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Global Logistics Outsourcing trends: Challenges in managing 3PL relationship 1 Global Logistics outsourcing trends: Challenges in managing 3PL relationship Author: Sangam VK Article Type: Critical review of Surveys Key Words: Logistics; Outsourcing, Global, 3PL, Survey, Supply Chain, Strategic Alliance, Survey, Contract Logistics. Sangam VK Lecturer in Logistics and SCM Massey University Private Bag 102904, North Shore Mail Centre, Auckland, New Zealand. Telephone: +64 9 4140800 ext. 41105 Facsimile : +64 9 4439640 e-mail: [email protected] .
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Page 1: Global Logistics Outsourcing

Global Logistics Outsourcing trends: Challenges in managing 3PL relationship 1

Global Logistics outsourcing trends: Challenges in managing 3PL relationship

Author: Sangam VK

Article Type: Critical review of Surveys

Key Words: Logistics; Outsourcing, Global, 3PL, Survey, Supply Chain, Strategic Alliance,

Survey, Contract Logistics.

Sangam VK Lecturer in Logistics and SCM Massey University Private Bag 102904, North Shore Mail Centre, Auckland, New Zealand. Telephone: +64 9 4140800 ext. 41105 Facsimile : +64 9 4439640 e-mail: [email protected].

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1.00 Abstract Today’s business success to a great extent depends on logistics and supply chain performance. The role of Supply Chain has never been as critical as it is today. Supply Chain speed and flexibility have become two key levers for competitive differentiation and increased profitability. Globalisation has opened many lucrative avenues to the business world and also posed many challenges to be successful in the global trade. One of the biggest challenges in the Global Trade is the ability to manage seamless forward and backward flow of material and information. Faced with increasing global competition in the last two decades, the popular reengineering strategy adopted by many successful companies to address these challenges involves outsourcing logistics and supply chain activities/processes to third-party logistics companies (3PL) and focus on Core Competency. These alliances are also known as Logistics or Supply Chain Outsourcing and Contract Logistics.

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2.00 Introduction The main objective of outsourcing is to reach markets faster, leverage economies of scale, to add flexibility to the supply chains, to increase global capabilities and to focus on core competencies. In order to be competitive in the market place and to improve return on investment to the share holders, organisations have identified the non-core functions within the organisation and outsourced it to reduce costs and to make supply chains more flexible and faster. The definition of non-core function is changing from time to time in the hypercompetitive market. IBM, who pioneered the PC technology is no longer considers manufacturing of desk-tops and some range of servers as core activity and they have outsourced extensively world wide. IBM says the reason for doing these manufacturing deals (outsourcing) with Sanmina-SCI and Solectron is because it wants to "optimize its supply chain for e-business on demand."1 Subsequently, IBM, a pioneer of the personal computer business, has sold its PC hardware division to China's number one computer maker Lenovo (formerly known as Legend). IBM, meanwhile, will be free to focus on its other more lucrative businesses. The definition of Core Competency has changed once again as far as IBM is concerned. In a recently conducted survey titled, “Supply Chain Directions”, sixty percent of the respondents have identified outsourcing Supply Chain functions as one of the strategy to over come inefficiencies in the system.2 Till 60’ mostly transportation activity was outsourced. In the recent past all Logistics and supply chain functions are being outsourced world wide. Further, the activity of managing a 3PL operator and other contractors is also outsourced. As the third party logistics (3PL) industry has continued to evolve, it has clearly become more global in nature. Many commercial establishments world wide have turned to logistics outsourcing as a way to re-engineer their distribution networks in order to meet the global market demands and also gain competitive edge. In responding to the needs of the customers who are increasingly global in it sourcing, manufacturing, sales, and distribution has encouraged large 3PL companies to expand their global network in order to meet the requirements of their customers. Some of these 3PL companies have expanded their operations in the emerging markets by acquisitions and by initiating new start-up operations. Where as they have developed strategic alliances with the local service providers in other parts of the world. The task of designing and developing global network and delivering consistent service levels all over the network is a challenging task taken up by 3PL companies.

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3.00 Objectives of this review: Outsourcing has become a successful strategy of getting some of the routine logistics and supply chain activities executed by a 3rd party all over the world in order to save costs and to focus on core activities. This review will focus on North America, Western Europe, Asia Pacific region, China, Australia and New Zealand markets. According to a recent Warehousing Education and Research Council (WERC) pamphlet reported that 55% of logistics outsourcing alliances are terminated after 3-5 years. In some cases it was noticed that the relationship ended even before completion of the first year of operation. According to a survey, 43% of identified users of 3PLs in North America cancelled at least one 3PL contract in 1998.3. Hence, this review has been undertaken to critically look at various surveys in the areas of Logistics Outsourcing and develop meaningful analysis and also address the issue of Challenges in managing 3PL relationship.

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4.00 Discussion on Logistics Outsourcing Trends: This section will provide answers to some of the critical questions in the area of Logistics and Supply Chain Outsourcing. The focus is on the topics such as 3PL Usage; Reasons for Outsourcing; Factors influencing the 3PL selection; Activities Outsourced; Future of Logistics Outsourcing. 4.1 3PL Usage: The discussion will focus on North America, Western Europe, Asia Pacific, China Australia and New Zealand. 4.2 Focus: United States of America “North American third-party logistics has been a growth business since its inception in the late 1980s. The cumulative annual growth rate from 1996 through 2003 was 14%. Armstrong & Associates estimates 3PL revenues for North America to be $104 billion (US). International transportation management which includes freight forwarding and cross border transportation management accounts for $39 billion. Value added warehousing/distribution is the second largest category.”4 Where as the average revenue generated in 2003 by 23 leading 3PL companies in North America recorded a growth rate of around 9.00% compared to 2002 revenue. The revenue of these 23 leading 3PL companies alone in 2003 amounted to US $17 billion.5 According to the Capgemini 2004 report6 North America 3PL usage is steady around 79%, where as there is a 5% growth in Logistics expenditure directed to outsourcing. The below given Exhibit (1) shows the graphic presentation of 3PL usage in North America from 1996 to 20046. Exhibit 1

3PL Usage in North America (1996 to 2004)

7173

7168

7371

78 78 79

60

65

70

75

80

1996 1997 1998 1999 2000 2001 2002 2003 2004

3PL Usage in %

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4.2.1 Highlights:

1. Eighty percent respondents indicated that their logistics and supply chain activities are outsourced and there was no growth recorded when compared with last year outsourcing trend reported by the same survey7.

