Chapter 12

Provides multiple logistics services for use by customers

3PL

Provides broader scope of services to help manage elements of supply chain

4PL

Percentage of freight forwarding

51%

Percentage of customs brokerage

53%

Percentage of warehousing

67%

Percentage of international transportation

70%

Percentage of domestic transportation

80%

Outsourcing is very common today for what kind of activities?

Accounting, Payroll/ tax preparation, Advertising, Human resource benefits administration, & Transportation and Logistics Services

What are 4 examples of non-asset based resource ownership?

C.H. Robinson, XPO Logistics, Capgemini, & KPMG

What are the 5 primary types of specialty services?

Dedicated contract carriage, Drayage, Pool distribution, Merge in transit, & Last mile delivery

What are the 3 examples of distribution based 3PL?

Excel, DSC Logistics, & Caterpillar Logistics Services

What are the benefits of air freight forwarders (intermediary)?

Fast, Door-to-door, Single carrier service, Single bill of lading, & Tracing services

What are some advantages or pool distribution (specialty)?

Faster transit time, Less handling, Lower rates, & Lower inventory costs

What are the last 5 reasons for using 3PL services?

Increase in inventory turns, Productivity improvement opportunities, Generate logistics process flexibility, Access to emerging technology, & Expansion to unfamiliar markets

Logistics service providers can refer to any other PL

LSP

What are the first 5 reasons to not use a 3PL?

Logistics is a core competency of company, Cost reductions would not be experienced, Control over outsourced function would diminish, Service level commitments would not be realized, & Company has more expertise than 3PL providers

What are the last 5 reasons why companies don't use 3PL services?

Logistics is too important to consider outsourcing, Outsourcing is not a corporate philosophy, Global capabilities of 3PL need improvement, Inability of 3PLs to form meaningful relationships, & Issues related to security of shipments

What are some service examples for information based 3PLS?

Online freight brokerage services, Cargo planning, Routing and scheduling, Internet access (pay per use) to TMS, WMS & performance management tools

What are the first four reasons for using 3PL services?

Opportunity for cost reductions, Ability to focus on core competencies, Opportunity to improve customer service, & Improve return on assets, use capital for more productive/ strategic projects

What are the 5 primary types of intermediary services?

Surface forwarding, Air forwarding, Freight brokerage, Intermodal marketing, & Shippers associations

Provided by organizations known as third-party logistics service providers or 3PLS.

Transportation and Logistics Services

What are the 5 primary services in 3PL Providers?

Transportation, Distribution, Forwarder, Financial, and Information

What are 5 examples of asset based resource ownership?

UPS, JB Hunt, Excel, Ryder, & FedEx

Consolidate small shipments for long-haul movement, primarily using major passenger and freight airlines

air forwarding (intermediary)

Pickup/delivery, consolidator, focus on high value, time-sensitive goods (documents, square parts, medical components)

air freight forwarders (intermediary)

Similar to surface freight forwarders, but use airlines for line haul service

air freight forwarders (intermediary)

What are the two types of Resource Ownerships in 3PL Providers?

asset based and non-asset based

Labor force is needed to run transport and logistics activities; owns assets

asset based resource ownership

What is the user concern of asset based resource ownership?

being bias towards the internal resources of 3PL

What is the disadvantage of air freight forwarders (intermediary)?

cost of service

3PL serves as customer's private fleet, Customer gains advantage of private fleet without capitalization operating and management responsibilities

dedicated contract carriage (specialty)

Serve as a customer's private fleet with a customized turnkey solution

dedicated contract carriage (specialty)

Warehousing is an example of what kind of primary service?

distribution based

Most were originally public or contract warehousing services, Expanded services into inventory management and order fulfillment, Some have integrated transport services into offerings, & wide range of market research from local to global

distribution based 3PL

Why are freight brokers not considered a carrier?

do not have to maintain cargo insurance, & must post a $10,000 surety bond

Short haul trucking, Pick up and delivery of containers, & Typically contracted for by rail or ocean carriers

drayage (specialty)

