86170834 Presentation 1 of 3pl and 4pl

8/10/2019 86170834 Presentation 1 of 3pl and 4pl

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BY

Gajendra Behera.


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LOGISTICS

Logistic is the flow of goods, services,information, etc from point of origin to thepoint of consumption (at a specified time )

to meet the requirement of consumers. Itinvolves integration of information ,transportation, inventory, ware housing,material handling, packaging and

occasionally the security. Logistic is thechannel of supply chain which adds thevalue of time and place utility.


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Third PartyLogistics

Third-party Logistics is simply the use ofan outside company to perform all or partof the firms materials management and

product distribution function.-- Simchi-Levi


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3PL

WAREHOUSE

IT SUPPORT

SCINTEGRATION

OTHERS

TRANSPORTATIONFIRMS

FIRMS

FIRMS

FIRMS

IN-HOUSE LOGISTICDEPARTMENT

IT SUPPORT

OTHERSTRANSPORTATIONWAREHOUSE

OUTSOURCEDOPERATION

IN-HOUSELOGISTIC

FIRMS


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OBJECTIVES OF 3PL Reduction in Risk and Liability.

Value added services to Customers.

Source of process improvement.

Wider market coverage.


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Key Driver For 3rdParty Distribution

Cost factor .

Service factor .

Organizational factor .

Physical factors.


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PAST V/S PRESENT LOGISTICS EXPENDITURES

FOR 3PL

0%

10%

20%

30%

40%

50%

60%

70%

80%

North America Western

Europe

Asia-Pacific Latin America

2006

2009-2011


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Drawbacks of 3PL

Still requires top management's time tomanage

relationships & resources Unable to cover

full range of SC requirements e.g. logisticsinformation, tech development...

Lack of shared goals...

Loss of control. Impact on in-house workforce


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TYPES OF 3PL PROVIDER.

TRANSPORTATION BASED

WAREHOUSE/ DISTRIBUTION BASED.

FORWARDER BASED

FINANCIAL BASED

INFORMATION BASED


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Factors for 3PL Selection Core Competencies of 3PL Provider Cost of 3PL Services Information Handling Capability / Compatibility Breadth of Services Provided

Past Experience of your Industry Technological Competencies of the Provider System Flexibility & Capacity Safety & Insurance Cover / Programs

Geographical Location & Spread Company Reputation Responsiveness & Service Quality Management Structure & Quality of Workforce


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SERVICES PROVIDED BY 3PL

VENDOR MANAGEMENT INVENTORYORGANIZATION (V.M.I)

WAREHOUSE INFORMATION SYSTEM

(W.I.S). FREIGHT FORWARDING SERVICE

PROVIDER (F.F.S).

CUSTOM HOUSE AGENT (C.H.S)

SOFTWARE APPLICATION SERVICEPROVIDER (S.A.S.P).


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ROLE OF F.F.S AS 3PL ORGANISATION

It is outsourced for a total cost effective andtime effective supply chain activities.

It provide service for both forward and Reverselogistic.

Aware of rule of the country in in total globalscenario .

Perfection about visibility of the consignment withknowledge domain of GPS , RFID , etc.

Awareness of IMO codified hazardous Goods .

Aware of EPA and Green planet (environmentprotection act.


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MaterialProcurementdepartment

INWARDSTORES

FINALASSLY

F.GSTORES

LOCALSUPPLIER

IndigenousSupplier

GLOBALSUPPLIER

DISTRIBUTIONCHANNEL

CustomerPlaces order

WEBSITEWeb based

Order process

-ing System

ONLINEBANKING

softwareApplication

ServiceProvider

Software application service provider


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3PL Providers


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FOURTH PARTY LOGISTIC

Fourth party logistics is an external organization who isable to provide a user with an overall supply-chain-widesolution by incorporating the resources and expertise ofany number of third parties to best effect. It will be

involved in both the design and the management of theclients logistics system and will act as a coordinator formany different types of services , which may includedistribution, information system, financial services, etc.


