WS - 3PLs, Logistics Service Operations

TRAINING PROGRAMME
SUPPLY
SUPPLY CHAIN
CHAIN EXCUTIVE
MANAGEMEENT
Supply Chain Executive 0
LECTURER
Supply Chain Executive 1 1

CHAPTER 1: SUPPLY CHAIN MANAGEMENT
Logistics – Concepts & Application
Logistics Definition
That part of the supply chain process that plans, implements, and controls the
efficient, effective flow and storage of goods, services, and related information from
the point-of-origin to the point-of-consumption in order to meet customers’
requirements. The definition includes inbound, outbound, internal and external
movements and return of materials for environmental purposes.
Council of Logistics Management
NOTES

NOTES

Cost Trade-offs in Marketing and Logistics
NOTES

Strategic Alliances in Supply Chain
Categories of Logistics Service Providers
All activities are outsourced

A “facilitator” provides strategic solutions
4 PL and contracts one or more 3PL providers.
3 PL A (large) logistics services provider

takes over all tactical and operational
activities
2 PL
The shipper only outsources certain
1 PL
specialized operational activities
All activities are performed under own

management
NOTES

Strategic Tactical Operational

System design, Chain management, Execution, Ownership of
tendering, judging Forwarding Logistics assets
1PL Shipper Shipper Shipper
2PL Shipper Shipper
Logistics Service Logistics Service
3PL Shipper Provider Provider and/or sub-
→ Forwarder contractor
Logistics Service Logistics Service
4PL Consultant, facilitator Provider Provider and/or sub-
→ Forwarder contractor
NOTES

 All activities are outsourced
 A “facilitator” provides strategic solutions and contracts one or
more 3PL providers
– Facilitator could be a consultant
– Facilitator could contract the 3 PL parties at his own or the
4 PL
shipper’s risk
 Advantage and disadvantage of 4PL
– Advantage: an independent party, capable of offering a
selection of services which would be the most favorable
– Disadvantage: without having assets it would be more
difficult for the 4PL party to manage operations and to
control performance and service levels
NOTES

Outsourcing
NOTES

Outsourcing
Considered factors in selecting logistics service providers
NOTES

Outsourcing
Considered factors in selecting logistics service providers
NOTES

Outsourcing
NOTES

The Process of Outsourcing
The framework for 3pl selection and performance management
NOTES

The Framework for 3PL Selection and Performance Management
Request for Proposal (RFP)
Defining Your Goals
Here’s three questions to ask yourself:
1)What Do You Hope to Accomplish?
2) What Are Your Estimated Cost Saving Goals?
3) What Kind of Operational Efficiency Do You Need?
 Outlining Your Requirements

Note: Don’t be timid on including more data, because the more the 3PL
knows, the more they can help nurture better teamwork with you.
 Listing Your Current Costs
Your perception of Cost/Service trade-offs
NOTES

Factors Priority criteria
Net delivered, payment terms, currency valuations, usage and processing

Price
costs
Conformance to specifications, consistency within control limits, results of
Quality quality audits
Service Lead times, on-time delivery performance, inventory, responsiveness
Technology Performance, responsiveness to request for specification changes

Long-term viability of supplier alignment with value proposition (mission
Partnership and objectives), business case (cost/benefit, risk analysis), length of
relationship (history)
NOTES

NOTES

Sourcing
NOTES

Tendering
Tendering is the process, in which an organization seeks quotes for a particular
provider. Project to be carried out by a contracting logistics service
 From clients side: bidding process
 Form logistics service provider: Following a Tender
NOTES

Selecting: Negotiation and Bidding process
NOTES

NEGOTIATING PROCESS HOW TO RESOLVE DEAD-LOCK?

