Third Party Logistics Libby Ogard Prime Focus LLC October 20, 2004.
-
Upload
alexina-owen -
Category
Documents
-
view
214 -
download
0
Transcript of Third Party Logistics Libby Ogard Prime Focus LLC October 20, 2004.
Source: Council of Logistics Management
Definitions
• Third Party Logistics (3PL): Outsourcing all or much of a companies logistics operations to a specialized company
• Third Party Logistics Provider: A firm which provides multiple logistics services for use by customers. Preferably, these services are integrated or “bundled” together by the provider. These firms facilitate the movement of parts and materials from suppliers to manufacturers and finished products from manufacturers to distributors and retailers. Among the services which they provide are transportation, warehousing, cross-docking, inventory management, packaging and freight forwarding.
Why Outsource?
• 80% of the top 400 US companies operate on a global scale
SHANGHAI, CHINA
PHILIPPINES
U.K.
HONG KONG
KOREA
JORDAN
HONDURAS
DOM. REPUBLIC
LOS ANGELES, CAL.
SAIPAN
LEGEND MERCHANDISING & PRODUCTION SERVICES
PRODUCTION SERVICES
US - Hayward
SRI LANKADHAKA, BANGLADESH
NEW YORK, NY
F I J I
TAIWAN
MAURITIUS
SWAZILAND
ISRAEL
EGYPT
PORTUGAL
SPAIN
MINNEAPOLIS, MINN.
HAYWARD CAL.
GUADALAJARA, MEXICO
GUATEMALA
NICARAGUA
LAHORE, PAKISTAN
NEW DELHI, INDIA
FRANCE
CHITTAGONG, BANGLADESH
MALAYSIA
MADRAS, INDIA
BANGALORE, INDIA
BOMBAY, INDIA
GUANGZHOU, CHINA
DONGGUAN, CHINA
QINGDAO, CHINA
TIANJIN, CHINA
MEXICO CITY, MEXICO
THAILAND
SINGAPORE
POLAND
INDONESIA
DUBAI
KENYA
Madagascar
MILAN, ITALY
FLORENCE, ITALYTURKEY
SHENZHEN, CHINA
EL SALVADOR
BRAZIL
LESOTHO
DURBAN
VIETNAM
BAHRAIN
KARACHI, PAKISTAN
Outsourcing - Industry Trends
Description Savings Realized
Route Design & Optimization
Closed Loop Dedicated Operations
Mode Conversion
Core Carrier Management
Rate Negotiation & Audit
Inbound Consolidation
Reverse Logistics
DC Location Realignments
Reduced Inventory
10-15%
15%
10-15%
5-10%
4-5%
20-25%
10-15%
10-12%
7-10%
Contract Logistics Savings Potential
FY 2003 Fortune 500 Global 3PL Gross Revenues by Industry
Consumer Products, $2.20
Healthcare$2.80
Food $6.40
Insdustrial $18.8 Other $2.90
Automotive, $26.7
Technology $22.20 Retailing $16.20
Automotive Technology Consumer Products
Retailing Health Care Food
Industrial Other
Costs stated in Billion's of Dollars
Customers of 3PL’s
Industry Global Costs
Domestic Costs
Automotive $98.2 $37.4
Technology $156.4 $77.4
Retailing $98.6 $67.2
Consumer Products $13.6 $13.3
Food and Grocery $32.2 $27.8
Healthcare $38.4 $34.0
Industrial and Elements $179.7 $84
Other $63 $25.3
Total Costs $678.3 $366.3
Armstrong and Associates 2004
Customers of 3PL’s
Percent of Fortune 500 Companies Using 3PL’s
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
1-100 101-200 201-300 301-400 401-500
2002
2003
Buyers of 3PL Services
Customer # of 3PL’s Used
General Motors 37
Wal-Mart Stores 33
Ford Motor, HP 27
Procter & Gamble 20
General Electric 17
Georgia Pacific, IBM 16
PepsiCo, Sears 13
Coca-Cola, Sara Lee, Target, Xerox
12
General Mills 11
Delphi, Safeway 10
Source: Armstrong and Assoc 2004
Services Provided By 3PL’s
Transportation Mgt21%
Private Fleets7%
Intermodal4%
Warehousing21%
Value Added20%
International9%
Integrated9%
Other5%
Lead Logistics4%
Top Providers Est. Rev. ($M)
2003 Rank Provider 3PL 2003 Revenue1 Excel $8,300
2 Kuehne & Nagel $6,900
3 Schenker $6,400
4 DHL $5,700
5 P&O Nedlloyd $4,800
6 TGP/TNT $4,700
7 Panalpina $4,600
8 UPS Supply Chain $4,100
9 Nippon Express $4,000
10 C.H. Robinson $3,600
11 Menlo Worldwide $3,100
12 NYK Logistics $3,000
10 Commandments of Outsourcing
1. Develop a strategy for outsourcing
2. Establish a rigorous provider selection process
3. Clearly define expectations
4. Develop a good contract
5. Establish sound policies and procedures
6. Identify and avoid potential points of friction
7. Communicate effectively with your partner
8. Measure performance and communicate results
9. Motivate and reward provider
10. Be a good Partner