Date post: | 16-Jan-2016 |
Category: |
Documents |
Upload: | loraine-hutchinson |
View: | 222 times |
Download: | 0 times |
OMSAN LOJİSTİK
Supply Chain & Logistics Outsourcing Projects
3. 3PL Provider Selection
Top Management Program in Logistics & Supply Chain Management (TMPLSM)
4
Demand Management
Sourcing Management
Fulfillment Management
What products could help our
clients generate demand?
What products could help our clients connect
their supply-demand points?
What products could help our clients satisfy their demand?
1. Call Centers2. Order management3. Forecasting4. Collections5. Factoring6. Customer Service
& Claims Management
1.Supplier management
2.Procurement3.Financing
1.Network management2.Inbound transportation3.Supplier consolidation4.Storage5.Order fulfillment6.Outbound
transportation7.Reverse logistics
Design Product (P) Portfolio
5
How Do We Select A 3PL Provider?
• Don’t Jump the Gun!!• Pre-planning is critical, ask yourself….
– “What do you hope to achieve by outsourcing”?– “Can the 3PL Provider offer a solution to our problem”?– “Are there other options available to us”?– “Is third-party a strategic direction for us”?– “Do we have the expertise, what is the opportunity cost and
what capital is required?
6
How Do We Select A 3PL Provider?
• Pre-planning is critical, ask yourself….– “What particular functions would be beneficial
to outsource?– “What are my costs to perform this activity in-
house”?– “How would my customer feel about the third
party relationship”?– “Where are the “holes” in our logistics
process’’?
7
How Do We Select A 3PL Provider?
• Develop a Business Case
• Why?
• What?
• When?
• Where?
• How?
• Who?
8
“Pre-Planning Analysis”Example
Criteria Mow Lawn Rebuild Engine Reverse Logistics
Expertise?
OpportunityCost?Fixed/VariableCosts?Outsource?
Probably Yes Probably No Maybe
Leisure, Time with Family, Home Business
Resources deployed to otherfunctional areas
Yes, mower, gas,oil, maintenance,
Yes, tools, computerequipment
Yes, Cross-dockfacilities, transport, IT
F(criteria weighting, goals, performance and service expectations)
Determination of the Economic Value Added (EVA)
9
“7 Steps to 3PL Provider Selection”
“Pre-Planning Analysis”
Establish Objectives and Selection Criteria
Identify Qualified Providers
Secure RFI/RFQ’s from Providers
10
“7 Steps to 3PL Provider Selection”
Evaluate Responses
Perform Site visits
Negotiate contracts
Selection
11
The ABC’s in Provider Selection
• Alliances
• Balance
• Culture
12
The ABC’s in Provider Selection
• Delivery!!
• Entrepreneurial Spirit
• Financial Position
13
The ABC’s in Provider Selection
• Gain-sharing
• Hierarchical Structure
• Information Integration
14
The ABC’s in Provider Selection
• Just-in-time capabilities
• Key performance measurements
• Legal Implications
15
The ABC’s in Provider Selection
• Management expertise
• Niche player
• One-stop shopping
16
The ABC’s in Provider Selection
• Process capability
• Quality certification
• References
17
The ABC’s in Provider Selection
• Solutions
• Technology
• Understanding
18
The ABC’s in Provider Selection
• Vision
• Willingness
• X-pertise
19
The ABC’s in Provider Selection
• Y ask Why - Always!!
• Zero Sum Game - No!!
20
RFI/RFQ ElementsCompany Profile
• How long has your company offered third party services to clients?
• What specific elements of your business give you a competitive advantage in the third party logistics area?
• In what market sectors does your company participate?
21
RFI/RFQ ElementsStrategic Direction
• What are your company objectives?
• What are your major goals for the next three years?
• What is your business strategy and what changes do you anticipate over time?
22
RFI/RFQ ElementsCustomer Base Profile
• Specify the percentage of sales from your #1 customer, from the top (5) customers and top (20) customers
• Provide two previous customer contacts whom you have ceased to do business with within the last year
• What percentage of sales would our business represent?
23
RFI/RFQ ElementsManagement Capabilities
• What is the tenure of the senior managers within your organization?
• What percentage of your revenue is allocated to employee training?
• How do you facilitate “continuous process improvement” in all of your operations?
24
RFI/RFQ ElementsFinancials
• What are your historic trends for
profitability and return on investment?
• Are you a part of a larger company and if
so what degree of corporate support do
they provide?
• Who are your top three competitors?
25
RFI/RFQ ElementsQuality Proficiency
• How is the corporation’s commitment to quality communicated to the employee?
• Are you currently ISO certified? If not, are you pursuing it? Detail your plan.
• Do you use quality costs and quality audits to assure adherence to the quality systems?
