plans for logistics company certification. contents 1. progress to date1 2. certification criteria...
TRANSCRIPT
ContentsContents
1. Progress to date 1
2. Certification criteria (draft) 2
3. Certification via strategic alliances (draft) 21
4. Certification procedures 23
5. Future action plans 26
Progress to date• Prepared Logistics Company Fostering System aimed at advancing the logi
stics industry (August 2004)* Newly adopted system aims to foster and certify qualified logistics service provi
ders • Goods Distribution Promotion Act amended in January 2004 for adoption of th
e certification system (effective Jan. 2006) and laid the legal foundation ꊱ Certify companies providing comprehensive logistics services ꊲ Certification criteria and lower regulations stipulated as joint ordinances of
concerned authorities ꊳ Give priority to major logistics facilities, prepare foundation for financial and
other supports
• Drawing up certification criteria and enforcement regulations in preparation for full adoption of the new system beginning 2006
- Joint ministerial ordinance being drafted: task forces set up and working on the draft (public hearing held on 29 July 2005)
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Comprehensive Logistics Company Certification Criteria (Draft)
1. Basic directions
■ Do away with simple logistics service providers and focus on companies providing more comprehensive services
■ Prepare separate criteria for transport-oriented, facilities-oriented, and service-oriented companies reflecting the diverse features of comprehensive logistics companies
■ Certify strategically allianced companies in order to induce participation of competitive small and medium sized companies
ㅇ Companies applying for certification are to be evaluated in 3 categories (transport, facilities and service perspectives) with the highest of the three scores becoming the candidate company’s final evaluation point.
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Certification Requirements (Draft)
2. Certification requirements in general ■ Set basic features of a comprehensive logistics company as essential criteria■ Diversify the evaluation categories to ensure that special characteristics of
comprehensive logistics companies are taken into account and to ensure that only competitive companies certified
Logistics CompanyLogistics Company
Corporate ScaleDiversity Potentials
Investm
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Asse
ts
Sale
s
Netw
orks
Sale
s structu
re
3rd
party
logistics
Glo
baliza
tion
Informatization
Sta
bility
Clie
nte
le
Hum
an re
source
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Man
ag
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Certification Requirements (Draft)
3. Requirements ■ Minimum requirements to qualify as comprehensive logistics company■ Companies not meeting the minimum requirements are not eligible for
certification
〔 Logistics businesses〕■ A company operating at least 3 logistics businesses with transporting,
which has the highest outsourcing rate, and logistics facilities operations as core businesses
* Logistics sales should account for min. 3% of the total sales or be at least 3 billion won
〔 3rd party logistics sales〕 ■ Logistic company aiming at 3rd party logistics ■ 3rd party logistics sales should account for min. 20% of the total
logistics sales
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Certification Requirements (Draft)
4. Evaluation categories for certification■ Average points for diversity, corporate scales, and growth potentials
should meet minimum required points■ Different categories will be weighed differently according to the
characteristics of each company * e.g. Growth potential weight more heavily than corporate scales for
service-oriented companies
Transport, facilities, etc. asset-oriented company
Forwarding, consulting and other service-oriented
company
Diversity 25% 25%
Corporate scales
35% 15%
Growth potentials
40% 60%
Total 100% 100%
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Certification Requirements (Draft)
4. Evaluation categories for certification(cont.)
■ Set perfect scores for each category
- Ceilings set so that excellence in any one field will not be over estimated ⇒ ratios to be calculated within the perfect score range
- Top 20% of the 110 logistics companies surveyed for polls and audited by the Financial Supervisory Commission to be set as the range for perfect scores
* However, large scale categories such as service-oriented category shall be set at top 40% with separate scoring standards applied
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Certification Requirements (Draft)
4. Evaluation categories for certification(cont.)
(1) Diversity standards: Networks, sales structures, clientele
〔 Networks diversity 〕
* Hubs where the sales were generated are recognized as hubs * Multiple hubs in a single region are permitted
PointsPerfect scoreTransportation/
FacilitiesServices
Domestic hubs
5 5Min. 5 cities/provinces or 10 hubs
Overseas hubs
5 5Min. 2 countries or 5 overseas hubs
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Certification Requirements (Draft)
4. Evaluation categories for certification(cont.)
〔 Diversity in sales structure 〕
* Sales for each business type needs to be at least 3% of the total sales or at least 3 billion won in total
* Divided into 11 smaller categories in the annexed table under the Enforcement Decree of the Goods Distribution Promotion Act
PointsPerfect scoreTransportation/
FacilitiesServices
No. of Businesses
5 5At least 5 business types
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Certification Requirements (Draft)
