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Contents : -

Definition 3PL , 4PL

3PL Service offering

Logistics cost estimates in India

Why 3PL

Value Proposition to the Customers

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3rd party Logistics Provider (3PL):

The role of the lead logistics provider is knitting together for amanufacturer or distributing company the services of varioustransportation and warehousing companies and third-partyservice providers

4th party Logistics Provider (4PL):4PL

LeadLogisticsServiceProvider

SuperManager

A 3PL provider is a company which supplies/coordinates logistic

functions across multiple links in logistics chain. The companythus acts as a third party facilititator between seller/manufacturer(the first party) and buyer/user (second party).

An integrator that assembles the resources, capabilities andtechnology of its own organisation and other organisations todesign, build and run comprehensive supply chain solutions.

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TransportationRelated

PrimaryTransportation

Transportation

WH / Depot Mngt. WH Design WH & Secondary

Inbound JITHubbing

Warehouse

Related

InventoryManagement

Value AddedServices Physical

& Financial

SolutionDevelopment /

Consulting

Cycle count Designing

inventory policy Order processing Demand Mngt. Documentation

& MIS

Kitting Repacking Stickering &

labeling Inspection &

Quality check Sales tax &

Excise registration

& Return filing Banking

transaction

4 PL / Consulting Logistics audit Logistics process

design Logistics

Performanceimprovementprojects

IntegratedLogistics

service (ILS)

3PL Services Moving up in Value Chain

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3PL Services :1. Integrated Logistics Service / Outsourcing2. Solution Development / Consulting

4PL / Consulting - Solution Design/ProjectsLogistics auditLogistics Process Design - for confirmation ot ISO,

Corporate governance guidelines )Logistics performance improvement projects, using SixSigma Methodology (DMAIC)

3. Transportation Related

Primary TransportationSecondary Transportation

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5.Inventory ManagementDesigning inventory policy, Cycle count

Demand Management ,Order processingDistribution Planning & ExecutionDocumentation & MIS

6.Physical Value Added ServicesKitting,RepackingStickering and labelingRepair centerInspection / quality checking

Smart courier

4.Warehouse RelatedWarehouse / Depot ManagementWarehouse Design

Warehousing & SecondaryInbound - JIT Hubbing

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7.Financial Value Added ServicesCOD (Cash on Delivery),Banking transactionsSales tax and Excise Registration and return filing

8.IT / IS Value Added ServicesOperation Software's - WMS / IMSDecision Support Software's

Software Package evaluation and SelectionSoftware Vendor / Developer evaluation and SelectionSoftware Design

9.Vehicle Tracking Solution

10.EXIM RelatedSteve dooringCustom clearanceCargo Consolidation

CHA , CFS

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Transportation

35%

Inventories

25%

Losses

14%

Others

6%

Warehousing &

VAS

20%

Source : CMIE, Published data

/ ET Knowled e series

Opportunities UnlimitedLogistics Cost Estimates In India

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Importance of 3PL Services to the Service Provider

high

low

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Value Proposition to the Customer :

Cost reductionImproved service levels

Reduced capital and assets

Concentration on core businessImproved service quality by adopting best practices

Increased flexibility

Have a matured & understanding partner to

handle and innovate non-core activities

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Drivers of Logistics Outsourcing

Debt reduction

Strategic focus of ...

Financial resources

Human resources

Information technology

CompetitionFaster (agility)

Better (quality)

Cheaper (low cost provider)

Investment

Rationing

Defining Contract Logistics

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Advantages

Less asset investment

Lower operating costs

Focus on core competence

Gain management skills

Provide higher service level

Increased flexibility

Entry mode to new markets

Disadvantages

Switching costs

Unseen hidden

costs

Less customer

contact

Dependency

Loss of control

Defining Contract Logistics

I l t ti

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ImplementationSteps to Outsourcing

Strategic decision to outsource

Determine the first impact area clearly

Define the objectives of outsourcing activity

Supplier selection process

Contractual issues Work the project

Review the operating plan and budget

Implementation plan

Frequent feedback - CIP Partnering