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4PL: The Evolution of Supply Chain Outsourcing
Fourth Party Logistics: The Evolution of
Supply Chain Outsourcing
NIls Peters
e-Business Seminar
8/14/2019 4PLppt.pdf
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4PL: The Evolution of Supply Chain Outsourcing
Outline1. Outsourcing: Third Party Logistics
Why outsourcing
Outsourcing logistics functions, but
which?
2. Fourth Party Logistics(4PL)
Definition
Example3 types of 4PL
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4PL: The Evolution of Supply Chain Outsourcing
Outline3. Technology in the next generation of Supply
Chain Outsourcing
4. Supply Chain Value Proposition
Revenue Enhancement
Operating Cost Reduction
WorkingCapital Reduction
Fixed Capital Reduction
5. Potentials and Constrains
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4PL: The Evolution of Supply Chain Outsourcing
0% 10% 20% 30% 40% 50% 60% 70% 80%
Reduce Operating Costs
Improve Customer service
Gain resources not available
Increase productivity and efficiency
Improve company focus
Make capital funds available
Share risks
Advantages expected from outsourcing
1. Outsourcing: Third Party LogisticsWhy outsourcing
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4PL: The Evolution of Supply Chain Outsourcing
2. Fourth Party LogisticsDefinition
8/14/2019 4PLppt.pdf
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4PL: The Evolution of Supply Chain Outsourcing
4PL only work wirth interlectual capital andcomputers
Birds eye view of supply chainto seek integration
to minimize inventory coststo improve efficiencyand to reduce lead times
2. Fourth Party LogisticsExample
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4PL: The Evolution of Supply Chain Outsourcing
Synergy Plus operating model
Solution Integrator model
Industry Inovator model
2. Fourth Party Logistics3 Types of 4PL
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4PL: The Evolution of Supply Chain Outsourcing
Partnership between 4PL 3PL to market supplychain solutions
Capabilities and market reach of both partners arecombined
The 4PL provides: technology, supply chain strategyskills, capability to go to market, and programmanagement expertise
2. Fourth Party Logistics3 Types of 4PL
Synergy Plus operating model
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4PL: The Evolution of Supply Chain Outsourcing
4PL develops and runs a supply chain solution
for multiple industry players with focus onsychronization and collaboration
this model provides the greatest benefits,however it is complex and a great challange
2. Fourth Party Logistics3 Types of 4PL
Industry Innovator model
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4PL: The Evolution of Supply Chain Outsourcing
Outsourcing logistics functions requires intensified communicationand information exchange between the parties involved.
This virtual business environment enables companies to optimizeforecasting, order processing, production and distribution
collaboratively with suppliers and service providers in the sense
of integrated supply chain management.
3. Technology in the next generationof supply chain outsourcing
Technology
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4PL: The Evolution of Supply Chain Outsourcing
The key distinction between 4PL and currentapproaches to supply chain outsourcing is aunique ability to deliver value to clientorganizations across the entire supply chain.
4. Supply chain value proposition
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4PL: The Evolution of Supply Chain Outsourcing
Supply Chain
ValueEnhancement
Profitability
Enhancement
Invested
CapitalReduction
RevenueEnhancement
OperatingCost
Reduction
WorkingCapital
Reduction
Fixed CapitalReduction
4. Supply chain value proposition
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4PL: The Evolution of Supply Chain Outsourcing
Supply Chain
Value
Enhancement
Profitability
Enhancement
Invested
Capital
Reduction
Revenue
Enhancement
Operating
Costs
Reduction
Working CapitalReduction
Fixed Capital
Reduction
Driven byenhanced product quality,availability andimproved cutomer service
Revenue Enhancement
With the 4PL focusing on the entire supply chaindramatic customer service improvements can beattained.
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4PL: The Evolution of Supply Chain Outsourcing
Supply Chain
Value
Enhancement
Profitability
Enhancement
Invested
Capital
Reduction
Revenue
Enhancement
Operating
Costs
Reduction
Working CapitalReduction
Fixed Capital
Reduction
Driven throughoperational efficiencies,process enhancement andprocurement savings
Operating Costs Reduction
Savings will be reached through economies of scaleby outsourcing the complete supply chain.
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4PL: The Evolution of Supply Chain Outsourcing
Supply Chain
Value
Enhancement
Profitability
Enhancement
Invested
Capital
Reduction
Revenue
Enhancement
Operating
Costs
Reduction
Working CapitalReduction
Fixed Capital
Reduction
Realized throughinventory reductions andreduced order to cash times
Working Capital Reduction
The proactive use of technology to manage ordersthroughout the pipeline will minimize the amount ofinventory required
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4PL: The Evolution of Supply Chain Outsourcing
Supply Chain
Value
Enhancement
Profitability
Enhancement
Invested
Capital
Reduction
Revenue
Enhancement
Operating
Costs
Reduction
Working CapitalReduction
Fixed Capital
Reduction
Will result fromcapital asset transfer andenhanced asset utilization(by shifting the supply chain to the 4PL)
Fixed Capital Reduction
This will allow the client to invest in its corecompetencies.
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4PL: The Evolution of Supply Chain Outsourcing
Economies of Scale
Reduced Supply Chain costs
Increased flexibility
Combines the advantages of in- and outsourcing
Manufacturers can focus on core competencies
Improved customer serviceReduced capital requirements
5. Potentials and constrainsBenefits
Benefits of the 4PL Concept
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4PL: The Evolution of Supply Chain Outsourcing
Customer relationships should not be
dismissed on basis of efficiency
Strict functional organization structure hindersintegrated Supply Chains
Resistance to change the biggest obstacle toimplementation of new approaches
Loosing sight of original core-conceptof SCM due to loss of controll
5. Potentials and constrainsProblems
Problems of the 4PL Concept
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4PL: The Evolution of Supply Chain Outsourcing
Discussion
Presentation byNils Peters
e-Business Seminar
Prof. Dr. H. H. SiedentopfUniversity of Applied Sciences
Hamburg
Resources soon available at:
www.hiplus.de
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