Third Party Logistics

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Third Party Logistics

• Libby Ogard
• Prime Focus LLC
• October 20, 2004

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Definitions

• Third Party Logistics (3PL) Outsourcing all or
  much of a companies logistics operations to a
  specialized company
• Third Party Logistics Provider A firm which
  provides multiple logistics services for use by
  customers. Preferably, these services are
  integrated or bundled together by the provider.
  These firms facilitate the movement of parts and
  materials from suppliers to manufacturers and
  finished products from manufacturers to
  distributors and retailers. Among the services
  which they provide are transportation,
  warehousing, cross-docking, inventory management,
  packaging and freight forwarding.

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Why Outsource?

• 80 of the top 400 US companies operate on a
  global scale

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Complex Inland Distribution Patterns
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Profitability depends on Speed, Reliability and
Visibility
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Outsourcing - Industry Trends
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Outsourcing - Industry Trends
Contract Logistics Savings Potential
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FY 2003 Fortune 500 Global 3PL Gross Revenues by
Industry
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Customers of 3PLs
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Customers of 3PLs

• Percent of Fortune 500 Companies Using 3PLs

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Buyers of 3PL Services
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Services Provided By 3PLs
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Top Providers Est. Rev. (M)
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10 Commandments of Outsourcing

• Develop a strategy for outsourcing
• Establish a rigorous provider selection process
• Clearly define expectations
• Develop a good contract
• Establish sound policies and procedures
• Identify and avoid potential points of friction
• Communicate effectively with your partner
• Measure performance and communicate results
• Motivate and reward provider
• Be a good Partner