Third-party logistics

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T. systems issuesReporting capabilities: name of IT manager (to collaborate with your IT manager)Warehouse Management System (WMS): Integration/customization capabilitiesTransportation Management Systems (TMS): Optimization capabilities for your freightYard Management Systems (YMS)Tracking freight systemsTheft Management considerationsFile transfer capabilitiesModification possibilitiesWhat are the shortcomings of their systems?What are the shortcomings of your systems?EDI, RFID or Voice Activation capabilities?Order ManagementStrong Inventory control capabilitiesStrong location management capabilitiesSystems available 24/7?Cost to use 3PL’s systemsFlexibilityDo they provide the necessary range of services?Do they have partners or trusted suppliers for services they don’t supply but you will need?Shift timesOvertime when necessary, and cost of overtimeWeekend workAbility to add staff – labor poolAbility to handle rush or emergency orders – what is the lead time necessary?CommunicationWho provides what information to whom – both ways?What is the time frame for the information provided?What is the method of transferring information? (Should always be in written/email form)In what format is the information being passed along?What information does the 3PL require from you?What information will they provide you?Review and define jargon and terms to be used.Conflict resolution: the chain of command to solve problemsQualificationsHow long in business?Warehouse: Asset or non-asset based 3PL?Staff qualifications?Accreditations?Customer comments about the 3PL?Core business/commodity specialtyCan they provide customer and other references?Do they have experience shipping the same product as your company ships?Do they have experience shipping to the same customers/consignees as your company?What size customers do they handle?What kind (corporate types) of customers do they handle?Expectations of performanceCustomer service: Use of VOC=Voice of the Customer techniques to satisfy your customers: on tome delivery to your customersTransportation: asset/non-asset? How to handle the FSC (Fuel Surcharge?);increasesTimetables and deadlines for receiving and providing informationTimetables for receiving new merchandiseTimetables for shipping ordersExpected quantities of inbound and outbound merchandise.Expected number of orders and units picked or shipped daily/weekly/monthly.What is the division of duties? Review all aspects of information management and flow to determine who is responsible for what (for example: routing, backorders, invoicing, returns, POD tracking, QC inspections)What are the shipping priorities?Service Level Agreement (SLA) with Key Performance Indicator (KPIs) experienceTypes of contracts 3PL requires? Ability to negotiate with 3PL?Price list validity? Dynamics of pricing?Receiving, Inspection, Dock-to-Stock, Warehouse Management, Cycle Counting capabilities, inventory Management, warehouse-to-dock, turn around tomes?Safety Program/Safety ManagerLEAN initiatives, meeting OSHA requirements, Six Sigma, Continuous Improvement/Kaizen, Kanban, Free/Foreign Trade Zone, cleanliness, 3PL teamworkComplianceWho is responsible for routing, packaging, and shipping guidelines?Who is responsible for charge-backs? Under what circumstances? What is the 3PL legal limit of liability? What does their insurance and your insurance cover and under what circumstances?Who handles RMA: Returned Materials AuthorizationReverse Logistics ProgramCreate quantifiable standards and measurements of performance.Does the 3PL subscribe to the VCF (Value Chain Federation) Clearinghouse (VCF is an organization that advocates trading partner alignment, retailer-supplier operating synchronization, and best practices by facilitating collaborative and educational opportunities and providing technology solutions to eliminate disruptions throughout the retail value chain. RVCF includes North America's leading retailers, merchandise suppliers, and service providers)…. and do they use it?CSA (Compliance, Safety, Accountability: US Department of Transportation: Federal Motor Carriers Safety Administration) compliance?PricingPrice structure that is easy to understand and easy to checkInvoices formatted to your specifications with proper backup documentation.Comprehensive price quote. Include all possible services you may require.Payment termsFinding a true partnerDo you feel they are honest, trustworthy and sincere?Do you feel they have a passion for the business and a commitment to customer service?Do they have the experience, education, and professionalism you require?2.6. Cooperation between 3PL providers (alliances)Today, logistics is dominated by forces that integrate the market participants in order to reduce total costs, rather than in the individual links of the supply chain. This vector of development of logistics at the present stage is the result of the following trends in the international logistics market:- globalization and, as a consequence, The rise of position players with developed logistics network. In connection with the development of markets, the increased demands of shippers to the logistics provider. Willing to work with one LP is due to the presence of a built logistics network to cover a large territory.- consolidation of logistics providers.Consolidating logistics providers due to the need to increase the number of services and expand geographically. It seems that eventually the market will be two or three large operators providers capture more of its share. However, this is misleading. The market will continue to operate a large number of companies. In this competition between them remains at a high level.