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