Transcript 3.03 3PLs
Third Party Logistics Types of Third Party Providers Asset-Based Services Offered Through Use of Supplier's Assets Often Dedicated Services (Contract Carriage, Warehousing) Management-Based Non-Asset-Based Act as Coordinators/Consultants Strength is Information Integrated Asset-Based Service Beyond Capacity of Assets Administrative Non-Asset-Based, Focus on Administrative Services Freight Bill Auditing/Payment Claims Management/Adjustment Third Party Logistics Asset-Based Third Party Providers Own Their Own Equipment Advantages Provide Name Recognition Financial Strength Equipment Availability Have In-House Expertise Ability to Handle Emergencies Disadvantages Internal Politics Lack of Management Commitment from Parent Difficult to Ensure Customer of Neutrality Third Party Logistics Management-Based Third Party Providers Do Not Invest in Equipment Contract with Other Companies Advantages Flexibility in Dealing with Carriers Frequently Have Excellent Information Systems Neutral Provider Ensures Serving Customer's Best Interest Disadvantages Lack of Name Recognition Unknown Financial Stability Lack of Expertise Difficult to Handle Emergencies Third Party Logistics Functions Outsourced to Third Party Providers Category Freight Bill Payment Shipment Consolidation Direct Transportation Service Custom Brokerage Warehouse Management Freight Forwarding Carrier Selection Tracking/Tracing Measure Carrier Performance Rate Negotiation Re-labeling /Re-packaging Order Fulfillment Product Returns Reverse Logistics IT System Operation Percentage of Firms Citing Usage 2000 2001 2002 2003 43 53 63 72 43 49 49 66 49 61 56 62 40 41 67 62 56 59 42 60 44 45 59 53 29 43 51 51 33 44 51 47 29 37 47 38 21 25 23 38 24 33 33 34 21 25 23 30 26 20 16 21 Third Party Logistics Major Users of Third Party Logistics Buyers of 3PL Services # of 3PLs Used General Motors 37 Wal-Mart Stores 33 Ford Motor, Hewlett-Packard 27 Procter & Gamble 20 General Electric 17 Georgia-Pacific, IBM 16 Du Pont, Home Depot 14 Altria Group, PepsiCo, Sears Roebuck 13 Coca-Cola, Sara Lee, Target, Xerox 12 General Mills 11 Delphi, Safeway 10 Colgate-Palmolive, Deere, Kroger, Lucent Tech 9 Dow, Exxon, Honeywell, IP, Kmart, Weyerhaeuser 8 Third Party Logistics Impact of 3PL Use on Firms Category Negative Employee Morale 22 Logistics Costs 10 Customer Satisfaction 6 Systems Development 10 Logistic Service Levels 1 Supply Chain Integration 2 No Impact Positive 45 33 14 77 29 65 47 43 14 85 35 63 Third Party Logistics 3PL Cost Benefits to Firms Percent of Respondents 3PL Service Reporting Benefits Warehouse Management 30 Rate Negotiation 16 Shipment Consolidation 14 Freight Bill Payment 30 Direct Transportation Service 14 Fleet Management/Operations 8 Carrier Selection 6 Freight Forwarding Third Party Logistics 3PL Service Benefits to Firms Percent of Respondents 3PL Service Reporting Benefits Warehouse Management 22 Order Fulfillment 11 Freight Bill Payment 9 Direct Transportation Service 9 Fleet Management/Operations 9 Tracking/Tracing 7 Third Party Logistics Reasons for Using Third Party Providers Category Labor Cost Savings Specialization Reduce Asset Use Inadequate Resources Transportation Cost Savings Expanding Workload Lack of Flexibility Importance Rank 2.08 1 2.29 2 2.36 3 2.43 4 2.54 5 2.54 5 4.07 7 1= Most important; 5 = Least Important . Third Party Logistics Reasons for Not Using Third Party Providers Category Loss of Management Control Company Policy Dictate Waiting for Industry Trends Lack of Specialized Vendors Organizational Resistance Human Resource Problems Importance Rank 1.62 1 3.44 2 3.59 3 3.67 4 3.74 5 4.04 6 1 = Most important; 5 = Least Important Third Party Logistics Problems with Using Third Party Providers Category Service Level Consistency Management Control Customer/Vendor Relations Company Policy Restraints Company Employee Relations Departmental Resistance Importance Rank 3.33 1 3.42 2 3.82 3 3.95 4 4.10 5 4.13 6 1 = Major Problem; 5 = Not a Problem Third Party Logistics Suggestions for First Time 3PL Users • Develop key performance indicators and targets and incorporate them into the 3PL contract • Carefully develop internal logistics costs before meeting with potential providers • Seek broad company inputs at the RFP Stage • Solicit multiple RFPs and closely check references • Be sure the cultures of the two organizations are similar • Don’t give up complete control of your supply chain to the provider Third Party Logistics Suggestions for First Time 3PL Users • Select only the services you really need • Make sure you understand the technology issues before proceeding to the contract stage • Prepare to change you assumptions after the startup • Move slowly before signing the contract • Retain your own links with carriers • Manage your provider very closely Carrier Selection Criteria Third Party Logistics Selection Criteria Transit Time Reliability/Consistency Door to Door Transport Rates/Cost Total Door to Door Transit Time Willingness to Negotiate Rates Financial Stability of Carrier Equipment Availability Frequency of Service Pickup and Delivery Service Freight Loss and Damage Shipment Expediting Quality of Operating Personnel Shipment Tracing Willingness to Negotiate Services Scheduling Flexibility Line Haul Service Claims Processing Quality of Carrier Salesmanship Specialized Equipment Importance Score Rank 1.301 1 1.405 2 1.551 3 1.611 4 1.807 5 1.878 6 1.892 7 1.899 8 2.037 9 2.054 10 2.108 11 2.118 12 2.162 13 2.267 14 2.389 15 2.338 16 2.635 17 3.476 18 .