305 OSCM - LOGISTICS

MANAGEMENT
Logistics Service Providers
Unit-4

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 Logistics Service Providers
• Carriers and Forwarders
• Courier, Express Parcel and Mail Service Providers
• Systems Service Providers and Contract Logistics
Providers.
• IT in Logistics
• Communication Standards
• Identification Standards
• Classification of IT in the Fields of Inventory and
Warehousing.
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 Overview of Logistic Service Providers
(LSPs) Management
• Logistic service providers management is the outsourcing of
logistics operations to a third party.
• Companies, or clients, use these third parties known as logistics
service providers (LSPs) to provide logistics services.
• LSPs may provide logistic services to one or more clients at any
given time.
• Clients may choose to outsource a portion, or all of their logistics
services to one or more LSPs.
• When sending information to an LSP, the client communicates the
receipts or shipment to the LSP, which then runs the transaction on
behalf of the client.
• Therefore, the client may be a buyer or seller for a transaction.

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 A client typically outsources the following
services to an LSP
• Warehousing
• Inventory management
• Cross docking
• Transportation
• Freight forwarding

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 What is a Carrier in logistics?
• A carrier is a company or a person legally
entitled to transport goods by land, water, and
air.
• Usually, the carrier works with shippers to ship
goods from one place to the other.

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 Types of carrier
• Common carrier: refers to the transport provider that
offers his services to any person or company, as he is
entitled to do so under the license provided by a regulatory
body. The common carrier is able to work with more
shippers within the same day because he is not bound by
any contract.
• Contract carrier: refers to the company or person who
provides transport services for a specified shipper on a
long-term basis. This means the contract carrier reaches a
common agreement with the shipper and agrees to work
under certain conditions over the length of the contract.

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 Freight forwarder
• A freight forwarder, forwarder, or forwarding agent, is a person
or company that organizes shipments for individuals
or corporations to get goods from the manufacturer or producer to a
market, customer or final point of distribution. Forwarders contract
with a carrier or often multiple carriers to move the goods from one
country to another.
• A forwarder does not move the goods but acts as an expert in
the logistics network. The carriers can use a variety of shipping
modes, including ships, airplanes, trucks, and railroads, and often use
multiple modes for a single shipment. For example, the freight
forwarder may arrange to have cargo moved from a plant to an
airport by truck, flown to the destination city and then moved from
the airport to a customer's building by another truck.

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 Freight forwarder
• International freight forwarders typically handle international
shipments and have additional expertise in preparing and processing
customs documentation and performing activities pertaining to
international shipments.
• Information typically reviewed by a freight forwarder includes
the commercial invoice, shipper's export declaration, bill of lading and
other documents required by the carrier or country of export, import,
and/or transshipment.
• The FIATA shorthand description of the freight forwarder as the
"Architect of Transport" illustrates the commercial position of the
forwarder relative to its client. In Europe, some forwarders specialize
in "niche" areas such as rail-freight, and collection and deliveries
around a large port.

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 CEP (courier express parcel services)
• CEP stands as an abbreviation for courier express
parcel services, which offer logistic services in
these areas.
• The offer of the service providers differs in the
speed, weight and volume of the packages and the
way of carrying out the shipment of the goods.
• Especially the regulations regarding weight and
volume allow for strong standardization and also
great potential for automating the service.

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 Courier
A courier service primarily draws direct, individual
pickup and delivery (desk to desk).
As a rule, these are shipments of smaller weight, which
are transported accompanied and delivered quickly.
The majority of shipments handled by courier service are
delivered locally or regionally over short distances only.
In the inner city, bicycle couriers often take over the
direct and personal delivery of shipments.
Valuable and cash transports are offered by special
security couriers.

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 Express
These service providers offer a very fast and
guaranteed transit time for shipping.
 However, the delivery is not made directly as
with the courier, but via appropriate handling
centers.
So that the delivery times can be met, the
processes of the express services are highly
automated.

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 Parcel
Parcel service providers are the most
standardized and automated deliverers.
Therefore, these system service providers have
precise restrictions on the weight and volume
of shipments.
The transit time of the shipment is longer than
express services and not guaranteed.

