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    Objectives By 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 conomy List 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 distribu are legally bound and responsible to perform the re*uested logistics activi the 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 Facts Phase 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 Logistics Department

    Shipper

    Transportation

    IT support Warehousing

    Others

    In-house Operation

    Outsourced Operation

    3PL

    Shipper

    Shipper

    Shipper

    Transportation

    Warehousing

    IT support

    SC integration

    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 Logistics Providers

    Sta"dard +dva"ced &omplete

    8arehouse management Transportation Dispatching Delivery documentation

    6ustoms documentation

    2ssembly Pac9aging :eturns Labeling

    Stoc9 accounting

    Order plannin processing IT manageme Invoicing

    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"-)ased Services e!tend beyond transportation to offer a comprehensive set of logistics offerings#

    Leveraged PLs use assets of other firms#

    4on leveraged PLs use assets belonging solely to the parent firm#

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

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    1- 'arehouse2 istributio"-)ased 0any, but not all, have former warehouse and>or distribution e!perience#

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

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

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

    4on&asset owners that capably provide a wide range of logistics services# 2 I, @uehne A 4agle, "rit;, 6ircle, 6# # :obinson, and the ub Croup 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 managing inventory# 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 begi to end# Provides technology, such as a transportation management sys and 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 rate maintenance and negotiation Cives information, such as freight data and matri! reports for b visibility and control on future logistics outcomes 6erasis, 2"S Logistics, ClobalTran;, 8orldwide !press are

    !amples of Shippers>0anagement & based TPLs#

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    6- ,"!ormatio"-)ased Significant growth and development in this alternative catego of Internet&based, business&to&business, electronic mar9ets transportation and logistics services# Transplace and 4istevo are e!amples of information&based TPLs#

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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 down relationship in the way you as a shipper will outsource to them# The follo the 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 c visibility# Strategic Outsourci"g: Based on long&term relationships with success

    PL companies become partners in supply chain management and establis transactional transparency#

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

    Traditio"al logistics $-logistics

    Orders Predictable Eariable Order 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&d ema"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! and 8ide ranging services to their clients

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    &ustomers o! TPL*s Industry Global

    Costs Dome

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

    etailin% $98. $ !.2 Consumer *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% &7 Geor'%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 TP activities 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 0 Cost per a!ti it/ Ser i!e an a!ti ities es!ription Ser i!e e e s

    onus pa/+ent .or e !e ent per.or+an!e Pena t/ ! ause .or ser i!e .ai ure & o!ation o. ro es an responsi-i ities% ris s an insuran!e !osts Contra