26
RFI/RFQ ElementsCustomer Service Policy
• How would you define responsiveness?
• What are you response time standards to customer inquires (order status, shipment verification, etc.)
• Are customer service standards well documented and distributed?
27
RFI/RFQ ElementsAccount Management
• Who will be the single point of contact for the account?
• Will a cross-functional team be assembled for the implementation?
• Describe how account management and program cohesiveness will be ensured.
28
RFI/RFQ ElementsTechnology
• Provide an overview of your overall information systems network including major hardware and software platforms as well as operating environment
• Were the software applications developed “in house”?
• What is your disaster recovery plan?
29
RFI/RFQ ElementsLogistics Network
• Provide details pertaining to the size and scope of your logistics network
• Describe you ability to provide “value-added services” to your customers
• Cite examples that demonstrate your expertise in warehousing and transportation management
30
RFI/RFQ ElementsFee Structure
• What is your pricing policy and methodology?
• Does your company utilize “open book” pricing?
• How are startup costs reflected in the pricing scenarios?
31
Third-Party Logistics RFI/RFQ Elements
• Company Profile• Strategic Direction• Customer Base Profile• Management Capabilities• Financials• Quality Proficiency• Customer Service Policy• Account Management• Technology• Logistics Network• Fee Structure
32
Why Are 3PL’s Valued?Client Motivation
• Gain Systems Capabilities/Technology
• Provide Benchmarking
• Enable Change
• Avoid Labor Problems
• Avoid Costs of Regulation (OSHA)
• Increase Productivity/Efficiency
• Gain World-wide Market Entry
33
Lets company focus on broader business issues by having outside experts handle various operational details
Lets company focus on broader business issues by having outside experts handle various operational details
Strategic Rationales for Outsourcing
Improve Business FocusImprove Business Focus
Permits firm to redirect efforts from non-core activities toward those that serve customers more effectivelyPermits firm to redirect efforts from non-core activities toward those that serve customers more effectively
Free Resources for Other PurposesFree Resources for Other Purposes
Provide Access to World-Class CapabilitiesProvide Access to World-Class Capabilities
Accelerate Business Re-Engineering BenefitsAccelerate Business Re-Engineering Benefits
Share RisksShare Risks
The specialized resources of outsourcing providers makes world-class capabilities available to firms in a wide range of applications
The specialized resources of outsourcing providers makes world-class capabilities available to firms in a wide range of applications Achieves re-engineering benefits more quickly by having outsiders--who have already achieved world-class standards--take over process
Achieves re-engineering benefits more quickly by having outsiders--who have already achieved world-class standards--take over processReduces investment requirements and makes firm more flexible, dynamic and better able to adapt to changing opportunities
Reduces investment requirements and makes firm more flexible, dynamic and better able to adapt to changing opportunities
34
Why Are 3PL’s Valued?3PL Provider Motivation
• Incremental Revenue
• Revenue Retention• Stability• Scale for Leverage• Increase Profit &
Reduce Costs
35
Why are Companies Reluctant to Outsource?
• Strategic– No perceived advantage– Internal resistance/politics– No credible 3PL provider– Difficult to develop new working relationships
36
Why are Companies Reluctant to Outsource?
• Strategic– 3PL provider does not offer solutions and
value– Limited history and payback with 3PL– Absence of comprehensive and integrated
3PL information systems– 3PL providers “talk-the-talk” but can they
“walk-the walk”? (over-sell and under-deliver)
37
Why are Companies Reluctant to Outsource?
• Tactical– Fear of losing control– Fear of lost jobs– Admission of incompetence– Fear of change– Perceived negative customer satisfaction
38
New Roles and Risks for 3PLs
While the existence of 3PLs is NOT new, the range of value propositions they offer today has changed dramatically:
1) Global Industry Consolidation in order to provide scale economies across services and geography while developing a degree of industry specialization (e.g., UPS and Fritz)
2) Technology Integration to link their business processes more directly to those of their clients
3) Industry Specialization to support unique industry needs
4) Industry Alliance Networks with the potential to create a new range of service offerings which are more global in scope and multi- or cross- modal in network connectivity (e.g., FedExp and the USPS)
Supply Chain Management Review, Sept. - Oct. 2001
39
Providers Overview
Type Market Focus Examples
Asset
Non-Asset
Information/Mgmt.
Integrated
Carrier, WarehouseBrokers, ForwardersIT, Freight PaymentSupply Chain Mgmt.