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 Night Express
Shipments that are handled by night express
are available to the recipient before the start of
work the next morning.
In most cases, a receipt is waived here and the
shipment is delivered to previously defined
handover points.
An overnight delivery is delivered overnight
on the next working day.

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 Difference between courier service and
logistics service
• The basic difference between courier and logistics starts with the amount and size
of the goods transported. Courier services generally do not involve delivering
bigger products from one place to another.
• Logistics services are employed whenever there is a need to deliver bigger
products that are many. Depending on the type of products, logistics services can
vary for taking a huge number of orders and impacting the complete business’s
working process.  
• Courier services will be responsible for delivering products in real-time, implying
taking on delivery tasks with immediate deliveries.
• They have various options for expedited deliveries with specific zed transport
services that don’t have to depend on filling truck loads as in logistics services.
• Logistics companies have faster delivery options but are not as quick as courier
services focus on small packages. Freights are shipped and delivered in a
contradicting manner concerning normal deliveries since they are large and less
time-bound than courier goods.

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 Difference between courier service and
logistics service
• Another key difference between couriers and logistics is the
uniqueness between courier and freight.
• A logistics service concentrates on moving freight shipped,
transported, and delivered more diversely than courier goods.
• Due to their bigger size and number, they are shipped in various
sized trucks or multiple modes like ships, trains, or aircraft.
• This could also vary depending on the distance from the origin to
delivery. Shipping of freight may be cheaper than sending
something via courier when these points are considered.
• Courier services usually concentrate on the delivery of precise
goods and returns. Logistics services typically handle all the ins and
outs of product deliveries between businesses and clients.

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 Difference between courier service and
logistics service
• This will also consist of moving goods from one place to another for
more extended periods.
• There is a huge change in charges for both courier and logistics services.
• You may think that it is more expensive to send a single package via
logistics services than courier services.
• But if you have a large number of bulky goods that have to be transported
from one location to another, you will end up being beneficial.
• Further, you will get better value for money if you are employing them
for the long term.
• Freight delivery companies can be highly reasonable since they will have
complete knowledge of various modes and guide you to use the
economical option for shipping your precise goods.

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Definition of logistics service provider

• Logistics service providers perform various

tasks and services for other companies and thus
act between the client and the end customer.
• In the meantime, logistics services include
more than just the pure transport or storage of
goods: Customs, assembly, labeling, shipping
and much more are now also provided by
logistics service providers.

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Classification of logistics service providers
• 1PL – FIRST PARTY LOGISTICS-1PL refers to an individual or a
business who ships, imports and exports or manufactures goods across
the world but does not outsource this to a dedicated logistics company.
All logistics is done in house by members of staff.
• 2PL – SECOND PARTY LOGISTICS-Second party logistics
providers are those who own the means of transport,
including aircrafts, ships and lorries. They can be used for deliveries
and transportation of goods.
• 3PL – THIRD PARTY LOGISTICS-3PL are expert logistics providers
that can help with all aspects of the supply chain, distribution
and customs. Companies can alleviate the stress and time of
organizing logistics by outsourcing to these experts, such as Sea
space.

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Classification of logistics service providers

• 4PL – FOURTH PARTY LOGISTICS-Similar to a

3PL, 4PL’s are logistics providers that businesses can
outsource to & have them organize supply chain
solutions, but using their own technology. This
allows them to offer a more strategic focus to help
meet company goals.
• 5PL – FIFTH PARTY LOGISTICS-Often linked to
e-commerce companies, 5PL providers construct,
organize and implement the best possible network,
technologies and rates for their clients supply chain.

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 What Is Contract Logistics?
• Contract logistics is the outsourcing of resource
management tasks to a third-party company.
• Contract logistics companies handle activities
such as designing and planning supply chains,
designing facilities, warehousing, transporting
and distributing goods, processing orders and
collecting payments, managing inventory and
even providing certain aspects of customer
service.
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 Understanding Contract Logistics
• Logistics management is an important component of
many companies' profitability and overall success.
• While some companies manage their logistics, others
find it more efficient to hire specialized contract
logistics companies to manage their logistics for
them.
• Contract logistics companies often need to develop a
deep understanding of how different industries work
to best manage the logistics of a variety of
companies.
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 Examples of Contract Logistics
• Examples of major contracts logistics companies
include United Parcel Service, Kuehne + Nagel, Exel,
Genco, and DHL.( Dalsey, Hillblom and Lynn)
• These companies have been around for a long time and
have made their mark in their respective industries,
offering cost-effective solutions from clients and
business owners.
• However, since the rise of start-up culture, many new
services have come to market that disrupt the
traditional supply chain model.

