To be efficient in Supply chain management

1. ALIGNING SUPPLY CHAINS

2. Learning Objectives
 concept of alignment and its importance
 supply chain relationships and their importance
 model that will facilitate the development and implementation of successful supply
chain relationships
 importance of collaboration and collaborative supply chain relationships
 potential importance of outsourced logistics services to supply chain management &
(3PL) providers and 4PLTM providers
 various outsourced supply chain services are used by client/customer firms and the
types of benefits
 role and relevance of information technology-based services to 3PLs and their
clients/customers
 which customers are satisfied with 3PL services and identify where improvement may
be need?
 future directions for outsourced logistics services
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3. Introduction
Ability to achieve “alignment” between people, processes, and technologies
Purpose that reinforces accomplishment of supply chain goals and
objectives
 Supply chain and organizational strategies
 Supply and demand
 Supply chain and trading partners.
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4.  Focuses on the types, develop and implement successful supply chain
relationships.
 Collaboration will highlight how this process can become a valuable element of
successful relationships
 3PL industry in general and how firms in this industry create value for their
commercial clients
 “We recognize and appreciate the power of the new technology and the
power it will deliver, but, in the frantic search for space, it is still about
relationships.”
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5. Intensity of Involvement
 A vendor to that of a strategic alliance
 Traditional “vertical” context, a vendor is represented simply by a seller or
provider of a product or service
 Relationship with a vendor is “transactional,” be at “arm’s length”
 Business objectives and practices to help achieve long-term goals and
objectives
 Benefits; reducing uncertainty, improving communications, increasing
loyalty, establishing a common vision, and helping to enhance global
performance.
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6. Strategic alliance end of the scale Partnerships are described as
being “collaborative,”
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7. Model for Developing and Implementing Successful Supply Chain Relationships
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Model is being applied from the perspective of a manufacturing firm, as it considers the possibility of
forming a relationship with a supplier of logistics services
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8. Step 1: Perform Strategic Assessment
 Overall business goals and objectives, including those from a corporate,
divisional, or logistics perspective
 Needs assessment to include requirements of customers, suppliers, and
key logistics providers
 Identification and analysis of strategic environmental factors and industry
trends
 Profile of current logistics network and the firm’s positioning in respective
supply chains
 Benchmark, or target, values for logistics costs and key performance
measurements
 Identification of “gaps” between current and desired measures of logistics
performance
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9. Step 2:Decision to Form Relationship
 Whether or not the provider’s services will be needed
 Decision make a careful assessment of the areas in which the
manufacturing firm appears to have core competency
 Lambert, Emmelhainz, and Gardner; research into the topic of how to
determine whether a partnership is warranted and, if so, what kind of
partnership should be considered.
 Drivers are defined as “compelling reasons to partner.”
 Facilitators are d fined a “supportive corporate environmental factors that
enhance partnership growth and development.”
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10. Step 3:Evaluate Alternatives
 Discuss a methodology; suggest the most appropriate type of relationship
to consider.
 Assessment of the manufacturing company’s needs and priorities in
comparison with the capabilities of each potential partner
 Important to ensure a broad representation and involvement of people
throughout the company in the partnership formation and partner
selection decisions
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11. Step 4:Select Partner
 Selection of a logistics or supply chain partner
 Executives will likely play key roles in the relationship formation process.
 Final selection decision to create a significant degree of “buy-in” and
agreement
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12. Step 5:Structure Operating Model
 Structure of the relationship refers to the activities, processes, and priorities that will be
used to build and sustain the relationship.
 Lambert and his colleagues, components “make the relationship operational and help
managers create the benefits of partnering.”
OPERATING MODEL:
 Planning
 Joint operating controls
 Communication
 Risk/reward sharing
 Trust and commitment
 Contract style
 Scope of the relationship
 Financial investment
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13. Step 6:Implementation and Continuous Improvement
 Challenging step in the relationship process has just begun
 Overall implementation process may be relatively short, or it may be
extended over a longer period of time.
 Future success of the relationship will be a direct function of the ability of
the involved organizations to achieve both continuous and breakthrough
improvement
 Steps should be considered in the continuous
improvement process
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15. Imperative for Collaborative Relationships
 “business practice that encourages individual organizations to share
information and resources for the benefit of all”
 Dr. Michael Hammer; “leverage each other on an operational basis so that
together they perform better than they did separately.”