2. The perception of the users in North America about the 3PL companies is

undergoing a change. There is a clear indication that 3PL companies role is beyond basic transportation and warehousing. 3PL companies are considered as Supply Chain Integrators and Strategists. According to the Capgemini report 20046, 81% of the respondents consider 3PL providers as “Total Service Provider”, 26% feel that 3PL companies act as Supply Chain Integrators and 20% treat 3PL companies as Logistics Strategists (only 13% felt that the 3PL companies act as strategists during the 2003)8.

3. There is a negative growth in future Logistics Expenditure directed to

outsourcing. The Capgemini 20038 report revealed that 56% of the logistics expenditure will be outsourced and where as the 2004 report6 indicated 49% only. Thus resulting in 14% negative growth. This could be due to increasing imports and shift of manufacturing base from North America. According to See Watson, Carlos, the US had a $120 billion trade deficit with China in 2003, and it is expected to be even higher in 20049. This could be one of the main reasons for the 14% negative growth discussed above.

4. North American users outsource only around 13% of their value added

services to the 3PL companies. Where as in Europe and Asia 3PL companies handling value added service is relatively high. 6

5. Interestingly US companies outsourcing Logistics Activities outside United

States and particularly in Asia is showing a growing trend. The NEU and Accenture survey revealed that in 2003 US Companies outsourcing 3PL activities in Asia was around 61% and where as the 2004 report indicated 58% excluding China (63%) and India (21%). This is phenomenal growth in Logistics outsourcing in Asia by US companies. This trend reveals two things to us. One is that China and India have increased the use of US made products and China and India have become important manufacturing options for American Companies.7

6. The negative impact of Logistics outsourcing on employee morale around

40% according to the NEU and Accenture 2004 report. This reflects true picture because according to the Encarta Encyclopedia Article by Steven Greenhouse (The New York Times) revealed that North America has lost nearly 3 million factory jobs since the year 2000. The total number of factory jobs declined to 14.4 million in August 2004. Many economists estimate that outsourcing and imports have caused one-fourth of this loss, while automation and slack demand have caused the rest. Forrester estimates that the wages lost from moving all these jobs offshore will total $136 billion by 2015.10

7. Forty two percent of users indicated that the value delivered by their providers

has “continued to increase over time”. Forty six percent said that it “stayed

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relatively constant over time” and only twelve percent indicated the value delivered by their providers “decreased over time”.7 According to the Capgemini 2004 report 42% of the non-users and 15% of the users believe that outsourcing may not result in cost reduction. Fifty two percent of the users group felt that the Logistics outsourcing costs go up once the relationship has commenced and 47% felt that Cost reductions have not been realized.6

8. Use of Technology will grow tremendously in the coming years in order to

establish supply chain visibility in order to minimise inventory carrying and reduce loss of sale. This factor was revealed in the survey conducted by “eye for transport”2. Around ninety seven percent respondents indicated that they have plans to deploy better technology. Dependence on the 3PL companies to provide IT technology including RFID will grow. According to the Capgemini report 2004, fifty three percent of the users have identified RFID as their future requirements in Logistics outsourcing6. According to the survey conducted by “eyefortransport”2 about forty seven percent respondents are planning to implement RFID. The dependency on 3PL companies for IT technology support also registered a growth of 19% over 2003.6

9. The rationale given for not to outsource logistics include factors such as non-

reduction of costs, loss of control, the importance of the logistics function, and the service levels.6

10. Ninety percent of the survey respondents consider Logistics outsourcing is a

success. The nine year average stands at 87%.6

11. On the costing side, more and more organisations are inclined towards “gain share”, this is a good sign and this could lead to supply chain partnership and long term outsourcing.6

12. Fifty seven percent respondents in the “eyefortransport”2 survey have

identified outsourcing as a strategy to improve the supply chain performance.

13. Fifteen percent cost reduction was achieved in North America, Sixteen percent Asset reduction was also noticed, average order cycle was reduced to 6.8 days (44% improvement), seven percent inventory reduction was achieved, Cash to cash cycle reduced to 19.8 days (11% improvement) and 58% service level improvement was reported.6

4.3 Focus: Western Europe According to Datamonitor’s European Logistics Market Maps 2004, total spend on outsourced logistics in Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, and the United Kingdom will reach €175.5 billion by 2008 to account for 45 per cent share of total logistics spend.11 "There will be continued growth in the outsourcing of more complex logistics tasks such as order handling, logistics management, and the provision of value-added services," said Tom Mills, Datamonitor logistics analyst.11 One of the reasons for

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increasing Logistics outsourcing is to achieve cost reduction in the areas of non-core areas in order to fund escalating cost of product research and development. Western Europe 3PL usage is around 76%, which amounts to 4% negative growth over 2003 as shown in exhibit 2. However, the Logistics expenditure directed to outsourcing is expected to grow at the rate of 11.5%.6 Thirty two percent of the 3PL company’s revenue came from new accounts and the rest from the existing accounts. This small piece of information reveals the growing trend of Logistics outsourcing in Western Europe.12 Here is a graphic presentation of Logistics Outsourcing trend in Western Europe during 2002, 2003 and 2004.6

Exhibit 2 4.3.1 Highlights:

1. The 3PL industry is very optimistic about the business growth. It is projected that the industry will grow next one year at the rate of 10% and in next 3 years the industry is expected to grow at a rate of 11%. 12

2. The 3PL industry accepts that the year 2003 was challenging. However,

majority of the 3PL companies have expressed satisfaction about meeting the revenue growth targets. Twenty three percent of the 3PL companies participated in the survey reported that they have exceeded the growth targets, fifty four have met their targeted growth rate where as twenty three percent failed to meet the targeted growth rate. Where as in North America more than one third of the participants failed meet the targeted revenue growth.12

3. The industry dynamics include, the universal demand for cost reduction

occupies the first place followed by large scale 3PL mergers, increased pressure to globalisation, 3PL top management participation in decision-making process and business alliances and broadening service offerings occupies the last place.12

4. At present 94% of the business is generated by 3PL companies is coming from

EU members mostly Western European countries and 6% of the business is

3PL Usage in Western Europe

9479 76

020406080

100

2002 2003 2004

Year

Usa

ge %

3PL Usage in %

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generated from other European Countries. However this trend is expected to go through slight change by 2006.12

5. Around 58% consider 3PL companies as Supply Chain integrators and

Logistics strategists. Where as 68% feel that 3PL companies act as tactical service providers. This is much better rating than what was indicated in 2003.6

6. There is a negative growth in future Logistics Expenditure directed to

outsourcing. The 20038 report revealed that 81% of the logistics expenditure will be outsourced (during 2006 to 2008) and where as the 20046 report indicated 68% only. Thus resulting in 16% negative growth. This needs to be analyzed further. One possible cause could be shift in production base to Eastern Europe in order to reduce the production costs.