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 Benefits of Contract Logistics
• The most obvious benefit of contract logistics
is cost-savings, either in the form of equity or
time, eliminating the need to construct a costly
infrastructure.
• For example, a company that produces
windows might have a large factory, and next
to it an office building to accommodate staff.

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 Role of Logistic providers
 Minimizing cost
 Ensuring efficient inventory management
 Assure speed to market
 Minimize wastage
 Minimize touch points
 Removal of unnecessary trade barriers
 Identifying essential transportation
 Ensuring proper documentation & insurance
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 Role of Logistic providers
1. Warehouse Designing Assist with warehouse design to ensure optimum
space utilization, dust free safe storage environment and minimize wastage
of materials
2. Warehouse Management Streamlining your warehouse requirements right
from planning to integrating and implementing of technology
3. Order fulfillment Work collaboratively to ensure real time tracking and
management of order distribution and assure inventory management while
giving you control over your goods
4. Transportation Optimize international transportation cycle and ensure Just
in time delivery, with effective freight management solutions
5. Customs Brokerage Navigate customs requirements and documentation
with professional expertise and ease
Logistics management helps provide higher levels of service to consumers
at a lower cost. It helps your business by:

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 Role of Logistic providers
1)Ensuring smoother operations
2)Freeing up your resources
3) Ensuring more satisfaction to customers
4)Penetrating new markets
5) Providing Turnkey solutions at reduced cost
6) Enabling flexibility through customized
services
7) Scaling your supply chain and distribution to
a global level
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Impact of Information Technology in the
Field of Logistics and Supply Chain
Management
• A huge advance in information technology has already taken place in all the
industries including changes in the logistics and supply chain. A fast data transfer is
a result of information technology in supply chain management resulting in
increased cooperation.
• Information Technology helps to restructure the entire distribution set up to achieve
higher service levels and lower inventory and lower supply chain costs.
• IT developments have presented companies with unprecedented opportunities to
gain competitive advantage. So IT investment is the pre-requisite thing for each firm
in order to sustain in the market.
• Supply chain management (SCM) is concerned with the flow of products and
information between supply chain members’ organizations. Recent development in
technologies enables the organization to avail information easily in their premises.
• The development of Inter organizational information system for the supply chain has
three distinct advantages like cost reduction, productivity, improvement and
product/market strategies.

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 The different role of IT in logistics and
supply chain are:
1. Electronic Commerce
• Electronic commerce includes electronic data
interchange, e-mail, electronic fund transfers,
electronic publishing, image processing,
electronic bulletin boards, shared databases
and magnetic/optical data capture.

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 2. Electronic Data Interchange
• EDI describes both the capability and practice of communicating
information between two organizations electronically instead of
traditional form of mail, courier, & fax. The benefits of EDI are:
• 1. Quick process to information.
• 2. Better customer service.
• 3. Optimize paper work.
• 4. Increased productivity.
• 5. Improved tracing and expediting.
• 6. Cost efficiency.
• 7. Competitive advantage.
• 8. Improved billing.

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 3. Bar Coding and Scanner
• Bar coding is a sequence of parallel lines of different
thickness with spaces in between. These bars are nothing
but the items of information in the codified form, which
can be read with the help of a scanner. The information
printed in bar code includes country code, manufacturer
name, product details, date of manufacture, material
content etc. These details are required at user end for
inventory management.
• Bar Coding and Scanner has reduced paper work and
processing time. It has increased logistics system
productivity through speed, accuracy and reliability.

