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Third-party logistics
Third party logistics (3PL) involves outsourcing logistics operations like transportation, warehousing, and inventory management to specialized third party providers. 3PL providers offer integrated logistics services and facilitate movement of materials and products. Using 3PLs allows companies to reduce costs, free up resources, and gain technical expertise while focusing on their core competencies. The 3PL industry contributes over 5% to national GDPs and employs over 1.7 million people globally. The top industries that use 3PLs are automotive, technology, retail, and consumer products. Successful implementation of 3PL relationships requires developing an outsourcing strategy, measuring performance, and creating a project plan.
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Third-party logistics
- 1. Third Party Logistics AnwarMohamed 31 October 2008
- 2. Definitions • Third PartyLogistics (3PL): Outsourcing all or much of a companies logistics operations to a specialized company. • Third Party Logistics Provider: A firm which provides multiple logistics services for use by customers. Preferably, these services are integrated or “bundled” together by the provider. These firms facilitate the movement of parts and materials from suppliers to manufacturers and finished products from manufacturers to distributors and retailers. Among the services which they provide are transportation, warehousing, cross-docking, inventory management, packaging and freight forwarding. Source: Council of Logistics Management
- 3. How to works… YourEnterprise Customer 3PL Provider
- 4. SIZE AND SCOPE • • • • Contributeswell over 5% of the GDP National Statistics,2006 5th Largest Industry in the UK Prospects,2006 Employs over 1.7 million people Skills for Logistics , 2006 Involves with over 65000 organisations Insidecareers,2006
- 5. WHY OUTSOURCE? • • • • • Cost &Time effectiveness Freeing resources Technical expertise Asset Reduction Focus on corporate core competitiveness
- 6. % of 3PLProviders Used 70 60 50 40 N. America W.Europe Asia 30 20 10 0 2001 2002 2003 Source: Focus 06 2004
- 7. Globalization • 80% ofthe top 200 UK companies operate on a global scale POLAND U.K. MINNEAPOLIS, MINN. FRANCE NEW YORK, NY HAYWARDUS CAL. Hayward PORTUGAL BAHRAIN SPAIN GUADALAJARA, MEXICO GUATEMALA HONDURA S LAHORE, KARACHI, PAKISTAN PAKISTAN MEXICO CITY, MEXICO LOS ANGELES, CAL. KOREA MILAN, ITALY FLORENCE, ITALY TURKEY BOMBAY, INDIA NEW DELHI, INDIA EGYPT BANGALORE, INDIA MADRAS, JORDAN INDIA DUBAI SRI LANKA DHAKA, BANGLADESH TIANJIN, CHINA QINGDAO, CHINA DONGGUAN, CHINA SHANGHAI, CHINA GUANGZHOU, SHENZHEN, CHINA CHINA TAIWAN ISRAEL DOM. REPUBLIC EL SALVADOR BRAZIL NICARAGUA VIETNAM THAILAND CHITTAGONG, BANGLADESH Madagascar MALAYSIA KENYA HONG KONG PHILIPPINE S SAIPAN SINGAPOR E INDONESIA FIJ I MAURITIUS LESOTHO SWAZILAN D DURBAN LEGEND MERCHANDISING & PRODUCTION SERVICES PRODUCTION SERVICES
- 8. Top Ten 3PL’sCustomers Industry Global Global Costs Domestic Costs Automotive Technology Retailing Consumer Products Food and Grocery Healthcare Metal Industry Other $98.2 $156.4 $98.6 $13.6 $32.2 $38.4 $179.7 $63 $37.4 $77.4 $67.2 $13.3 $27.8 $34.0 $84 $25.3 Costs stated in Billion's of Dollars Total Costs $678.3 $366.3
- 9. Clients of 3PLProviders
- 10. Services Provided By3PL’s Lead Logistics 4% Integrated 9% Other 5% Transportation Mgt 21% International 9% Private Fleets 7% Intermodal 4% Value Added 20% Warehousing 21% Source: Armstrong and Assoc 2004
- 11. Top 3PL Providers Est.Rev. (£M) Rank (2003) Provider Revenue 1 Excel £8,300 2 Kuehne & Nagel £6,900 3 Schenker £6,400 4 DHL £5,700 5 P&O Nedlloyd £4,800
- 12. For a Successful3PL • Develop an Outsource Strategy • Measure Performance • Create a Project Plan / Road Map
- 13. Source • • • • • • 3PL definition: http://accuracybook.com/glossary.htm Top 103PL providers: http://www.inboundlogistics.com/3pl/awards.shtml Successful 3PL implementation: http://logistics.about.com/od/thirdparty/a/uc041805a.htm Sangam, VK. (2006). Implementing Third Party Logistics. Retrieved May 5th, 2006. From Massey University, About Business and Finance website: http://logistics.about.com/od/thirdparty/a/uc041805a.htm Red Prairie: http://www.redprairie.com/Industry%20Solutions/Third%20Party%20Logistics.aspx Class lecture slides: http://logistics.about.com/od/thirdparty/a/uc041805.htm • CILT uk • Logistics and Transport Focus Magazines
Editor's Notes
- #11 <number> Many 3PL’s grow from a single discipline, but the buyers want turn key, multi functional capabilities. It is no longer valuable to simply manage the truck linehaul. 3PL’s are supply chain managers who move and monitor goods from Asia to Alpheretta, GA, managing cost, service and information, every step of the way.
- #12 <number> Source Armstrong and Associates This list of 10 ten providers is interesting in that Ryder may be the largest but their revenues are not from trucking alone. Excel is dominent in the warehouse and value added area, but they must also package the movement of goods from start to finish. While UPS may be the largest carrier in the shipping business, they are not the largest 3PL