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Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
Solution Design  Logistics Outsourcing Summary Ppt 300910 Linked In
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Solution Design Logistics Outsourcing Summary Ppt 300910 Linked In

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An update on phd research to Oct 2010

An update on phd research to Oct 2010

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  • 1. Solution Design in Logistics Outsourcing Briefing Pack Richard Gibson October 2010
  • 2. Hypothesis <ul><li>The length and stability of an outsourcing relationship is directly related to the amount of effort expended by the customer in designing their logistics solution. </li></ul>A research project based at the University of Huddersfield and supported by the Chartered Institute of Logistics
  • 3. <ul><li>Research project commenced 2007 </li></ul><ul><li>Literature review delivered 2008 </li></ul><ul><li>Research methodology agreed 2009 </li></ul><ul><li>Case studies completed 2008 & 2009 </li></ul><ul><ul><li>British Sugar; behaviours in the outsourcing process </li></ul></ul><ul><ul><li>J Sainsbury’s; contractor management </li></ul></ul><ul><li>Interviews conducted in Q1 2010 </li></ul><ul><ul><li>14 Logistics leaders </li></ul></ul><ul><li>Policy Delphi survey </li></ul><ul><ul><li>Survey 1 published April 2010, addressed to 1,002 logistics professionals including the CILT Outsourcing and Procurement Forum </li></ul></ul><ul><ul><li>Survey 2 published July 2010 </li></ul></ul><ul><ul><li>Survey 3 published September 2010 </li></ul></ul><ul><li>Project conclusion expected Q1 2011 </li></ul>Research – progress to date 71,000 words In the ‘bank’ Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3
  • 4. Early results; behaviours <ul><li>What is a poor set of behaviours in this environment? </li></ul><ul><li>The client has </li></ul><ul><li>Little or no standard specifications </li></ul><ul><li>Little or no service level management criteria </li></ul><ul><li>Little or no frequent cost control </li></ul><ul><li>No understanding of the cost of the supply chain or an element thereof </li></ul><ul><li>No cost to serve modeling </li></ul><ul><li>Procurement specialists work independently of the Logistics team and are focused only on cost reduction in procuring logistics functions </li></ul><ul><li>There is unlikely to be a coherent plan describing how the supply chain should look in the future </li></ul><ul><li>Any outsourced solution is likely to be prescribed by the LSP </li></ul><ul><li>Balcony view </li></ul><ul><li>This is the territory for outsourcing poorly performing and misunderstood areas of the business </li></ul><ul><li>It could be a highly transitory environment where bad areas of the business are outsourced for short term cost benefits. </li></ul><ul><li>Classic ‘outsource a mess and get a mess back’ territory </li></ul><ul><li>What is a good set of behaviours in this environment? </li></ul><ul><li>The client has </li></ul><ul><li>A strategy or roadmap describing the supply chain of the future and how it supports the core competencies of the business. </li></ul><ul><li>A clearly defined set of objectives, balanced with the needs of safety, health and environment. </li></ul><ul><li>A high level of familiarity of the cost of the supply chain </li></ul><ul><li>The capacity to model supply chain costs, perhaps supported by a data warehouse style model. </li></ul><ul><li>A clear understanding of where the competitive edge lies in the business. </li></ul><ul><li>A clear service level management policy </li></ul><ul><li>Balcony view </li></ul><ul><li>The customer will exhibit a high degree of control </li></ul><ul><li>The customer will have a clearly defined set of targets for any LSP involved in their supply chain </li></ul><ul><li>The customer may be using outsourcing alongside decentralisation and rationalisation to achieve supply chain targets </li></ul><ul><li>The customer is willing to share their metrics with others to endorse their ‘best in class’ approach </li></ul>Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3
  • 5. Early results; behaviours LSP’s The good and the bad
  • 6. Early results – a hierarchy of risk and reward Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3 Blind Outsourcing: No service or operational criteria, customer not able to specify requirements, probably chasing a cost saving. Procurement Officer Outsourcing: Specification based On previous 12 to 18 months performance. Save money Outsourcing to change an element of the supply chain that customer cannot do on their own. End result defined in terms of infrastructure, people & process is agreed with the customer pre contract. Targets agreed across term ‘ Traditional outsourcing’ led in partnership with Customer’s logistics team or consultants. Process includes ITT, RFI etc Prescriptive: Customer owns Infrastructure and assets. LSP supplies labour and Intellectual Property within clearly defined and closely managed boundaries Customer Supply Chain Control High Low Balance of risk to customer Low High JSC with organisations sharing infrastructure and risk
  • 7. Early results; the future <ul><li>Opportunities </li></ul><ul><ul><li>Benchmarking </li></ul></ul><ul><ul><li>Value chain analysis </li></ul></ul><ul><ul><li>Specification </li></ul></ul><ul><ul><li>Planning for the long term </li></ul></ul><ul><li>Future challenges </li></ul><ul><ul><li>Supply of managers </li></ul></ul><ul><ul><li>Outsourcing the FULL supply chain </li></ul></ul><ul><ul><li>Procurement led outsourcing </li></ul></ul><ul><ul><li>How important is green? </li></ul></ul>Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3
  • 8. Early results; the hypothesis <ul><li>The last question of the last survey, asked respondents if they felt this statement was ‘true’ or ‘false’. </li></ul>‘ The length and stability of an outsourcing relationship is directly related to the amount of effort expended by the customer in designing their logistics solution.’