Specialize in short-haul movement of intermodal containers from origin to ocean ports and rail yards and from these facilities to their ultimate destination

drayage (specialty)

Specialize in monetary issues and financial flows in the supply chain

financial based 3PL

Value on a balance sheet is an example of what kind of primary service?

forwarder based

Originated from intermediaries such as freight forwarders, brokers, and agents; arrange transport-related services for less-than-full vehicle shipments and for international shipments; considerable mergers and acquisitions among this group

forwarder based 3PL

Represent carrier seeking freight or shipper seeking capacity

freight brokerage (intermediary)

Middlemen between shipper and motor carrier, normally represent the carrier, charges the shipper, takes broker fee, and gives rest to trucking company.

freight brokers (intermediary)

Real estate agents and stock brokers are example of

freight brokers (intermediary)

What are some examples of financial based 3PLs?

freight rating, freight payment, freight bill auditing, accounting, electronic payment, carrier compliance reporting, & freight claims

Technology is an example of what kind of primary service?

information based

Digitize activities that were previously performed manually or required the use of licensed software

information based 3PL

Act as facilitators or arrangers of rail transportation service

intermodal marketing (intermediary)

Also known as Shippers' Agents and Consolidators, Facilitators of transportation only, Assume no legal liability, Function like a broker but typically work for the shipper instead of the carrier, and Usually handle shipper's payments to carrier (shippers must beware)

intermodal marketing companies (intermediary)

A new breed of last mile service providers, covering the final dock-to-door or store-to-door delivery with value-added services such as inside delivery, product assembly, installation, and testing

last mile delivery (specialty)

Unite shipments from multiple suppliers at a specified merge point located close to the end customer

merge in transit (specialty)

What are the two user concerns about non-asset based resource ownership?

more competition bc more external providers, & need more knowledge with relationships

What are the two advantages of non-assed based resource ownership?

more flexible than asset based, & unbiased

What are the 4 examples of transport based 3PL?

move freight, manage transportation operations, operate fulfillment center, & develop logistics solutions

Contract with other firms to provide services rather than owning required assets

non- asset based resource ownership

Outsourcing and Offshoring are different!!! Sometimes ___ requires ___ but does not always require the opposite

offshoring; outsourcing

Substituting external specialist for in-house capabilities

outsourcing

What is Step 1 in the 3PL Relationship Development Process

perform strategic assessment

Perform a logistics/ supply chain audit, Identifies current state, Needs, and Strategy Alignment

perform strategic assessment (step 1)

Competes directly with LTL service offered by LTL motor carriers

pool distribution (specialty)

Large quantity of freight moved as one shipment in bulk to central distribution point, Freight unloaded, Sorted by customer, & Delivered to local destination

pool distribution (specialty)

Move a large quantity of product in bulk to a specific market or regional terminal, to be offloaded, sorted by customer

pool distribution (specialty)

What are the 3 advantages of asset based resource ownership?

readily available capacity, permanent employees, & control of freight

What are the two types of 3PL providers?

resource ownership and primary services

Nonprofit transportation membership cooperatives arrange for the domestic or international shipment of members' cargo

shippers associations (intermediary)

Non- profit cooperative consolidators, Function must like surface forwarders and brokers but only for members, Negotiates volume discounts with transportation providers, Arranges flexible services, and Better service and lower costs to members

shippers' associations (intermediary)

Consolidates small shipments, Acts as both a shipper and a carrier, & assumes responsibility for the shipment

surface forwarders (intermediary)

Pick up, assemble & consolidate shipments, then hire carriers to transport and deliver the consolidated shipments

surface forwarding (intermediary)

Business origin in freight movement; one of the five primary categories of services

transport based 3PL

JB Hunt is an example of what kind of primary service?

transportation based

What is the most frequently used 3PL service, with outsourced services overall remaining "tactical" (vs. "strategic") in nature?

transportation management