3party and 4 party logistics

arun palanisamyI MBA, TNAU. 104/13/23

arun palanisamyI MBA, TNAU. 2

1.Logistics outsourcing

2. Third party logistics

3.fourth party logistics

4.Difference between the TPL and FPL.

04/13/23


Logistics is the management of the flow of goods between the

point of origin and the point of consumption in order to meet some

requirements.

information flow,

material handling,

production,

packaging,

inventory,

transportation,

warehousing, and often security04/13/23

Outsourcing - Industry Trends

Findings of a Survey : Why company's Outsource


Third-party Third-party logisticslogistics

(3PL) involves using external organizations to execute logistics

activities that have traditionally been performed within an organization

itself.


For example, if a company with its own warehousing facilities decides to employ external transportation, this would be an example of third-party logistics. 04/13/23

The evolution of 3PL market is explained with reference to three distinct phases


Service Category

Basic Service Some specific value added services

Transportation Inbound, outbound by ship, truck, rail, air

Track/trace, mode conversion

Warehousing Storage, facilities management

Cross-dock, in-transit merge, inventory control

Information technology

Provide and maintain advanced information systems

Transportation management systems, warehousing management

Reverse logistics Handle reverse flows Recycling, customer returns, repair/refurbish

Other 3PL services

Customs brokering, hazardous material, order taking, consulting, port services, etc.

04/13/23 10arun palanisamyI MBA, TNAU.

Services Provided By Services Provided By 3PL’s3PL’s


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

Standard 3PL Provider: this is the most basic form of a 3PL

provider.

pick and pack,

warehousing,

distribution


Service Developer: this type of 3PL provider will offer their customers advanced value-added services such as:

tracking and tracing

cross-docking

specific packaging

unique security system

Service Service DeveloperDeveloper


The Customer Adapter:


1. integrated logistics service provider

2. contract-based service provider

3. consulting service provider

3PL (or 3PL provider) has the following features at present


Asset-based - provider owns some assets, particularly transport-

related assets such as trucks, warehouses, etc.,

Non-asset-based -does not own such assets, and usually relies on

sub-contractors


Customer # of 3PL’s Used

General Motors 37

Wal-Mart Stores 33

Ford Motor, HP 27

Procter & Gamble 20

General Electric 17

Georgia Pacific, IBM 16

PepsiCo, Sears 13

Coca-Cola, Sara Lee, Target, Xerox 12

General Mills 11

Delphi, Safeway 10

GREATER THE NUMER OF COMPONENTS INVOLVED IN MANUFACTURING MORE 3PL ACTIVITES WILL BE OUTSOURCED

Source : international logistics


The partnership between Ryder Dedicated Logistics and GM Saturn division is a good example of 3PL. Saturn focuses on automobile manufacturing and Ryder manages most of Saturn other logistics considerations. Ryder deals vendors, delivers parts to the Saturn factory and delivers finished vehicles to the dealers . Saturn Orders parts using Electronic Data Interchange ( EDI ) and sends same information to Ryder. Ryder makes all the necessary pickups from 300 different suppliers in the U.S., Canada and Mexico using special decision-support software to effectively plan routes to minimize transportation costs.


3PL is more complex than normal outsourcing of logistics

activates .When speaking of 3PL a true partnership condition is usually

assumed because

Strategic nature of services purchased

Buyer of 3PL realizes that synergies can be achieved by exploiting

the logistics provider distinct competencies


The concept of a fourth-party logistics (4PL) provider was first The concept of a fourth-party logistics (4PL) provider was first

defined by Andersen Consulting as an defined by Andersen Consulting as an integrator that assembles the integrator that assembles the

resources, planning capabilities, and technology of its own resources, planning capabilities, and technology of its own

organization and other organizations to design, build, and run organization and other organizations to design, build, and run

comprehensive supply chain solutions. comprehensive supply chain solutions.

fourth-party fourth-party logistics (4PL) logistics (4PL)


Synergy Plus operating model

Solution Integrator model

Industry Innovator model


1. Partnership between 4PL – 3PL to market supply chain solutions

2. Capabilities and market reach of both partners are combined

3. The 4PL provides:

Technology

supply chain strategy skills

capability to go to market

by program management expertise


Core Model: 4PL operates comprehensive supply chain

solutions for a single client.

Solution encompasses resources,

capabilities and

technology

of the 4PL with complementary service providers


4PL develops and runs a supply chain solution for multiple industry

players with focus on synchronization and collaboration

This model provides the greatest benefits, however it is complex and

a great challenge


ProcurementStorageDistribution


4pl providers

UPS,

CMA

CGM

04/13/23


1.Higher order-to-delivery cycle times, and order-to-cash cycles that are

increasing in length. Order-to-cash cycles affect other areas of the

company and can be one big area where improvement can free up cash

for important enterprise initiatives such as research and development

2.The need and demand for IT resources. Lack of IT infrastructure to

support an expanding global supply chain can inhibit growth.

04/13/23

3.Global growth, more inventory in more places, and a shifting

revenue recognition point. Companies often lack the ability to

generate substantive supply chain performance improvement on their

own.

4.Global expansion. Companies wanting to get into markets they have

not been in before need flexible, effective supply chain processes to

be successful

SOURCE: Carl Fowler, senior director of operations, and leader of Menlo Logistics’ 4PL practice


Economies of Scale

Reduced Supply Chain costs

Increased flexibility

Combines the advantages of in- and outsourcing

Manufacturers can focus on core competencies

Improved customer service

Reduced capital requirements


Loosing sight of original core-concept of SCM due to loss of Loosing sight of original core-concept of SCM due to loss of

controlcontrol

Customer relationships should not be dismissed on basis of Customer relationships should not be dismissed on basis of

efficiencyefficiency

Strict functional organization structure hinders integrated Strict functional organization structure hinders integrated

Supply ChainsSupply Chains

Resistance to change – the biggest obstacle to Resistance to change – the biggest obstacle to

implementation of new implementation of new approachesapproaches


An example here would be a bicycle importer. The main function is

to import bicycles however, they need to have spare parts for these

unique bikes. A 4PL would manage the total logistic operations for

the spare parts business.


Difference between 3PL and 4PL FPL differs from TPL in several respects

FPL organization is often a joint venture between a primary client

and one or more partners;

FPL organization acts as a single interface between the client and

multiple logistics service providers;

The major part, of the client's supply chain is outsourced to the FPL

organization.


ALL THE COMPANYS WOULD LIKE TO PROVIDE ALL THE COMPANYS WOULD LIKE TO PROVIDE

AN BETTER THING IN BETTER MANNER TO AN BETTER THING IN BETTER MANNER TO

STABLIZE AND INCREASE THEIR STABLIZE AND INCREASE THEIR

EFFECTIVENESS AND EFFECIENCY IN THIS EFFECTIVENESS AND EFFECIENCY IN THIS

COMPETITATIVE WORLDCOMPETITATIVE WORLD


Thank u


The supply chain integration The raise of 4pl : gail dutton Third party logistics by C. John Langley Jr., Ph.D.

Logistics outsourcing and selection of third party logistics service provider (3pl), erdal çakir 2009.

Fourth party logistics a study of modern logistics Paulo Bragança 2009

http://www.cquential.co.za/industries/3pl-4pl/

REFERENCE

04/13/23

3party and 4 party logistics

Documents

present arun palanisamyi

pl services customer

pl services customs

pl market

pl activites

services transportationinbound

financial services

port services