  • 9. Interviews Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3
  • 10. <ul><li>Interviews conducted with 14 logistics leaders based in UK and Australia </li></ul><ul><li>Spread across public and private sectors as well as own account and fully outsourced operations </li></ul><ul><li>Semi-structured interview style </li></ul><ul><li>Areas of divergence used as basis for Survey 1 </li></ul>Interviews
  • 11. Interview structure Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3
  • 12. Interview findings <ul><li>Principle areas of divergence </li></ul><ul><ul><li>Strategy </li></ul></ul><ul><ul><li>Specification </li></ul></ul><ul><ul><li>Knowledge of the outsourcing process </li></ul></ul><ul><li>Headlines </li></ul><ul><ul><li>Customers do not realise the importance of specification </li></ul></ul><ul><ul><li>Customers are now purchasing logistics services in a different way (ie Krajlic Model) </li></ul></ul><ul><ul><li>How do we know what good looks like? Feedback confirmed benchmarking is not used as a tool to confirm this (see following slide) </li></ul></ul>Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3
  • 13. Interview findings; areas of divergence Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3
  • 14. Interviews - fear of benchmarking Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3
  • 15. Surveys Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3
  • 16. <ul><li>Sent to 1,002 logistics professionals in April 2010 </li></ul><ul><li>Survey collectors were closed with 237 responses in May 2010 </li></ul><ul><li>Respondent roles </li></ul><ul><ul><li>39% were board members or board leaders </li></ul></ul><ul><ul><li>18% were senior supply chain roles </li></ul></ul><ul><ul><li>33% may be described as middle management </li></ul></ul><ul><li>Respondents represented > 2,190 years of logistics experience </li></ul><ul><li>Headline question areas </li></ul><ul><ul><li>Strategy and functional specification </li></ul></ul><ul><ul><li>Cost, value chain, safety and defining success </li></ul></ul><ul><ul><li>Outsourcing </li></ul></ul><ul><ul><li>Environment and the future supply chain </li></ul></ul><ul><li>158 respondents were happy to be contacted again </li></ul>Survey 1 7,000 pieces of information http://www.surveymonkey.com/s/op Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3
  • 17. Survey 1 <ul><li>Strategy and functional specification </li></ul><ul><li>The majority of customers felt their strategic plans ran longer than the LSP’s perceived. On further analysis, specialists felt customers plans were built on an even shorter timesacle. </li></ul><ul><li>A large proportion (but minority) of customers did not have written functional specifications for all or part of their supply chains </li></ul><ul><li>Customers are unlikely to understand the relevance or content of KPI’s associated or included in their Operations Manual </li></ul><ul><li>Many organisations rely on ‘embedded knowledge’ rather than an operations manual </li></ul><ul><li>Customers may not understand the relevance or content of KPI’s. </li></ul>Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3
  • 18. Survey 1 <ul><li>Cost, value chain, safety and defining success </li></ul><ul><li>Two thirds of the specialists felt that customers did not have a firm grip on their supply chain costs. </li></ul><ul><li>Value chain analysis; most respondents had not used the tool. Of those that did, the best results were seen in the areas of transport and stock-holding </li></ul><ul><li>A large number of respondents did not have safety targets in their supply chains </li></ul><ul><li>Only one respondent reported monitoring the cost of accidents </li></ul><ul><li>In terms of defining success, questioning on benchmarking suggested the service providers to be more blinkered than csutomers to what is happening in the wider market and this oculd be a limiting factor on the customer’s supply chain development </li></ul><ul><li>The industry is generally unwilling to share learnings and success to improve standards and performance </li></ul>Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3
  • 19. Survey 1 <ul><li>Outsourcing </li></ul><ul><li>When asked who was the most competent at managing the outsourcing process, customers and LSP’s were split down the middle in their responses </li></ul><ul><li>Customers obtain their knowledge of outsourcing from an unstructured range of sources and a large minority do not seek training or knowledge on the matter </li></ul><ul><li>Why do contracts fail? Those customers who had been involved in a failure felt it was their responsibilty by failing to scope the service, correctly designing the solution and then not managing the ongoing relationship. The LSP comments reflected these areas as well as admitting a degree of over-selling </li></ul><ul><li>Service providers reported a change in the way customers procure logistics services </li></ul>Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3