7. Western Europe non-users feel that Logistics is their core competency and

they also consider Logistics management is very important. Further, they strongly feel that they will loose control over operations and customer service related issues. This year findings are no different from last year.6

8. Gain share and risk and reward share deal structure are popular in Western

Europe. 6

9. Western Europe users also expressed satisfaction (81% - 3 year average) over outsourcing success consistently from 2002 to 2004.6

10. Automotive industry seems to be hot favourite for the 3PL companies in

Europe. This was followed by High Tech/Electronics, Manufacturing, retail, consumer goods, Chemical, Health Care, Pharmaceuticals, and Wholesale.12

4.4 Focus: Asia Pacific The logistics outsourcing industry is expected to be around US $ 80 billion in Asia Pacific region by 2012 and the logistics outsourcing industry is growing by 3 to 10% per annum in the region according to Singapore Economic Development and JP Morgan. The 3PL Companies operating in Asia Pacific region reported average revenue of US $ 425 million for the year 2003. This constitutes 16% revenue growth over 2002. The same report also indicates that the revenue growth would be around 15% every year for next 3 years.13 Interestingly, Capgemini report also indicated 15.5% growth in 2004 over 2003. Where as 21% percent growth is projected in Logistics Expenditure directed to outsourcing for the period 2007 to 2009.6

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4.4.1 3PL Usage within Asia Pacific:

Region/Country 3PL Usage % Source Asia-Pacific Region 84% Capgemini 20046

China 55% 2003 China Logistics user Survey14

New Zealand 67% Massey University Student’s research 2003.15

Australia 60% ALPHA Research Consortium – 2004.16

Exhibit 3

4.4.2 Highlights:

1. China contributes 40% of revenue to the 3PL companies operating in Asia Pacific region. Followed by Japan (18%); India (9%); Australia (18%) and Others (15%). Where as the project revenues for 2006 will continue the same pattern with small adjustments in percentage. China is expected to dominate with thirty eight percent, followed by Japan (14%), India (12%); Australia (14%) and others (22%).13

2. Capgemini 20037 report projected that 50% of the logistics expenditure will be

directed to outsourcing and that projection has come true. Where as the projection for the year 2006 to 2008 was sixty percent and the latest report (2004) indicates that seventy six percent of the logistics expenditure will be directed to outsourcing during 2007-2009.6 That is phenomenal growth of 27%.

3. The China survey indicated the following outcomes of outsourcing. Logistics

Cost reduction scored a rating of 4.8 on a scale of 1 to 7 (15% reduction), Fixed Asset reduction scored 5.2 rating (35% reduction), Order Cycle length reduced by 6 days, overall inventory reduced by 33%, Cash to cash cycle reduced by 8.5 days and service improvement scored maximum rating of 5.4 against 7.14

4. Further, it was revealed that domestic Chinese 3PL companies are preferred

over MNC 3PL companies. Insufficient global capabilities were indicated as one of the biggest reason for not outsourcing Logistics activities. This was followed by apprehension about poor customer service levels, loss of control and Chinese users feel that Logistics Management is their core strength. Further, the Chinese users also feel that it may not be economically viable to outsource logistics functions.14

5. The industry dynamics identified by 3PL operators in AP in NEU and

Accenture (AP) 200413 report are as follows:

Continued growth of Chinese Economy

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Continued downward pressure on prices Growing customer expectations on IT support Customer interest in outsourcing broader array of logistics activities Formation of business alliances to broaden service offerings.

6. Apprehension about loss of control and scepticism of cost reductions are the

main reasons for not outsourcing in Asia Pacific region. This was followed by reasons such as “Logistics too important to outsource”, “Logistics is our Core Competency”, “Service levels would not be realized”, and “Customer complaints would increase”. 6

7. The Massey University study15 reveals that around 26% of the current non-

users have plans to outsource logistics activities in the coming years. The same report reveals that majority of users feel that their 3PL operator is very co-operative. Further, the users are very satisfied with main 3PL operator with a rating of 4 on a scale of 1 to 5 (4 and 5 being Very satisfied).

8. ALPHA Survey – 200316 report indicates that IT remains the key enabler for

achieving benefits in outsourcing.

9. ALPHA Survey - 200316 reveals that Finance and Operations play a key role in 3PL selection decision making process, followed by Sales, Customer Service and Purchase.

10. It is quite common for the users to hire multiple 3PL companies for executing

logistics related activities. However, in order to achieve best possible co-ordination in the areas of supply chain efficiency maximisation, it is always suggested that one 3PL company should handle all activities. The Massey study15 reveals that around forty four percent users deploy one 3PL company and twenty eight percent deploy two 3PL companies and the rest (28%) deploy 3 or more 3PL companies.

11. Australian Logistics Industry is estimated around A $ 57 billions, out of which

A $ 23 billion outsourced to logistics companies A $ 3 Billion to non-transport logistics operations.16

5.00 Reasons for outsourcing Logistics outsourcing, once a mere option, has today become a necessity. The growth of Information Technology, increasing competition, globalisation, rise of mass customization, product proliferation, scrambled merchandizing, demanding customer needs and pressure to reduce costs etc. has forced the organisations to re-focus on their core competencies and outsource non-core activities. There are several reasons why outsourcing is becoming a necessity. The prime reason to outsource is to focus on core strengths and improve product differentiation and innovation in order to gain sustainable competitive edge in the market place. Many commercial establishments world wide have turned to logistics outsourcing as a way to re-engineer their distribution networks in order to meet the global demand and also gain competitive edge. We have various surveys discussing reasons for not

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outsourcing Logistics activities. However, we do not have very clear picture about what the users consider as the main reason for outsourcing. The following could be possible reasons for outsourcing:

Reduce Operating Costs Focus on core strengths Create a Variable cost structure Increase speed to market place Conserve Capital Foster Innovation Improved Customer Service Levels To create a flexible supply chain

In China17, reducing logistics cost is the prime reason for outsourcing followed by Ability to focus on core business, Improve customer service and quality, Simplify complex operations, Improve Logistics chain flexibility. Where as the Australian users16 indicate that the Customer satisfaction as reason one for outsourcing and followed by Flexibility, Productivity Improvement, Cost Savings, Focus on Core business, Access to up-to-date techniques and expertise and employee morale is given least preference. The New Zealand users15 reveals that Focus on Core business as the primary reason followed by Reduce costs, Reduce Investment in facilities and Inventory, Access to cutting-edge technology & acquire expertise, seek greater flexibility, respond quickly and others. The Capgemini report6 identified factors affecting 3PL user firms and they are, Significant pressures to reduce costs, Emphasis on improving supply chain, Pressures to enhance customer service, Globalisation, Rapidly accelerating new product introductions, Implementation of information technology, Consolidations, mergers, acquisitions etc., New Markets, Security Issues, Intensifying Government and regulatory policies etc., All these factors will strongly encourage companies to outsource logistics activities. 6.00 Factors influencing 3PL selection Selecting a 3PL operator is a very critical job. It is as critical as selecting your partner. Most of the organisations do use a very scientific approach in selecting 3PL partner. In this section we will review the key selection attributes region wise as well as globally.

