Logicstics and Supply chain aspects in retail management

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LOGICSTICS
MANAGEMENT
DEFINITION
•Logistics management activities typically include inbound and outbound
transportation management, fleet management, warehousing, materials
handling, order fulfillment, logistics network design, inventory
management, supply/demand planning, and management of third party
logistics services providers.
•To varying degrees, the logistics function also includes sourcing and
procurement, production planning and scheduling, packaging and
assembly, and customer service.
•It is involved in all levels of planning and execution--strategic, operational
and tactical.
•Logistics management is an integrating function, which coordinates and
optimizes all logistics activities, as well as integrates logistics activities with
other functions including marketing, sales manufacturing, finance, and
information technology.

3. 1. 1PL
Concerns beneficial cargo owners which can be the shipper (such as a
manufacturing firm delivering to customers) or the consignee (such as a retailer
picking up cargo from a supplier). They dictates the origin (supply) and the
destination (demand) of the cargo with distribution being an entirely internal
process assumed by the firm. With globalization and the related outsourcing
and off shoring of manufacturing, distribution services that used to be assumed
internally tend be contracted to external service providers.
2. 2PL
Concerns the carriers that are providing a transport service over a specific
segment of a transport chain. It could involve a maritime shipping company, a
rail operator or a trucking company that are hired to haul cargo from an origin
(e.g. a distribution center) to a destination (e.g. a port terminal).
3. 3PL
Third-party logistics in logistics and supply chain management is an
organization's use of third-party businesses to outsource elements of
its distribution, warehousing, and fulfillment services.
4. 4PL
A fourth party logistics provider has no owned transport assets or warehouse
capacity. They have an a locative and integration function within a supply chain
with the aim of increasing the efficiency of it. The idea of a fourth-party
logistics provider was born in the seventies by the consulting company
Accenture.
•Value Proposition
LAYERS OF LOGISTICS
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4. WHAT IS 3RD PARTY LOGISTICS?
• Third-party logistics (3PL or TPL) in logistics and supply chain management is an
organization's use of third-party businesses to outsource elements of its distribution,
warehousing, and fulfillment services.
• Third-party logistics providers specialize in integrated operations of warehousing and
transportation service that can be scaled and customized to customer's need, based on
market conditions, to meet the demands and delivery service requirements for their
products.
• Services often extend beyond logistics to include value-added services related to the
production or procurement of goods, such as services that integrate parts of the supply
chain. A provider of such integrated services is referenced as a third-party supply chain
management provider (3PSCM), or as a supply chain management service provider
(SCMSP).
• 3PL targets particular functions within supply management, such as warehousing
transportation, or raw material provision.
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5. STANDARD 3PL
PROVIDERS
At this level, the 3PL
company provides only
basic logistics. This
involves the storing and
transporting of your
products, and some
distribution in
accordance with your
company’s requests.
SERVICE DEVELOPER 3PL
In addition to the basic logistics services
offered at the standard level, the service
developer 3PL offers support in IT,
security, and product tracking. This
means they can further ensure the
delivery of your package is safe and on
time.
CUSTOMER ADAPTER 3PL
Customer adapter 3PL’s are different in
that they take over and run the existing
logistics operation from the partner
company rather than creating their own.
CUSTOMER
DEVELOPER
3PL
At this level, the
customer developer
3PL will not only
inherit the logistics
operation of their
partner company,
but they will also
adapt their own
systems.
TYPES OF 3RD PARTY LOGISTICS05

6. Transportation
At this phase, a 3PL can leverage other
transportation firms in order to fulfill the
duties of its partner. If they are non-
leveraged, the assets they use will be strictly
those of the parent company.
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Forwarder
Middle men with extended roles in
managing logistics
Financial
This includes accounting, auditing, freight
payment, and tracking services, along with
inventory management
Warehouse/Distribution
3PL who specialize in managing the storing
and distribution of product.
Shipper/Management
Provides the resources to manage the
logistics operation from start to finish. This
includes preparing reports and establishing
carrier relations.
Information
Growing category of electronic, business-to-
business and internet market
CHARACTERSTICS OF 3RD PARTY LOGISTICS

