Download - Third party logistics
Third Party Logistics
Anwar Mohamed
31 October 2008
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.
How to works…
Customer
3PL Provider
Your Enterprise
SIZE AND SCOPE
• Contributes well over 5% of the GDP National Statistics,2006National Statistics,2006
• 5th Largest Industry in the UK Prospects,2006Prospects,2006
• Employs over 1.7 million people Skills for Logistics , 2006Skills for Logistics , 2006
• Involves with over 65000 organisations Insidecareers,2006Insidecareers,2006
WHY OUTSOURCE?
• Cost & Time effectiveness• Freeing resources• Technical expertise • Asset Reduction• Focus on corporate core
competitiveness
% of 3PL Providers Used
Source: Focus 06Source: Focus 06
0
10
20
30
40
50
60
70
2001 2002 2003 2004
N. America
W.Europe
Asia
Globalization
• 80% of the top 200 UK 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
Costs stated in Billion's of Dollars
Top Ten 3PL’s Customers
Industry Global
Global
Costs
Domestic Costs
Automotive
Technology
Retailing
Consumer Products
Food and Grocery
Healthcare
Metal Industry
Other
$98.2
$156.4
$98.6
$13.6
$32.2
$38.4
$179.7
$63
$37.4
$77.4
$67.2
$13.3
$27.8
$34.0
$84
$25.3
Total Costs $678.3 $366.3
Clients of 3PL Providers
Source: Armstrong and Assoc 2004
Services Provided By 3PL’s
Transportation Mgt21%
Private Fleets7%
Intermodal4%
Warehousing21%
Value Added20%
International9%
Integrated9%
Other5%
Lead Logistics4%
Top 3PL Providers Est. Rev. (£M)
Rank (2003) Provider Revenue1 Excel £8,300
2 Kuehne & Nagel £6,900
3 Schenker £6,400
4 DHL £5,700
5 P&O Nedlloyd £4,800
For a Successful 3PL
• Develop an Outsource Strategy• Measure Performance• Create a Project Plan / Road
Map
Source
• 3PL definition:http://accuracybook.com/glossary.htm
• Top 10 3PL providers:http://www.inboundlogistics.com/3pl/awards.shtml
• Successful 3PL implementation:http://logistics.about.com/od/thirdparty/a/uc041805a.htm
• Sangam, VK. (2006). Implementing Third Party Logistics. Retrieved May 5th, 2006. From Massey University, About Business and Finance website:http://logistics.about.com/od/thirdparty/a/uc041805a.htm
• Red Prairie:http://www.redprairie.com/Industry%20Solutions/Third%20Party%20Logistics.aspx
• Class lecture slides:http://logistics.about.com/od/thirdparty/a/uc041805.htm
• CILT uk
• Logistics and Transport Focus Magazines