The document summarizes a presentation on the evolving relationship between shippers and third-party logistics providers (3PLs). It discusses the research objectives, which were to understand the factors shippers consider when outsourcing logistics and how they evaluate and choose 3PLs. The research methodology included interviews and a literature review on how shippers assess 3PL relationships and services. Key findings indicated strategic alliances help reduce costs while maintaining quality, and shippers align business strategies with 3PLs to leverage their capacity and technologies. The conclusion recommends shippers strategically outsource to fewer 3PLs and both parties include each other in their strategies to empower their supply chains.

1. CRP 3 FINAL PRESENTATION
The Study of evolving nature of relationship between
Shipper and 3PL
GAURAVKUMAR MAHAJAN (MGBSEP13GLSCM063)
U N D E R T H E G U I D A N C E O F
MR. NIHAR KUMTHEKAR
1

2. Agenda
• Introduction
• Research objectives
• Research methodology
• Research Framework
• Literature Review
• Primary data analyses
• Limitations & Future scope
• Recommendation
• Conclusion
2

3. Introduction
 THIRD PARTY LOGISTICS(3PL)- A firm that provides multiple logistics services for the use of Customers.
 Shipper- A party responsible for initiating a shipment
e.g. Consignor, exporter, seller
 Impact of shipper-3PL relationship-
Overall average logistics cost reduction of 11 %
Average inventory cost reduction of 6% (2014 Third Party Logistics
Study)
 Major 3PL Players-
 Major 3PL Players in U.A.E.
(SCATA 2014)
 Total 329 3PL Companies registered under National Association of Freight and Logistics (NAFL
2014)
 Logistics Industry contributes 15% of GDP US$ 390 billion in U.A.E (UAE Yearbook
2013)
Kuehne+NagelDHL
DB Schenker
Logistics
Nippon Express
Al-Futtaim
Logistics
CEVA Logistics DHL
3

4. Research Objectives & Area of Interest
OBJECTIVES
To understand the factors taken into consideration by Shipper to
outsource its logistics services to 3PL.
To understand the view on choosing the 3PL for the benefit of the
company.
To study the Services being provided by 3PL in U.A.E.
To study the factors on which the 3PL are assessed on the service
provided and current relations in the Industry
Area of Interest
Considering the growing global trends towards third party logistics, it is important to
understand the basics and current trends of it as a Supplier Chain Manager and create
value through relating primary and secondary knowledge.
4

5. Research Methodology
Operationalization/Drawing Conclusion
For Shipper and 3PL relationship
Relationship between the both is important for the success of
the Business
The assessment of the shipper to outsource its logistics
activities
The sourcing based on the assessment of the Shipper
Summarise the research finding
Make recommendations and future scope
5

6. Research Framework
Shipper Assessment Sourcing 3PL provider
Operational &
Repetative
activities
Value Added
Services
Strategic & IT
intensive
services
Strategic
Alliance
Contracting
Performance
based
Outsourcing
Shipper-3PL relationship
• Global Competition
• Company policies and values
• Evaluation of strategies
• Selection Criteria
• Total Cost reduction
• Lead time constraint
• Maintain level of Quality
• Minimise Risk
• Long term benefits
6

7. Literature Review
 The 3PL outsourcing is showing growing trend
65% in 3PL activities from last previous year 2013
47% Shipper switched or planning to shift to 3PL activities
 The 3PL revenue in the world has shown growth of 9.9% with revenue of
US$ 676 billion. (Langley 2014)
 The Foreign trade of U.A.E. has grown by 22.8% in 2011.
(UAE Interact 2013)
 Re- exports of has grown by 10% 2011 and important market for Shipper
and 3PL in the future. The Consequences associated with the sourcing
decision of Shipper. 10 to 20% loss incurred due to logistics spend.
7

8. Literature Review
Strategic Assessment
To understand the current business and products or product-service systems, and
information on the new system is yet available
 Aligning with business strategy Shipper decides which logistics services to be
outsourced.
Operational & Repetitive
activities
Strategic &
IT intensive service
Value Added services
• Domestic/International
Transportation
• Warehousing
• Freight Forwarding
• Custom Brokerage
• Transportation
planning&
Management
• Product labelling,
packaging, assembly
• SC consultancy
• IT services
• Order management &
fulfilment
• Inventory management
• Customer service
• Green Supply Chain
Services
8

