Third Party Logistics(3PL)

Presented by :- Shailendra Kumar SumanAdm. No:- 2008 MT 0079

?What comes to our mind when we think about transportation as a function of logistics

But it also includes such Over Dimension Consignments

Transportation of modules

Support fixtures

Trailer design

Road widening

Which involves Lifting the consignment (arranging for cranes) Deciding the transportation means (type of truck- special design or barge) Preparing the fixtures for safe transportation Conducting route survey (road, bridges, water level) Strengthening bridges Taking various permits

LOGISTICS is a vital component of a company's strategy to improve performance. Manufacturers abroad have realised that the best way to improve performance is to concentrate on the core competence — making a product, and outsourcing the rest, including logistics from a third party logistics (3PL-Third party logistic) service provider.

LOGISTICS

Company's realised that the best way to improve performance

Why Third Party Logistics(3PL) Required

Description Savings Realized

Route Design & Optimization

Closed Loop Dedicated Operations

Mode Conversion

Core Carrier Management

Rate Negotiation & Audit

Inbound Consolidation

Reverse Logistics

DC Location Realignments

Reduced Inventory

10-15%

15%

10-15%

5-10%

4-5%

20-25%

10-15%

10-12%

7-10%

Contract Logistics Savings Potential

How 3PL originated Globalization Manufacturing revolution Reengineering Technological growth

Outsourcing of logistics

3PL Vs. Transportation Services

Degree of commitment

Single transaction

Repeated transactions

Partnership agreement

Third party agreement

Integrated logistics

Degree of integration

3PL

Introduction to 3PL

A third-party logistics provider (abbreviated 3PL) is a firm that provides outsourced or "third party" logistics services to companies for part, or sometimes all of their supply chain management functions. Third party logistics providers typically specialize in integrated operation, warehousing and transportation services that can be scaled and customized to customer’s needs based on market conditions and the demands and delivery service requirements for their products and materials.

“Third-party Logistics is simply the use of an outside company to perform all or part of the firm’s materials management and product distribution function.” --

Simchi-Levi ( 2000 )

“A relationship between a shipper and third party which, compared with the basic services, has more customized offerings, encompasses a broad number of service functions and is characterized by a long-term, more mutually beneficial relationship”

-- Murphy & Poist ( 1998 )

Introduction to 3PL

Services Provided By 3PL’s

Transportation Mgt21%

Private Fleets7%

Intermodal4%

Warehousing21%

Value Added20%

International9%

Integrated9%

Other5%

Lead Logistics4%

Types of 3PL providersHertz and Alfredsson (2003) describe four categories of 3PL providers:

What are the Selection criteria for 3PL

Parameters Cost On time delivery Level of customer service Flexibility – demand fluctuation Past experience and client reference Infrastructure – capabilities

3PL Gross Revenues by Industry

Why is it needed (Advantages / Disadvantages) ?

• Advantageso Cost reductiono Focus on core competencyo Improved efficiency, service and flexibilityo Industry-specific application – “build-to-order” systems and e-merchants

• Disadvantageso Loss of controlo Impact on in-house workforce

3PL Market in India

Year 2005 2012(Estimated)

3PL market(in billion) 890.4 3556.7

Growth Rate

(in %)--- 21.9

Few Challenge for 3PL in India

Some Factors that are Driving Indian Logistics towards 3PL

Two major projects Golden Quadrilateral network and North-South-East-West (NSEW) Corridor

Case Study

• Gati pioneered the concept of Retail Express Cargo and Express Distribution in India

• 19 years working tenure• Gati has the largest fleet of over 2100 vehicles

on road, with a nation wide network unmatched in the industry

• Gati has connected businesses across the border

• Providing seamless multi modal network across road, air, rail and sea, & hold position in the Express Distribution Segment.

Gati Profile Ahead in Reach

Important Important AwardsAwards:-:- Ahead in Reach

1. First Logistics Company in India to be 1. First Logistics Company in India to be Awarded ISO -9001 certification ISO 9001-Awarded ISO -9001 certification ISO 9001-2000 in 1998.2000 in 1998.Frost and Sullivan Award for the Best Domestic Frost and Sullivan Award for the Best Domestic Logistics Company in 2003.Logistics Company in 2003.2. Award for the Best HR Practices” in Service 2. Award for the Best HR Practices” in Service Industry by Amity International Business School Industry by Amity International Business School in 2005 & 2007.in 2005 & 2007.3. Consumer Super Brand award in Logistics 3. Consumer Super Brand award in Logistics Category by Super brands, UK in 2006.Category by Super brands, UK in 2006.