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ORG

ANIZAT

ION

4PL

3PL Providers

IT ServiceProviders

3PL Providers

Provider


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LOGISTICS OUTSOURCING


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LOGISTICS OUTSOURCING

MODELS

Basic services(Logistics ServiceProviders)

Value-Added(Third Partylogistics)

LeadLogistics(4PL)

AdvancedServices

Insourcing


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4PL : differs from 3PL...

The 4PL organization is often separate entityestablished as a joint venture or long termcontract between a primarily client and one ormore partners.

It acts as single interface between the client andmultiple logistics service providers.

All aspects of the clients supply chain aremanaged by the 4PL organization.

It is also possible for a major 3PL provider toform a 4PL organization within existing structure


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4PL Set-up

Primary Client

Contribution

PartnersContribution:

3PL ProvidersContribution:

Start-up equityAssetsWorking capitalOperational

expertiseOperational

staff

Transportation services

Ware house facilities

Set-up equity

Logistics strategy IT development Customer service management Supplier management Logistics consultancy

Best practices

PrimaryClient's)

4PLOrganization

Partners


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The role of a 4 PL agency

Interacting with the marketing function tounderstand the desired availability of productsat different geographical locations at differenttimes.

Interacting with manufacturing function tounderstand the production scheduling.

Depending on A & B, defining the shipment size.

Hiring of godowns (Bonded or otherwise) at

different geographical locations. Planning and establishing the logistics hubs

which are large and modern warehouses.


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Hiring of Freight Forwarders and Custom House Agents incases of exports and imports.

Doing all the above for multiple clients to reduce the cost toindividual manufacturing organizations.

Hiring the services of 3PL agencies

Understand the transport/handling needs within the premisesof the manufacturing organization and outsourcing these tosmall transporters.


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SERVICES OFFERED BY 4PL.

A total supply chain perspective;

Visibility along the supply chain;

Measurement along the supply chain (cost

and performance). Open systems;

Technical vision;

Flexibility.


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Advantages of 4pl.

Addressing strategic failures.-minimizing the time and effort spent on logistic by the user.

- a single point of contract for all aspects of management.

- It can source different specialist with best in class credentials.

Addressing service and cost failures.-freeing the user company's capital for core/ main stream use by selling assets.- the continuous monitoring and improvement of supply chain process, performance andcost .

Addressing operational failures.- it is easier to eradicate old industrial relations issue.

- More flexible working environment can be established.

Additional benefits.-provision for supply chain accountability for achieving desired performance ,

-the provider assumes risk on behalf of the user in return for a share ofprofit.


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FUTURE OF FORTH PARTY LOGISTIC

The 4PLs are thus basically specializedconsulting organizations not owninglarge resources but having a focused

team of experts.Even the interaction with 5 PLs would

be done by 4PLs.


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1.TRANSPORTATIONCourier, Air, Rail, Road, Inland Waterways,

Ocean or Multi-modal- Service provider details

- Services offered- Market rates- Different routes- Transshipment points

- Transit times- Insurance coverage's- Imbalance of containers

FIFTH PARTY LOGISTIC


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5. REFERENCE DOCUMENTS- Cabot age laws- Service tax manuals- Concor manuals

-ICD/ CFS manuals

6. All other information regarding host ofrelated subjects- Banking and bill discounting

- Financing- Warehousing


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CONCLUSION 55% companies use 3PL services in India one form or the

other compared to 75% globally

3PL And 4pl are the future, should be seen as a support tocorporate growth

Close to 60 % of 55% uses transportation and custom

clearing & forwarding Of the rest 45%, 75% do not use 3PL services because

they are not sure of providers capability

Company should focus on outsourcing 3PL services likeinventory management, order processing, labeling &

packaging and reverse logistics Use of IT in 3PL services is very low both by user and

provider


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3PL and 4PL providers feel thatUsers are unwilling to share information

Do not show commitment towards therelationship.

Do not want to share rewardsDo not show interest in continuing the

relationship

Contracts are used more to avoid risks rather

than to develop relationship Today in India, the 3 PL concept is getting

established, the 4 PL agencies are justcoming up and 5 PLs are on the horizon.


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86170834 Presentation 1 of 3pl and 4pl

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