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 4. SKU DIM
• This SKU (Stock Keeping Unit) DIM capturing is
done by weight machine integration. During
previous years this was done manually and it was
time consuming. Now with the help of this DIM,
length, width, height, weight of the consignment is
measured without any much hassle and moreover
here we can avoid revenue leakage, because in our
experience we have seen users capturing wrong
dimensions which lead to wrong calculation during
billing.
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 5. RFID
• RFID is an Automatic Identification and Data Capture (AIDC)
technology. RFID first appeared in tracking and access
applications during 1980.
• RFID-based systems allows for non contact reading and are
effective in manufacturing and other environment where bar codes
could not survive.
• These are used as an alternative to Barcodes to communicate the
inventory data to the reader via radio waves. RFID wirelessly
exchanges information between a tagged object and a reader.
• RFID has improved the ability of manufacturers to better manage
the inventory levels. It has improved the tracking, logistics and
planning operations.

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 6. Case ID Capture
• This ID is used to capture information on
cases, where for each SKU, box case will be
defined with number of SKU units kept inside
each unique product cases.
• In some cases information will be flown and
measured towards UOM which is mentioned
as CASES.

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 7. Route Optimization
• Truck routing, delivery scheduling and fleet management
software solutions help hundreds of private fleet and logistics
operators to cut transportation costs every day – giving a fast
return on software investment.
• Some of the uses of this route optimization are:
 Reduce total mileage for lower fuel bills
 Fully utilize the fleet for maximum distribution efficiency
 Cut overtime and agency bills with improved driver
productivity
 Optimize the distribution networks to reduce overall
transportation costs

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8. GPS Tracking (Track & Trace)
• New and growing logistics companies are quite
apprehensive and skeptical about transport management,
claiming that it will only result in increased expenses that
could eventually hurt their business in the long run. This
is a common misconception about GPS tracking.
• The benefits of GPS Tracking system includes below:
• • Real time monitoring of the shipment
• • Reduced fuel consumption
• • Improved productivity
• • Better Customer Service

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9. Last mail Delivery Tracking on Mobility

• Last mail delivery plays a vital role in SCM.

Now days B2C transaction is increased and
every end customer expects the delivery on
time. To active this, TAT service providers are
very key on delivery information capture and
reflecting it in the online sites.

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 How to Build an Effective Logistics
Communication Process 
• Communication is a vital aspect of building a
successful business.
• An effective communication process ensures
that information flows seamlessly between
departments and amongst the various teams on
time and in a form which will allow them to
achieve individual, departmental, and
organizational goals and objectives.

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 Why is communication important for
Logistics
• Information interchange plays an important role in
creating a cost-effective and agile logistics management
process.
• It ensures that tasks are completed and transferred from
one point to the other seamlessly and without delay.
• For example, the sales department needs logistics data to
analyse orders that have been shipped, customer service
needs information to update shipment status, and the
accounts section requires the data to cross-check
transporter invoices.

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 Why is communication important for
Logistics
• The procurement team needs information from logistics
when new vendors are to be hired or old contracts are due
for renewal. The other functions of the supply chain also
have to collaborate or communicate with the logistics
team to get their work done.
• In addition to the internal information requirements,
vendors such as carriers, warehouse operators, and 3PLs
also need to exchange information with the logistics team
on a daily basis to ensure that the company’s products are
delivered at the right time to the right place at the right
cost.

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 What are the features of an effective
process for Logistics?
• It should be in writing: Written communication is
important as it minimizes the scope to misinterpret or
forget the message. 
• Today, written communication is the most common form of
business communication. 
• Since emails and all forms of messages across multiple
platforms can easily be sent to multiple recipients situated
across offices, countries, and continents, it is essential for
all professionals to develop effective written
communication skills and to encourage the same in all
employees.

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 What are the features of an effective
process for Logistics?
• It should follow the 3 C’s: A clear, concise, and
consistent message is the hallmark of effective
communication.
• A clear message ensures that there is no ambiguity in
what needs to be conveyed. Conciseness ensures that
the message is brief, but includes all important
information.
• And, consistency in language, format, mode of
delivery ensures that the receiver does not waste time
in understanding the message.
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 What are the features of an effective
process for Logistics?
• It should be sent to the right
recipients: More often than not information is
lost in the organizational hierarchy because it
is not addressed to the right person. In
logistics, given the fact that a lot of the work is
time-bound, marking the right team or person
on the email is of utmost importance.

