13
  14. 14. www.emil.gatech.edu Non-User Respondents: Rationale for Not Using 3PL Services Logistics is a Core Competency 35% Logistics Too Important to Outsource 23% Costs Would Not Be Reduced 36% Control Would Diminish 41% We Have More Expertise 23% Service Levels Would Not be Realized 31% 0% 10% 20% 30% 40% 50% 14
  15. 15. www.emil.gatech.edu 3PL Service Offering and Capabilities 15
  16. 16. www.emil.gatech.edu Outsourced Logistics Services (North America Results – 2005) Percent Percent Logistics Service Outsourced Logistics Service Outsourced Outbound Transportation 78% Product Returns and Repair 18% Warehousing 63 Inventory Management 17 Customs Brokerage/Clearance 63 Product Assembly/Installation/Mfg 16 Inbound Transportation 58 Reverse Logistics & Waste Disposal 16 Freight Forwarding 56 Information Technology 15 Transportation Management 49 Rate Negotiation 14 Freight Bill Auditing/Payment 45 Fleet Management 13 Cross-Docking/Shipment Consolidation 39 LLP/4PL Services 11 Order Fulfillment/Distribution 29 Materials Management 10 Consulting Services 23 Inventory Ownership 8 Procurement of Logistics 23 Order Entry/Processing/Customer Svc 7 Carrier Selection 19 Customer and Supplier Compliance 5 Product Marking/Labeling/Packaging 18 Factoring (Trade Financing) 2 16
  17. 17. www.emil.gatech.edu Technology Enablement 17
  18. 18. www.emil.gatech.edu 3PL Technology Expectations and Perceptions 100 IT Capabilities are key 89 to the 3PL provider 80 80 selection process While important, 3PL IT 60 expertise is relied upon in only 1 out of 3 40 40 relationships 34 Percent of Respondants 3PL customers’ 20 satisfaction levels with 3PL technology services has great 0 IT Capabilities are Rely on 3PL Satisfied with 3PL Having the "right room for improvement necessary for 3L providers for IT provider's IT software" is major providers Leadership capabilities competitive advantage 18
  19. 19. www.emil.gatech.edu Management and Relationship Issues 19
  20. 20. www.emil.gatech.edu 3PL Provider Roles 3PL’s Mostly thought of as 80% “Tactical Service Providers” 70% 60% 50% 40% 30% 20% 10% 0% Tactical Service Logistics Strategist Supply Chain Provider Integrator North America Western Europe Asia-Pacific Latin America 20
  21. 21. www.emil.gatech.edu Two-Tiered Relationship Structure Relationship Relationship Traditional Service Attributes Structure Outsourcing Terms Attributes • Fourth-Party • Broad supply chain expertise • Partnership Joint Logistics Provider • Deep industry domain & consultative skills Venture (4PL) • Advanced technology capability • Value Based • Business process outsourcing, beyond logistics • Risk Sharing • Lead Logistics • Project management & provider coordination • Few Partners Provider (LLP) • 3PL technology integration • Long Term (5+ years) • Innovation & continual improvement • Common Core Values • Supply Chain • Alignment & Trust Manager (SCM) • “Coopetition” Strategic • Contractual • Third-Party • Traditional logistics services • Fixed & Variable Logistics Provider • Modular product offerings •Transaction (3PL) • Focused cost reduction & service improvement Oriented • Operating excellence • Short Term • Logistics Service • Niche services Tactical (1 to 5 years) Provider (LSP) 21
  22. 22. www.emil.gatech.edu Customer Value Framework 22
  23. 23. www.emil.gatech.edu Customer Evaluation of Outsourcing Success 100% 80% 60% 40% 20% 0% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 North America Western Europe Asia-Pacific Latin America 23
  24. 24. www.emil.gatech.edu Quantifiable Measures of 3PL Success North Western Latin Cost/Benefit Asia-Pacific America Europe America Logistics cost reduction 11% 10% 11% 10% Fixed logistics asset reduction 8% 20% 33% 14% From From From From Order fill rate (%) 91.6 to 93.9 86.6 to 92.7 91.5 to 95.8 77.5 to 83.9 Average order-cycle length From From From From change (days) 9.3 to 7.0 6.3 to 4.3 6.3 to 4.1 16.0 to 8.0 Inventory turns* 7.1 to 8.2 10.0 to 9.3 28.3 to 29.7 14.5 to 14.3 Cash-to-cash cycle From From From From reduction (days) 41.4 to 36.9 37.1 to 33.3 31.0 to 26.2 33.7 to 30.9 Service level improvement 62% 67% 64% 77% (percent “yes”) 24
  25. 25. www.emil.gatech.edu Areas for 3PL Provider Improvement Service level commitments not realized Time and effort spent on logistics not reduced Cost reductions have not been realized Cost “creep” and price increases once relationship has commenced Unsatisfactory transition during implementation stage Inability to form meaningful and trusting relationships Lack of on-going improvements and achievements in offerings Lack of strategic management and/or consultative/knowledge based skills Lack of global capabilities 25
  26. 26. www.emil.gatech.edu Future Industry Trends 26
  27. 27. www.emil.gatech.edu Next Generation of Logistics Outsourcing Models Key Attributes Geographic Coverage • Speed of Implementation • Knowledge Transfer Global Supply Chain • Shared Risk & Reward Advanced Integrators • Comprehensive Solution Services • Project Management • Single Point of Lead Logistics Pan-Regional Integrators Contact (4PL) • Enhanced Capabilities Value-Added Multiple Locations • Broader Service Offerings (Third Party Logistics) (intra or inter regional) • Focused Cost Basic Services Location(s) Reduction Specific (Logistics Service Providers) • Resident Client Infrastructure Knowledge Insourcing 27
  28. 28. www.emil.gatech.edu Future Industry Trends Continued expansion, acquisition Increased efforts to update, and consolidation of 3PL industry enhance, and improve 3PL Improved customer-needs provider-user relationships alignment Expansion of global markets Two-tiered relationship models and needed services (strategic and tactical) Increased adoption of shared Continued expansion of service service networks and offerings across supply chain, “coopetition” strategies with and broad-based business traditional competitors process outsourcing Need for relationship Increasing importance on reinvention, mechanisms for repeatable and leveraged continual improvement, and solutions solution innovation 28
  29. 29. www.emil.gatech.edu Thank You Very Much !!! “Tenth Annual 2005 Third Party Logistics Study: Views from the Customers” For Further Information: www.3PLstudy.com www.tli.gatech.edu 29
  30. 30. www.emil.gatech.edu For More Information Webinars − Latin American Logistics Excellence – May 18, 2006 • Register at www.emil.gatech.edu − Managing Asian Logistics – July 2006 − A True Life Story from the RFID Frontline – September 2006 EMIL Program Information & Deadlines − Information: www.emil.gatech.edu − Application Deadline: August 2006 30
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