4PL
Ryder, USCO
Intral (ex Gillette)
GEIS, IBM, Cass LogisticsUPS Supply Chain Solutions, Exel Logistics, DHL DanzasAccenture, Cap Gemini Ernst & Young
40
Providers Overview Differentiating Factors
• Differentiating factors– Industry Specialization (food/groceries,
temperature controlled, automotive)– Mode Specialization (truck, rail, ocean)– Geographic Specialization (local, regional,
national, international)
41
Overview of The Providers
• Differentiating factors– Service capabilities (TL, LTL, ocean, air, rail)– Technology offerings (information systems,
satellite vehicle communications, EDI)– Additional factors (import/export/customs, ISO
9000 certified, process re-engineering)
42
Strengths of Major 3PL Supply Chain Integrators (Large Industry Capability)
• Caliber Logistics• Customized Transportation Inc.• Exel Logistics• J.B. Hunt Logistics• Logix• Menlo Logistics• Ryder Integrated Logistics• Schneider Logistics
43
• DSC Logistics
• Exel Logistics
• GATX Logistics
• Tibbett & Britten
Strengths of Major 3PL Warehousing & National Distribution Chain
44
• Airborne Logistics Services• Associated Distribution Services• BAX Global Logistics• Emery Worldwide Global Logistics• FedEX LEC&C• Skyway Freight Systems• UPS Worldwide Logistics
Strengths of Major 3PL High-Value Commodities (Asset Based)
45
Strengths of Major 3PL High-Value Commodities (Non-Asset Based)
• AEI
• Circle International
• Expeditors International
• Fritz Companies Inc.
46
Strengths of Major 3PL Dedicated Contract Carriers
• Builders Transport• Caliber Logistics• J.B. Hunt Logistics• Penske Logistics• Rollins Logistics• Ryder Integrated Logistics• Schneider Logistics• Werner Logistics
47
Strengths of Major 3PL Intermodal Carriers
• Hub Logistics
• Mark VII Logistics
48
Services Offered by 3PL
Shipment Consolidation Logistics Information Systems Product Returns Warehouse Management/Operations Inventory Management Carrier Selection Order Fulfillment Rate Negotiations Order Processing Fleet Management /Operations Product Assembly Customer Spare Parts Vendor Selection Purchasing
49
Shipment Consolidation …
50
Classification of Services by 3PL
Physical Contract Physical Contract Logistics ServicesLogistics Services
• Dedicated Contract Carrier• Dedicated Warehousing
Integrated Integrated Contract Contract LogisticsLogistics
• Integrated Warehousing and Transportation
• Integrated Carrier Management and Transportation
Basic ServicesBasic Services
• Common Carriage• Public Warehousing
Management Management Contract Contract
Logistics Logistics Services Services
• Traffic Management• Warehouse Management• Import/Export management
PhysicalPhysicalServicesServices
ManagementManagementServicesServices
Complexity and Customization
Co
mp
lexi
ty a
nd
Cu
sto
miz
atio
n
Low High
High
Source: J.M. Africk and C.S. Calkins (Transportation and Distribution, 1994)
51
When Should You Contract Logistics?
Company Company NeedsNeeds
Provider Provider CapabilitiesCapabilities
Tangible Tangible ValueValue
ManagementManagementCommitmentCommitment
Low
Low
High
Low
Low
High
Yes NoNo
Do It!Do It!
Source: H.L. Randall, The Logistics Handbook, 1994
52
Services Offered by 3PL
ResourceOrientedLogistics
UserOrientedLogistics
InformationOrientedLogistics
Shipment Consolidation
Logistics Information Systems
Product Returns
Warehouse Manag / Operat
Inventory Management
Carrier Selection
Order Fulfillment
Rate Negotiations
Order Processing
Fleet Management /Operations
Product Assembly
Customer Spare Parts
Vendor Selection
Purchasing
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
53
Show Me the Value!
ValueValue = ai Xi + bjYj
where
Xi = Tangible Parameter i (e.g., cost)
Xi = Deviation from BASE CASEBASE CASE for parameter Xi
ai = Weight assigned to tangible parameter Xi
Yj = Potential Parameter j (e.g., new market)
Yj = Deviation from BASE CASEBASE CASE for parameter Yj
bj = Weight assigned to potential parameter Yj
54
• Logistics may not be a core competency of the company
• 3PLs can enhance supply chain coordination: - risk pooling - IT infrastructure
- planning & control systems - warehouse management systems
• Outsourcing can be used to impose performance standards
• 3PLs can be more efficient by integrating flows across multiple customers: - FTL transportation - common warehouses - maximize backhauling
Show Me the Value!
55
Ten Rules for Outsourcing
1) Develop a strategy for Outsourcing
2) Establish a rigorous provider selection process
3) Clearly define your expectations
4) Develop a good contract
5) Establish sound policies and procedures
6) Identify and avoid potential friction points
7) Communicate effectively with your logistics partner
8) Measure performance, communicate results
9) Motivate and reward providers
10) Be a good partner
Logistics Outsourcing: A Management Guide