T2 - Short Ans

3PL (Outsourcing) Defn?

"An external supplier that performs all or a part of a company's logistics functions."

Non-asset based providers -(Alternative 3PL SCHEME)

3PL arranges for services from other companies that own equipment The 3PL tends to not own equipment (assets)

DEDICATED CONTRACT CARRIAGE It is one of the (Specialty Services) Intermediary Services = One of the 4 3PLs (in Trans) Function and Benefit?

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

Advantages/Disadvantages for user of Asset Based 3PL services

Advantages: 3PL maintains direct control over shipper's freight 3PL has ready access to capacity Fewer organizations to work through to resolve problems Disadvantages: Provider may be biased in favor of using assets it owns which may be less then optimal for user

Advantages for user of Non-asset Based 3PL services

Advantages: flexibility, unbiased solutions

INTERMODAL MARKETING COMPANIES It is one of the (Intermediary Services) Intermediary Services = One of the 4 3PLs (in Trans) A.K.A? Role in Process? Liable? Function? Beware? Why?....

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 Usually handle shipper's payment to carrier - shippers must beware

Non-asset based providers Service integrator?

Build customer-tailored solutions from services offered by transport and logistics service specialists Experts in structuring and negotiating contracts

SURFACE FORWARDERS It is one of the (Intermediary Services) Intermediary Services = One of the 4 3PLs (in Trans) Purpose? What does it function as? Assumes?

Consolidates small shipments Acts as both a shipper and a carrier Assumes responsibility for the shipment Issues a Bill of Lading to shipper Must maintain cargo insurance Assumes liability for loss and damage

POOL DISTRIBUTION It is one of the (Specialty Services) Intermediary Services = One of the 4 3PLs (in Trans) Description? Competes with? Potential Advantages?

Description: Large quantity of freight moved as one shipment in bulk to central distribution point where freight is unloaded, sorted by customer, and delivered to local destination Competes directly with: LTL service offered by LTL motor carriers Potential advantages : Faster transit time, less handling, lower rates, lower inventory costs

Which of the 4 3PLs relative to transportation provide the following types of services? Carrier selection, routing, & scheduling Contract compliance Performance analysis Freight bill auditing and payment Transportation management systems

Freight management

Which of the 4 3PLs relative to transportation provide the following types of services? For hire carriage Contract carriage Expedited service Time definite service Intermodal service

Freight movement

Relative to transportation, 3PLs provide 4 principal types of services?

Freight movement Freight management Intermediary services Specialty services

FINANCIAL BASED

Helps customers with financial flows in the supply chain Traditional services include freight rating, freight payment, freight bill auditing, accounting services Expanded services include IT systems for freight visibility, electronic payment, carrier compliance reporting, claims management Example providers Cass Information Systems Commercial Traffic Corporation

Which of the 4 3PLs relative to transportation provide the following types of services? Surface freight forwarder Air freight forwarder Freight brokers Intermodal Marketing Companies Shippers' Associations

Intermediary service providers

HOUSEHOLD GOODS MOVEMENT It is one of the (Specialty Services) Intermediary Services = One of the 4 3PLs (in Trans) Shipment Process...How does it work?

Local agent visits shipment site and estimates weight and cost Shipper signs order for service (contract) - Packing may/may not be included Van is loaded as scheduled and moved to destination site Final charges based on actual weight and services provided Typical revenue distribution: 10% to Franchise, 25% to pickup agency, 50% to vehicle owner, 15% to destination agency

Reasons Against Using 3PL Services Meh....why not.

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 Logistics is too important to consider outsourcing Outsourcing is not a corporate philosophy Global capabilities of 3PL need improvement Issues related to security of shipments But, most 3PL relationships have some problems Most common: unrealized service-levels or cost reductions, lack of continuous improvement

FREIGHT BROKERS It is one of the (Intermediary Services) Intermediary Services = One of the 4 3PLs (in Trans) Purpose? Function? Charge? Considered Carrier T/F? Why?

Middlemen between shipper and motor carrier - Like a real estate agent or stock broker Normally represents the carrier - Seeks freight on their behalf Charges the shipper, takes broker fee (approximately 8-10%), gives rest to trucking company Are NOT considered a carrier - Do not have to maintain cargo insurance - Must post a $10,000 surety bond

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. Example providers Exel, DSC Logistics, Caterpillar Logistics Services

TRANSPORTATION BASED

Most were originally transportation companies Developed 3PL subsidiaries in response to expanding customer requirements Transport management, dedicated contract carriage, and fulfillment center operation Example providers (with parent company) UPS Supply Chain Solutions/UPS of North America APL Logistics/Neptune Orient Lines Limited

HOUSEHOLD GOODS MOVEMENT It is one of the (Specialty Services) Intermediary Services = One of the 4 3PLs (in Trans) Function? Industry Organization?

Motor carriers (van lines) specializing in movement of household goods Industry organization Alliances of entities (segments) sharing single external identity and communications system Central franchise firms, Local agencies, Over-the-road vehicles, Owner-operators

SHIPPERS' ASSOCIATIONS It is one of the (Intermediary Services) Intermediary Services = One of the 4 3PLs (in Trans) What are they? Function? Role in Process? Benefit to members?

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

Reasons for Using 3PL Services? Name at least three of them.

Opportunity for cost reductions Ability to focus on core competencies Opportunity to improve customer service Improve return on assets Increase in inventory turns Productivity improvement opportunities Imbibe more flexibility into logistics processes Access to emerging technology Expansion to unfamiliar markets

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 Example providers C.H. Robinson Worldwide, Hub Group, Kuehne+Nagel Considerable mergers and acquisitions among this group

AIR FREIGHT FORWARDERS It is one of the (Intermediary Services) Intermediary Services = One of the 4 3PLs (in Trans) Purpose? Focus? Benefits? Disadvantage?

Pickup/delivery, consolidator Similar to surface freight forwarders, but use airlines for line haul service Focus on high value, time-sensitive goods Documents, spare parts, medical components Benefits Fast, door-to-door, single carrier service Single bill of lading, tracing services- Disadvantage - cost of service

Non-asset based providers Popular Services?

Popular services include freight management and brokerage, routing and scheduling shipments, international freight flow management Examples: CEVA Logistics, C.H. Robinson

INFORMATION BASED

Services include online freight brokering and cargo planning, routing, and scheduling Also offer online access to transportation and warehouse management systems (TMS & WMS) Avoids purchase of licensed software for these services Example providers Transplace, Descartes Systems Group, Sterling Commerce

DRAYAGE It is one of the (Specialty Services) Intermediary Services = One of the 4 3PLs (in Trans) Function? Typically Contracted by?

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

Which of the 4 3PLs relative to transportation provide the following types of services? Dedicated contract carriage Drayage Pool distribution Merge in transit Household good movemen

Specialty services

Asset based providers -(Alternative 3PL SCHEME)

The 3PL owns the equipment used to provide services