Gati Services1.Gati Surface Express2.Gati Air Express3.AI Gati4.Gati SCM5.Gati Cold Chain6.Gati Europe Express7.Gati Global Express

Premium Clientele

Services Network

Distribution NetworkLocations 414

Locations serviced 20000

Delivery capability 603 out of 611 Districts

Gati Associates 970

Routes 753

Vehicles 1146(Own vehicles-163)

Vendors 606

Handlers 1500

Weight Handled (per month) 37000 ton

• GLS serves 2,20,000 customers in Europe in 36 countries, handling 311 million parcels, has 17,800 vehicles, 32 transshipment points, employs 12,000 employees.• Growing at a CAGR of 24% in the last 3 years, is expected to grow at 27% from this year.

EBIDTA Growth Chart

Case Study

KTSPLKTSPL ProfileProfile Since 1992, Kandarp Tradelinks and Since 1992, Kandarp Tradelinks and

Services Private Limited. Engaged in a Services Private Limited. Engaged in a business of C & F Agency in North India.business of C & F Agency in North India.

Clients integrated bulk transport, freight forwarding, and logistics management services, and to be a single window end-to-end logistics solution provider.

Customer Oriented and Customer Friendly

AHEAD IN LOGISTICS

Total Logistics Solution Heavy / ODC / Specialized   Third Party Logistics Turnkey Logistics Contract Warehousing Crane Hiring - Crane Rent Project Cargo Services Supply chain solutions Vendors Management System Value Added Services

Services

KTSPL Client List

KTSPL Services Network

Case Study

TVS Profile:TVS Profile: Chennai-based Company A part of the TVS group In logistics business since 1995 Frost & Sullivan's 2005 Voice of Customer Award In 2006, the company reported a turnover of Rs 140 crore Target is to reach Rs 500 crore by 2007-08

TVS Logistics Services Ltd

Various aspects of transportation Warehousing Supply chain solutions Vendors Management System Value Added Services Overall capability

Services

4PL(Forth party logistic)

The Fourth-Party Logistics service provider (4PL) or Lead Logistic Provider (LLP) is a Business Process Outsourcing (BPO)

provider.

•Solution Integrator•Lead Logistic Provider•Industry Innovator

• The services provided by a 4PL provider are:• Freight Negotiations with 3PLs • Freight Contract Management• Transport Billing• Continuous Improvement Programs • Management of Service Providers • IT Solutions• Risk Management and Insurance • Cash-flow Management.

Fifth-party logistics

• fifth-party logistics service i.e. the realisation of full-scale operation of e-procurement. A key function of the 5PL is to aggregate the demands of the 3PL into a bulky volume for negotiating more favourable rates with airlines and shipping companies regardless of which generation of logistics solution belongs to all.

Sixth Party Logistics (6PL)

• Sixth Party Logistics (6PL) to the outsourcing of a manufacturing and marketing for the organizations.

Logistics is one of the area of the supply chain i.e. growing at a tremendous case as the Internet and E-Commerce is drastically changing the range, delivery time and the speed of information as well as ordering and payment process. Due to the big boon of information technology, greatly influencing and enhancing the effectiveness of logistics, the time is not far when 5 PLs and 6 PLs may emerge which will probably we doing part of the manufacturing and marketing for the organizations.

CONCLUSION:

ConclusionThe Indian 3PL market is set to grow tremendously in the next 5-7 years, spearheading the growth of logistics market. Several factors including government’s support are instrumental in this growth. Though certain challenges remain to be addressed, the general trend is highly positive. With scenario highly favorable for them, the onus is now on 3PL service companies to offer quality services at affordable pricing, and delivering consistent results to maintain the momentum. For now, surely 3PL is the way forward for Indian Logistics Market.

 

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Skjoett-Larsen, T. (2000). Third party logistics-from an inter organizational point of Skjoett-Larsen, T. (2000). Third party logistics-from an inter organizational point of view. view. International Journal of Physical Distribution & Logistics Management, 30(2),International Journal of Physical Distribution & Logistics Management, 30(2), 112-127.112-127.

Sum, C. & Teo, C. (1999). Strategic posture of logistics service providers in Sum, C. & Teo, C. (1999). Strategic posture of logistics service providers in Singapore. Singapore. International Journal of Physical Distribution & Logistics Management, International Journal of Physical Distribution & Logistics Management, 29(9),29(9), 588-605. 588-605.

References:-•Sengupta, Rika “Transportation and Warehousing Facilities at Gati”, Harvard Business review, September,PP-82-84.•Alteler, Rahul., ”Supply Chain Management, Concepts and Cases”,2005,Prentice-Hall of India.•Gati (www.gati.com/caogo_management.jsp•www.kandarptraders.com/contact.htm•www.kandarptraders.com/areas_we_cover.htm•www.kandarptraders.com/third_party_logistics.htm•www.globeecologistics.com/clients.html•www.globeecologistics.com/mangements.html•www.globeecologistics.com/supply_chain.html•www.tvs.com/third _party logistic.hyml•Chopra, Sunil.,”supply Chain Management” Strategy, planning and operation”, 2002,person Education (Singapore) pvt. Ltd