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ObjectivesBy the end of presentation learners will be able to,

Define Third Party Logistics

Discuss brief history of evolution of TPL

Describe the importance of TPL and services provided by them

Identify types of TPL Providers

Discuss Shifts of Logistical Operations in the Internet conomyList down the customers and buyers of TPL services

!amine advantages and disadvantages of TPL

Discuss "ourth Party Logistics and how it differs from TPL#

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■ Third Party Logistics is simply the use of an outside company to perform part of the firm$s material management and product distribution method#%Simchi&Levi, '((()

■ Third Party Logistics Providers are independent companies providing sing

multiple logistics services to a purchasing company# Third Party logistics providers, although they do not old ownership of the product for distribuare legally bound and responsible to perform the re*uested logistics activithe purchasing company# %Papadopoulou, '((+)

■ Terms contract logistics and outsourcing are sometimes used in place

Third Party Logistic - e!i"itio"

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#istory o! TPL $volutio"

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Fe% #istorical FactsPhase Period Phase Name &haracteristics

arly +-((s . late +-/(s Introductory Period Single Services

Late +-/(s . 0id +-1(s 2wareness Period Separate Services

0id +-1(s . Late +-3(s 4ecessity Period Integrated Services

Late +-3(s . Late +-5(s Integration Period 6ombined Services

Late +-5(s . Late +--(s Differentiation Period Incorporate Services

Late +--(s . Today 6orporate Period 6orporate Services

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'hy Third Party Logistics(

■ Providing better *uality service■ Limiting investment opportunities■ 6ost reduction 7 6ontrol■ Political considerations

■ "ocus on core competences■ 6ustomers demand order accuracy■ !cellent service■ Time compression#

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Third Party Logistics

In-house LogisticsDepartment

Shipper

Transportation

IT supportWarehousing

Others

In-houseOperation

OutsourcedOperation

3PL

Shipper

Shipper

Shipper

Transportation

Warehousing

IT support

SCintegration

Others

8

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Outsourced Logistics services SOME OF THE MAJOR OUTSOURCED

ACTIVITES

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Services Provided )y TPL*s

1

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Services O!!ered by Third Party LogisticsProviders

Sta"dard +dva"ced &omplete

8arehouse managementTransportationDispatchingDelivery documentation

6ustoms documentation

2ssemblyPac9aging:eturnsLabeling

Stoc9 accounting

Order plannin processingIT managemeInvoicing

Payment coll

The trade off between cost and control would determine what level services an organi;ation ac*uires, that range from standard to comp

Sour!e" O#C$% Logisti!s Integration in the &sia'Pa!i(! )egion% 2 *

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,mpact o! TPL se o" Firms

■ mployee 0orale ''

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TPL .s/ Tra"sportatio" services

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Types o! TPL Providers

0- Tra"sportatio"-)asedServices e!tend beyond transportation to offer acomprehensive set of logistics offerings#

Leveraged PLs use assets of other firms#

4on leveraged PLs use assets belonging solely tothe parent firm#

:yder, Schneider Logistics, "ed ! Logistics, and=PS Logistics are e!amples of TPLs

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1- 'arehouse2 istributio"-)ased0any, but not all, have former warehouse and>or distributione!perience#

Transition to integrated logistics has been less comple! than forthe transportation based providers#DS6 Logistics, =S6O, !el?, 6aterpillar Logistics, and IB0 aree!amples of warehouse>distribution&based TPLs#

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:ather than offering warehouse and transportation facilities separatmany TPL provides integrated facility#

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3- For%arder-)asedssentially very independent middle men e!tending forwarder ro

4on&asset owners that capably provide a wide range of logisticsservices#2 I, @uehne A 4agle, "rit;, 6ircle, 6# # :obinson, and the ubCroup are e!amples of forwarder&based TPLs#

4- Fi"a"cial-)ased

Provide freight payment and auditing, cost accounting and contrtools for monitoring, boo9ing, trac9ing, tracing, and managinginventory#6ass Information Systems, 6T6, C Information Services, and"leetBoston are e!amples of financial&based TPLs#