9. Literature Review
KANO model
The Model of Customer Satisfaction classifies product attributes based on how
they are perceived by customers and their effect on customer satisfaction
• Basic Attributes
attributes are the expected attributes or “musts” of a
product
• Performance Attributes
Performance attributes are those for which more is
generally better, and will improve customer satisfaction
• Excitement Attributes
Excitement attributes are unspoken and unexpected by
customers but can result in high levels of customer
satisfaction
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10. Literature Review
Evolution of Service Attributes in 3PL industry
Year Up to 1920 1920-40 1940-80 1980-90 1990 -2000 2001-Onwards
Market Entry
Parameters
Capacity to
Produce
HC HC+ CC HC
+CC
+TQM
HC
+CC
+TQM
+Delivery
HC
+CC
+TQM
+Delivery
+Value
Market
Leadership
Parameters
High
Capacity to
Produce
(HC)
HC
+Cost
Competency
(CC)
HC+CC
+Quality
HC+CC
+TQM
+ Delivery
HC
+CC
+TQM
+Delivery
+Value
HC
+CC
+TQM
+Delivery
+Value
+ GO GREEN
TQM DRIVE ERP DRIVE CRM DRIVE GO GREEN
Drive
10

11. Literature Review
Strategic Sourcing
A disciplined and systematic process for reducing the total cost of externally
purchased materials, products and our source activities by maintaining level of
quality, service and technology.
• Total Cost reduction
• Lead time constraint
• Maintain level of Quality
• Minimise Risk
• Long term benefits
Strategic Alliance
Performance Based
Logistics
Contract logistics
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12. Literature Review
Kraljic Sourcing Matrix
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13. Literature Review
Kraljic Sourcing Matrix
Strategic Alliance between Dragon Mart and Cosco Logistics
HIGH
ProfitImpact
LEVERAGE ACTIVITIES
Domestic Transportation
Freight Forwarding
Labelling and Packaging
STRATEGIC ACTIVITIES
Inventory Management
Transportation planning&
Management
Green Supply Chain Services
ROUTINE ACTIVITIES
Reverse Logistics
Cross Docking
Customs Brokerage
BOTTLENECK ACTIVITIES
Order Management & Fulfilments
IT services
LOW Supply Risk/Criticality
HIGH
Dragon Mart
• Chinese Company
• Chinese government
project
• Joint Venture of
Chinese and Dubai
Government
Cosco Logistics
• Sole 3PL for Dragon
Mart
• 1o years of services
• Services from Ex-
works to DDP offered
• IT system linked for
Order Management
and fulfilment
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14. Literature Review
Strategic Sourcing
14

15. Literature Review
Case Studies
Successful Alliances Failed Alliances
Danzas DHL and HP FedEx and Laura Ashley
Future Alliances
BDP International and Dubai Exports
Al Futtaim Group and Alliance Electronics
Auto Industry Strategic Alliances in U.A.E.-
Al Futtaim
Group
Al Rostamani
Group
Al Tayer
Group
Al Habtoor
Group
Al Jaziri Group
Toyota Nissan Ford Mistubishi Lamborgini
Honda Renault Ferrari Bentley
Nissan Suzuki Maserati Bugatti
Volvo Infiniti Spyker McLaren
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16. Expert Interview summary
 Logistics Services completely out sourced to 3PL to focus on Core competency
 Business strategies aligned with 3PL by Shipper
 Capacity utilization using multiple customers for 3PL
 Adopt new technologies to reduce Operations time and lead time
 Prior experience in the industry helps to understand the shippers
requirement in better way
 Experience of 3PL helps to manage People, Process and Product effectively
 Increased reliance on fewer number of supplier helps to execute your Supply
Chain more effectively
 3PL out source it own activities to add value to logistics activities
 Scaling of the processes are done to meet the clients requirement
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17. Limitations and Future scope
 Primary Research for the U.A.E. market
is done
 Analysing the gap between the
theoretical best practices and current best
practices that are employed
 Primary and Secondary data
interpretation and relation was limited to
few Industry
 Other industries should also be studied
and market trends should be identified
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18. Recommendations
 Out-source the logistics activities with
fewer service providers
 Strategy based approach to empower
the entire supply chain by including 3PL
providers into the strategy
 Shipper strategic its business by keeping
3PL provider in mind
 Similarly, 3PL should expand the
business keeping their clients in mind
18

19. Conclusion
 Shipper and 3PL relations are existing in
U.A.E. and gaining through alliances
 Consider independent external
resources to add value to the process
 Adopt good processes and good proven
criteria of selection
 The selection process should be intense
and time consuming
 Worldwide Supply Chain will improve, if
effective measures taken by both.
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