Description
Global Supply Chain Management
• • •
Global Supply Chain Management. Logistic Outsourcing. Case study
GLOBAL SUPPLY CHAIN FORUM ?
Supply Chain Management is the integration of key business processes across the supply chain for the purpose of adding value for customers and stakeholders (Lambert, 2008).
?
Supply chain execution means managing and coordinating the movement of materials, information and funds across the supply chain. The flow is bi-directional.
GLOBAL SUPPLY CHAINS POSE CHALLENGES REGARDING BOTH QUANTITY AND VALUE:
Supply and Value Chain Trends ? Globalization ? Increased cross border sourcing ? Collaboration for parts of value chain with low-cost providers ? Shared service centers for logistical and administrative functions ? Increasingly global operations, which require increasingly global coordination and planning to achieve global optimums ? Complex problems involve also midsized companies to an increasing degree,
?
THE CONSEQUENT PROBLEMS INCLUDE:
?
Different currencies and valuations in different countries; Different tax laws (Tax Efficient Supply Chain Management); Different trading protocols;
?
?
?
Lack of transparency of cost and profit.
LOGISTIC OUTSOURCING
Outsourcing logistics operations to a 3PL (third party logistics) adds to the bottom line for both the retailer and manufacturer through accurate, wellmanaged inventory and supply chain solutions. ? Outsourcing reduces the need for costly real estate to hold inventory. Manufacturers, distributors and retailers who outsource save time and money. ? 3PLs offer expertise that manufacturers, distributors and shippers can tap into, allowing users to achieve supply chain solutions with their customers that minimize total delivered costs.
?
?
The efficiencies generated by outsourcing logistics has made it extremely popular. Recent studies show that fully 80 percent of Fortune 500 companies outsource at least one function - the largest such number in history.
BENEFITS OF USING A 3PL
? ? ? ? ? ? ? ?
?
? ?
Reduced total delivered cost for your customer Local expertise in new markets Improved customer service through shorter shipment times Reduced inventory costs through better management. Cost benefits through volume shipping discounts. Improved focus on core competency . Increased shipment visibility . More scalable logistics operation and cost model . Improved variety of technology and service. Risk reduction . Increased expertise in supply chain security .
CASE STUDY - DHL ADVANTAGES AND DISADVANTAGES OF LOGISTICS OUTSOURCING – 3PL, 4PL
BACKGROUND TO THE LOGISTICS OUTSOURCE INDUSTRY
?
The majority of the findings are based on the outcome of a global survey completed mid 2007 by Cap Gemini, Georgia Institute of Technology, SAP and DHL .
?
1,568 supply chain executives in Europe, North America, Asia Pacific and Latin America responded. 82% of the respondents have an outsourced logistic relationship.
A s ia P a c if ic 2 3 %
N o rt h A m e ric a 29%
E uro pe 2 7 %
La t in A m e ric a 2 1%
9
BACKGROUND TO THE LOGISTICS OUTSOURCE INDUSTRY
Market Summary Why is outsourcing of logistics so popular? The majority of today’s industry leaders strongly believe in the outsourcing of logistics Once the decision is made to outsource wins are instant In most organisations logistics is a non-core activity As global trade grows many organisations do not have a presence in new markets Logistic Service Providers welcome the opportunity to move away from a basic commodity-service (e.g. point to point transportation) to a more comprehensive service offering.
?
? ? ?
?
10
BACKGROUND TO THE LOGISTICS OUTSOURCE INDUSTRY (CONT.)
% Of Respondent Activity Outsourced
11
Dom Transportation Int Transportation Warehousing Custom s Forw arding Reverse Logistics Freight Paym ent Order Entry Custom er Service 4PL 0% 14% 13% 11% 10% 20% 30% 31% 25% 51%
83% 79% 69% 67%
40%
50%
60%
70%
80%
90%
% Outsourced
3PL, LLP, 4PL
?
A '3PL' or third-party logistics provider is a supplier of outsourced logistics services that primarily uses its own assets and resources.