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6.1 Focus North America and Western Europe and All regions

Attributes North America

Western Europe All regions

Service 3.2 3.5 3.4 Price 3.2 3.5 3.2 Product 3.0 2.9 3.0 Access 2.8 2.6 2.7 Experience 2.8 2.5 2.7

Exhibit 4* The North America and Western Europe user preferences are the same6. They give top priority for the Value-added services provided by 3PL companies (service) as most important selection attribute followed by Fess paid for 3PL services (Price), Core services (Product), Ease of doing business (Access) and finally Overall feeling about 3PL (Experience). * All regions include Latin America also. Measured on a scale of 1 to 5, one being least important and 5 being most important. 6.2 Focus Asia Pacific

Attributes Asia-Pacific Service 3.5 Product 3.4 Price 2.8 Access 2.7 Experience 2.6

Exhibit 5+ + Measured on a scale of 1 to 5, one being least important and 5 being most important. The main difference in the Asia Pacific user’s preferences6 is that they would prefer Overall feeling about 3PL than the price. The same feelings were reflected in the surveys conducted in China14, Australia16 and New Zealand15. The selection criteria are different in three different countries. Logistics Outsourcing is still evolving in Asia Pacific region. Hence, the focus is more on Overall experience than costs. Each country reviewed hereunder has different set of selection criteria. In order to present the uniqueness of each survey, I have presented them as revealed in the survey.

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6.2.1 Focus China According to China Survey17, the selection criteria attributes are given with percentage of preference in the exhibit given below:

Attributes % Industry/operations experience 31 Reputation 18 Network coverage 16 Lower price 16 Own strategic assets 9 Integrated logistics capabilities 4 Good IT system 4 Strategic fit 2

Exhibit 6 6.2.2 Focus Australia The ALPHA Survey16 posed the same question to the 3PL companies as well as the users. What is presented hereunder is the user response which is critical.

Rank Selection Criteria Mean Rating 1 Supports our Custer Service 4.49 2 Reliability 4.38 3 Committed to us 4.29 4 Integrity 4.27 5 Trustworthy 4.23 6 Economic benefit 4.22 7 Improves Market Position 4.07 8 Knows our business 3.99 9 Strong Reputation 3.82 10 Potential Synergy 3.66

Exhibit 7 # # Measured on a scale of 1 to 5, one being least important and 5 being most important.

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6.2.3 Focus New Zealand The below given selection criteria was ascertained from Massey University study15.

Exhibit 8 Measured on a scale of 1 to 5, one to three, not important and 4 and 5 being very important

7.00 Logistics and Supply Chain activities outsourced One of the innovative trends used today is the outsourcing of logistics to manage complex distribution requirements, postponement of manufacturing, cross docking, Kitting or Assembly, Inventory Financing, Vendor Managed Inventories, Reverse and Repair Logistics etc. This triggered phenomenal growth in 3PL business world wide. The author classified outsourcing into three categories. The first level of outsourcing is transactional outsourcing. This is typically based on transactions and no long term contracts and no bonding between 3PL and outsourcing company. These types of outsourcing are driven by pricing. The second classification is Tactical outsourcing. This kind of outsourcing is on medium to long term basis with negotiated contacts in place and with integrated IT systems, to facilitate free flow of information and create supply chain visibility. The pricing will remain a factor but not prime factor for this kind of outsourcing. This is considered as a stepping stone for strategic alliances which is the third category. Strategic outsourcing is also known as Strategic Alliance

Factors influencing the selection of a 3PL Logistics Provider

Priority (Mean)

Responsiveness 4.78 Ability to meet or exceed promises 4.67 Quality of the provider’s management team 4.52 Experience 4.48 Flexibility 4.41 Information systems/technology capabilities 4.27 Financial stability 4.19 Availability of top management when necessary 4.00 Price 3.85 International Scope 3.56 Location 3.56 Quality Certification 3.22 Asset Ownership 2.70

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or Collaborative alliance. This type of outsourcing is based on long term relationships with successful outcomes or based on strategic issues. In this category the 3PL companies become partners in supply chain management and complete transactional transparency will be established. Very few 3PL companies are able achieve this status with their customers by constantly innovating and constantly maintaining operational efficiency and integrity. Some even follow open book costing method and gain share concepts to demonstrate the transparency and win confidence of the customers. The below given table is produced by the author based on Cap Gemini report6, The 2003 China Logistics user Survey14, The ALPHA Survey – 200316, and Massey University Study 200315, in order to explain different levels of outsourcing and Logistics activities outsourced to 3PL companies.

Logistics Activities outsourcing in % Logistics Activity North

America Western Europe

Asia Pacific China New

Zealand Strategic Activities

4PL Services 1 10.00 19.00 24.00 Carrier Selection 13.00 25.00 8.00 21.00 3 Consulting Services 21.00 12.00 28.00 7.00 Factoring (Trade Finance) 2.00 7.00 0.00 5.00 Freight Bill auditing/payment 53.00 19.00 8.00 7.00 10.50Information Technology 19.00 24.00 16.00 11.00 15.80Inventory Ownership 6.00 9.00 4.00 Product Assembly/Installation/Manufacturing 16.00 16.00 12.00 9.00 Rate Negotiation 14.00 12.00 0.00 7.00 10.50Supply Chain Manager 7.00

