3rd PARTY WAREHOUSE AND TRANSPORTATION OPERATORS Industrial engineering management E-Book

Industrial Engineering Management Systems Approach to the Enterprise Vision

L | C | LOGISTICS ENTERPRISE SUPPLY CHAIN MANUFACTURING & COMMERCIAL LOGISTICS OPERATIONS …._____ _ PROCESS INNOVATION-OPTIMIZATION & ENGINEERING PROJECTS MANAGEMENT….

Industrial Engineering Management E-Book

INDUSTRIAL ENGINEERING MANAGEMENT FUNDAMENTALS AND HOW IT WORKS

February 2015

Expertise in Process Engineering Optimization Solutions & Industrial Engineering Projects Management

Supply Chain Manufacturing & DC Facilities Logistics Operations Planning Management

Chapter VII 3rd PARTY WAREHOUSE AND TRANSPORTATION OPERATORS

Systems Approach to the Enterprise Vision

Chapter VII3rd PARTY WAREHOUSE AND TRANSPORT OPERATORS

Some Brand owners companies introduce their high value products, like cosmetics, pharmaceuticals, medical supplies and others none high value merchandise such as apparel, sports gear and equipment, with the support of 3rd party accounting, warehousing and transportation operators In this way, the Brand owner’s management and staff concentrate their efforts in marketing and sales activities

There are basically two types of operators, one providing warehousing facilities and other kitting and co-packing services based on intensive labor The other operator offers transportation services, and at times the two operators work together to service the same client, integrating the services of warehousing and deliveries



In some cases the client will have their own administration staff and computer system installed at the operator’s warehouse admin office, in order to receive their customers orders, process their invoice for picking and delivery control and to control their stocks movements and balances Otherwise, the warehouse operator will be prepared to offer the administration services to the client and also to manage the transport operator on behalf of the client In any case, the client will have a manager or supervisor dedicated to look after the operation and services provided by the operators, besides the staff from the accounting department, tracking every bill and expenses claimed by the operators



The services are charged as per each activity, such as receiving stocks, moving to storage, picking or retrieving from storage, loading into trucks, kitting and co-packing, issued warehousing stocks activities reports The delivery transportation charges are normally charged per delivery drop within a route, per round trip, per half or full day deliveries within the city Cost is calculated on an “open book bases” plus margin and efficiency performance is evaluated on a job-by-job results Followed by a complains, whenever there are costly mistakes



Usually the 3rd party Logistics and transportation company sale their “Logistics Services” through soft marketing presentations, showing the advantage of managing the potential customer logistics operations on their behalf, through their vast “Logistics experience” The Marketing efforts are very strong, solid and at times very credible, however, they regularly do not have the management, admin and labor force to manage the customer facilities. So it is basically a well prepared marketing presentation Their headache, once the 3rd party logistics operator signs the contract with the customer, is to find the managers, supervisors, admin and labor staff, to work in this new contract

Their human resources department is always going through a hard time, and that is besides finding replacements due to their high staff turnover



Once the customer sign with the 3rd party logistics company, then, they have to go into the hiring market to recruit the managers, supervisors, admin and labor force to manage the customer operation; if it is within the customer’s facilities; otherwise, they also have to go out and rent the facilities space and transportation to operate the customer logistics operation Many times they use their well-documented standard operational procedures, with the promise that, it is part of their know-how and management technology, already proved in other countries, within the industry, or with the customer’s competitor



However, the reality is, that, the new recruited managers, supervisors, admin and labor staff have other knowledge and experiences and not necessarily, understand and know, how to apply or use the 3rd party logistics company operational procedures documents, written and prepared for marketing presentations, rather than for real working life situations



At the same time, the 3rd party logistics operator, might not have anyone within their organization, to train and teach the new recruited staff, all about these well prepared and presented marketing documents Everyone will have to go through the learning curve and operational process, before they can really perform, as it was presented during the marketing show to the customer In regards to materials handling equipment, computer software and any other tool to be used during the performance of the 3rd party logistics operator, the customer will have to pay the full rental cost or purchase cost, staff and or operators cost, plus the overall commission, plus the overall management fee