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5- Shipper2Ma"ageme"t )ased Third Party Logistics Services"ocused on the management of the shipping process from begito end#Provides technology, such as a transportation management sysand integrated freight management services to eliminate heavy

process and cumbersome features such as claims and accountin%freight payment and accounting)Provides management of carrier relations for ongoing ratemaintenance and negotiationCives information, such as freight data and matri! reports for bvisibility and control on future logistics outcomes6erasis, 2"S Logistics, ClobalTran;, 8orldwide !press are

!amples of Shippers>0anagement & based TPLs#

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6- ,"!ormatio"-)asedSignificant growth and development in this alternative categoof Internet&based, business&to&business, electronic mar9etstransportation and logistics services#Transplace and 4istevo are e!amples of information&basedTPLs#

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Levels o! Outsourci"g i" Third Party Logistics Services

■ 4ot all third party logistics services are created e*ual when it comes downrelationship in the way you as a shipper will outsource to them# The follothe different types of levels of outsourcing you can see

Tra"sactio"al Outsourci"g: Based on transactions, with no long term no bonding between the PL and the outsourcing company#Tactical Outsourci"g: Outsourcing on a long term basis with negotiated

integrated IT systems to facilitate free information flow and create supply cvisibility#Strategic Outsourci"g: Based on long&term relationships with success

PL companies become partners in supply chain management and establistransactional transparency#

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Shi!ts o! Logistical Operatio"s i" the ,"ter"et $co"omy

Traditio"al logistics $-logistics

Orders Predictable EariableOrder cycle time 8ee9ly Daily or hour&ustomer Strategic Broader base

&ustomer service :eactive, rigid :esponsive, fle

7eple"ishme"t Scheduled :eal&time

istributio" model Supply&driven %push) Demand&dema"d Stable, consistent 0ore cyclical

Shipme"t type Bul9 Smaller lots

esti"atio"s 6oncentrated 0ore dispersio

'arehouse reco"!iguratio" 8ee9ly or monthly 6ontinual, rule

,"ter"atio"al trade complia"ce 0anual 2utomated

Technology has allowed TPL to offer comple! and8ide ranging services to their clients

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&ustomers o! TPL*sIndustry Global

CostsDome

Automotive $98.2 $ !."#ec nolo%y $&' ." $!!."

etailin% $98. $ !.2Consumer *roducts $& . $& .

+ood and Grocery $ 2.2 $2!.8,ealt care $ 8." $ ".-Industrial and lements $&!9.! $8"/t er $ $2'.#otal Costs $ !8. $ .

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)uyers o! TPL Services

Customer # of TPL’s Used

General Motors 37

Wal-Mart Stores 33

Ford Motor, HP 27

Pro ter ! Gam"le 2

General $le tr% &7Geor'%a Pa %f% , ()M &*

Pe+s%Co, Sears &3

Co a-Cola, Sara Lee, Tar'et, ero &2

General M%lls &&

.el+/%, Safe0a1 &

Creater the number of components involved in manufacturing more TPactivities will be outsourced

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TPL ) 8,NG P7O&$SS%+) Identify the need to outsource logistics

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+ typical TPL co"tract i"cludes///

Contra!t ter+s , nu+-er o. /ears 0Cost per a!ti it/Ser i!e an a!ti ities es!riptionSer i!e e e s

onus pa/+ent .or e !e ent per.or+an!ePena t/ ! ause .or ser i!e .ai ure& o!ation o. ro es an responsi-i ities% ris s aninsuran!e !ostsContra!t ter+ination ! ause*

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From Push to Pull Logistics

Su""lier Su""lier Su""lier

Manu)acturer

Customer

Distri'utor

Su""lier Su""lier Su""lier Su

Su""lier Su""lier Su""l

Manu)acturer

Distri'utor

Customer

*

Returns - Rec.cling +oint/o)/sale

Freig$t 0o#

+us$ +ull

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Top 09 TPL Providers by $ celle"c+# 6# # :obinson

'# cho

# Transplace

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+dva"tages a"d isadva"tages o! TPL

6an you thin9 of any other advantage or disadvantage GGG

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TPL Selectio"(■

8hat is the best way to choosthird party logistics provider

It depends on the 6O0P24H$situation

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Develop 9ey performance indicators and targets and incorporate thethe PL contract

6arefully develop internal logistics costs before meeting with potent providers

See9 broad company inputs at the :"P Stage

Solicit multiple :"Ps and closely chec9 references

Be sure the cultures of the two organi;ations are similar

Don$t give up complete control of your supply chain to the provide

Select only the services you really need

Suggestio"s !or First Time TPL sers;;