Tactical Activities Inventory Management 16.00 27.00 40.00 27.00 10.50Order Entry/Processing/Customer Service 8.00 7.00 16.00 23.00 2 Order Fulfilment and distribution 35.00 22.00 52.00 14.00 10.50Procurement Logistics 16.00 33.00 24.00 5.30Product Marking/ Labelling/Packaging 25.00 29.00 20.00 18.00 15.80Product Returns and Repair 22.00 30.00 36.00 5.00 15.80Returns/Reverse Logistics 27.00 32.00 32.00 Shipment planning/Distribution Control 13.00 15.80Warehousing 72.00 70.00 88.00 46.00 52.60

Transactional Activities Cross-Docking/Shipment Consolidation 55.00 49.00 40.00 49.00 47.40Customs Brokerage 60.00 34.00 88.00 Customs Clearance 57.00 48.00 68.00 29.00 Fleet Management 9.00 18.00 40.00 21.00 10.50Freight Forwarding 47.00 40.00 84.00 38.00 Inbound Transportation 54.00 82.00 84.00 63.00 Outbound Transportation 66.00 89.00 100.00 86.00 78.90 1 Trademarked by Andersen Consulting (now Accenture) 2 Included in Order Processing and Fulfilment 3 Carrier selection was included in rate negotiation

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Exhibit 9

Where as The ALPHA Survey – 200316 projected the same information on scale of one to five, one being “Not at all or low” and 5 being “Very extensive or High”. Here is the classification of logistics activities outsourced in Australia.

ActivityAustralia -

Mean ratingStrategic Activities

Carrier Selection 2.28Freight Payment 1.91Logistics Information Systems 2.48Product Assembly/Installation 2.03Rate Negotiation 1.95

Tactical ActivitiesCustomer Spare parts 1.92Inventory Replenishment 1.88Order Fulfillment 2.85Product returns 2.76Warehousing 3.07

Transactional ActivitiesFleet Management and operations 3.00Inbound Trasnportation 4.18Outbound Transportation 4.70Shipment Consolidation 2.95

Logistics Activities outsourced in Australia

Exhibit 10 8.00 The future of Logistics Outsourcing 3PL service providers are continually looking to provide innovative supply chain solutions to customers by focusing on value-added capabilities, differentiating themselves from the competition. They focus on priorities, such as implementing information technologies, developing customised management processes, integrating services and technologies globally, and delivering comprehensive solutions that create value for 3PL users and their supply chains. 8.1 Focus North America In view of the amount of manufacturing that has moved from North America to other geographies, the Logistics outsourcing particularly in the areas of value added services in North America is going through a “no” growth period. The same feeling

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was reflected by CEOs of twenty three 3PL companies interviewed by NEU and Accenture in 20045. Only ten out of twenty three CEOs confirmed that their North America Operations are not affected due to shifting of manufacturing base from North America to other cost efficient locations. 8.1.1 Highlights:

1. Logistics outsourcing industry is expected to grow at the rate of 9% per annum in North America and 10% growth in the next Three years according to NEU and Accenture 7 report.

2. Increasing use of Information Technology by 3PL companies. The Capgemini

report6 indicates that 91% of the users believe that IT capabilities are necessary for 3PL companies. Only forty five percent indicated that there are satisfied with the 3PL current IT capabilities. Fifty three percent users have indicated that RFID is their future requirement.

3. Greater product sourcing from overseas, with a notable increase from China,

will drive logistics suppliers to expand global operations and increase usage of 3PL services including inbound freight management. There will be increase of 40% in 3PL service used in China by US manufacturers according to NEU and Accenture report7.

4. Logistics providers continue to shift toward a one-stop model to offer

comprehensive services and control more of the supply chain. The NEU and Accenture report5 indicates that apart from global expansion other opportunities for 3PL companies include, further supply chain integration, further IT integration and increased customer collaboration.

5. Forty seven percent of North American users believe that existing 3PL

companies are best suited to offer 4PL service6.

6. 3PL industry is going through mergers and acquisitions keeping in view of global challenges. North America will witness increase in this activity. “We expect the M&A trend to increase in 2004 and we reiterate our belief that deals will get done for strategic reasons rather than for market share”.18

7. Majority of North American users have indicated that service consideration

comes first while renewing the existing contracts followed by cost consideration, IT capabilities and reliability.7 Fifty one percent users indicated that lack of ongoing improvements and achievements in offering is the number one area identified for 3PL service offering improvement. 6

8.2 Focus Western Europe “Increased outsourcing of key internal logistics functions, the growth of important regional retail markets in France, Italy and Benelux together with the expansion of warehouse space in France and Italy is poised to drive revenue growth in the European warehousing markets.

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At the same time, the growth of retail and FMCG end-user sectors in Western Europe is also set to boost warehousing market revenues. Buoyed by these trends, revenues in the European warehousing markets are anticipated to rise from 18.5 billion euros in 2003, to an estimated 25.4 billion euros in 2012,” 19 Further, the above report reveals that, the 3PL – warehousing market is highly fragmented with large number of small and medium sized 3PL companies operating across European Markets. As the manufacturing firms are outsourcing significant portion of their Logistics activities in order to reduce costs, we will notice increase in 3PL mergers and acquisitions like North America. Further market consolidation among the leading 3PL companies are likely to be initiated with a primary objective of cost reduction. This report also indicates shortage of skilled labour as hurdle for the 3PL growth. According to the NEU and Accenture report12, major source for Management talent for 3PL companies is other 3PL providers. This reveals the criticality of the issue. "There will be continued growth in the outsourcing of more complex logistics tasks such as order handling, logistics management, and the provision of value-added services," said Tom Mills, Datamonitor logistics analyst.20 8.2.1 Highlights

1. Western Europe market projected growth is no different from North America Projected growth. Both these markets are experiencing similar hurdles in increasing the share of logistics outsourcing. The NEU and Accenture report12 projects ten percent growth for one year and eleven percent growth for the three year period.

2. Increasing use of Information Technology by 3PL companies in Western

Europe is no different from North America. The Capgemini report6 indicates that 92% of the users believe that IT capabilities are necessary for 3PL companies. Only forty five percent indicated that they are satisfied with the 3PL current IT capabilities. Sixty one percent users have indicated that RFID is their future requirement.

3. The three industry dynamics identified in the Western Europe market by the

NEU and Accenture report12 include, continuing downward pressure on pricing, large scale mergers of 3PL companies and increasing pressure to internationalise.

4. Lack of variety in the service offerings and lack of strategic management skills

seems to be an issue with Western Europe users6. It is time for these advanced markets to focus on 4PL companies to support organisational supply chain strategy. If the 3PL companies remain focussed on transactional management and ignore strategy development, 4PL Company’s growth is assured and 3PL companies will loose wonderful opportunity to diversify into new avenues of revenue generation.

