EMILWebinar Langley

8/14/2019 EMILWebinar Langley

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www.emi l .ga tech .edu

WELCOME

Moderator

Dr. John Vande Vate

Executive Director, EMIL

Georgia Institute of Technology

Speaker

C. John Langley Jr., Ph.D.

Prof, of Supply Chain Management



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For More Information

Webinars

Latin American Logistics Excellence May 18, 2006 Register at www.emil.gatech.edu

Managing Asian Logistics July 2006 A True Life Story from the RFID Frontline September 2006

EMIL Program Information & Deadlines Information: www.emil.gatech.edu

Application Deadline: August 2006

Manufacturing Business Technology (MBT)

http://www.mbtmag.com
http://www.emil.gatech.edu/http://www.emil.gatech.edu/http://www.mbtmag.com/http://www.mbtmag.com/http://www.emil.gatech.edu/http://www.emil.gatech.edu/


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Tenth Annual Third Party Logistics Study:

Views from the Customers

C. John Langley Jr., Ph.D.Professor of Supply Chain Management


March 21, 2006


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Introduction and 10-Year Perspective

Logistics Outsourcing Practices

3PL Service Offerings and Capabilities

Technology Enablement

Management and Relationship Issues Customer Value Framework

Future Industry Trends

Webinar Agenda


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Introduction and 10-Year Perspective


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Tenth Annual Third Party Logistics Study Research Objectives

Strategic Assessment of Use of 3PLs

Understand Customer Perspectives

Investigate Leading Topics

3PL Industry Assessment for the Future

3PL Study Sponsors


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Industry Segments and Response Rates and Geographies Studied

7,775 Companies e-Mailed Spring/Summer 2005

Sent to Chief Logistics Executive

1,091 Surveys Returned - 14% Response Rate

Food and BeverageFood and Beverage

13.9%

Industrial Mfg.Industrial Mfg.

6.1%

High-Tech/ElectronicsHigh-Tech/Electronics

20.9%

Pharma and MedicalPharma and Medical

6.7%

TelecommunicationsTelecommunications

4.3%

Retail and ApparelRetail and Apparel

4.1%

AutomotiveAutomotive

7.0%7.0%

Consumer ProductsConsumer Products

13.6%13.6%

ChemicalChemical

8.4%8.4%


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Special 3PL Workshops and Focus Group Sessions

Key Sessions Held With Industry Executives

Boston, Massachusetts session at Capgeminis AcceleratedSolutions Environment

Western Europe two focus groups held with key European logisticsexecutives

Asia-Pacific workshop held in Singapore for Asian executives havinglogistics responsibilities

Purposes of ASE, Workshop, and Focus Group Sessions

Individual perspectives relating to the 3PL industry

Identify and discuss key industry themes, trends, and issues

Use feedback from executives to help with interpretation of 2005 study

results Incorporate findings into study publication


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Factors Perceived Important byLogistics Executives, 1996-2005

2005Factor

1996North

America North America

96%

80

80

Develop new informationtechnologies

47 82 81 - 96

All Regions

Pressure to reduce cost 87% 91 - 100%

Pressure to enhancecustomer service

65 74 - 84

Globalization 58 63 - 90

i l h d


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Logistics Outsourcing Practices

i l t h d


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Factors Responsible for Decision to Use 3PL Provider

FactorNorth

America

Western

Europe

Asia-

Pacific

Latin

America

Cost 72% 74% 71% 65%

Service 61 55 51 64

Focus on corporate core competencies 29 40 43 38

Industry experience 27 16 20 26

Unique services available from 3PL provider

Asset reduction

Access to capable information technologies

Seasonality or surges in logistics activity

Corporate philosophies encourage outsourcing

Need for change agentLabor problems

16 21 9 20

12 10 17 16

24 14 17 10

22 30 31

20

3 4 3 36

30

16 10 9

2 7 7

i l t h d


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Number of 3PL Providers Used

73

17

8

2

64

16 14

6

67

12 15

6

82

108

00

10

20

30

40

50

60

70

80

One to Five Six to Ten Eleven to

Fifty

More than

Fifty

North America Western Europe

Asia-Pacific Latin America

PercentofRespon

dants

Most Users InvolveFrom One-Five 3PLs

www emi l ga tech edu


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Current (2005) vs. Projected (3-5 Years) LogisticsExpenditures Directed to Outsourcing

63%70%

52%53%

44%

69%

59%51%

63%

77%

0%

20%

40%

60%

80%

100%

NorthAmerica

WesternEurope

Asia-Pacific Latin America South Africa

2005

2008-2009



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Non-User Respondents:Rationale for Not Using 3PL Services

31%

23%

41%

36%

23%

35%

0% 10% 20% 30% 40% 50%

Service Levels Would Not be Realized

We Have More Expertise

Control Would Diminish

Costs Would Not Be Reduced

Logistics Too Important to Outsource

Logistics is a Core Competency



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3PL Service Offering and Capabilit ies



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Outsourced Logistics Services(North America Results 2005)

Percent

Logistics Service Outsourced

Outbound Transportation 78%

Warehousing 63

Customs Brokerage/Clearance 63

Inbound Transportation 58

Freight Forwarding 56

Transportation Management 49

Freight Bill Auditing/Payment 45

Cross-Docking/Shipment Consolidation 39Order Fulfillment/Distribution 29

Consulting Services 23

Procurement of Logistics 23

Carrier Selection 19

Product Marking/Labeling/Packaging 18

Percent

Logistics Service Outsourced

Product Returns and Repair 18%

Inventory Management 17

Product Assembly/Installation/Mfg 16

Reverse Logistics & Waste Disposal 16

Information Technology 15

Rate Negotiation 14

Fleet Management 13

LLP/4PL Services 11Materials Management 10

Inventory Ownership 8

Order Entry/Processing/Customer Svc 7

Customer and Supplier Compliance 5

Factoring (Trade Financing) 2



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Technology Enablement



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3PL Technology Expectations and Perceptions