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 What are the features of an effective
process for Logistics?
• It conveys urgency appropriately: Many executives are
in the habit of marking all their emails as “urgent” to
ensure that it gets immediate attention from the receiver.
While this practice is great to ensure that important and
critical communication does not get missed, however, if
all communication is urgent, it becomes difficult to
prioritize tasks. It also dilutes the meaning of the word. In
such instances, the receivers take up the tasks in the
priority that they think is correct. Hence, it is crucial to
mark only communication or tasks that are the top priority
as urgent and not all communication.

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 What are the features of an effective
process for Logistics?
• It should provide clear timelines: The delivery or timeline for
getting a response or the task being assigned should be clearly
mentioned in the communication. This will help the receiver
gather information, plan, and execute the requirements
mentioned in the message and avoid unnecessary delays.
• It should be transparent and reliable: Interdepartmental
conflicts, organizational politics, and cutthroat competition
encourage employees to keep information from their
counterparts or colleagues. This creates chaos, confusion, and
mistrust which in turn affects the execution of tasks. It is thus
important that the organizational culture promotes transparent
communication and sharing of reliable information.

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 What are the features of an effective
process for Logistics?
• It should be real-time: Logistics is a fast-paced function and information
exchange also needs to be equally quick. Hence, information such as a
change in freight rates, loading lists, customer orders, etc. needs to be
verified and relayed to the next person as soon as it is received. Apart from
these things, queries asked in relation to a task or process should be
addressed promptly or the receiver should at least provide a timeline by
when the sender may expect an answer.
• Technology Integration: In this digital age, just getting the written
communication right is not enough to ensure the successful implementation
of business plans. Organizations must also integrate the technologies,
backend systems and processes that are used by different departments to
ensure that information flows seamlessly and without manual intervention
from one function to another.
•  

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 ISO standards 
• 1. ISO 22301
• What would you do if a key supplier went bust tomorrow? Or a crucial
delivery was delayed past crunch time? What if your power supply was
suddenly cut off?
• ISO 22301, the business continuity standard, is designed to ensure you
have answers to those questions.
• Accrediting to the standard means:
 Pinpointing the critical processes your business needs to continue
functioning
 Assessing the key associated risks for each process with a Business
Impact Analysis
 Building and testing a continuity plan to ensure your critical processes
continue to operate

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 ISO standards 
• Assessing supply chain risk is a core element of ISO 22301.
• An ISO 22301 auditor will expect to see that you've considered
how to work around any event that disrupts your suppliers' ability
to work for you, from transport disruption and natural disasters to
financial collapse and technological faults.
• Accrediting to the standard is a great way to give your business a
more flexible, resilient approach to your suppliers and prevent an
irreparable break in your ISO supply chain. Bringing your
suppliers into the loop with shared continuity plans and
transparent risk assessments will only make your business
continuity management system (BCMS) even stronger.

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 2. ISO 27001
• The longer, more complex and more international your ISO supply
chain, the weaker the security of information passing along it. This
makes your business more vulnerable to cyber breaches, attacks and
regulatory penalties.
• A 2018 survey showed that 56% of organisations had suffered a breach
of security caused by one of their vendors, and the average number of
third parties with access to sensitive information was 471 per company.
That means potentially hundreds of cyber security threats are present
within your supply chain, making an ISO 27001-certified information
security management system crucial.
• Hardware and software systems, particularly cloud-based, are a key
risk factor to consider since it's likely your business is supplied with
them by at least one third party.

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 3. ISO 14001
• Businesses looking to lighten their environmental impact and carbon footprint can only
make the strongest possible change by driving their supply chains into compliance
with them. One of our clients did exactly that, harnessing their massive purchasing
power to restructure their supply chain towards more efficient, low-wastage suppliers
and processes. Along with the wider environmental benefits, they reported a dramatic
cost reduction as waste was sliced.
• Several studies have shown that profitability and public benefit don't form a zero-sum
game. 14001-accredited businesses with environmentally conscious supply chains
outperformed other businesses by around 10% on the stock market in 2018, according
to Bloomberg.
• Establishing common objectives and KPIs, maintaining performance with a Plan Do
Check Act cycle and transparent reporting, implementing a shared improvement plan:
these are all key ingredients for driving ISO 14001 compliance deep into your supply
chain. Thanks to the so-called 'green bullwhip effect', pushing for environmental
sustainability tends to cause ripples of action beyond your immediate grasp, driving
positive improvement far beyond your direct suppliers.