5. Eastern Europe is a potential growth market. Due to shift of manufacturing

base, more logistics activities will be shifted to Eastern Europe and it is

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projected that there will be 150% increase in revenue generation from Eastern European countries for 3PL companies by 200612.

6. Large percentage of Western Europe users (32%) views their 3PL companies

as Logistics Strategists when compared with North America and even the growing market of Asia Pacific6.

7. Twelve percent increase in customer rating as far as outsourcing success is a

positive note for 2004 for Western Europe logistics outsourcing initiative6.

8.3 Focus Asia Pacific Supply Chains in Asia are fragmented and less competitive when compared with US and Europe. This does not mean that Supply Chain excellence, a key driver of value addition and competitive differentiation across industries is ignored in Asia. The growing trend of manufacturers and retailers to outsource and produce abroad, particularly in Asia, has led to a situation where trade outstrips capacity, and the world’s transportation and 3PL infrastructure is struggling to keep its head above water. As the world focus is shifting to Asia Pacific region and particularly China, the supply chain and logistics outsourcing market is expected to be US $ 12.08 billion in next three years according to China’s State Economic and Trade Commission. International Data Corp (in 2001) predicted the Asia-Pacific logistics outsourcing market will reach US$29 billion by 2005. 8.3.1 Highlights

1. The Asia Pacific market is expected to grow at a phenomenal rate of 15% per year over next three years. China will be the focussed market as far as growth is concerned and India will be second targeted country by the 3PL industry13.

2. Three industry dynamics identified are, continued growth of Chinese

economy, continued downward pressure on prices (this factors is universal) and growing consumer expectations for IT support. Forty eight percent users feel that 3PL companies are not keeping up with advances in IT. One hundred percent users believe that IT capabilities are a must for a 3PL company. Only twenty four percent are satisfied with current IT capabilities of 3PL companies. 6

3. Seventy one percent of users feel lack of ongoing improvements and

achievements in service offerings and fifty seven percent feel that 3PL companies lack strategic management skills. 6

4. Around 21% increase is projected in logistics outsourcing spend for the period

2007-2009. 6

5. Thirty four percent growth in outsourcing of inbound transportation indicates the shift of manufacturing base to Asia Pacific market. 6 & 8

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6. “According to the statistics from Customs General Administration of the PRC, the annual growth rate of China’s imports and exports between 1980-2003 is 14.5 percent (14.9 percent for exports and 14.1 percent for imports), a rate that is higher than China’s economic growth over the corresponding period and also much higher than the rate of world economic and trade growth. In 2004, China’s foreign trade is expected to exceed the benchmark of $1000 billion, which will make China the third biggest trading economy in the world.”

7. The impact of RFID usage in US is also felt in Asia Pacific region. Fifty nine

percent believe RFID is a requirement in future and only nine percent are currently using. 6

8. The perception of the user about the outsourcing success is registering a

downward trend in spite of growing outsourcing industry. Around twelve percent negative growth in user’s perception indicates that 3PL companies have to pull up their socks. 6 & 8

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9.00 Discussion on managing 3PL relationship: Unfortunately 3PL relationships are always not successful. According to a recent Warehousing Education and Research Council (WERC) pamphlet reported that 55% of logistics outsourcing alliances are terminated after 3-5 years. In some cases it was noticed that the relationship ended even before completion of the first year of operation. According to a survey reported by the Journal of Commerce3, 43% of identified users of 3PLs in North America cancelled at least one 3PL contract in 1998. The main reason for this failure could be the gap between expectations and the reality. According to this author, most of the 3PL relationships goes through four critical stages and they are courtship (happy time); battleship (struggle); hardship (resistance) and relationship (mutual benefit). In order to reach the pinnacle of relationship management, it is very much necessary for both the parties to nurture the bonding in order to make Logistics outsourcing a great success. The outsourcing arrangement can be successful only when there is mutual trust and respect in relationship. Unless there is this sense of integrity in the relationship, it most certainly will fail. Hence, it is very much necessary to take care of certain issues in outsourcing in order to enjoy the benefits. Here are some of the challenges in managing logistics outsourcing relationship. 9.1 Challenges and Solutions 9.1.1 Lack of Outsourcing Strategy Lack of Outsourcing Strategy means no clarity on the subject of outsourcing and outcomes. Outsourcing strategy should always be a well thought out and carefully measured against an "in-house" solution and capabilities. Outsourcing the Logistics function can free up companies to focus on their core competencies. This was reflected in 2002 Outsourcing World Summit as well as many logistics outsourcing surveys conducted across the word. A SWOT analysis will always help the organisation in understanding clearly the strengths, weaknesses, opportunities and the threats of outsourcing logistics activities versus in-house solutions. While Request for Information (RFI) is a tool to gather information and measure the strengths with respect to capabilities and cost effectiveness of outsourcing, sometimes this can also mislead due to over commitments by the service providers. Sixty two percent North American users, forty eight percent Western Europe users and seventy one percent Asia Pacific users conveyed that service level commitments made by 3PL companies are not realized6.

Courtship(Happy Time)

1. Initial enquiry;

2. Awarding RFQ;

3. Period of High Expectations.

Courtship(Happy Time)

1. Initial enquiry;

2. Awarding RFQ;

3. Period of High Expectations.

Battleship(struggle)

1. Start-up hick-ups;

2. Service below expectations;

3. Period of Great tension.

Battleship(struggle)

1. Start-up hick-ups;

2. Service below expectations;

3. Period of Great tension.

Hardship(Resistance)

1. Cost over-runs;

2. Service will never meet targets;

3. Period of Questioning.

Hardship(Resistance)

1. Cost over-runs;

2. Service will never meet targets;

3. Period of Questioning.

Partnership(Mutual benefit)

1. Level Setting;

2. Dependent;

3. Period of bonding.

Partnership(Mutual benefit)

