AND

FPL

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 CONTENTS
1.Logistics outsourcing

2. Third party logistics

3.fourth party logistics

4.Difference between the TPL

and FPL.
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 LOGISTICS
Logistics is the management of the flow of goods
between the point of origin and the point of
consumption in order to meet some requirements.
information flow,

material handling,

production,

packaging,

inventory,

transportation,

warehousing, and often security

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 Logistics
outsourcing
Logistics outsourcing involves
between a company and an LSP (logistic service
a relationship

provider), which, compared with basic logistics

services, has more customized offerings,
encompasses a broad number of service activities,
is characterized by a long-term orientation, and
thus has a strategic nature

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Outsourcing - Industry Trends
Findings of a Survey : Why company's Outsource

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 Third-party
logistics
(3PL) involves using external organizations to execute
logistics activities that have traditionally been performed
within an organization itself.

For example, if a company with its own

warehousing facilities decides to employ external
transportation, this would be an example
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The evolution of 3PL market is explained with reference to three
distinct phases

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arun palanisamyI MBA, TNAU. 2/27/17 9
Services Provided by 3PLs
Service Basic Service Some specific value
Category added services
Transportation Inbound, outbound by Track/trace, mode
ship, truck, rail, air conversion
Warehousing Storage, facilities Cross-dock, in-transit
management merge, inventory control
Information Provide and maintain Transportation management
technology advanced information systems, warehousing
systems management
Reverse logistics Handle reverse flows Recycling, customer
returns, repair/refurbish
Other 3PL Customs brokering,
services hazardous material, order
taking, consulting, port
services, etc.

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Services Provided By 3PLs

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 TYPES OF 3PL
PROVIDERS
Hertz and Alfredsson (2003) describe four
categories of 3PL providers

Standard 3PL Provider: this is the most basic

form of a 3PL provider.
pick and pack,
warehousing,
distribution

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 Service
Developer
Service Developer: this type of 3PL provider will
offer their customers advanced value-added
services such as:
tracking and tracing
cross-docking
specific packaging
unique security system

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 The Customer Adapter:

This type of 3PL provider comes in at

the request of the customer and
essentially takes over complete control of
the company's logistics activities.

The 3PL provider improves the logistics

dramatically, but does not develop a new
service.

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 3PL (or 3PL provider) has
the following features at
present
1. integrated logistics service provider

2. contract-based service provider

3. consulting service provider

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 3PL provider
classified
Asset-based - provider owns some assets,
particularly transport-related assets such as trucks,
warehouses, etc.,

Non-asset-based -does not own such assets, and

usually relies on sub-contractors

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Buyers of 3PL
Services
Customer
General Motors
# of 3PLs Used
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 : international logistics

GREATER THE NUMER OF COMPONENTS INVOLVED IN
MANUFACTURING MORE 3PL ACTIVITES WILL BE OUTSOURCED
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Advantages and
Disadvantages of 3PL

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3PL example
The partnership between Ryder Dedicated Logistics and
GM Saturn division is a good example of 3PL. Saturn
focuses on automobile manufacturing and Ryder manages
most of Saturn other logistics considerations. Ryder deals
vendors, delivers parts to the Saturn factory and delivers
finished vehicles to the dealers . Saturn Orders parts
using Electronic Data Interchange ( EDI ) and sends same
information to Ryder. Ryder makes all the necessary
pickups from 300 different suppliers in the U.S., Canada
and Mexico using special decision-support software to
effectively plan routes to minimize transportation costs.

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 TPL vs OTHER
ACTIVITIES
3PL is more complex than normal outsourcing
of logistics activates .When speaking of 3PL a
true partnership condition is usually assumed
because
Strategic nature of services purchased

Buyer of 3PL realizes that synergies can be

achieved by exploiting the logistics provider
distinct competencies arun palanisamyI MBA, TNAU. 2/27/17 22
 fourth-party
logistics (4PL)
The concept of a fourth-party logistics (4PL) provider

was first defined by Andersen Consulting as an

integrator that assembles the resources, planning

capabilities, and technology of its own organization

and other organizations to design, build, and run

comprehensive supply chain solutions.

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4pl

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arun palanisamyI MBA, TNAU. 2/27/17 25
 4pl types
Synergy Plus operating model

Solution Integrator model

Industry Innovator model

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 Synergy Plus
operating model
1. Partnership between 4PL 3PL to market supply
chain solutions
2. Capabilities and market reach of both partners
are combined
3. The 4PL provides:
Technology
supply chain strategy skills
capability to go to market

by program management expertise

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 Solution
Integrator
model
Core Model: 4PL operates comprehensive supply
chain solutions for a single client.
Solution encompasses resources,
capabilities and
technology

of the 4PL with complementary service providers

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 Industry
Innovator model
4PL develops and runs a supply chain solution for
multiple industry players with focus on
synchronization and collaboration
This model provides the greatest benefits, however it is
complex and a great challenge

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Functions provided by
a 4PL company
Procurement
Storage
Distribution

4pl providers
UPS,
CMA
CGM

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 Reasons Why You Might Need a
Reasons Why You Might Need a
4PL
4PL
1.Higher order-to-delivery cycle times, and order-to-cash
cycles that are increasing in length. Order-to-cash cycles
affect other areas of the company and can be one big
area where improvement can free up cash for important
enterprise initiatives such as research and development

2.The need and demand for IT resources. Lack of IT

infrastructure to support an expanding global supply
chain can inhibit growth.

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3.Global growth, more inventory in more places, and
a shifting revenue recognition point. Companies
often lack the ability to generate substantive supply
chain performance improvement on their own.
4.Global expansion. Companies wanting to get into
markets they have not been in before need flexible,
effective supply chain processes to be successful

SOURCE: Carl Fowler, senior director of operations,

and leader of Menlo Logistics 4PL practice

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 Benefits of 4pl

Economies of Scale
Reduced Supply Chain costs
Increased flexibility
Combines the advantages of in- and outsourcing
Manufacturers can focus on core competencies
Improved customer service
Reduced capital requirements

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Problems of the 4PL Concept
Loosing sight of original core-concept of
SCM due to loss of control
Customer relationships should not be
dismissed on basis of efficiency
Strict functional organization structure
hinders integrated Supply Chains
Resistance to change the biggest obstacle

to implementation of new approaches

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example
An example here would be a bicycle importer. The main

function is to import bicycles however, they need to

have spare parts for these unique bikes. A 4PL would

manage the total logistic operations for the spare parts

business.

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 Difference
between 3PL and
4PL
FPL differs from TPL in several respects

FPL organization is often a joint venture between

a primary client and one or more partners;
FPL organization acts as a single interface
between the client and multiple logistics service
providers;
The major part, of the client's supply chain is
outsourced to the FPL organization.
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 CONCLUSION
ALL THE COMPANYS WOULD LIKE TO PROVIDE

AN BETTER THING IN BETTER MANNER TO

STABLIZE AND INCREASE THEIR EFFECTIVENESS

AND EFFECIENCY IN THIS COMPETITATIVE

WORLD

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REFERENCE

The supply chain integration The raise of 4pl : gail dutton

Third party logistics by C. John Langley Jr., Ph.D.

Logistics outsourcing and selection of third party logistics service

provider (3pl), erdal akir 2009.

Fourth party logistics a study of modern logistics Paulo Bragana

2009

http://www.cquential.co.za/industries/3pl-4pl/

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