  • 20. Survey 1 <ul><li>Environment and the future supply chain </li></ul><ul><li>Who is likely to drive collaboration initiatives in the future? The majority of both respondent groups felt a combined approach was appropriate and they would also fund it together </li></ul><ul><li>Green logistics was a popular topic amongst the group but few made the direct connection with reducing cost </li></ul><ul><li>77% of the entire respondent group reported having an environmental policy </li></ul><ul><li>Only 50% of customers reported having targets for their environmental impact </li></ul>Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3
  • 21. Survey 2 Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3
  • 22. <ul><li>Headline question areas </li></ul><ul><li>Confirm how customers see the value of the Service Provider and how much engagement they sought before outsourcing </li></ul><ul><li>Who knows the outsourcing process best </li></ul><ul><li>Have environmental targets been defined? </li></ul><ul><li>Strategic planning horizons </li></ul><ul><li>Supply chain safety targets </li></ul><ul><li>A fear of benchmarking </li></ul><ul><li>Presence of environmental targets </li></ul><ul><li>How stable is the supply chain? </li></ul><ul><li>Are contract variation clauses present and used? </li></ul><ul><li>What happens when ownership changes? </li></ul>Survey 2 2,921 pieces of information http://www.surveymonkey.com/s/R733GH3 Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3
  • 23. <ul><li>Results downloaded at end of July 2010 </li></ul><ul><li>77 out of 148 people responded to the second survey </li></ul><ul><li>Discussion points </li></ul><ul><ul><li>Supply chains strategies and plan exist; customers think they plan over longer timescales than that the outsourcers think they do, and definately longer than the consultants know they do. </li></ul></ul><ul><ul><li>Some customers change their lsp’s regularly based on their own business quirks </li></ul></ul><ul><ul><li>Everyone except the customers say they nurture relationships pre contract </li></ul></ul><ul><ul><li>A change of ownership of either party is said to have a negligible effect on the relationship style or strength </li></ul></ul><ul><ul><li>The majority say they have a specification for their supply chain and the same majority suggest it is out of date and difficult to understand. </li></ul></ul><ul><ul><li>Most are likely to monitor accident frequency, but few are likely to capture the cost </li></ul></ul><ul><ul><li>The benchmarking process is not understood </li></ul></ul><ul><ul><li>Few vary contracts to fit the changing business during term </li></ul></ul>Survey 2 Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3 Shame about the environment
  • 24. Survey 3 Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3
  • 25. <ul><li>Published September 2010 </li></ul><ul><li>67 respondents generated 1,945 pieces of data and 250 comments. </li></ul><ul><li>One respondent commented </li></ul><ul><li>‘ Some of these opinions are the truths that cannot be uttered by 3PLs, but can be put in the same category as &quot;3PLs don't innovate&quot; and &quot;3PLs don't collaborate&quot;. Customers can have exactly as much innovation and collaboration as they are prepared to allow. Good 3PLs can be a bridge to this good behaviour, bad customer behaviour is the biggest obstacle .’ </li></ul>Survey 3 Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3
  • 26. <ul><li>Headlines </li></ul><ul><ul><li>Customers typically work either one or three or more service providers </li></ul></ul><ul><ul><li>Leadership in the outsourced relationship is lead through regular contract reviews </li></ul></ul><ul><ul><li>In terms of value for money </li></ul></ul><ul><ul><ul><li>Service providers sais this was demonstrated through year on year cost and service improvements </li></ul></ul></ul><ul><ul><ul><li>Customers said it was demonstrated by comparing to other operations </li></ul></ul></ul><ul><ul><li>The majority of repsondents agreed they had learnt good things from other operations which thay had then implemented in their supply chains </li></ul></ul>Survey 3 Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3
  • 27. <ul><li>Headlines </li></ul><ul><ul><li>Of the outsourcing pitfalls, respondents could not agree on the following areas </li></ul></ul><ul><ul><ul><li>Overlooking personnel issues </li></ul></ul></ul><ul><ul><ul><li>Losing control over the outsourcing activity </li></ul></ul></ul><ul><ul><ul><li>Failing to plan an exit strategy </li></ul></ul></ul><ul><ul><li>Written contracts assume the commercial agreement will be a success </li></ul></ul><ul><ul><li>Finally..what does a good supply chain feel like? </li></ul></ul><ul><ul><ul><li>43 responses which were widespread in nature </li></ul></ul></ul>Survey 3 Progress to date Early Results Interviews Survey 1 Survey 2 Survey 3
  • 28. <ul><li>Richard Gibson </li></ul><ul><li>07814 554 051 </li></ul><ul><li>[email_address] </li></ul><ul><li>[email_address] </li></ul>

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