89

34

40

80

0

20

40

60

80

100

IT Capabilities arenecessary for 3L

providers

Rely on 3PLproviders for IT

Leadership

Satisfied with 3PLprovider's IT

capabilities

Having the "rightsoftware" is major

competitiveadvantage

PercentofRes

pondants

IT Capabilities are keyto the 3PL providerselection process

While important, 3PL IT

expertise is relied uponin only 1 out of 3relationships

3PL customers

satisfaction levels with3PL technologyservices has greatroom for improvement



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g

Management and Relationship Issues



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g

3PL Provider Roles

0%

10%

20%

30%

40%

50%

60%

70%

80%

Tactical Service

Provider

Logistics Strategist Supply Chain

Integrator

North America Western Europe Asia-Pacific Latin America

3PLs Mostly thought of as

Tactical Service Providers



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Two-Tiered Relationship Structure

RelationshipAttributes

RelationshipStructure

TraditionalOutsourcing Terms

ServiceAttributes

Partnership Joint

Venture

Value Based

Risk Sharing Few Partners

Long Term (5+ years)

Common Core Values

Alignment & Trust

Coopetition

Fourth-Party

Logistics Provider

(4PL)

Lead Logistics

Provider (LLP)

Supply Chain

Manager (SCM)

Broad supply chain expertise

Deep industry domain & consultative skills

Advanced technology capability

Business process outsourcing, beyond logistics

Project management & provider coordination

3PL technology integration

Innovation & continual improvement

Third-Party

Logistics Provider

(3PL)

Logistics Service

Provider (LSP)

Contractual

Fixed & Variable

Transaction

Oriented Short Term

(1 to 5 years)

Traditional logistics services

Modular product offerings

Focused cost reduction & service improvement

Operating excellence Niche services

StrategicStrategic

TacticalTactical21



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Customer Value Framework



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Customer Evaluation of Outsourcing Success

0%

20%

40%

60%

80%

100%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

North America Western Europe Asia-Pacific Latin America



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Quantifiable Measures of 3PL Success

Cost/BenefitNorth

America

Western

EuropeAsia-Pacific

LatinAmerica

Logistics cost reduction

Fixed logistics asset reduction

Order fill rate (%)

Average order-cycle length

change (days)

Inventory turns* 7.1 to 8.2 10.0 to 9.3 28.3 to 29.7 14.5 to 14.3

Cash-to-cash cycle

reduction (days)

From

41.4 to 36.9

From

37.1 to 33.3

From

31.0 to 26.2

From

33.7 to 30.9

Service level improvement

(percent yes)62% 67% 64% 77%

From

9.3 to 7.0

From

6.3 to 4.3

From

6.3 to 4.1

From

16.0 to 8.0

11% 10% 11% 10%

8% 20% 33%

From

91.5 to 95.8

14%

From

91.6 to 93.9

From

86.6 to 92.7

From

77.5 to 83.9



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Service level commitments not realized

Time and effort spent on logistics not reduced

Cost reductions have not been realized

Cost creep and price increases once relationship has commenced

Unsatisfactory transition during implementation stage

Inability to form meaningful and trusting relationships

Lack of on-going improvements and achievements in offerings

Lack of strategic management and/or consultative/knowledge basedskills

Lack of global capabilities

Areas for 3PL Provider Improvement



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Next Generation of Logistics Outsourcing Models

Location(s)Specific

InsourcingInsourcing

Basic Services(Logistics Service Providers)

Value-Added(Third Party Logistics)

Lead Logistics(4PL)

AdvancedServices

Global Supply ChainIntegrators

Pan-Regional Integrators

Multiple Locations

(intra or inter regional)

Project Management

Single Point ofContact

Enhanced Capabilities

Broader Service Offerings

Speed of Implementation

Knowledge Transfer Shared Risk & Reward Comprehensive Solution

Resident ClientKnowledge

Focused CostReduction

Geographic CoverageKey Attributes

Infrastructure



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Continued expansion, acquisitionand consolidation of 3PL industry

Improved customer-needsalignment

Two-tiered relationship models(strategic and tactical)

Continued expansion of service

offerings across supply chain,and broad-based businessprocess outsourcing

Increasing importance on

repeatable and leveragedsolutions

Increased efforts to update,enhance, and improve 3PLprovider-user relationships

Expansion of global marketsand needed services

Increased adoption of sharedservice networks and

coopetition strategies withtraditional competitors

Need for relationshipreinvention, mechanisms for

continual improvement, andsolution innovation



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Tenth Annual 2005 Third Party Logistics Study:

Views from the Customers

For Further Information:

www.3PLstudy.comwww.tli.gatech.edu

Thank You Very Much !!!



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For More Information

Webinars

Latin American Logistics Excellence May 18, 2006

Register at www.emil.gatech.edu

Managing Asian Logistics July 2006

A True Life Story from the RFID Frontline September 2006

EMIL Program Information & Deadlines

Information: www.emil.gatech.edu

Application Deadline: August 2006
http://www.emil.gatech.edu/http://www.emil.gatech.edu/

EMILWebinar Langley

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