 Seek for more
Opening Testing Proposal information
Stage Stage Stage
 Have a break
 Ask to know what the
problems of the other
sides are
Agreement Bargaining  Concess small details
stage Stage  Change negotiator
 Change rank of the
negotiator
NOTES

NEGOTIATING PROCESS
NOTES

COMPETITIVE BIDDING PROCESS -> When do you need a bidding?
1. Identify bidding objectives
2. Form bidding team
3. Prepare inquiry documents
4. Screen supplier list for inquiry
5. Conduct pre-inquiry meeting with each supplier
6. Receive proposal/quotation from suppliers
7. Analyze quotations
8. Assess, grade suppliers
9. Conclusion, recommendation of selecting supplier for approval
NOTES

SELECTING
 Three primary criteria:
• Cost/price
• Quality
• Delivery
 Other criteria during Logistics Service Providers
evaluation and selection:
• Exchange of information
• Sharing of future plans
• Level of comfort between two parties
• Supplier’s cost data sharing
• Innovative idea/R&D competence
NOTES

Contract Logistics
CONTRACT STRUCTURE
NOTES

Contract Logistics
CONTRACT STAGES
Corporate strategy – commercial strategy – need identification- budget allocation –

Conception
contract strategy
Gestation Market test – negotiation – business case – bid
Birth Drafting – negotiation – execution (signature) – copies to key stakeholder
Mobilization – contract management plan – progress monitoring – changes to scope

Life or duration – dealing with problems – SRM – CRM – progress payments – transfer of
legal title – progress meetings – project memo system for communication
Final delivery – final payment – final “sign-off” (issue certificate)

Death Expiry of warrantees/guarantee – latent defects period – IPR provision expire- archival
of documentation – document retention and destruction policy
NOTES

TRANSITION - Timing Control
NOTES

3PL PERFORMANCE MANAGEMENT
 Service requirements and Service level agreement (SLA)
NOTES

NOTES

NOTES

NOTES

NOTES

Relationship management and 3PL development
Stages of Relationship Management
NOTES

Decision to form relationship
NOTES

Supplier Development
NOTES

Partnership
 Partnerships are appropriate for critical and

bottleneck items and where the focus is on
long-term product development
 They can allow you to achieve a better result
than you could have achieved alone
 Partnerships require time and effort so
selecting the right partner is fundamental
NOTES

Partnership
NOTES

Partnership
 Partnership is sometimes failed because:
 The buyer is unable to adjust to the partnership culture
 One party is more dependent on the relationship than the other
 Key people are replaced
 The level of time and investment needed was underestimated
 The relationship loses commercial focus
 A successful partnership is characterized by:
 Mutual interdependence
 High levels of trust
 A high degree of interaction and information sharing
 A focus on costs rather than price
 Teamwork
 Investment in the relationship
NOTES

Partnership
 How to develop a partnership
 Becoming aware of the need for a partnership
 Conceptualising the partnership
 Pursuing the partnership
 Confirming the partnership
 Implementing and administering the partnership
 Assessing the partnership
 Terminating the partnership
 Determining if a partnership is working:
 Adherence to standards
 Operational co-operation
 Partner co-ordination
 Organisational compatibility and style
 Power imbalance
 The level of strategic co-operation
NOTES

Supplier Positioning Model - 4 Types Of Purchase Items
NOTES

NOTES

Summary of typical quadrant characteristics of the Supply Positioning Model
NOTES

Bottleneck Critical
Reduce Risk
Reduce Risk
Your overriding objective...

...is to increase leverage!
Increase
expenditure
Routine Leverage
NOTES

HOW ?
 Identify different items that can be

grouped together (e.g., office &
computer consumables)
 Group the requirements of different Increase expenditure

sites and users
 Group your requirements with those

of other companies (e.g., amongst
SMEs)
NOTES

HOW ?
 Review the specifications and go for standards

where possible
Reduce Risk
 Identify new sources through supply market
analysis
 Work with suppliers to develop their

capabilities
NOTES

Supplier Perception Model
NOTES

 Low priority & low supplier motivation
 No development potential
 Your bargaining position will be weak
NOTES