The same will apply to the rental of warehouse space; the service price comes with a premium cost, covering actual cost, plus staff and operators cost, plus commission, plus management fee In regards to transportation; very seldom the 3rd party logistics operator own a vehicle or a few vehicles; most of the time, they have to make contracts with independent transporters, who fix their vehicles service price, regardless of what the 3rd party company wants, or try to bargain with the transporter company owner Very seldom or almost never, the transporter company will give way to the bargaining of the 3rd party logistics company. At the end the contracts are signed with a one year period, revised every year, and with wide coverage due to the world wide fuel price fluctuations, where by, the transporter cover themselves, from any irregularity in the world wide fuel prices changes



The customer has to accept most of these conditions, and the management of the transporter is based on what the transporter can offer, rather than on what the 3rd party logistics operator would like to do The reason is, that the transporter itself wants to become a 3rd party transportation and warehousing logistics operator, and always wants to learn how the 3rd party company gets their customers What the transporter company do not have, is the marketing know-how, and also do not have a brand name as the 3rd party logistics operator usually has



That is the weak point of the independent transporter, and it always happen the same to the independent warehouse operator The lack of high end marketing resources, to go out into the market and sell their services for a premium price, including management fees and commission Trucks and Warehouse rented facilities are mainly painted and decorated with the 3rd party logistics operator colors, flag and logo



It is all part of their marketing efforts, as well as the use of standard working uniform, and standard procedures

which by the way they are all very standard around the world, regardless of industry, country and level of automation materials handling equipment used; ERP computer systems in place; cloud website technologies, and or the use of android smart phone devices for their data transfer In another document, I will show you how to calculate everything from high bay steel pallet racks to be used with cranes, narrow aisles, turret trucks, reach trucks, mini loads containers high bay shelf’s storage, mezzanine floors, shelf’s racks; including how to calculate the specifications for steel racks uprights columns and beams, storage slab floors loadings, and materials handling operational layouts flow



Also I will explain you all about conveyors for all applications; how to calculate and select what is required, conveyors type, materials, electric motors, speed inverters, loadings, transport speed, etc., all based on all type of transportation facilities available in the market, for mechanical, semi-automated and fully automated installations In regards to transportation I will show you how to calculate the total transportation costs, for all type of deliveries such as milk runs, just in time, price per parts, delivery per trip, and how to select all type of vehicles from 4 wheel pickups, 6 and 10 wheel trucks to TEU container trucks, twin boxes trucks, and all about in-land transportation for nationwide delivery, freight forwarding TEU containers delivery to port, urban drop deliveries, inter factories deliveries, etc.



I will show you how to design urban delivery routes, and how to create your simulation tables, to calculate and change all your logistics cost variables data on an what if bases, so that you can plan and organize your logistics operation, and determine your growing or contracting requirements, based on your seasonality needs and or your own internal growth

All summarized in your costing and P&L template for your own budget planning

Industrial Engineering Management Systems Approach to the Enterprise Vision

L | C | LOGISTICS ENTERPRISE SUPPLY CHAIN MANUFACTURING & COMMERCIAL LOGISTICS OPERATIONS ….

_____ _ PROCESS INNOVATION-OPTIMIZATION & ENGINEERING PROJECTS MANAGEMENT….

Industrial Engineering Management E-Book

INDUSTRIAL ENGINEERING MANAGEMENT FUNDAMENTALS AND HOW IT WORKS

February 2015

Expertise in Process Engineering Optimization Solutions & Industrial Engineering Projects Management

Supply Chain Manufacturing & DC Facilities Logistics Operations Planning Management

THANK YOU

Chapter VII 3rd PARTY WAREHOUSE AND TRANSPORTATION OPERATORS

3rd PARTY WAREHOUSE AND TRANSPORTATION OPERATORS Industrial engineering management E-Book

Engineering

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