7. THE DIFFERENCE
BETWEEN 3PLS
AND 4PLS AND
OTHER LOGISTICS
PROVIDERS: A
HOT DEBATE
The difference between 3PLs, 4PLs and other ‘PL’s is
highly debated, even among experts in the supply chain
industry.
The simplest way to think about it is that each
successive type of logistics provider offers greater
involvement in the supply chain than the last.
As for which one will work best for you, that depends on
your business model, infrastructure, budget, and how
much control you want over your supply chain.
Many e-commerce businesses choose 3PLs because
they provide a good combination of support, flexibility,
and cost-effectiveness.
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8. CONTD…
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ON -DEMAND
TRANSPORTATION
On-demand transportation is a relatively new term coined by 3PL providers to
describe their brokerage, ad-hoc, and "flyer" service offerings. On-demand
transportation has become a mandatory capability for today's successful 3PL
providers in offering client specific solutions to supply chain needs.
These shipments do not usually move under the "lowest rate wins" scenario
and can be very profitable to the 3PL that wins the business. The cost quoted to
customers for on-demand services are based on specific circumstances and
availability and can differ greatly from normal "published" rates.
On-demand transportation is a niche that continues to grow and evolve within
the 3PL industry.

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ON -DEMAND
TRANSPORTATION
MODEL
FTL, or Full Truck Load
LTL, or Less-than Truckload
Hotshot (direct, exclusive
courier)
International Expedited
Next Flight Out,(commercial
airline shipping)
Expedited services

11. 113PL INTEGRATION THROUGH ELECTRONIC DATA
INTERCHANGE

12. Logistics is the core competence of third-party logistics providers. Providers may have better related
knowledge and greater expertise than the producing or selling company, and may also have more global
networks enabling greater time and cost efficiencies.
The equipment and the IT systems of 3PL providers are constantly updated and adapted to match the
requirements of their customers and their customer’s suppliers. Producing or selling companies often do not
have the time, resources, or expertise to adapt their equipment and systems as quickly.
Cost and time savings
If most or all operative functions are outsourced to a 3PL provider, there is usually no need for the client to
own its own warehouse or transport facilities, lowering the amount of capital required for the client's
business. This is particularly beneficial if a company's warehouse has high variations in capacity utilization,
leading to over purchasing of warehouse capacity and reducing profitability.
Low capital commitment
ADVANTAGES OF 3RD PARTY LOGISTICS
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13. Logistics outsourcing allows companies with limited logistics expertise to focus on their core business.
Increasing complexity in business suggests that companies benefit from not devoting resources to areas in
which they are not skilled.
Focus
Third-party logistics providers can provide higher flexibility for geographic distribution and may offer a
larger variety of services than clients could provide for themselves. Postal services and private couriers
typically factor in distance when they calculate the cost of shipping; many 3PL providers market the
benefit of what is known as zone skipping to potential clients, because it shortens the distance between
products to be shipped and customers, resulting in lower shipping costs. This also allows businesses to
more predictably manage their resources including workforce size, and turn fixed costs into variable costs
Flexibility
CONTD… 13

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Loss of control
With outbound logistics, the 3PL provider usually assumes communication and interactions with a firm's customer or supplier. To
mitigate this, some 3PL’s attempt to brand themselves as their clients, such as applying clients' logos on their assets and dressing
their employees like their client’s employees.
IT
The IT systems of the provider and the client must be interoperable. Technology helps increase visibility for the client by way of
continuous status updates via Dispatch Management Software and Electronic Data Interchange (EDI) which does involve a cost,
but it can help avoid penalties for delays and subsequent financial losses such as from not unloading freight in time.
Reverse logistics
Numerous studies have shown that selling products online, rather than in a brick and retail environment, adds extra costs when it
comes to handling returns (i.e., reverse logistics).The reliance upon third-party logistics providers to handle aspects of the E-
commerce supply chain such as warehousing and pick-and-pack also means these companies must be relied on to handle reverse
logistics.
DISADVANTAGES OF 3RD PARTY LOGISTICS

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