4. Evaluation categories for certification(cont.)
〔 Clientele diversity 〕
* Only long-term contract (min. one year) clients apply * Minimum 5 clients are guaranteed when sales to the largest
clients is 20% or under. * Limited to sales in the logistics sector only
PointsPerfect scoreTransportation/
FacilitiesServices
Number of clients 5 510 or more
clients
Largest client sales 5 5 20% or less
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Certification Requirements (Draft)
4. Evaluation categories for certification(cont.)
(2) Structure and scale of companies: capital, assets, sales
〔 Capital volumes 〕
* Scope of capital: paid in capital + funds that are capital in nature and that are actually invested as they appear in the settlement of accounts
Points Perfect score (ratios)
Transportation/Facilities type
5 pts. Minimum capital of 10 billion won
Services type 3 pts. Minimum capital of 5 billion won
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Certification Requirements (Draft)
4. Evaluation categories for certification(cont.) 〔 Asset (transportation) volumes 〕
* Includes vessels and aircraft * 300DWT vessels, 1 ton of aircraft loaded cargo calculated as equivalent to 1 motor ve
hicle * Values of motor vehicles determined based on vehicle sizes (see p. 8) * Owned & secured: owned & operated is owned, leased is secured
PointsTotal value
Perfect score(ratios)Owned Secured
Transportation type 10 pts. 1.0 0.8
Min. 1000 vehiclesFacilities type 5 pts. ″ ″
Services type 2 pts. ″ ″ Min. 500 vehicles
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Certification Requirements (Draft)
4. Evaluation categories for certification(cont.) 〔 Asset (facilities) volumes 〕
* Additional points awarded according to areas and usages ⇒ 1.0 pt for delivery centers, general warehouses & other building areas ⇒ 0.5 pts for storage yards, garages, container yards, other land areas ⇒ 1.0 pt for warehouses in cases of CFS and 0.5 pts for containers yards * Owned and secured: self-owned is owned and long-term lease is secured
Points
Total valuePerfect Score
(ratios)Points
Owned Secured
Transportation type 5 pts. 1 0.8 200,00 ㎡
or largerFacilities type 10 pts. ″ ″
Services type 2 pts. ″ ″ 100,000 ㎡ or larger
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Certification Requirements (Draft)
4. Evaluation categories for certification(cont.)
〔 Asset (misc. logistics assets) value 〕
* Containers, pallets, loading/unloading equipment, automation equipment, etc.
⇒ All tangible fixed logistics related assets not including transportation and logistics facilities
PointsAggravated value
Perfect score(ratios)Owned Secured
Transportation/Facilities type
5 pts. 1 0.8 Min. 10 billion won
Services type 2 pts. ″ ″ Min. 5 billion won
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Certification Requirements (Draft)
4. Evaluation categories for certification(cont.) 〔 Sales volumes 〕
* Only pure logistics sector sales apply and goods sales are excluded * 3rd party logistics: Volume consigned to 3rd party shippers, consignors or goods owners (in
cluding logistics companies) based on long-term contacts (min. 1 year). Subsidiary or affiliated companies under Article 11 of the Monopoly Regulation and Fair Trade Act do not qualify as 3rd party companies.
* Turnkey consignment sales: contracted sales that provides integrated logistics services combining 2 or more of the logistics service businesses among 3rd party logistics sales
Points (Total 100)Perfect points criteriaTransport/
Facilities Services
Logistics sector sales 4 2 Min. 100 billion won
3rd party logistics sales 3 2 Min. 50 billion won
Turnkey consignment sales 3 2 Min. 25 billion won
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Certification Requirements (Draft)
4. Evaluation categories for certification(cont.) (3) Growth potential based: 3rd party logistics, globalization, informatization, st
ability, human resources, management quality〔 3rd party logistics – Growth potentials 〕
Points
Perfect points criteriaTransport/Facilities Services
3rd party logistics sales ratio 4 4 50% or higher
Turnkey consignment sales
ratio4 4 50% or higher
3PL sales increase rate 4 4 100% for 3PL sales of min.
50%, 50% for 5~50%Turnkey
consignment sales increase rate
3 3100% for turnkey consignment sales ratio of min. 50%, 50% for 5~50%
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Certification Requirements (Draft)
4. Evaluation categories for certification(cont.)
〔 Globalization – Growth potentials 〕
* International investments: Joint venture investments included * International sales: includes all overseas sales by domestics or
overseas companies ⇒ In case of joint ventures, only the portions for actual investment
shares are recognized
PointsPerfect points criteriaTransport/
FacilitiesServices
Overseas investments
3 5 Min. $5 million
Overseas sales 3 5 Min. $5 million
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Certification Requirements (Draft)
4. Evaluation categories for certification(cont.) 〔 Informatization – growth potentials 〕
PointsPerfect points
criteriaTransport/Facilities
Services
Information system asset value
2 4 Min. 5 billion won
Sales/investment in informatization (R&D investment i
ncluded)2 4
Min. 3% or 3 billion won
Accessibility to shared information network
2 2Accessibility to shared information network
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Certification Requirements (Draft)
4. Evaluation categories for certification(cont.) 〔 Stability – Growth potentials 〕
* Rate of return: average value of most recent 3 years
PointsPerfect points criteriaTransport/
FacilitiesServices
Debt ratio 2 4Under 100% (perfect score), over 600% (0 pts.)
