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  1. 1. Third Party Logistics Providers (3PL) Kyle Sera Amy Irvine Scott Andrew Carrie Schmidt Ryan Lancaster
  2. 2. Overview What are 3PL’s Why use them Tips for implementation of 3PL’s 4PL’s
  3. 3. Types of 3PL Providers Transportation Based  Services extend beyond transportation to offer a comprehensive set of logistics offerings.  Leveraged 3PLs use assets of other firms.  Non-leveraged 3PLs use assets belonging solely to the parent firm.  Examples: Ryder, Schneider Logistics, FedEx Logistics, UPS Logistics
  4. 4. Types of 3PL Providers Warehouse/Distribution Based  Many have former warehouse and/or distribution experience.  Examples: DSC Logistics, USCO, Exel, Caterpillar Logistics, IBM
  5. 5. Types of 3PL Providers Forwarder Based  Very independent middlemen with forwarder roles.  Non-asset owners that provide a wide range of logistics services.  Examples: AEI, Kuehne & Nagle, Fritz, Circle, C. H. Robinson, Hub Group
  6. 6. Types of 3PL Providers Financial Based  Provide freight payment and auditing, cost accounting and control, and tools for monitoring, booking, tracking, tracing, and managing inventory.  Examples: Cass Information Systems, CTC, GE Information Services, FleetBoston
  7. 7. Types of 3PL Providers Information Based  Significant growth and development in this category of Internet-based, business-to- business, electronic markets for transportation and logistics services.  Examples: Transplace, Nistevo
  8. 8. Logistics? Logistics:Managing the flow of information and goods inbound from suppliers and outbound to customers. Why be good at this? Core competency?
  9. 9. Why Use 3PL’s? Save time  Don’t need to invest in:  Trucks  Training  Development Help expand  New markets  International  No roads
  10. 10. Why Use Cont. Narrow your focus  Allows you to focus on your strengths  Don’t get spread too thin Reach more customers more effectively  Can ensure delivery times  can help a company run leaner
  11. 11. Management Focus Furthering your company Consider potential benefits and drawbacks 3pl’s can increase profitability Can you be a 3PL to someone else?
  12. 12. Levels of Outsourcing Transactional Outsourcing: Based on transactions, with no long term contracts and no bonding between the 3PL and the outsourcing company. Tactical Outsourcing: Outsourcing on a long term basis with negotiated contacts and integrated IT systems to facilitate free information flow and create supply chain visibility. Strategic Outsourcing: Based on long-term relationships with successful outcomes, 3PL companies become partners in supply chain management and establish transactional transparency.
  13. 13. 3PL Defined Can be ambiguous as there are many definitions  Some say “all or a significant part”  Some say “at least one part” Best definition is probably a combination:  Businesses that provide one or many of the following logistics services:  Transportation Management  Public/Contract Warehousing  Distribution Management  Freight Consolidation
  14. 14. As a Manager…Which 3PL Provider Do I Choose? Inbound Logistics recognizes top 10  Uses its readers to conduct vote  Over 300 companies nominated with 3,000+ votes  Top 3 this year:  1) UPS Supply Chain Solutions  2) Schneider Logistics  3) C.H. Robinson
  15. 15. How is a 3PL Differentiated From a Transportation Provider? Transportation provider gets product from point A to point B Could be considered a 3PL Just one function of logistics 3PL provider assists in multiple functions
  16. 16. Successful Implementation of 3PL Why you want to select the right provider the first time  Only about 65% of companies believe their provider is doing a “good” job.  55% of logistics outsourcing contracts end in 3-5 years  The source had a list of 14 key tips for success, but we are going to focus on the 5 most important issues.
  17. 17. Tips for Successful Implementation1) Have an outsourcing strategy. Know what your outsourcing strategy is. It needs to be well thought out and measured against in house solutions and capabilities. SWOT analysis. As a company you should understand the strengths, weaknesses, opportunities and threats of outsourcing logistics, rather than keeping them in house.2) Do your homework. Do a comprehensive study  Clearly document advantages, challenges, costs and benefits. Document expectations  Set down expectations in clear terms and include current costs.
  18. 18. Tips Continued… Create a robust selection process.  Invite companies in to give a formal presentation without giving requirements. This can help document their strengths and weaknesses.  Make a site visit to the 3PL, and talk with its existing customer.3) Measure and review performance Have a efficient and accurate measurement system.  Qualitative measures that focus on effectiveness and quantitative measures that focus on efficient utilization. Have an efficient costing system  This will help you to understand the costs involved in outsourcing.  “Are we making money doing this?”
  19. 19. Tips Continued…4) Create an Implementation Strategy Create a project plan road map  Be clear who does what, create a project management team with members from both organizations and review progress vs. planned milestones.5) Nurture the Relationship Both Parties must nurture the relationship to make outsourcing successful.  Create mutual trust, respect and a sense of integrity.
  20. 20. 4PL Providers Manage and direct the activities of multiple 3PLs, serving as an integrator Refinement on the idea of 3PLs 4PLs are not asset based like 3PLs Assembles and manages the resources, capabilities, and technology of its own organization and other organizations to design, build and run comprehensive supply chain solutions
  21. 21. Transways Express 4PL One stop transport and logistics supplier Work with suppliers and customers
  22. 22. Questions?
  23. 23. Sources 3PL definition: http://accuracybook.com/glossary.htm Top 10 3PL providers: http://www.inboundlogistics.com/3pl/awards.shtml Successful 3PL implementation: http://logistics.about.com/od/thirdparty/a/uc041805a.htm Sangam, VK. (2006). Implementing Third Party Logistics. Retrieved May 5th, 2006. From Massey University, About Business and Finance website: http://logistics.about.com/od/thirdparty/a/uc041805a.htm Red Prairie: http://www.redprairie.com/Industry%20Solutions/Third%20Party %20Logistics.aspx Class lecture slides: http://logistics.about.com/od/thirdparty/a/uc041805.htm