Third Party Logistics - THIRD PARTY LOGISTICS(3PL WHAT IS...

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Unformatted text preview: THIRD PARTY LOGISTICS (3PL) WHAT IS 3PL? True Strategic Alliances Long Term Commitments Multiple Functions Process Management RYDER DEDICATED LOGISTICS WHIRLPOOL Corp. INBOUND LOGISTICS 5 yr agreement Design Manage Operate USE OF 3PL Most Prevalent in large companies. Minnesota, Mining and Manufacturing (3M), Eastman Kodak, Time Warner, Sears Robuck. Hard to convince small companies to use 3PL ADVANTAGES Focus on Core Strengths Provides Technological Flexibility Provides Other Flexibilities CORE STRENGHTS Ryder Dedicated Log. • Manages Vendors • Delivers parts • Delivers Finished Vehicles • Makes Pickups from over 300 suppliers and delivers. Saturn Builds the Cars CORE STRENGTH BP and Chevron GATX Maintains Inventory Delivers Product Determines Routes Created Atlas Atlas Outsources to GATX Determines Transmit Order. Number of DC’s decreased from 13 to 5 TECHNICAL FLEXIBILITY Better able to update equipment Quicker More Cost Effective Allows access to retailers that otherwise may not have been possible OTHER FLEXIBILITIES Geographic locations Service Offerings Resource Work Size It can change fixed costs to variable FLEXIBILITY Rapidly delivers parts Uses specialized software Determines best way to deliver Very profitable Enables less inventory Cost Savings Parts Expensive Willing to pay well for service DISADVANTAGES Loss of Control May not be as capable LOSS OF CONTROL More common with Outbound Logistics Solutions: • • • Paint company logos on trucks Dress 3PL employees in host company uniforms Extensive reporting on each customer reaction CAPABILITY Only if Logistics is a core competency of the Firm E.g. Wal­Mart manages own DC Caterpillar runs own parts supply operations ISSUES and REQUIRMENTS Know your own costs Customer orientation of the 3PL Specialization of the 3PL Compare with costs of using 3PL Reliability, Flexibility, Cost Savings Asset­owning versus non­asset­owning 3PL Asset=More bureaucratic Non= More flexible IMPLEMENTATION ISSUES Leave enough time to start up considerations (first 6mnths­1yr) Identify Needs Provide specific performance measures and requirements Effective communication…make sure all departments are on the ”Same Page” OTHER ISSUES Respect confidentiality of the data Specific performance measures agreed on Specific Criteria regarding subcontractors Arbitration issues should be considered before contract Escape clauses should be negotiated Methods of ensuring goals are met REAL WORLD Development Sourcing Manufacture Distribution Catalog Fulfillment Operations Total 3PL Manufacture Verify Patient Compliance Analytical and Quality assurance Purchase raw materials PRODUCTS o o o o Host Companies Amway Nutrilite Artistry Cosmetics, Vitamins, Air and Water treatment systems ...
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