- regionalization of supply chains. Although the processes of globalization and the development of world trade, international logistics trend in the development of supply chains within a single region. Development of regional distribution due primarily an increase in the cost of transportation, the need to reduce the delivery time and the emergence of new consumer markets.The main reason for the development trends of cooperation in the supply chain logistics are clearly increasing demands of customers, which in turn caused by the growth of the logistics costs and the need to focus on the management of a given level of logistics costs. One of the most common ways to create full-featured large 3PL logistics providers is a cooperation of intermediaries, the formation of strategic alliances between the narrow functional logistics operators. However, their development interferes with the low level of state support, serious administrative barriers, the lack of sources of investment, limited access to credit resources, difficulties with the allocation of land, and so on. D. Therefore, in reality, already today the Russian small and medium-sized enterprises is quite difficult to arrange an optimal service and ensure customers supplies without the involvement of partners in the field of logistics in terms of increasing competitive pressures.3PL providers are considered to be the strategic alliance itself with other alliances being Retailer-Supplier Partnerships and Distributor Integration. Raue & Wieland (2015) describe the example of horizontal alliances between logistics service providers, i.e., the cooperation between two or more logistics companies that are potentially competing. Logistics companies can benefit twofold from such an alliance. One the one hand, they can "access tangible resources which are directly exploitable". This includes extending common transportation networks, their warehouse infrastructure and the ability to provide more complex service packages by combining resources. On the other hand, LSPs can "access intangible resources, which are not directly exploitable". This includes know-how and information and, in turn, innovativeness.3PL providers nowplay an essential part in theoperation of supply chains and takeover increasingly largeintermediation tasks, from therunning of conventional logisticaloperations to the running ofpostponement operations, andabove all facilitating the pooling oflogistical resources to the benefit ofa network of interconnectedsupply chains. Competition andcooperation thus become thetwo in dissociable faces of the competitive value-creation process,and 3PL providers appear as keyplayers as caretakers, leadoperators, or architects [7].But competition does not form ahomogeneous relationship spectrum;its evolution is deeply influencedby the intensity of cooperation andcompetition at a given moment inthe building, then the development,of exchange relations betweenfirms. Moreover, we can questionwhether competition itself shouldnot be understood in a diachronicmanner from the existence ofstrategic sequences. In other words,competition and cooperation willsometimes follow each other in thesame dimension for two firms Aand B. If A and B use the same3PL provider in the runningof operations of differentiationreported at time t by playing onresource pooling patterns, nothingallows us to state that at timet+1, the situation will remainidentical, for example, in case ofradical modification of customers'expectations, preferring A'sproducts rather than B's products.3PL providers will have to learn tomanage such strategic switches bybeing able to rearrangepostponement operations veryquickly or risk losing the accountsof both firms now in a competitivesequence after playing thecooperation game [5].Third-party logistics (3PL) providers play an essential role in hooking up shippers with the right kind of transportation service. But their numbers are shrinking.The trend is toward fewer, larger players. A recent example was the acquisition of One Stop Logistics by Echo Global Logistics, Inc. Chicago-based Echo earned $884 million in revenue in 2013, drawing on a network of more than 26,000 transportation providers. One Stop, with $50.7 million in gross revenue last year, offers both truckload and less-than-truckload brokerage services out of offices in Northern California and Florida. Purchase price of the deal was $37.3 million.The latest wave of deals has been triggered by an influx of private equity, including venture-capital funds. Much of that money sat on the sidelines during the Great Recession, and is now searching for new targets as the economy sputters toward recovery. Freight brokerages and 3PLs, with their extensive rosters of contracted carriers and loyal shippers, are especially attractive prospects.Investors are drawn to the industry’s growing level of sophistication. The roots of many smaller 3PLs were in transportation and warehousing, giving their executives a “blue-collar” quality. As old-line brokers and 3PLs expand their offerings into full-service supply-chain management, their level of expertise rises accordingly.Big firms like XPO and Coyote are even attracting talent from major universities offering degrees in supply-chain management [16]. The very definition of a broker or 3PL today is in flux. The lines between pure brokers and “value-added” providers are blurring. Many are offering intermodal service, arranging for the shipment of containers by rail over long distances, in addition to truck and ocean transport. Some entities operate their own trucks or warehouses, while others function as pure intermediaries between shippers and underlying asset providersAs North American 3PLs become bigger and more successful, they could themselves become targets for acquisition by foreign-based transportation conglomerates. Companies that have sought a U.S. market presence in the past include Germany’s DB Schenker and Deutsche Post AG, the latter of which owns DHL. Denmark’s DSV is another