1. Level Setting;

2. Dependent;

3. Period of bonding.

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The dissatisfaction of the user will be felt in the second or third stage of relationship management. When 3PL companies fail to deliver the agreed service levels the users feel deprived and feel the loss of control over their own operations. Recent surveys indicated that loss of control is the primary reason for not using 3PL services6. Further, the users believe that logistics outsourcing creates unrest within the organisation. However, according one of the surveys conducted in US in 2004 reported that only 40% of the respondents have reported negative impact on employee morale due to logistics outsourcing7. Keeping in view of these conflicting feelings conveyed through various surveys, it is very much necessary to understand whether the organisation is well equipped with necessary skills and mind set to outsource Logistics activities. Further, it is also necessary to gauge the impact of outsourcing decision on the organisation and examine the ability to go through the proposed change management process. The resistance to this change could come from three angles and they are, the content (outsourcing decision), the methodology (the implementation process) and from the people (due to possible job loss). Unless comprehensive study is conducted and clearly documented the advantages, challenges and cost benefits of outsourcing, it is not advisable to outsource Logistics activities. One thing is sure that Logistics outsourcing is not a fad; it is a necessity if we can clearly evaluate the pros and cons and prioritise business objectives. This fact was supported by numerous survey reviewed in this article. Even if a firm has the available resources to perform a particular logistics task, another external organisation within the supply chain may sometimes be better suited to perform that task, simply because its relative position in the supply chain, supply chain expertise and economies of scale. Hence, a well developed strategy document is crucial in Logistics outsourcing decision making process. 9.1.2 Absence of Robust Selection Process Absence of Robust Selection Process can derail the objectives of outsourcing. Before any organisation embark on the selection process, it is very much necessary to adopt a scientific selection process or appoint a consultant (specialist in this area) to assist in short listing and recommending the suitable service provider. Further, it is also necessary to document the expectations in clear terms along with current performance standards and costing information. This would help the outsourcing organisation to evaluate the success of outsourcing from time to time. A site visit and one to one interview with one of the existing customers of the service provider are very much part of the selection process. It would be ideal to develop SOP (Standard Operating procedures) for all the processes to be outsourced. This would eliminate any gap in understanding of expectation. The standard procedure followed in the selection process include, invite all eligible 3PL companies for a formal presentation on capabilities without giving any information about the requirements. This will help the outsourcing organisations to assess the strengths and weaknesses of each 3PL company and their specialisation. This would help in eliminating some 3PL companies and the second stage could be a RFI (Request for Information) or a RFQ (Request for Quotation). The RFQ document should always accompany with all relevant documents about the project and expectations with regard to performance standards and statistical data. Once some

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more filtering is done on the basis of expertise, suitability and cost effectiveness, it would be ideal to visit few sites of 3PL companies and talk to some of their customers to gather first hand information and finally conduct reference checks in order to select a suitable 3PL company. It may not be necessary to select a 3PL on the basis of cost effectiveness only. What is more important is compatibility. Majority of North American users have indicated that service consideration comes first while renewing the existing contracts followed by cost consideration.6 9.1.3 Inefficient Costing methodology Inefficient Costing methodology will directly contribute to the downfall. An efficient costing system will not only help in understanding the costs involved in outsourcing but also will help the organisation in measuring the cost efficiency. Often we hear the question, "Are we making any money doing this?", or the answer, "I don't know. We don't have the costing data." Collecting cost data relative to a specific functional area is a challenging task. Gathering detail on the true costs of receiving, storage, pick-n-pack, value-added processing, special packaging, staging and shipping is fundamental to performance assessment for an organization. Clearly, Activity Based Costing (ABC) offers great potential for improved performance and competitive differentiation. Activity-based Costing enables organisations to enhance profits through cost control and tracking practices. It would be always advisable to avoid “pallet in” and “pallet out” costing method and adopting Activity Based Costing would help to achieve the cost objectives of outsourcing. The North American and Western Europe users prefer deal structures which eliminates risk of outsourcing. However, Asia Pacific users are still follows the conventional costing methodology6. Further, ABC will also help us to understand the variance between projected costs and actual costs in three forms of variance; they are cost variance, volume variance and the norm (standard) variance. An efficient costing system and periodical cost analysis which is translated to performance indicators will help both the parties to keep the project on track. According to one of the surveys, the users conveyed that fifteen percent cost reduction was achieved in North America and Asia Pacific and eleven percent in Europe6. However, in the recently conducted surveys fifty one percent North American users, thirty five percent Western Europe users and forty three percent Asia Pacific users believe that the costs creep and prices increase once relationship is established. Further, forty seven percent North American users, forty three percent Western Europe users and fifty two percent Asia Pacific users conveyed that cost reductions were not realized. 6 These facts suggest that 3PL relationships thrive on structured costing agreements. 9.1.4 Inept Legal Documentation Inept Legal Documentation will also add confusion to the relationship and contribute to the failure. Even though contracts are administered and managed by humans through structured processes, it is very much necessary to document what is agreed and what is disagreed clearly in order to avoid ambiguity in the relationship. The legal document (contract) should address all possible friction points and address them with remedies. In the absence of clarity, confusion prevails and confusion leads to inefficiency and inefficiency leads to downfall. Exit strategies such as mediation and

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arbitration should also be part of any 3PL contract. Contract logistics services are in high demand as more and more organisations move towards more contractual partnerships with third party service providers. Many companies have overlooked critical areas when they define their contract relationships. The Massey University Study15 indicates that around eleven percent users in New Zealand do not have any formal contract in place. 9.1.5 Lack of Project Implementation strategy The start-up phase is a strong determinant of how a 3PL relationship will evolve down the road. Though the 3PL's implementation team is generally responsible for execution, the customer also plays a critical role in the partnership's initial success. Lack of Project Implementation strategy will negate advantages of outsourcing. There must be a detailed project implementation plan also known as road map as well as periodic reviews also known as mile stones should be in place to make sure everything is on track. This makes the management of the project easier and guards against drastic deviation in the scope of the project. Inefficient handling of the project implementation will lead towards project failure before the take off. The process of project implementation is a very tricky one. This is the process of translating thoughts into deeds. This process needs active co-operation and co-ordination of both the parties. Logistics outsourcing project implementation includes system (IT) integration, customisation of operating procedures, adapting to the service measures, understanding the exceptions management process, defining the escalation process etc. All these activities need precise handling and a dedicated team. Many outsourcing organisations believe that Contract Logistics Project Management is the responsibility of the 3PL company. In fact it is a team effort. A project management team should consist of stake holders from both the organisations. It is an ideal time to build relationships and establish communication channels to avoid bottlenecks in future and enable free flow of information. There are several efficient project implementation methods in use and each 3PL company will have its own methodology. What is critical is customisation, to suit the specific requirements and deliver agreed service levels. Twenty nine percent Americans, twenty one percent Western Europe users and twenty four percent Asia Pacific outsourcing community believe that the transition during implementation stage was not satisfactory6. 9.1.6Absence of Efficient Performance Measurement system One of the most critical tasks during the start-up phase is developing performance measurements and reporting methods. The customer must take initiative to design measurements that support the company's business goals for the outsourcing strategy. Absence of efficient Performance Measurement system will also directly contribute to the downfall of outsourcing initiatives. The five studies published by the Council of Logistics Management on the subject of performance measurement in logistics had three significant findings in common. 1. Most firms do not comprehensively measure logistics performance, 2. Even the best performing firms fail to realize their productivity and service potential available from logistics performance measurement, and 3. Logistics competency will increasingly be viewed as a competitive differentiator and a key strategic resource for the firm.