 Your level of purchases may be important, but the

supplier sees no reason to develop a long-term
relationship
 The supplier will not make any particular effort or

give you priority
 If the supplier is sure of your business, it may

exploit you by raising prices
NOTES

 Your business may be small, but the supplier sees a

long-term development potential or wishes to be
associated with your company for other reasons
 The supplier is willing to invest time & effort in the

relationship
 This quadrant is suitable for long-term and

cooperative relationships
NOTES

 The supplier consider your company to be part of its

core business (in terms of current business as well as
development potential)
 Suppliers will make a significant effort to sell to you

and to retain your business
 This quadrant is suitable for partnerships
NOTES

Implications of Supplier’s perception of your business for supplier relationships
Suppliers’ perceptions of your company’s

What to do as a buyer
business
Low Be a good customer
Medium-high Develop partnership
Dominate the relationship, but be fair and

Very high
reliable
NOTES

Linking The Supply Positioning Model & The Supplier Perception Model
Develop
Core
Marginal
Exploit
NOTES

Workshop: Risk Management in Supply Chain
Sharing – Q&A
100
Supply Chain Executive
NOTES

LIÊN HỆ HỢP TÁC
VILAS - TRƯỜNG HÀNG KHÔNG VÀ LOGISTICS
VIỆT NAM
TRÂN TRỌNG • Địa chỉ: Tầng 11, tòa nhà Hải Âu, 39B Trường Sơn,
CẢM ƠN! phường 4, quận Tân Bình, Thành phố Hồ Chí Minh, Việt
Nam
• Điện thoại: 0934 077 677
• Email: program@vilas.edu.vn
Supply Chain Executive

• Website: https://vilas.edu.vn
52

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TRAINING PROGRAMME

Supply Chain Executive 0

Supply Chain Executive 1 1

Supply Chain Executive 2

Supply Chain Executive 3 2

Supply Chain Executive 4

Supply Chain Executive 5 3

Supply Chain Executive 6

Supply Chain Executive 7 4

All activities are outsourced

3 PL A (large) logistics services provider

All activities are performed under own

Supply Chain Executive 8

Supply Chain Executive 9 5

Strategic Tactical Operational

Supply Chain Executive 10

Supply Chain Executive 11 6

Supply Chain Executive 12

Supply Chain Executive 13 7

Supply Chain Executive 14

Supply Chain Executive 15 8

Supply Chain Executive 16

Supply Chain Executive 17 9

Supply Chain Executive 18

Supply Chain Executive 19 10

Supply Chain Executive 20

Supply Chain Executive 21 11

Supply Chain Executive 22

Supply Chain Executive 23 12

 Outlining Your Requirements

Supply Chain Executive 25 13

Factors Priority criteria

Net delivered, payment terms, currency valuations, usage and processing

Technology Performance, responsiveness to request for specification changes

Supply Chain Executive 26

Supply Chain Executive 27 14

Supply Chain Executive 28

Supply Chain Executive 29 15

Supply Chain Executive 30

Supply Chain Executive 31 16

Supply Chain Executive 32

Supply Chain Executive 33 17

Supply Chain Executive 34

Supply Chain Executive 35 18

NEGOTIATING PROCESS HOW TO RESOLVE DEAD-LOCK?

Supply Chain Executive 37 19

Supply Chain Executive 38

Supply Chain Executive 39 20

Supply Chain Executive 40

Supply Chain Executive 41 21

Supply Chain Executive 43 22

Supply Chain Executive 44

Supply Chain Executive 45 23

Corporate strategy – commercial strategy – need identification- budget allocation –

Mobilization – contract management plan – progress monitoring – changes to scope

Final delivery – final payment – final “sign-off” (issue certificate)

Supply Chain Executive 46

Supply Chain Executive 47 24

Supply Chain Executive 48

Supply Chain Executive 49 25

Supply Chain Executive 50

Supply Chain Executive 51 26