BY Deepanjan Ghosh

Definition of 3PL. Objectives of 3Pl. Advantages and Disadvantages of 3PL. Key Drivers of 3PL. Definition of logistic. Services provided by 3PL. Conclusion.

Logistic is the flow of goods, services, information, etc from point of origin to the point of consumption (at a specified time ) to meet the requirement of consumers. It involves integration of information , transportation, inventory, ware housing, material handling, packaging and occasionally the security. Logistic is the channel of supply chain which adds the value of time and place utility.

Third-party Logistics is simply the use of an outside company to perform all or part of the firms materials management and product distribution function.
-- Simchi-Levi

OUTSOURCED OPERATION

FIRMS

TRANSPORTATION

WAREHOUSE

FIRMS FIRMS
IN-HOUSE LOGISTIC FIRMS IN-HOUSE LOGISTIC FIRMS DEPARTMENT IT SUPPORT OTHERS

3PL

IT SUPPORT
SC INTEGRATION

OTHERS

WAREHOUSE

TRANSPORTATION

Reduction in Risk and Liability. Value added services to Customers. Source of process improvement. Wider market coverage.

Cost factor . Service factor . Organizational factor . Physical factors.

80% 70% 60% 50% 40% 30% 20% 10% 0% North America Western Europe Asia-Pacific Latin America

2006 2009-2011

 Reduction

in Logistic Cost By 7 to 10% Reduction in Logistic assets By 20 To 25%. Reduction of the order cycle time. Focus on core competency Improved efficiency, service and flexibility Industry-specific application build-toorder systems and e-merchants.

Still requires top management's time to manage relationships & resources Unable to cover full range of SC requirements e.g. logistics information, tech development... Lack of shared goals... Loss of control. Impact on in-house workforce

TRANSPORTATION BASED WAREHOUSE/ DISTRIBUTION BASED. FORWARDER BASED FINANCIAL BASED INFORMATION BASED

Core Competencies of 3PL Provider Cost of 3PL Services Information Handling Capability / Compatibility Breadth of Services Provided Past Experience of your Industry Technological Competencies of the Provider System Flexibility & Capacity Safety & Insurance Cover / Programs Geographical Location & Spread Company Reputation Responsiveness & Service Quality Management Structure & Quality of Workforce

VENDOR MANAGEMENT INVENTORY ORGANIZATION (V.M.I) WAREHOUSE INFORMATION SYSTEM (W.I.S). FREIGHT FORWARDING SERVICE PROVIDER (F.F.S). CUSTOM HOUSE AGENT (C.H.S) SOFTWARE APPLICATION SERVICE PROVIDER (S.A.S.P).

It is outsourced for a total cost effective and time effective supply chain activities. It provide service for both forward and Reverse logistic. Aware of rule of the country in in total global scenario . Perfection about visibility of the consignment with knowledge domain of GPS , RFID , etc. Awareness of IMO codified hazardous Goods . Aware of EPA and Green planet (environment protection act.

Software application service provider

Web based Order process -ing System

Customer Places order

WEBSITE

ONLINE BANKING

Material Procurement department

DISTRIBUTION CHANNEL

software Application Service Provider

INWARD STORES

GLOBAL SUPPLIER

Indigenous Supplier

LOCAL SUPPLIER

F.G STORES

FINAL ASSLY

Warehouse Information System -WIS has registered the name, acronym originated from WMS. It is an important part of the supply chain and provide directed stock rotation, intelligent policy of picking , automatic consolidation and cross-docking to maximize use of valuable warehouse space . The system also manages and optimizes the willingness to "putaway or placed in the warehouse, based on real-time information about the status of the use of shelves. Information technology in the warehouses, including the logistical systems of information, allow better integration between activities in the supply chain. However, alone does not solve problems, but changing organizational patterns. The stores must have logistics systems that have information systems in order to take care of customer requests, refer them to the suppliers and give instructions authorizing the movement or shipment of material. Information systems facilitate the planning and controlling the supply of services, and its efficiency a key to the smooth operation of logistics systems, so for the proper operation of warehouses

55% companies use 3PL services in India one form or the other compared to 75% globally 3PL And 4pl are the future, should be seen as a support to corporate growth Close to 60 % of 55% uses transportation and custom clearing & forwarding Of the rest 45%, 75% do not use 3PL services because they are not sure of providers capability Company should focus on outsourcing 3PL services like inventory management, order processing, labeling & packaging and reverse logistics Use of IT in 3PL services is very low both by user and provider

3PL and 4PL providers feel that Users are unwilling to share information Do not show commitment towards the relationship. Do not want to share rewards Do not show interest in continuing the relationship Contracts are used more to avoid risks rather than to develop relationship Today in India, the 3 PL concept is getting established, the 4 PL agencies are just coming up and 5 PLs are on the horizon.