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Roy Lenders  from Capgemini; Nick Wyss from Panalpina; Chris Saynor from eyefortransport on ‘Outsourcing Logistics: Findings from the 15th Annual Third Party Logistics Global Study’

Roy Lenders from Capgemini; Nick Wyss from Panalpina; Chris Saynor from eyefortransport on ‘Outsourcing Logistics: Findings from the 15th Annual Third Party Logistics Global Study’






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    Roy Lenders  from Capgemini; Nick Wyss from Panalpina; Chris Saynor from eyefortransport on ‘Outsourcing Logistics: Findings from the 15th Annual Third Party Logistics Global Study’ Roy Lenders from Capgemini; Nick Wyss from Panalpina; Chris Saynor from eyefortransport on ‘Outsourcing Logistics: Findings from the 15th Annual Third Party Logistics Global Study’ Presentation Transcript

    • November 25th, 2010
    • The 2010 15th annual 3PL study focuses attention ontopics of current importance  3PL Customer study and Provider study • Investigate customer needs and experiences • Validate customer perspectives from 3PL providers point of view • Identify areas for future improvement  Topics of contemporary interest • Total Landed Cost (TLC) • Life sciences 2010 Special Topics • Fast-moving consumer goods  Strategic assessment of future of 3PL-customer relationships 2
    • Survey respondents represented range of geographiesand industriesShipper respondents Shipper industries represented Industry % Europe 1. High-Tech / Electronics 12 (297) North America 26% 2. Consumer Products 10 (446) 40% Asia-Pacific (194) 3. Food and Beverage 9 17% 4. Automotive and Transport Equipment 9 5. Life Sciences and Pharma/Healthcare 8 Latin America (139) 6. Industrial Manufacturing 8 12% 7. Retail 6 Other 8. Chemical 6 (57) 5% Additional Industries (14) 18 Other 14 + 746 Survey respondents from 3PL provider firms. 3
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    • Changing use by shippers of 3PL services is evidenced in2010 after the 2009 economic downturnIndustry challenges that impact the use of 3PLs Logistics cost pressure Highly volatile freight prices Unpredictable demand challenge efficient supply chain managementChanging use of 3PL services in 2010 65% of the shippers increase the use of 3PL services 24% of the shippers return to insourcing of logistic activities 46% of the shippers are reducing/consolidating the number of 3PLs used • Consolidation trend of 3PLs in use by shippers is perceived even stronger from 3PL perspective (73%) and is expected to continue in the next couple of years 5
    • Shippers report measurable benefits from use of 3PLs Results All regions Logistics Cost Reduction (%) 15% Logistics Fixed Asset Reduction (%) 25% Inventory Cost Reduction (%) 11% Changed From 17 days Average Order Cycle Length Changed To 12 days Changed From 73% Order Fill Rate Changed To 81% Changed From 83% Order Accuracy Changed To 89% 6
    • The IT Gap continues, but shows some narrowing inrecent years IT “Gap” 7
    • Shipper-3PL relationships evidencecontinued improvement Success Ratings: 89% of Shippers; 97% of 3PLs Success Factors  Openness, transparency and good communication  Agility and flexibility to accommodate current and future business needs and challenges  Interest in “gainsharing” between 3PLs and shippers  Interest in collaborating with other companies, even competitors, to achieve logistics cost and service improvements  Use of 3PLs Provides New and Innovative Ways to Improve Logistics Effectiveness: 68% of Shippers; 95% of 3PLs 8
    • Current State of the 3PL MarketKey Takeaways Outsourcing trend of logistic services continuous in combination with the consolidation of 3PLs in use Shippers interest in integrated logistics services for supply chain optimization is still limited Shippers report 15% cost reductions from 3PL use 90% of 3PL relationships are seen as successful 3PLs ability to provide new and innovative ways to increase logistics effectiveness scores low (68%) 9
