OUTSOURCING

Outsourcing refers to the process of involving a third party in order to bring about an increase in profit. This is done to ensure the reduction of inhouse cost and instead concentrate on the utilization of the available resources. It revolves around the concept where in an arrangement is made by one company with another company, to provides services tothat would have otherwise have been implemented in-house. It is The process of hiring another company to manage, maintain & run some portion of a firm's business.

REASONS
There are many reasons for outsourcing. The main reason is in order to concentrate in core competencies and to overcome resource constraints. There is a cross pollination of better available practices which ensures better results. The Cost savings result in better management of the supply chain. There is a wider geographical coverage and increase in flexibility. This process improves overall operating performance.

RISKS INVOLVED
Operational issues at service provider's end Non-alignment of company's & service provider's goals Inability of the service provider to cope with the organization's changing requirements Service provider's outlook on business may not match the company's business philosophy & vision

THIRD PARTY LOGISTICS

The trend of using a strategic partnership in integrated logistics has become an accepted practice in the industry. These partners are called third party service providers or 3PL or TPL. According to the Council of Supply Chain Management Professionals, 3PL is defined as 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, crossdocking, inventory management, packaging, and freight forwarding The most important aspect of a 3PL is that they are external to the company. They Handle one or more of the supply & demand management functions such as pick & pack, warehousing, distribution, tracking & tracing and cross-docking. The service provider who provides only one type of service viz standalone

basis is called a wholesaler. He may provide any of the services such as warehousing, transportation inventory management, packaging etc. The service provider who provides total
logistics solutions to customers on an integrated basis is called an integrator. The industry shows a preference for integrated logistics service providers as the solution to several logistics problems can be obtained from a single source.

The 1990s witnessed a growth of 3PL firms, when organizations around the world started concentrating on the entire supply chain & realized that logistics is the key to success of supply chain.Initially organization were outsourcing only warehousing & transportation to 3PLs As organizations started realizing the benefits of 3PLs, 3PLs were invited to provide services in the areas of multimodal transportation, freight consolidation, cross-docking, payment collections etc. As this service industry is in the mature stage in developed countries, there is stiff competition in this sector. Hence 3PL firms are offering: End-to-end services and customized services Value-added services such as consignment tracking, real-time data access & analysis etc Prominent 3PLs in India: All Cargo Global Logistics Ltd. Patel Integrated Logistics Pvt. Ltd. Safexpress Pvt. Ltd. Gati Mahindra Logistics TVS Logistics Services Ltd. Western Arya Logistics Transportation Corporation of India FedEx Ltd. DHL

FOURTH PARTY LOGISTICS

IT plays a key role in logistics & SCM. Integration of logistics, which is a complex process, is totally dependent on the support of IT. A new trend has emerged wherein IT firms which are non-asset based firms, are now working with various carriers and warehouses in order to stitch together integrated supply chains, this is known as 4P logistics. The basic approach behind 4PL lies in forming a collaborative relationship among various logistics service providers based on IT as the backbone. They act like a consultant rather than an active member in the process.

Definition
A fourth-party logistics provider is an independent, singularly accountable, non-asset based integrator of a client's supply and demand chains The term 4PL is generally considered to have been introduced by Accenture.

 Accenture described the 4PL as an "integrator that assembles the resources, capabilities, and technology of its own organization and other organizations to design, supply chain solutions 4P logistics should fulfill the following requirements: They should cover the entire supply chain of the customer and provide a collaboration between two or more logistics service providers on a resource-sharing basis to extend logistics solutions to a common customer. This should be a flexible arrangement.

Rather than just operational cost reduction provided by 3PLs, 4PL works in four ways (code word to remember: red cake was fantastic) Increase revenue Reduce cost Reduces working capital Reduces fixed capital The following are examples of non-asset based consulting firms exclusively specialized in logistics, transportation, and supply chain management Supply Chain Management Outsource SCMO BMT Limited MVA Consulting TTR CPCS 3t-Europe The above offer complete ranges of services, from strategy to implementation Other more generalist consulting firms such as the Big Four auditors Deloitte, PricewaterhouseCoopers, Ernst & Young, and KPMG, as well as Accenture

DIFFERENCE BETWEEN 3PL and 4PL

3PL
A 3PL is an operator, which specializes in integrated operations, warehousing and transportation services 3PL owns and manages the assets (manpower, warehousing, transportation etc) 3PL's core activities including cross-docking, inventory management, packaging, and freight forwarding

4PL
4PL is a consultant, and not an operator 4PL provides intellectual capital and IT backbone 4PL leverages the capabilities of 3PLs and supplies technology-based service through a centralized point of contact