3 Party Logistics- Value addition in economic crisis_Abhijeet Ghadge


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Supply Chain Risk Management-
How 3 Party Logistics services can help in economic crisis scenario for their clients?

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  • Third Party Logistics- Value Addition in Economic Crisis Presentation by-Abhijeet Ghadge
  • 3 Party Logistics- Value addition in economic crisis_Abhijeet Ghadge

    1. 1. Third Party Logistics Value Addition in Economic Crisis Abhijeet S. Ghadge 26 th April, 2009
    2. 2. Overview Meltdown and its Impacts 3PL - Value Preposition Customers’ Issues & Expectations
    3. 3. Global Meltdown Immediate Sub prime defaults Network Stock market crash & credit crunch Cascade Slowdown in economic activities across globe Avalanche of the financial crises
    4. 4. Gl obal Meltdown Effects on Supply Chain Crashing Demand in market – “ Inverse Bullwhip Effect” Stagnation of Inventory – Increased warehouse cost Reduced movement of goods – Operational inefficiency & Increased Logistics cost Restrictive trade practices – Increased hassles in Import/Export
    5. 5. Changing Trends in Logistics Source : 3PL 2005: Results and Findings of the 10th Annual Study
    6. 6. Woes Vs Opportunities Clients’ Recession Woes Pilled up Inventory - Underutilized logistics fleet - Issues relate to Custom Duties - Coordination of bills and- payments - Hunger for continuous – improvements - Waste Disposal - 3PL Opportunities - Improved WMS - ‘Economy of scale’ - Value added Services in Customs - Customs clearance and Brokerage - IT support & Consultancy - Reverse Logistics Support
    7. 7. 3PL Value Prepositions <ul><li>TIME TO INVEST IN NEW WAREHOUSE SYSTEMS </li></ul><ul><li>Piled up inventory due to demand shrinkage needs efficient WMS </li></ul><ul><li>Use of Auto ID Data Capture (AIDC) technology for status of goods. </li></ul><ul><li>Integrating WMS with ERP as “Interpreter and </li></ul><ul><li>message buffer” </li></ul><ul><li>“ Right stuff” for end-to-end fulfillment and </li></ul><ul><li>distribution. </li></ul>Reduce inventory- 5 to 20% Increase labor productivity-15 to 40% Improve shipping accuracy- 2 to 5% Increase inventory accuracy- 99+% at location level Reduce direct operating costs
    8. 8. 3PL Value Prepositions <ul><li>CONSOLIDATION OF TRANSPORTATION FLEET </li></ul><ul><li>Reducing the fleet maintenance cost for clients </li></ul><ul><li>by acquiring clients’ fleet (value investment for 3PL). </li></ul><ul><li>Improve transportation asset utilization by leverage </li></ul><ul><li>across multiple clients. </li></ul><ul><li>Harness technology (RFID, GPS) for fleet operations optimization and explore cross docking opportunities. </li></ul><ul><li>Use of ‘logistic software's for reducing cycle time and eliminating inefficiencies. </li></ul>
    9. 9. 3PL Value Prepositions <ul><li>CUSTOMS & BILL PAYMENT COORDINATION </li></ul><ul><li>Provide TOTAL FORWARDING SOLUTIONS including customs related services, fright bill auditing and payments. </li></ul><ul><li>Provide consultancy in shipment route planning for clients to minimize shipment costs and tax liabilities. </li></ul>
    10. 10. 3PL Value Prepositions <ul><li>IT SUPPORT & CONSULTANCY </li></ul><ul><li>Provide Electronic Logistic Management (ELM) with </li></ul><ul><li>use of visibility tools for In-transit inventory tracking </li></ul><ul><li>(Mobile/ Web enabled). </li></ul><ul><li>Provide Intelligent Warehouse Solutions for integrating across clients’ ERP & FMS to extend support up to line side delivery. </li></ul>
    11. 11. 3PL Value Prepositions <ul><li>REVERSE LOGISTICS </li></ul><ul><li>Reverse logistics support for reusable packing materials. </li></ul><ul><li>Provide logistic support for waste disposal, reclamation (regulatory), product returns and ‘Re-X’ activities in line with clients product planning strategies. </li></ul><ul><li>Boost from Government regulatory plans for “Green” Supply chain. </li></ul>
    12. 12. Clients’ Concerns with 3PL <ul><li>Lack of cost control </li></ul><ul><li>Unsatisfactory customer service </li></ul><ul><li>Inadequate technology and capabilities </li></ul><ul><li>Lack of understanding scope of work </li></ul><ul><li>Inadequate knowledge/performance and lack of “proactive” management </li></ul><ul><li>Unsatisfactory transition during Implementation phase </li></ul>
    13. 13. Challenges <ul><li>Ability to develop advanced services. </li></ul><ul><li>Need for relationship reinvention. </li></ul><ul><li>Mechanisms for continual improvement, and solution innovation. </li></ul><ul><li>Increasing importance of repeatable and leveraged solutions. </li></ul><ul><li>Emerging role of supply chain integration. </li></ul><ul><li>Meeting Cultural feet and global needs of 3PL usage. </li></ul>
    14. 14. Key Survey Findings KPIs for 3PL 3PL Globally preferred deals Study based on 3PL conferences: 1996-2008 findings Sector-wise usage of 3PL <ul><li>Target decision makers - Logistics Exe., CEOs </li></ul><ul><li>Best ROI - WMS & TMS </li></ul>
    15. 15. Future predictions of 3PL <ul><li>Continued expansion, acquisition, innovation need of hour for 3PL </li></ul><ul><li>Conventional 3PLs will face the competition from the online logistics providers. </li></ul><ul><li>Product returns and repair are projected to have 100% growth in use of 3PL. </li></ul><ul><li>Demand for logistics support will grow with the booming e-commerce/business. </li></ul>“ The best way to predict the future is to invent it.” — Alan Kay, noted computer scientist.
    16. 16. Abhijeet S. Ghadge M.Tech. (Industrial Engineering & Management) Indian Institute of Technology Kharagpur [email_address] +91 93333 75414