Third Party Logistics Providers (3PL)

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Third Party Logistics Providers (3PL)

• Kyle Sera
• Amy Irvine
• Scott Andrew
• Carrie Schmidt
• Ryan Lancaster

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Overview

• What are 3PLs
• Why use them
• Tips for implementation of 3PLs
• 4PLs

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Types of 3PL Providers

• Transportation Based
• Services extend beyond transportation to offer a
  comprehensive set of logistics offerings.
• Leveraged 3PLs use assets of other firms.
• Non-leveraged 3PLs use assets belonging solely to
  the parent firm.
• Examples Ryder, Schneider Logistics, FedEx
  Logistics, UPS Logistics

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Types of 3PL Providers

• Warehouse/Distribution Based
• Many have former warehouse and/or distribution
  experience.
• Examples DSC Logistics, USCO, Exel, Caterpillar
  Logistics, IBM

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Types of 3PL Providers

• Forwarder Based
• Very independent middlemen with forwarder roles.
• Non-asset owners that provide a wide range of
  logistics services.
• Examples AEI, Kuehne Nagle, Fritz, Circle, C.
  H. Robinson, Hub Group

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Types of 3PL Providers

• Financial Based
• Provide freight payment and auditing, cost
  accounting and control, and tools for monitoring,
  booking, tracking, tracing, and managing
  inventory.
• Examples Cass Information Systems, CTC, GE
  Information Services, FleetBoston

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Types of 3PL Providers

• Information Based
• Significant growth and development in this
  category of Internet-based, business-to-business,
  electronic markets for transportation and
  logistics services.
• Examples Transplace, Nistevo

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Logistics?

• Logistics Managing the flow of information and
  goods inbound from suppliers and outbound to
  customers.
• Why be good at this?
• Core competency?

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Why Use 3PLs?

• Save time
• Dont need to invest in
• Trucks
• Training
• Development
• Help expand
• New markets
• International
• No roads

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Why Use Cont.

• Narrow your focus
• Allows you to focus on your strengths
• Dont get spread too thin
• Reach more customers more effectively
• Can ensure delivery times
• can help a company run leaner

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Management Focus

• Furthering your company
• Consider potential benefits and drawbacks
• 3pls can increase profitability
• Can you be a 3PL to someone else?

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Levels of Outsourcing

• Transactional Outsourcing Based on transactions,
  with no long term contracts and no bonding
  between the 3PL and the outsourcing company.
• Tactical Outsourcing Outsourcing on a long term
  basis with negotiated contacts and integrated IT
  systems to facilitate free information flow and
  create supply chain visibility.
• Strategic Outsourcing Based on long-term
  relationships with successful outcomes, 3PL
  companies become partners in supply chain
  management and establish transactional
  transparency.

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3PL Defined

• Can be ambiguous as there are many definitions
• Some say all or a significant part
• Some say at least one part
• Best definition is probably a combination
• Businesses that provide one or many of the
  following logistics services
• Transportation Management
• Public/Contract Warehousing
• Distribution Management
• Freight Consolidation

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As a ManagerWhich 3PL Provider Do I Choose?

• Inbound Logistics recognizes top 10
• Uses its readers to conduct vote
• Over 300 companies nominated with 3,000 votes
• Top 3 this year
• 1) UPS Supply Chain Solutions
• 2) Schneider Logistics
• 3) C.H. Robinson

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How is a 3PL Differentiated From a Transportation
Provider?

• Transportation provider gets product from point A
  to point B
• Could be considered a 3PL
• Just one function of logistics
• 3PL provider assists in multiple functions

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Successful Implementation of 3PL

• Why you want to select the right provider the
  first time
• Only about 65 of companies believe their
  provider is doing a good job.
• 55 of logistics outsourcing contracts end in 3-5
  years
• The source had a list of 14 key tips for success,
  but we are going to focus on the 5 most important
  issues.

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Tips for Successful Implementation

• 1) Have an outsourcing strategy.
• Know what your outsourcing strategy is. It needs
  to be well thought out and measured against in
  house solutions and capabilities.
• SWOT analysis. As a company you should
  understand the strengths, weaknesses,
  opportunities and threats of outsourcing
  logistics, rather than keeping them in house.
• 2) Do your homework.
• Do a comprehensive study
• Clearly document advantages, challenges, costs
  and benefits.
• Document expectations
• Set down expectations in clear terms and include
  current costs.

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Tips Continued

• Create a robust selection process.
• Invite companies in to give a formal presentation
  without giving requirements. This can help
  document their strengths and weaknesses.
• Make a site visit to the 3PL, and talk with its
  existing customer.
• 3) Measure and review performance
• Have a efficient and accurate measurement system.
• Qualitative measures that focus on effectiveness
  and quantitative measures that focus on efficient
  utilization.
• Have an efficient costing system
• This will help you to understand the costs
  involved in outsourcing.
• Are we making money doing this?

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Tips Continued

• 4) Create an Implementation Strategy
• Create a project plan road map
• Be clear who does what, create a project
  management team with members from both
  organizations and review progress vs. planned
  milestones.
• 5) Nurture the Relationship
• Both Parties must nurture the relationship to
  make outsourcing successful.
• Create mutual trust, respect and a sense of
  integrity.

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4PL Providers

• Manage and direct the activities of multiple
  3PLs, serving as an integrator
• Refinement on the idea of 3PLs
• 4PLs are not asset based like 3PLs
• Assembles and manages the resources,
  capabilities, and technology of its own
  organization and other organizations to design,
  build and run comprehensive supply chain solutions

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Transways Express 4PL

• One stop transport and logistics supplier
• Work with suppliers and customers

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Questions?
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Sources

• 3PL definition
• http//accuracybook.com/glossary.htm
• Top 10 3PL providers
• http//www.inboundlogistics.com/3pl/awards.shtml
• Successful 3PL implementation
• http//logistics.about.com/od/thirdparty/a/uc0418
  05a.htm
• Sangam, VK. (2006). Implementing Third Party
  Logistics. Retrieved May 5th, 2006. From Massey
  University, About Business and Finance website
• http//logistics.about.com/od/thirdparty/a/uc0418
  05a.htm
• Red Prairie
• http//www.redprairie.com/Industry20Solutions/Th
  ird20Party20Logistics.aspx
• Class lecture slides
• http//logistics.about.com/od/thirdparty/a/uc0418
  05.htm