European entity that is looking to grow globally.In actuality, third parties are migrating in both directions. Pure brokers are moving up into value-added services, while the biggest companies are venturing into brokerage to supplement their higher-level offering. At the transactional level, those “bedroom brokers” that are too small to compete will likely give way to internet-based exchanges that can serve the needs of small shippers. In this historically low-margin industry, the key to survival today is either to broaden one’s service menu or abandon the business altogether [19].Of course, fewer players with greater market power leads to higher rates, but that trend is already evident. The nationwide driver shortage is forcing carriers to raise wages in order to attract talent, capacity is tight due to the new boom in domestic oil and gas production, and fuel prices are likely to rise in the coming year. Even without the inevitable consolidation of third parties, shippers can expect to pay more for transportation in the coming year.Integrated logistics service providing customers (industrial, commercial or service companies) 3PL providers, expanding the range of so-called contract logistics by combining several (or overwhelming quantity) of logistics and coordination of their functions under a single operator.The emergence 4PL provider is due to the expansion of the functions, integration and coordination of the company's focus and key suppliers in the supply chain, including the establishment of an efficient circuit and data exchange between counterparties chain in real time with the help of modern information systems and technologies.Thus, in the development of logistics there is a clear trend towards the integration of the activities of regional businesses, including logistics operators. These general trends are a consequence of the global logistics processes in the world economy that on the background of increasing competition are the main actors in the integration of the market for its activities in order to reduce costs.In the scientific literature on strategic management in the context of institutional mechanisms stresses that the transition to a new type of interaction. It is not based on functional specialization, and on the integration of management activities and is aimed at increasing the flexibility of production and sales activities of enterprises before the due receipt of specific market opportunities that are not available for individual kompaniy. The objective content of the integration of interweaving and interpenetration and merging of reproduction processes, providing a more effective cooperation between enterprises.Thus, economic integration has a number of favorable conditions for the communicating parties. As a result of the integration of the system formed special relationships and ties between economic entities or creating new organizations. Integration cooperation gives businesses greater access to resources: financial, labor, and material, to the latest technology, and allows the products (services), based on a more capacious and demanding market.As a result of the integration of logistics operators form a complex scheme of interaction between business-related sequence of process steps and the process of promoting products on the market, called the supply chain. Such a scheme with characteristics similar to the networks, but may contain elements of hierarchical systems. The key principles of network organizations: a common goal, independent members, voluntary bondage, the presence of several leaders, integrated levels.The development of processes of interaction of enterprises can be viewed from the perspective of capital concentration and coordination of their economic activity. Joint activity of enterprises may have different legal form - the consortium, cartels, syndicates, a pool, a conglomerate, trust, association, group, industrial holding company, financial and industrial group, etc. However, the boundaries between the organizational forms of cooperation between the companies are quite blurred, since the variety of forms of business combination can be crossed on general characteristics.LIST OF REFERENCESAn overview of Third Party Logistics Industry; Centre for transportation studies, Massachusetts Institute of Technology.APICS Dictionary, 8th edition, 1995.Waters. Global Logistics and Distribution Planning: Strategies for Management, 2003.Chartered Institute of Logistics and Transport, 1998.Harland, C.M. (1996) Supply Chain Management, Purchasing and Supply Management, Logistics, Vertical Integration, Materials Management and Supply Chain Dynamics. In: Slack, N (ed.) Blackwell Encyclopedic Dictionary of Operations Management. UK: Blackwell.Hertz, Susanne; Monica Alfredsson (February 2003). "Strategic development of third party logistics providers". Industrial Marketing Management (Elsevier Science).Implementation of the strategy development and work 3PL-provider practice LLC «ILG» - magazine "Logistics» №2, 2011.Joel Sutherland of J.B. Hunt Logistics, Inc.Nesterov SY Warehouses in the system an integrated approach to logistics in regional aspect .// Integrated Logistics. researcher Information Journal number 4 (July-August), Ch. Ed. Reser CM. - Moscow, VINITI, 2010. - P. 12-13.Simchi-Levi and Kaminsky, Designing and Managing the Supply Chain: Concepts, Strategies and Case Studies, third edition, McGraw-Hill International Edition.Supply Chain Management Terms and Glossary; The Council of Supply Management Professionals, 2013.Third-Party Logistics Providers Are Shrinking in Number, Growing in Size; Forbes, 6 March 2014.Third Party Logistics Services Explained, The Different Types of 3PLs, and The Various Levels of Outsourcing; Adam Robinson, 7 February 2014, cerasis.com.3PL vs 4PL: What are these PLs, Anyway? 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