Logistics outsourcing

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Logistics outsourcing

  1. 1. ARAB ACADEMY FOR SCIENCE, TECHNOLOGY & MARITIME TRANSPORTInstitute of International Transport and Logistics Logistics Outsourcing • By Marwan Bahgat Supervised by: Prof. Dr.Islam Al-Naqeeb
  2. 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
  3. 3. Chapter 1 Logistics and Supply Chain Management Logistics and supply chain definition• Logistics Management• Supply Chain Management (CRM)• Deference between logistics and supply chain
  4. 4. 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. 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. 6. Chapter 1 Logistics and Supply Chain Management Importance of logistics• Logistics as a percentage of GDP
  7. 7. Chapter 1 Logistics and Supply Chain Management Importance of logistics• Profit impact of logistics cost saving
  8. 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
  9. 9. 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
  10. 10. 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. 11. Chapter 1Logistics and Supply Chain Management Case Study vs.
  12. 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
  13. 13. 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
  14. 14. 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. 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. 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. 17. Chapter 1Logistics and Supply Chain Management Integration of logistics activity
  18. 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
  19. 19. 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
  20. 20. 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. 21. Chapter 2 Logistics Outsourcing Logistics Outsourcing DefinitionKey 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. 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
  23. 23. 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
  24. 24. 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
  25. 25. 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. 26. Chapter 2Logistics Outsourcing Why Outsourcing?
  27. 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
  28. 28. 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
  29. 29. 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
  30. 30. 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
  31. 31. 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. 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)
  33. 33. 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)
  34. 34. 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)
  35. 35. 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)
  36. 36. 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. 37. Chapter 2 Logistics Outsourcing IMPACT OF OUTSOURCING LOGISTICSAdvantages of Logistics Outsourcing• Cost Reduction• Service and Technology Improvement• Strategic Flexibility• Capital Investment Saving• Focus on Core Competency• Sharing and Reducing Risks
  38. 38. Chapter 2 Logistics Outsourcing IMPACT OF OUTSOURCING LOGISTICSDisadvantages 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. 39. Chapter 2 Logistics Outsourcing Logistics Outsource Process• System Takeover• Joint Ventures• System “Spin-off”• Management-only Contract
  40. 40. Chapter 2 Logistics Outsourcing Logistics Outsource Process• System Takeover• Joint Ventures• System “Spin-off”• Management-only Contract
  41. 41. Chapter 2 Logistics Outsourcing Logistics Outsource Process• System Takeover• Joint Ventures• System “Spin-off”• Management-only Contract
  42. 42. Chapter 2 Logistics Outsourcing Logistics Outsource Process• System Takeover• Joint Ventures• System “Spin-off”• Management-only Contract
  43. 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. 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. 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. 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. 47. Chapter 3Procurement Outsourcing Introduction
  48. 48. Chapter 3 Procurement OutsourcingWhat is Procurement Outsourcing?Benefits of Procurement Out sourcingProcurement Outsourcing DisadvantageProcurement Outsourcing Risks
  49. 49. Chapter 3 Procurement Outsourcing Procurement Outsourcing Scope• Transactional Buying and Settlement• Measurement and Development• Selection and Contracting• Sourcing Strategy Development
  50. 50. Chapter 3 Procurement Outsourcing Procurement Outsourcing Scope• Transactional Buying and Settlement• Measurement and Development• Selection and Contracting• Sourcing Strategy Development
  51. 51. Chapter 3 Procurement Outsourcing Procurement Outsourcing Scope• Transactional Buying and Settlement• Measurement and Development• Selection and Contracting• Sourcing Strategy Development
  52. 52. Chapter 3 Procurement Outsourcing Procurement Outsourcing Scope• Transactional Buying and Settlement• Measurement and Development• Selection and Contracting• Sourcing Strategy Development
  53. 53. Chapter 3 Procurement OutsourcingImplementation Implementation Approach • Consult, fix and outsource • Consult, outsource and fix
  54. 54. Chapter 3 Procurement OutsourcingImplementation 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. 55. Chapter 3 Procurement OutsourcingImplementation 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. 56. Chapter 3 Procurement OutsourcingImplementation Evaluating and selecting a procurement service provider (PSP) selection criteria • Category expertise • Sourcing Process Methodology • Operational Excellence • Experience and Customer References • Financial stability
  57. 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. 58. Thank YouPrepared by Under supervision of Prof. Dr. Islam Al NaqeebMarwn Bahgat

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