Logistics Relationships and Third-Party Logistics 3PL

Logistics Profile:

UPS Logistics Group

UPS Logistics Group - five-year $150 million deal to manage National Semiconductors global supply chain distribution center in Singapore. The DC uses radio frequency, bar-code scanning, and web-based technology. Fills >450K orders per year; receives 12 million inbound chips daily; and ships four billion products per year on sales of $2.1 billion.

Logistics Relationships:

Intensity of Involvement
Vendor relationship shows little or no integration or collaboration. Strategic alliance shows full integration and collaboration. Partnership shows a customized relationship that results in better outcomes than could be reached separately.

Process Model for Forming Logistics Relationships

Third-Party Logistics (3PL):

Definitions

3PLs are external suppliers that perform all or part of a companys logistics functions, including: Transportation Warehousing Distribution Financial services Terms contract logistics and outsourcing are sometimes used in place of 3PL.

Third-Party Logistics (3PL):

Types of 3PL Providers

Transportation-Based

Warehouse/Distribution-Based Forwarder-Based

Ryder, Schneider Logistics, and UPS Logistics

DSC Logistics, USCO, Exel, Caterpillar Logistics, and IBM AEI, Kuehne & Nagle, Fritz, Circle, C. H. Robinson, and the Hub Group

Financial-Based

Information-Based

Cass Information Systems, CTC, GE Information Services, and Fleet Boston Transplace and Nistevo

Shippers Using More than Five 3PLs

Third-Party Logistics Research Study: Industry Details

Quantifiable measures of 3PL success: Logistics costs reduced by 8.2 percent. Logistics assets reduced by 15.6 percent. Average order cycle length changed from 10.7 to 8.4 days. Overall inventories reduced by 5.3 percent.

Third-Party Logistics Research Study: Industry Details

Reported problem areas:

Service level commitments not realized. Strategic management skills lacking. Cost reduction goals not realized. Cost creep and price increases occurring. Improvements and achievements lacking. Control of outsourced functions diminished. Consultative, knowledge-based skills lacking. Technology capabilities not being delivered. Time and effort spent on logistics not reduced.

A Note on Fourth-Party Logistics (4PL): The Next Evolution?

Thought of as supply chain integrator, a firm that assembles and manages the resources, capabilities, and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution. 4PLs manage and direct the activities of multiple 3PLs, serving as an integrator.

Fourth-Party Logistics (Registered Trademark of Accenture, Inc.)

Seven Laws of Collaborative Logistics