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3PL Presentation PDF
3PL Presentation PDF
3PL Presentation PDF
Overview
Introduction
Definition of Third Party Logistics (3PL)
3PL Evolution
Current 3PL Market
Types of 3PL Providers
By Services
By Operations
By Contract Type
Role of Third Party Logistics in Supply Chain & Company
Performance
Logistics Outsourcing
Selection Criteria for 3PL Selection
3PL Relationships
Challenges of EPL
Organizations move
“ materials (tangible &
intangible) to support
their operations
”
LOGISTICS is responsible for these movements; it manages the
transport & storage of materials from original suppliers through
supply chains and to its final customers
3PL Definition
A third-party logistics (3PL) is a firm that provides services to its
customers of outsourced (or third-party) logistics services for
part or all of their supply management function Preferably,
these services are integrated, or bundled together, by the
provider. Among the services 3PLs provide are transportation,
warehousing, cross-docking, inventory management,
packaging, and freight forwarding
[Wikipedia]
A firm that provides multiple logistics services for use by
customers. Preferably, these services are integrated, or
bundled together, by the provider. Among the services 3PLs
provide are transportation, warehousing, cross-docking,
inventory management, packaging, and freight forwarding
[CSCM]
Evolution
Types of 3PL
▪ SERVICES
• Standard 3PL Providers
• Service Developers 3PL
• Customer Adapters 3PL
• Customer Developers
▪ OPERATIONS
• Transportation-Based
• Warehouse/Distribution-Based
• Forwarder-Based
• Financial-Based
• Information-Based
▪ CONTRACT
• Fixed fee.
• Cost plus.
• Fixed/Variable pricing
Types of 3PL
Warehouse/
Transportation-Based
Distribution-Based
•FedEx • DSC
•UPS Logistics
•Ryder • IBM
Forwarder-Based Financial-Based
• Cass
• Kuehne &
Information
Nagle
• GE
• Hub Group
Information
• Fritz
• FleetBoston
Services are provided beyond
transportation and offer
different set of logistics offerings
Leveraged 3PL use assets of
other firms
Non-leveraged 3PL use assets
that belong only to the parent
firm
Transportation-Based
Some of the companies have
warehouse and/or distribution
expertise
Warehouse/Distribution-Based
They are independent
middlemen who extend
forwarder roles
They are owners with no-assets,
but are capable in providing a
variety of logistics services
Forwarder-Based
This type of 3PL provides freight
payment and auditing,
accounting services and
control, tools to monitor,
bookings, tracking, tracing and
managing inventory
Financial-Based
Drivers & Challenges
Drivers & Challenges
There are a large number of
advantages and disadvantages
claimed for and against both third
party and in-house distribution. The
major drivers can be split into
different categories as follows:
▪ Organizational
▪ Financial
▪ Service
▪ Physical
Drivers - Benefits
Organizational
Focus on their core business or core competence
Access to wider knowledge
Financial
Capital cost advantages
Improved cash flow
Converting fixed cost to variable
Economies of scale
Operating cost savings
Clearer picture of actual operating costs
Drivers - Benefits
Service
Greater flexibility
Value added services
Logistics service improvements
Physical
Complexity
2012 2013
3PL Market with Figures
80
Outsourcing Spending Patterns (%)
71
70
66 66
61 60
60 Total Logistics Expenditures as a
56 55
54 Percentage of Sales Revenues
50 48 47
46 45 Percent of Total Logistics Expenditures
42 41 42 42 42 Directed to Outsourcing
39 39 40 39
40 38
36 36 35
33 Percent of Transportation Spend Managed
31 31 32 30 by Third Parties
30
0
All Regions All Regions North North Europe 12 Europe 13 Asia Pacific Asia Pacific Latin Latin
12 13 America 12 America 13 12 13 America 12 America 13
3PL Market with Figures
All North 3PL
Outsourced Logistics Service Europe Asia-Pacific Latin America
Regions America Percentages
International Transportation 76% 64% 86% 79% 82% 71%
Domestic Transportation 71 67 81 76 61 88
Warehousing 63 61 72 59 51 83
Freight Forwarding 53 54 60 46 47 64
Customs Brokerage 52 52 57 44 57 54
Reverse Logistics (defective, repair, return) 26 27 31 23 19 60
Cross-Docking 25 29 31 18 19 64
Product Labeling, Packaging, Assembly, Kitting
25 25 31 21 20 65
Transportation Planning and Management 22 24 27 19 15 70
Inventory Management 19 16 15 21 17 64
Freight Bill Auditing and Payment 18 32 13 11 5 34
Order Management and Fulfillment 16 20 18 16 9 65
Information Technology (IT) Services 13 16 16 14 9 50
Service Parts Logistics 12 11 14 12 12 39
Customer Service 10 8 7 17 14 67
Supply Chain Consultancy Services Provided by
10 14 7 9 9 56
3PLs
Fleet Management 8 8 8 8 9 26
LLP (Lead Logistics Provider) / 4PL Services 8 8 17 4 4 39
OA to 89%
87%
72%
OA from 83%
80%
67%
OFR to 81%
65% 79% 2010
OFR from 73%
2012
11% 58% 70%
Fixed Asset Reduction 25% 2013
26%
Inventory Cost Reduction 9% 25%
8%
15%
Logistic Cost reduction 13%
15%
0%
20%
40%
60%
80%
100%
So… Outsourcing?
3PL Selection Process
Managing 3PL Relationship
The 3PL/client relationship is a relationship where ‘partnership’ can provide the basis for the
business relationship. Good partnerships will encourage the sharing and joint development
of a strategic vision. Not only does a client get the benefit of the 3PL’s thoughts and
experiences, it also achieves their buy-in for the realization of the vision.
A high degree of trust and collaboration is required
Managing 3PL Relationship
For almost all new outsourcing arrangements, the initial issue after the contract has been
successfully negotiated is the successful implementation of the operation. As with any large
business project it is essential to identify and agree a project plan to ensure that
responsibilities are clear and that there is a feasible timetable for implementation.
Monitoring & Measuring 3PL