0a9e sure you understand the technology issues before proceeding to

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0a9e sure you understand the technology issues before proceeding tothe contract stage

Prepare to change you assumptions after the startup

0ove slowly before signing the contract

:etain your own lin9s with carriers

0anage your provider very closely#

:eputation, references, trac9 record %Is this firm already e!pertly performing this function for other firmsG)

Technology, *uality, e!pertise, leverage %Is this firm at its corecompetencyG)

:esponsiveness, delivery, cost, price %6an this firm improve our performance li9e customer support etcG)

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Secret to Success6ommunications"le!ibilityInnovationIntegrityPersonal ServiceProductivity:elationship 0anagement:esponsivenessTechnical 6ompetenceEalue

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&urre"t TPL &halle"ges

Industrial Dynamics Logistics "le!ibility Technological 2dvancements 2nticipation of "uture Trends

TPL l 0

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TPL e ample-0

The partnership between :yder Dedicated Logistics and C0 Saturn dis a good e!ample of PL# Saturn focuses on automobile manufact:yder manages most of Saturn other logistics considerations# :ydvendors, delivers parts to the Saturn factory in Spring ill, Tennedelivers finished vehicles to the dealers # Saturn Orders parts using Data Interchange % DI ) and sends same information to :yder# :ydall the necessary pic9ups from (( different suppliers in the =#S#, 6a

0e!ico using special decision&support software to effectively plan minimi;e transportation costs#

TPL e ample 1

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"inding of a survey conducted by eye for transport■ +3 logistics professionals from manufacturing and retail

companies responded to the survey, which was conducted by for transport# :esponses were contacted in a targeted emailcampaign that included select trade associations, industry reladatabases, and other highly specific groups#

TPL e ample-1

f f d

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ye for transport survey findings

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Fourth Party Logistics■ "ourth&party logistics %"PL) is an emerging new outs

concept# 2ndersen 6onsulting has defined "PL as K2 chain integrator who assembles and manages the resocapabilities, and technology of its organi;ation with thocomplementary service providers to deliver a compreh

supply chain solutionK# "PL can be considered as a comprehsupply chain solution which combines the capabilitimanagement consulting, IT technology and TPL&providers

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Third a"d Fourth Party Logistics Providers

Modes

Distribution Centers

Management

3PL

3PL

4PL

3PL

3PL

Manu factu rers

Parts andR aw

Mater ials

Reta

i lers

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i!!ere"ce bet%ee" 3PL a"d 4PL

"PL differs from TPL in several respects

"PL organi;ation is often a joi"t ve"ture between a primary clione or more partners#

"PL organi;ation acts as a si"gle i"ter!ace between the client amultiple logistics service providers#

2ll, or a ma or part, of the clientMs supply chain is outsourcedorgani;ation#

Predictio"s a"d &o"clusio"s

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Predictio s a d &o clusio sThe total mar9et for freight transportation intermediaries is still growing with the boomcommerceJ

The conventional TPLs will not fade, but will face with the competition from the onlin providersJThe companies have to combine the logistics e!pertise with advanced technology to evStrategic alliance and merge>ac*uisition will be important to obtain comprehensive ansupply chain solution capabilityJSmall carriers and niche carriers will benefit from increased access to shippers and redcosts0edium si;ed and Large carriers may resist and try to continue business as usual or simp

become e&commerce enabled using current business modelsThe +'(N on&line freight mar9etplaces will be reduced to less than +( leaders and a fewniche players in near future#

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7e!ere"ces

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7e!ere"ces■ A Study on Factors Infuencing the Selection o 3PL Logistics Providers – sers Perspective

,2 160* )etrie e 12 a/ 2 16% .ro+http" g o-a -i resear!h*org $u-ai:Con.eren!e p . p . $412*p .

■ FA!"#$S I%FL &%!I%' "(I$D PA$") L#'IS"I!S P&$F#$*A%!& +AS&D #% *A% FA!" $&$ SP&$SP&!"I,& "(& $#L& #F "$ S" AS A *&DIA"#$ * ,2 160* Docplayer.net * )etr2 16% .ro+ http" o!p a/er*net 1456717 ';a!tors'in

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