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    • Common understanding of concerns but different view ofrole that 3PLs should play in addressing themAssessment of 3PL’s capabilities in addressing top logistic concerns Ranking of Shipper concerns1 view 3PL viewImproving shipment density/load utilization 87% 74% 76%Reducing logistic costs 98% 69% 73%Having a supply chain disruption/mitigation strategy 81% 68% 70%in placeBuilding sustainability into supply chain 82% 65% 65%Ensuring perfect order fulfillment 87% 62% 70%Shortening new product time-to-market and supply chain 81% 46% 62%integrationAccommodating sales promotions 66% 42% 60%Rapidly responding to changes in consumer demand 83% 35% 43%Gathering / utilizing in-store data on products 65% 32% 26%Growing market share in emerging economies 63% 29% 26% 1 Shippers’ ranking of top concerns (see previous slide) 11
    • Shippers most-used cost-reduction strategies don’t alwaysinvolve 3PLs 87% Improved distribution center processes 53% 86% Renegotiated rates for logistics services 48% 83%Improved forecasting and inventory visibility 16% 80% Improved shipment density/load utilization 56% 75% Redesigned supply chain network 32% 74% Renegotiated rates for warehouse services 46% Method Used % of Methods implemented with 3PL 12
    • Fast-Moving Consumer GoodsKey Takeaways The high-volume, low-margin fast-moving consumer goods manufacturer must become more demand-driven to serve a less loyal, more cautious post-recession shopper Shippers are involving 3PLs less often in cost-reduction strategies than one might expect The role 3PLs can play in helping shippers shall focus in the future more on • Shortening new product time-to-market and • Ensuring perfect order fulfillment 13
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    • 62% of Life Sciences shippers cite ensuring productquality as a significant challengeImperatives Related Data Points  Visibility is the top service Life Sciences companies need from 3PLs Product Visibility  Driving the need for serialization and e-pedigree  50% agree good business case for RFID in Life Sciences Quality, compliance, and  More than 30 different Life Sciences GDP interpretations globally risk  70% of shippers say that compliance is their top challenge  73% of shippers say quality, compliance and risk mitigation are Balancing quality and price significantly more important than price  Just 49% of 3PLs agree that customers prioritize these over price  Inventory control not just accurate quantity but quarantine Inventory and temperature  More than 60% of shippers list temperature control as an important control 3PL capability  High dollar value and treatment value make drugs tempting targets Security  Counterfeit drugs and drug diversion have doubled over past five to size years 15
    • Life SciencesKey Takeaways Challenges lie in three major areas: Product integrity, customer service requirements, and inherently complex ecosystem Cost is important but outweighed by quality, compliance and risk mitigation Visibility is the top service need among life sciences shippers 3PLs can play a role in serving individual customers and also in linking parties together 16
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    • Unforeseen costs can quickly increase the total deliveredcosts of a shipment Total landed cost: the sum of all costs associated with making and delivering products to the point where they produce revenue Country of Origin Price Components China Vietnam EU Net purchasing price for a specific volume of the 10,000 8,000 12,000 product from 3 different suppliers Total transportation cost to Switzerland – 4,000 6,000 1,200 Ocean freight from China/Vietnam – Road freight within Europe Customs according trade agreement 1,000 1,500 n.a. VAT (Switzerland 7.6%) based on value of goods 1,140 1,178 1,003 Total Landed Cost 16,140 16,678 14,203 18
    • Nearly half of shipper respondents claim they makeextensive use of total landed cost % Respondents by reasons why they are not or minimally using TLC Shipper Use of Total Landed Cost Necessary data is not 49% available Somewhat 41% Minimally 11% Do not have the right 48% tools Exten- sively Do not have sufficient 45% 31% None time for analysis 3% Not sure how to calculate 27% or apply total landed cost 19
    • Total landed costKey takeaways Understanding total landed cost helps companies make better supply chain decisions While many shippers claim extensive use of TLC, others are hampered by lack of data and tools Today’s lesser used factors, including risk factors, transfer pricing and tax, and carbon costs, are of increasing interest 3PLs report a lack of customer interest and customer data for providing TLC capabilities 20
    • Q&A Check out our website at www.3plstudy.com Download copy of 2010 and earlier reports Additional information about the 2010 3PL Study Thank You! 21