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Inbound Logistics

By

PRATICK GAYEN.

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Presentation Plan

The production planning process The procurement process Outsourcing of logistical activities Third Party Logistics providers

(3PL’S) Partnership agreements

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Sub-contracting and Outsourcing

Sub-contracting:Activities that are too complex or that require

special competenciesActivities that are outside the field of

competencies of our enterprise (example construction and aerospace industry)

Outsourcing:Delegate to others activities that we were

doing ourselves previously

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Outsourcing of logistical services to «3PL’s» To delegate to another organization

part or all of logistical activities These activities include:

TransportationWarehousingOrder processing Inventory managementLogistics information systems

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Some of the major 3PL’s

Ryder Tibbett & Britten Circle Schneider Bax Global Exel GATX Geodis

TNT Logistics Hunt Logistics UPS SCS DSC Caliber Menlo USCO FedEx

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3PL: Some examples

Whirlpool Ryder Dedicated

Motorola UPS SCS Proctor & Gamble Exel Logistics Wal-Mart (Can) SCM (T & B) Domtar (Can) Groupe Robert Goodyear CAT

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Reasons for using 3PL’s?

0 20 40 60

Reduce costs

Focus on critical activities

Improve operational efficiency

Flexibility

Acquire expertise

Customer service

%

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3PL’s: Services offered

0 20 40 60 80

Transportation

Warehousing

Consolidation

Consultation

Carrier selection

Packaging and labelling

Information systems

Tariffs negotiation

Fleet management

Reverse logistics

%

Source: CLM Annual Conference, 1999.

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Partnership - a definition

• A partnership is a customized business relation based on mutual trust, openness, and the sharing of risks and benefits.

• Its objective is to procure a competitive advantage resulting from improved performance compared to what partners could have obtained individually.

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Partnership Life Cycle

Having a vision Searching for a partner Negotiating an agreement Managing the relationship

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Having a vision and searching for a partner

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Forming a partnership

Source: Lambert, D.M., M.A. Emmelhainz et J.T. Gardner, «Developping and Implementing Supply Chain Partenership», IJLM, vol. 7, no 2, 1996.

Reasons leading to a partnership

Factors facilitating

partnershipsDecision to engage in a partnership

Shared activities and processes

Partnership results

Reevaluation

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Reasons leading to a partnership

External factors:•Consumer requirements•Logistical excellence / complementary•Information technologies and systems•Complexity and globalization of markets

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Reasons leading to a partnership

Internal factors:• Minimizing costs (ex. transportation)• Increase speed and reduce cycle time • Improve service/product quality• Increase customer satisfaction• Better utilization of assets

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Partnership - advantages

Reducing the number of suppliers Collaborative planning Risk sharing Continuous improvement Acquiring an expertise Requiring less resources and capital Increased flexibility

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Partnership - disadvantages

Difficult to select a partner Loss of direct control over outsourced

activities Performance evaluation may be

difficult Risk of logistical dependency Internal resistance to change

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Facilitating factors

Compatibility of organizations in terms of culture and conduct (individuals)

Similar management techniques and practices

Readiness to share with partner Complementary needs and competencies Symmetry There must be a common interest!

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Activities supporting the partnership (cont’d)

Mutual trust and engagement Sharing risks and benefits Investments

HumanMaterialFinancial

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Conditions for a successful partnership A complex and

gradual approach Trust between

partners Socio-

psychological proximity

Dedicated resources

Exchange of « rich » information

Shared innovation Firm engagement Common learning

process

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Conclusion

Partnership arrangements have to be adapted to the particular situation and specific needs of the partners

Successful partnerships require time and energy