Long-term consignment
contracting ratio2 4 70% or higher
Sales/rate of return ratio
2 4 4% or higher
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Certification Requirements (Draft)
4. Evaluation categories for certification(cont.) 〔 Human resources – Growth potentials 〕
* Logistics related license (logistics manager, CPIM, CPM, transport related technicians, customs broker, etc.), master’s degree or higher in related fields (logistics, transportation, etc.)
* Make assessments to see whether company provides training and their performances
PointsPerfect points criteriaTransport/
FacilitiesServices
Experts availability
2 4 Min. 20 persons
Training system
2 4Training system,
evaluation of training programs
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Certification Requirements (Draft)
4. Evaluation categories for certification(cont.) 〔 Quality management – Growth potentials 〕
* Measure company’s business processing qualities via official certification * Post-certification inspections are conducted to ensure that quality meeting the c
ertification criteria is maintained
PointsPerfect points criteriaTransport/
FacilitiesServices
Certification in Logistics
2 4 ISO or other certifications
Effective period
1 1Additional points given when
held for 3 years or longer
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Certification & Strategic Alliance
• Basic concept of strategic alliance
- One company cooperation with another company to strengthen competitiveness
- Used as pre-stage to inducing friendly mergers among companies
• General methods of strategic alliance
- Contracting: Companies contracting with each other with aim to expand their services and service areas as well as joint marketing activities
- Exchange of shares: exchanging shares with companies as a way of entering into strategic alliance
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Certification & Strategic Alliance
• Certification requirements for companies participating in strategic alliances
- Requirements: same as general logistics companies (p. 4)
- Strategic alliance requirements * Number of participating companied: maximum 5 * Alliance methods: contracting or share exchanging
(undecided) * Alliance period: effective for at least 3 years * Minimum points requirements for participating companies:
minimum 20 certification evaluation points * Minimum 3PL priority requirement: 20% or higher - Operation requirements * Use of joint trademarks * Sharing of logistics information system * Submission of combined logistics accounting reports
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Certification Procedures• Certification Evaluation Process
신청인 인증기관 인증심사위원회
인증신청
심사결과보고
이의신청 내역 재심사
재심사결과보고
심사위원회 구성 서류심사 및 현장실사
심사결과정리
반려결과통보
심사종료
이의신청
필수요건충족Y es
No
Y es
No
인증운영위원회
인증심사접수
심사결과심의
신청서 접수
재심사여부심의
재심사결과심의
반려결과보고
1. 사전심사
2. 인증심사
심의결과접수
심사결과통보
심사종료
심사위원회 구성
재심사
기각
심사결과정리
심의결과접수
심사결과통보
3. 이의신청
23
Certification Procedures• Certification Evaluation Process
〔 Certification Committee 〕 - Summary: Run jointly buy the relevant ministries
- Responsibilities: Designate certification authority, make certification decisions
〔 Certification authority and procedures 〕 - Designate an organization that will be in charge of the certification
system (Korea Transport Institute expected to be designated)
- Set up a certification center within the certification authority (operational funds to be provided by the government)
〔 Run a pool of certification committee members and certification procedures 〕
- Certification authority to compose a pool of certification committee members (50 logistics related experts)
- Sub-committees composed of about 5 members from the pool to undertake evaluation of individual companies
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Certification Procedures• Certification Evaluation Process
〔 Evaluation Process 〕 - Document and on-site inspections - Certification sub-committee makes report of evaluation
outcomes to the certification authority - Certification authority placed those outcomes before the
Certification Committee - Certification Committee makes final decisions
[Scheduled Inspections] - Annual inspections are conducted to determine whether the
company is qualified maintain its certification status - Certification is canceled when requirements are not met
25
Future Action Plans1. Legislate Joint Ministerial Ordinance - Notification: October 2005 - Ministry of Justice deliberations: Early November 2005 - Proclamation: November 2005 - Date of enforcement: 1 January 2006
2. Certification Center and preparations for enforcement - Establishment of certification center: October 2005 - Develop Operational Guidelines for Certification Center:
October ~ November 2005 - Develop and open Certification Center website: October ~
December 2005 - Final presentations on comprehensive logistics company
certification system given: December 2005
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