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 Essential Technologies for
Inventory
• Warehouse Management System (WMS)
• Warehouse management systems come in a variety of types and
implementation methods, and the type typically depends on the size and
nature of the organization. They can be stand-alone systems or modules in a
larger enterprise resource planning (ERP) system or supply chain execution
suite.
• They can also vary widely in complexity. Some small organizations may
use a simple series of hard copy documents or spreadsheet files, but most
larger organizations — from small to medium-sized businesses (SMBs) to
enterprise companies — use complex WMS software. Some WMS setups
are designed specifically for the size of the organization, and many vendors
have versions of WMS products that can scale to different organizational
sizes. Some organizations build their own WMS from scratch, but it’s more
common to implement a WMS from an established vendor.

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 Radio Frequency Identification (RFID)
Technology
• RFID is an acronym for “radio-frequency identification”
and refers to a technology whereby digital data encoded in
RFID tags or smart labels (defined below) are captured by
a reader via radio waves.
• RFID is similar to barcoding in that data from a tag or
label are captured by a device that stores the data in a
database. RFID, however, has several advantages over
systems that use barcode asset tracking software. The most
notable is that RFID tag data can be read outside the line-
of-sight, whereas barcodes must be aligned with an optical
scanner.

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 Radio Frequency Identification (RFID)
Technology
• RFID belongs to a group of technologies
referred to as Automatic Identification and Data
Capture (AIDC).
• AIDC methods automatically identify objects,
collect data about them, and enter those data
directly into computer systems with little or no
human intervention.
• RFID methods utilize radio waves to
accomplish this.
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 Light Fidelity (LiFi) Technology
• LiFi is a technology for wireless communication between
devices using light to transmit data and position. LED lamps can
be used for the transmission of visible light. Providing wireless
connectivity for a large number of robots and electronic devices
is a challenging problem in warehouses and factories.
• LiFi offers huge advantages over WiFi in those environments
and can be used as a reliable wireless networking technique in
those indoor areas. In addition, visible light communication can
provide accurate 3D positioning for robots, drones and other
devices in warehouses and factories, where indoor positioning
and navigation is a crucial element.

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 Barcode System
• You see barcodes everywhere – from identification cards,
to mail, to goods you purchase in a store.
• The small image of lines, or bars, and spaces are affixed to
nearly everything you can imagine, for identification
purposes.
• Specifically, barcodes use a sequence of vertical bars and
spaces that represent numbers and other symbols;
typically, a barcode consists of five parts – a quiet zone, a
start character, data characters (often including an optional
check character), a stop character, and another quiet zone.

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 Barcode System
• Barcoding increases efficiency and productivity in a number of
industries when paired with barcode readers.
• Barcode readers use laser beams to read the barcodes and translate
the reflected light into data that is then transferred to a computer
for action or storage.
• Most people are familiar with barcodes and barcode readers in
supermarkets and retail stores. However, barcodes are useful in
several other applications, from taking inventory to checking out
books, to tracking bees for research.
• Barcode readers often are attached to computers in retail settings,
but they also are handheld and portable for other uses, such as
scanning barcodes in warehouses and tracking inventory.

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 Robotics Technology
• New robotics technology has become one of
the most sought-after technologies for
warehouse management.
• Leading-edge manufacturers are partnering
with providers of warehouse management
systems to create customized software and
smart robots that help to manage the
movement, storage, and sorting of warehouse
inventory.
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 Robotics Technology
• With increasing order volumes, numerous products to navigate,
highly personalized order packing and faster shipping
requirements, robotics solutions will help effectively respond to
volume growth and perform more tasks with lesser labor and at a
lower cost.
• The increasing demand for higher levels of performance and
flexibility in warehouse robotics is stimulating some innovative
product developments and early adoptions of mobile warehouse
robotics.
• As a warehouse manager, one should choose a robotic
technology that best caters for their needs in all aspects of
workflow.

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