A NEW WAVE(3PL)

By:- KUNAL JHA LAKSHYA SOOD

Third Party Logistics - India

“Third-party Logistics is simply the use of an outside company to perform all or part of the firm’s materials management and product distribution function.”

-- Simchi-Levi (2000)

“A relationship between a shipper and third party which, compared with the basic services, has more customized offerings, encompasses a broad number of service functions and is characterized by a long-term, more mutually beneficial relationship”

-- Murphy & Poist (1998)

Third Party Logistics

Characteristics of 3PL

Perform outsourced logistics activities Process management / Multiple activities More customized services Mutually beneficial and risk-sharing relationship Long-term commitments (1~ 3 years)

Why is it needed?

Advantageso Cost reductiono Focus on core competencyo Improved efficiency, service and flexibilityo Industry-specific application – “build-to-order” systems and e-merchants

Disadvantageso Loss of controlo Impact on in-house workforce

Types of 3PL Providers Transportation-Based Warehouse/Distribution-Based Forwarder-Based Financial-Based Information-Based

A practical overview

• 1 billing cycle• A cycle completes in 15 days• 50% in advance• Forward the acknowledgement to the

transporter

Budget Allocation

• According to Delhi Transportation Corporation:-

• Unskilled Labour = 247• Semiskilled Labour = 273• Skilled Labour = 301

Budget Allocation

• Available Budget = 10 lakh• No of truck = 2• Cost of 1 Truck = 1.5 lakh (CNG)• Total cost = 2*1.5 = 3 Lakh• No of labour = 4• No of working days = 300• Cost of 1 labour = 300*247=75k (app)• Cost of 4 labour = 3 lakh

Budget Allocation

• Remaining Amount = 4 lakh• Risk covering amount = 3 lakh• Maintenance charge = 1 lakh

Thank you