wk7 Outsourcing,revlog.ppt
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Transcript of wk7 Outsourcing,revlog.ppt
Logistics Outsourcing
An Emerging Trend
Drivers to Outsourcing
•Globalization of markets
•Competitive pressure
•Changing customer demands
•Emerging technologies
- To focus on core competencies- Resource constraints- Cost-saving resulting from better management- Wider geographical coverage- Reduction in risk and liability- Extend superior customer service- Source of process improvement
Why Outsourcing?
• Warehousing and warehousing management• Transportation and freight management• Freight payment and audit• Inventory management• Customs clearance• Material Handling• Packaging
Which Logistics Activities Are Outsourced ?
OutsourcingWarehousingTransportationInventoryOrder processing
Self -relientOrganization performing all logistics operation
Alliance with3 PL Service providerIT OrganizationIT/logistics Consultant
4 PartyLogistics
3 PartyLogistics
In-house logistics
Logistics Evolution
WholesalersThe stand-alone operators, who extend only onetype of service in which they have an expertisesuch as: - Warehousing - Transportation - Customs clearance - Packing - Equipment suppliers - IT support
IntegratorsOne who provides entire logistics services and offers Logistics solutions to customer’s logistics problem
3 PL Service Provider
•Reduction in risk and liabilities
•Value added service to the customer
•Source of process improvement
•Wider market coverage
•Speed to market
Advantages of 3 PL
•Cross docking•Customs clearance•Reverse logistics•Assembly or mixing •Freight consolidation•Special packaging & labelling•Logistics audits•Stock financing
Value Added Services by 3 PL Service Providers
Prominient 3PL providers AFL Limited Dynamic Logistics Fed Ex Gati Logistix limited Patel Roadways SembCorp TCI TNT
- Covers the entire supply chain of the customer
- Collaboration between two or more 3PL service Providers on the resources sharing basis to extend logistic solution to a common customer
- Alliances to be led by integrator with IT based and not asset based service provider
- Flexible arrangement
4 PL Service Provider
• Reduced logistics cost• Concentration on core competencies• Release of management capacities• Reduced assets• Economies of scale• Increase of process quality• Access to latest technologies
Advantages of 4 PL
Switching cost (assets , customer service)
Degree of control (over employees)
Human & electronic interface ( decision issues, EDI)
Tuning logistics to need of channel partners (ITC)
Degree of outsourcing
Legal aspects
Logistics Outsourcing Issues
•Define logistics problems
•Identify problem areas
•Establish objectives
•Search for service provider
•Proposal evaluation
•Selection of service provider
Service Provider Selection - 1
Define logistics problems
- High logistics cost- Longer performance cycle- Increased customer complaints- Reverse logistics
Service Provider Selection- 2
Identify problem areas
- Warehousing- Material handling- Storage arrangement- Transportation- Packaging
Service Provider Selection-3
Establish objectives
- Cost reduction- Performance cycle compression- Customer complaints resolution- JIT delivery- Freight optimization- Route planning- Inventory carrying cost
Service Provider Selection-4
Search for service provider
- Integrator- Wholesaler- Consultants
Service Provider Selection-5
Proposal evaluation & Selection
- Credentials- Logistics infrastructure- Experience and customer base- Technology- Cost of service- Reliability- Government liaison
Service Provider Selection-6
•Date & place of the contract•Names and addresses of contracting parties•Scope of service•Delivery requirements•Payment terms•Extra services from service providers•Charges for services offered•Value proposition by service provider•Damage liability•Responsibilities•Performance measures criteria•Risk sharing•Termination of contract•Notice period•Notice for claims and filing suits •Authority & jurisdiction of dispute settlement•Governing laws
Logistics Service Contract Agreement
Reverse Logistics -A New Wave
The process of moving goods from their place of use , back to their place of manufacture for reprocessing, refilling, repairs or waste disposal
It’s a planned process of goods movement in reverse direction done in efficient and cost-effective manner through the organized network. It can be standalone or integrated system in company’s supply chain
Reverse Logistics What it is…
•Growing public concern for environmental pollution
•Government regulations on product recycling and waste disposal
•Growing consumerism
•Stiff competition
Why Reverse Logistics ?
RefillingLPG Cylinders, Soft Drink Bottles, Liquor Bottles,
Pallets, Containers
Product RecallDefective product, Shelf life over (Johnson)
RefurbishingUsed and returned within warranty period
RemanufacturingUsed product for quality up-gradation
Waste DisposalRecycling the waste
Reverse Logistics Scope
Car Dealer
CarDealer
Car
Dealer
Customer
Customer
Customer
Customer
Customer
Customer
CarProduce
r
Steel melters
Componentsproducers
Tyre producers
Packagingmanufacturer
s
Battery suppliers
Stage II Stage III Stage I
Three Stage Reverse Logistics System for Used Car Recycling
Reverse Logistics: System Design Considerations
• Product location identification
• Product collection system
• Product recycling / disposal centres
• Documentation system
• Cost implications
• Legal issues
Reverse Logistics in India
Refilling of LPG Cylinders, & Soft Drink Bottles Bharat Petroleum, Hindustan Petroleum Pepsi, Coca-Cola United Breweries (Beer)
Return of ‘Life Expired’ Products Nestle (Yoghurt) Mongini’s (Cakes)
Rest in the next ……