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Efficiency is critical to profitability, it is of little value unless it accompanies by another quality: effectiveness. While efficiency defines the economical use of resources, effectiveness reflects how well a process achieves its business objectives. Hence, it is very much necessary to identify “Qualitative Measures” which focuses on effectiveness and “Quantitative Measures” which focuses resource efficient utilisation. The 3PL performance should be measured on well defined qualitative and quantitative performance measures periodically. Ideally, Financial, Productivity, Utilisation, Quality and cycle time measure should be considered while defining the performance measures. This is a very critical exercise and while defining the measures, it is very much necessary to follow a practical approach and based on current performance and taking into account the expertise of the service provider. Ambiguous and ambitious performance targets will ruin the whole objective of outsourcing as well performance measurement. One of the objectives of Performance Measurement is not only to measure the performance but also initiate necessary corrective action with regard to negative performance and explore the possibility of gain share arrangement with regard to positive performance in order to encourage continuous improvements. Periodical performance measurement presents an ideal opportunity for both the parties to discuss and communicate effectively to make the outsourcing a grand success. Some of the Fortune 500 companies do measure performance on daily basis, weekly basis and monthly basis, however discuss on a quarterly basis which is known as QBR (Quarterly Business Reviews). 10.0 Conclusion Outsourcing logistics activities to a 3PL has been a means of leveraging economies of scale and tapping into a logistics infrastructure which includes IT systems, human resources and knowledge base that delivers increased robustness to a company’s logistics and supply chain operations. Logistics outsourcing has improved productivity and significantly reduced costs in many instances. The success of partnerships with 3PLs requires a combination of trust and collaboration. That could be the reason that strategic alliances are now a day called as collaborative alliances. Trust determines the level of flexibility one can allow the 3PL in managing the operations to the best of their capability which, in its own right, should exceed outsourcing organisation’s abilities. In order to achieve the agreed performance and cost goals, it is necessary to have a partner who can deliver best of the breed solutions. Therefore, it would be wise to acknowledge the abilities of the 3PL, agree on a mutually beneficial business arrangement, and trust that they will do what is in your best interest. Recently, “Eye for Transport” conducted survey in North America on “Outsourcing Logistics – The latest trends in using 3PL providers” in January 20052 and this report indicates that 65% of the respondents have reported that the 3PL performance is good, 12% felt that the performance was higher than expected and 4% reported that it was outstanding. With this optimistic note I would like to conclude this article. Before I do that, let me mention the preaching of Mr. Tom Peters, U.S. management guru on outsourcing, ‘Do what you do best and outsource the rest.’

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References: 1 IBM Outsourcing to Solectron, Sanmina-SCI, By Mark Berniker, Business News, January 7, 2003. 2 Fortune 500 companies’ views on the supply, chain and logistics landscape 2005/2006 by “eyefortransport”. 3 Atkinson, Helen. “Logistics Contract ‘divorces’ rising as industry grows.” Journal of Commerce, (November 1998). 4 Special Report, The Top 20 3PLs in North America, By Richard Armstrong (November 2004). 5 The Year 2004 Survey: CEO perspectives on the current status and future prospects of the third party logistics industry in North America. By Dr. Robert Lieb, Professor of Supply Chain Management, College of Business Administration, Northeaster University and Brooks a. Bentz, Associate Partner, Accenture – Supply Chain Management. (September 15, 2004). 6 Third Party Logistics, Results and Findings of the 2004, Ninth annual study conducted by Capgemini, Georgia Institute of Technology and FedEx Supply chain services. 7 The use of third party Logistics Services by Large American Manufacturers, The 2004 survey. By By Dr. Robert Lieb, Professor of Supply Chain Management, College of Business Administration, Northeaster University and Brooks a. Bentz, Associate Partner, Accenture – Supply Chain Management. (September 1, 2004) 8 T H I R D - P A R T Y L O G I S T I C S, Results and Findings of the 2003 Eighth Annual Study by Capgemini, Georgia Institute of Technology and FedEx Supply chain services. 9 See Watson, Carlos (2004). "The Inside Edge: The rise of the online citizen: Not India but China." CNN.com. Inside Politics. March 17, 2004. 10 "Outsourcing," Microsoft® Encarta® Online Encyclopedia 2005, Contributed By: Steven Greenhouse, B.A., M.Sc., J.D. Labour and workplace reporter, the New York Times. 11 EU15 embraces logistics outsourcing, by Food Productiondaily.com, Dt.4/10/2004. 12 The Year 2004 Survey: CEO perspectives on the current status and future prospects of the European Third Party Logistics Industry. By Dr. Robert Lieb, Professor of Supply Chain Management, College of Business Administration, Northeaster University and Brooks a. Bentz, Associate Partner, Accenture – Supply Chain Management. (September 15, 2004) 13 The Year 2004 Survey: CEO perspectives on the current status and future prospects of the third party logistics industry in the Asia-Pacific Region. By Dr. Robert Lieb, Professor of Supply Chain Management, College of Business Administration, Northeaster University and Brooks a. Bentz, Associate Partner, Accenture – Supply Chain Management. (September 15, 2004) 14 2003 China Logistics User Survey – Results and findings, August 2003 by Jim Dai, Yang Wang and Nancy Wong (TL-I-Asia Pacific) and Wang Derong, Liu Xiaohong, L I Rui 15 The current status of Logistics Outsourcing by New Zealand Manufacturers by Yanhua Gou (2003) 16 “Characteristics, Strategies and Trends for 3PL/4PL in Australia by Alpha Research Consortium, March 30, 2004. 17 The Third Party Logistics Market in China, By Opportunities and Challenges Mark Kadar, Vice-President, Diana Huang, Principal, September 30, 2002 18 2004 logistics & distribution industry report, Vol. 3, issue 1.

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19 Outsourcing of Internal Logistics Functions by Cost Conscious End Users to Sustain Overall Growth of European Warehousing Markets, by Featured Auto News Article. 20 EU15 embraces logistics outsourcing, Food Productiondaily.com, 04/10/2004.


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