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    An Overview of Third PartyLogistics

    Name - Manoj Kumar Dubey

    MBA (Evening) IIIrd Year

    Subject Supply ChainManagement

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    Overview Introduction

    Definition of Third Party Logistics (TPL)

    A Brief History of TPL Evolution

    Current TPL Companies

    Types of TPL Providers

    By Services

    By Operations

    By Contract Type

    Role of Third Party Logistics in Supply Chain & Company Performance

    Logistics Outsourcing

    Selection Criteria for TPL Selection

    TPL Relationships Current TPL Challenges

    Discussion & Questions

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    TPL Definition

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    Definition of TPL

    Third party logistics providers are independent

    companies providing single or multiple logisticsservices to a purchasing company. Third partylogistics providers, although they do not holdownership of the product for distribution, are legally

    bound and responsible to perform the requestedlogistics activities of the purchasing company. Therelationship between the two parties is long-term andbeneficial.

    (Papadopoulou, 2001)

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    A Brief History of TPL Evolution

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    1900 1960 1970 1980 1990 2000-2010 Time

    Incorporation

    Differentiation

    Integration

    Necessity

    Awareness

    Introduction

    6 Phases of TPL Evolution

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    Separated Integrated Combined Incorporated CorporateSingle

    Service Classification of TPL

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    A Few Historical FactsPhase Period Phase Name Characteristic

    Early 1900s - Late

    1950s

    Introductory Period Single Services

    Late 1950s - Mid 1960s Awareness Period Separate Services

    Mid 1960s - Late 1970s Necessity Period Integrated Services

    Late 1970s - Late1980s

    Integration Period Combined Services

    Late 1980s - Late1990s

    Differentiation Period Incorporate Services

    Late 1990s - Today Corporate Period Corporate Services

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    Factors Influencing TPL

    Development

    New Phenomena

    Internationalization

    Virtual Organizations

    Time & Cost

    Competition High Customer

    Awareness

    Political

    Technological

    Natural

    Legal Social

    Economic

    TPL

    PLESaNT

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    The TPL Survival Guide

    Cost efficiency of services

    Low but flexible costing Company control maintenance over the TPL services

    Compatible information technology

    Operational efficiency

    Technological development Specialization (service or industry)

    Consistency & reliability of services

    Maintenance of long-term contracts

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    Current TPL Companies

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    Top TPL by Excellence1. Ryder

    2. FedEx Supply ChainServices (tie)

    UPS Logistics

    3. Menlo Logistics4. C.H.Robinson

    5. Exel (tie)

    Schneider Logistics6. TLC

    7. Penske

    8. APL Logistics9. Danzas AEI (tie)

    Hub Group

    10. TNT Logistics (tie)USCO Logistics

    EGL Eagle Global

    Logistics

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    Which TPL is the Oldest? APL

    C.H.Robinson Worldwide UPS

    Caterpillar

    Ryder

    Tibbett & Britten (UK)

    Penske

    FedEx

    EGL

    Exel Logistics (UK)

    Menlo Worldwide Logistics

    1846 (but named APL 1953)

    1905 1907

    1915

    1933

    1958

    1969

    1971 (Roberts Cartage 1947 Ohio & Viking Freight 1966 Cal)

    1984

    1989 (NFCo 1982 NFC acquires Merchants Home Delivery &Dauphin Distribution Services)

    1990 by CNF Inc.

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    Types of TPL Providers(TPLP)

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    Classification of TPLP Service

    Simple service Combined service

    Added value services

    Industry

    Contract

    Public

    Private

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    TPL/Service Examples Warehousing

    Exel

    Tibbet & Britten USCO

    Trucking Frans Maas J.B. Hunt Logix Penske Logistics (Leaseway) Ryder Integrated Logistics Schneider

    Ocean Carriers APL Nedlloyd

    Air Freight DHL

    FedEx LEC&C / Caliber UPS - WWL

    Industry Caterpillar Logistics

    Fluor Daniel GATX W.W. Grainger

    Logistics Management Menlo TNT Logistics

    Value Added Logistics Services

    C.H. Robinson Danzas Fritz Hub Group Kuehne & Nagel Schenker

    Logistics Consulting

    Andersen Consulting GE Capital

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    Current Use of TPL by Industry

    75.9

    71.1

    61.4

    56.2

    53.8

    82.2

    Percentage of 3PL use in different industriesIndustry

    Computer

    Consumer

    Retail

    Chemical

    Medical

    Auto

    Modern Materials Handling,, 2008

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    Classification by Contract

    Public Carriers

    Common carriers

    Contract carriers

    Exempt carriers

    Private carriers

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    Role of TPL in Supply Chain &Company Performance

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    Logistics Chain

    Supplier Sourcing Inventory I:

    Raw Material

    Production

    Physical

    Distribution

    Customer/

    Buyer

    Inventory II:

    Finished Product

    Transportation Transportation

    Transportation

    Recycling

    Transportation

    Transportation

    Transportation

    Transportation

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    TPL Relations between Buyer-Supplier

    Supplier TPL Customer/Buyer

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    The Participation of TPL in the

    Supply Chain of A Product

    What is the role of third party logistics providersin this virtual supply chain?

    Can you guess how many third party logistics providers

    participate in the manufacture of cotton trousers?

    $ 450

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    The Supply Chain of TPL

    TPL Provider

    Suppliers

    Resource Suppliers

    Asset BasedManagement Based

    Integrated Service

    Product Suppliers

    Spare PartsFinal Product

    Manufacturer II Dealer or Intermediate Final CustomerBuyers

    Technology &

    Material Handling

    Human

    ResourcesTransportation

    Carriers

    Banking Legal

    AdministrationExporting Arrangements

    Information

    Technology

    Warehousing &

    Property Brokerage

    WholesalerManufacturer I

    (Spare Parts)

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    Participation of TPL in Company

    Performance

    Strategic Planning

    Operations Efficiency

    Logistics Competencies

    Speed

    Know-how

    Cost efficiency

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    Selection Criteria for TPL

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    TPL Selection

    What is the best way tochoose a third partylogistics provider?

    It DEPENDS on theCOMPANY SITUATION!!!

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    Some Selection Criteria (1) Technology, quality, expertise, leverage

    Is this function or business their core competency?

    Responsiveness, delivery, cost, price

    Can this firm improve our performance (e.g., customer support &/or

    our bottom lie?

    Reputation, references, track record

    Is this firm already expertly performing this function for other firms?

    Balance sheet, access to capital, resources

    Does this firm have the wherewithal & drive to invest in itself & thepartnership over the long term?

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    Some Selection Criteria (2) Corporate culture fit, prospects for partnership, commitment &

    flexibility

    Can we work comfortably & smoothly with this firm to achieve ourjoint strategic objectives?

    Reputation & recommendations

    Customer level satisfaction

    Customer turnover rate

    Area of service coverage

    Added value services

    Order processing

    Financial stability and punctuality

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    Current TPL Challenges

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    Current TPL Challenges

    Industrial Dynamics

    Logistics Flexibility

    Technological

    Advancements

    Anticipation of FutureTrends

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    Looking for the Future.

    So the bottom line is:

    Real-Time and Real-

    Cost Competition Customer Service

    Vision & Diversification

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    Discussion & Questions