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Parcel Industry Overview Jerry Hempstead

Parcel Industry Overview Jerry Hempstead. Observations Comments Issues. Inland Water. 1. KIA Motors Logistics Program Mercedes Hernandez Garner. Observations Comments Issues. Inland Water. 2. Wiring Harness Decision. Assumptions Calculations Recommendation. Inland Water. 3.

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Parcel Industry Overview Jerry Hempstead

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  1. Parcel Industry Overview Jerry Hempstead Observations Comments Issues Inland Water 1

  2. KIA Motors Logistics Program Mercedes Hernandez Garner Observations Comments Issues Inland Water 2

  3. Wiring Harness Decision Assumptions Calculations Recommendation Inland Water 3

  4. Third Party Logistics (3PL) 3PL 4

  5. 3PL Industry Objective Logistics Service Provider Shipper Third Party Logistics Firm Inland Water 5

  6. Third Party Logistics Defined • THIRD PARTY LOGISTICS is an industry to which a shipper (owner of transported goods) outsources various elements of the supply chain to perform some / all logistics management functions including inbound freight, customs, warehousing, order fulfillment, distribution and outbound freight. • Initiated in 1980s when companies began looking for opportunities to improver logistics performance. • FedEx drew attention to 3PL service by offering JIT delivery • FedEx success in 3PL marketplace opened it up to competition • Initially primarily domestic coverage, 3PL industry is now global in character with a revenues approaching $150 billion in NA Inland Water 6

  7. 3PL Industry Characteristics Inland Water 7

  8. 3PL Outsourcing Opportunity For the shipper … To acquire skills / resources not available internally To achieve competitive advantage through outside expertise To allow company to focus on its core competencies To improve operational productivity and customer service To improve business process efficiency To avoid making capital expenditures Inland Water 8

  9. Types of 3PLs • There are three types of third party logistics providers: • Asset Based – 3PL companies that use their own trucks, warehouses and personnel to operate the client’s business • Management Based – 3PL companies that provide the technological and managerial functions to operate the logistics functions of their clients, but do so using the assets of other companies and do not necessarily own any assets • Integrated Providers – 3PL companies that can either be asset based or management based that supplement their services with whatever services are needed by their clients Inland Water 9

  10. 3PL Application to Industry • Computers • Retail • Chemicals • Medical • Automotive Inland Water 10

  11. Top 10 Services Outsourced to 3PL • Freight payment & auditing • Warehouse operations • Carrier selection & rate negotiation • Logistics information systems • Shipment planning • Fleet management • Packaging • Customer relations • Customer order processing & fulfillment • Total supply chain (logistics) management Inland Water 11

  12. Top 10 Global 3PL Companies Inland Water 12

  13. 3PL Provider Differentiation • Focus on shipper business performance and value • Employ performance measures that track shippers specific business objectives • Emphasize flexibility and responsiveness to changing supply chain conditions • Open flow / exchange of information (transparency) • Target strategic (long-term) solutions Inland Water 13

  14. 3PL Industry – Gap Issues Shipper Service Issues 3PL Inland Water 14

  15. Shipper Benefits Attributed to 3PLs Inland Water 15

  16. 3PL Industry Status • Shippers continue to increase use of 3PL outsourced services • Demand for transactional / operational logistics services greater than demand for strategic management value-added services • 3PL industry revenue will continue to grow at a 10%+ rate per year, almost 5 times the growth rate of US GDP • International logistics management is largest growth sector • Joint gainsharing contracts have not taken hold • Typically, 3PLs rank its relationship with shippers higher than the reverse but the gap is closing • A significant logistics talent gap exists for both 3PLs and shippers • 4PLs (integrate resources / capabilities / technology) in demand • Strategically, nearshoring is growing opportunity for 3PL services Inland Water 16

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