 Internet facilitates the ability of supply chain participants to readily
transact
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16.  • collaboration occurs when companies work together for mutual
benefit
 • creates a synergistic business environment in which the sum of the
parts is greater than the whole
Well-understood goals and objectives of the participating organizations and
the collaboration
 • Trust and commitment
 • Organizational compatibility and communication
 • Equitable sharing of gains and losses
 • Benefits greater than going it alone
 • Dedication to continuous improvement
 • Strategic plan to provide direction to the collaboration
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18. Third-Party Logistics;
 Manage logistics services on behalf of clients and customers
 1PL – Shippers or receivers of product moved through supply chain.
 2PL – Asset-based logistics providers that physically move product
through the supply chain (e.g., motor carriers; railroads; airlines and air
cargo; ocean vessels; pipelines; etc.)..
 3PL – Firms that manage and/or provide logistics services on behalf of
their clients and customers.
 4PL – Firms that provide broader scope of services to help manage
elements of the supply chain.
 5PL – Companies that aggregate demands of 3PLs into bulk volumes to
negotiate better rates with logistics service providers.
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20. Services of 3PL Providers
 Transportation, contract logistics, freight forwarding, financial, and
information-related services
 Current 3PL organizations have grown well beyond the scope of their
predecessor organizations
 Transportation; FedEx Supply Chain Services, UPS Supply Chain
Solutions, DHL, Ryder Supply Chain Solutions, Schneider logistics, and
Penske Logistics
 Contract Logistics ; services relating to warehousing and distribution;
CEVA Logistics, DSC Logistics, Exel/DHL, Geodis, Penske Logistics,
Saddle Creek Corporation
 Freight Forwarding; daily flow of global commerce, and involves a wide
range of organizations; C.H. Robinson, DHL, DSV, Expeditors, Hub
Group, and Kuehne & Nagel.
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21.  Financial ; Freight payment and auditing, cost accounting and control,
tools for managing shipment visibility, information, and tracking, and
consulting and advisory services.
 Information-Related: growth and development of Internet based,
business-to-business, electronic markets for transportation and logistics
services
 Corporate Subsidiaries; 3PL organizations that initially were divisions or
subsidiaries of manufacturing or distributor organizations
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22. Global 3PL Market Size and Scope
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24. Third-Party Logistics Research Study—Industry Details
 The management and leadership of logistics/supply chain activities at
customer firms, and executive-level contact at 3PL organizations.
Focus interviews;
 The purchase, use, or provision of 3PL services,
 Other experts from industry, consulting,
 Academia who has valuable knowledge and perspective on the topics of
interest
Workshops with users of 3PLs in selected cities; New York, Boston, Chicago,
San Francisco, Singapore, Shanghai, Sydney, Amsterdam, Paris, Berlin, and
Utrecht (Netherlands)
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25. Profile of Logistics Outsourcing Activities
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26. User Spending Patterns on Logistics and 3PL Services
 50 percent of their total logistics expenditures are related to outsourcing.
Benefits of Using 3PLs16
 3PL services has contributed to overall logistics cost reductions ( 70% of
Shippers, 85% of 3PL providers)
 3PLs has contributed to improved customer service (83% of Shippers, 94
% of 3PL providers)
 3PLs offer new and innovative ways to improve logistics effectiveness (75%
of 3PL users, 88% of 3PL providers)
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27. Strategic Role of Information Technology
 Which information technologies, systems or tools a 3PL must have to
successfully serve a customer in your industry classification.”
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28. Management and Relationship Issues
 Chief executive in the logistics area is the person who clearly is most aware of
the need for 3PL services
 Finance executive are many times involved with the identification of the need
for such services
 Executives from other areas such as manufacturing, human resources,
marketing, and information systems are also aware of such needs but to a lesser
degree
 Information systems executives are becoming
 increasingly involved
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30. Customer Value Framework
 • 3PL users across the global regions studied characterized
their outsourcing efforts as having been successful
Number of areas in which they encourage 3PLs to pursue opportunities for
improvement.
 Meeting service-level commitments
 Realizing cost reductions
 Avoiding “cost-creep” and price increases once the relationship has commenced
 Effective “onboarding” by 3PLs of new customer relationships
 Ability to form meaningful and trusting relationships
 Information technology capabilities
 Global capabilities
 Strategic management capabilities and consultative/knowledge-based skills
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31.  A Strategic View of Logistics and the Role of 3PLs
 • Establishing the validity of the logistics outsourcing model and
specifically of the 3PL provider
 • future, we already see increasing acceptance of the 4PL model,
 • Table 12.4 identifies a number of trends that seem to characterize the
future direction of the 3PL sector
 • Logistics outsourcing is likely to be central and critical to the future
successes of logistics and supply chain management
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33. Thanks for your Time
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