?
A ‘LLP’ or Lead Logistics Provider co-ordinates and integrates its own logistics services with those of others with complementary or supporting capabilities.
A '4PL' or fourth-party logistics provider is a supplier of outsourced supply chain coordination and management services that generally does not own or operate the underlying logistical assets and resources. 4th Party Logistics is a term created by global consulting firm Accenture.
?
?
12
OUTSOURCE LOGISTICS- THE ADVANTAGES!
?
? ? ? ? ? ?
In the far majority of cases costs are reduced. Service level and service offering is improved- tried and tested solutions. Management have more capacity to focus on the core business. Capital is made available for other uses( e.g. no warehouse). LSP can also use the organisation’s existing assets to return more value. Access to innovation/expertise in the logistics industry is easier. Emerging markets are more accessible.
Note: In The Survey 85% Of Respondents That Outsource Are Convinced It Was The Right Decision
Average Fixed Assets Value Reduce By 18%
Average Reduction In Cost Of 13%
Average Order Cycle Time Reduced From 14 To 10.3 days 13
WHY DO ORGANISATIONS CHOOSE TO KEEP LOGISTICS IN HOUSE?
? Organisation strategy is to develop logistics as a core business.
? ? ?
?
? ?
Downsizing of operations creates extra capacity. Does not make sense. Model is too complex/ savings are insignificant. Risk of choosing the wrong partner- savings not realised, service level failure, cultural fit. Difficult to trust or rely on an external party for success-low maturity of market. IT systems- would create too much dependency. LSP works with competitors.
Note: In the survey conducted only 42% of European companies that currently do not outsource logistics will consider it in the future.
14
FUTURE TRENDS
Current V's Projected Outsource Expenditure
2010-2012
2007
Latin America Asia Pacific Europe North America
0%
10%
20%
30%
40%
50%
60%
70%
80%
? LSP Information Technology is continually advancing to optimise global supply chains and customers see a large advantage and want to be part of this ? Industries not previously under intense pricing pressure may now need to ensure they are as cost competitive as possible. ? Consolidation of LSP organisations will continue to result in unprecedented capacity, efficiency and scope- again customers want to be part of this ? Collaboration is key- it makes the difference between a good and a great outsourcing relationship!!!!!!
15
doc_844851366.pptx
Global Supply Chain Management
• • •
Global Supply Chain Management. Logistic Outsourcing. Case study
GLOBAL SUPPLY CHAIN FORUM ?
Supply Chain Management is the integration of key business processes across the supply chain for the purpose of adding value for customers and stakeholders (Lambert, 2008).
?
Supply chain execution means managing and coordinating the movement of materials, information and funds across the supply chain. The flow is bi-directional.
GLOBAL SUPPLY CHAINS POSE CHALLENGES REGARDING BOTH QUANTITY AND VALUE:
Supply and Value Chain Trends ? Globalization ? Increased cross border sourcing ? Collaboration for parts of value chain with low-cost providers ? Shared service centers for logistical and administrative functions ? Increasingly global operations, which require increasingly global coordination and planning to achieve global optimums ? Complex problems involve also midsized companies to an increasing degree,
?
THE CONSEQUENT PROBLEMS INCLUDE:
?
Different currencies and valuations in different countries; Different tax laws (Tax Efficient Supply Chain Management); Different trading protocols;
?
?
?
Lack of transparency of cost and profit.
LOGISTIC OUTSOURCING
Outsourcing logistics operations to a 3PL (third party logistics) adds to the bottom line for both the retailer and manufacturer through accurate, wellmanaged inventory and supply chain solutions. ? Outsourcing reduces the need for costly real estate to hold inventory. Manufacturers, distributors and retailers who outsource save time and money. ? 3PLs offer expertise that manufacturers, distributors and shippers can tap into, allowing users to achieve supply chain solutions with their customers that minimize total delivered costs.
?
?
The efficiencies generated by outsourcing logistics has made it extremely popular. Recent studies show that fully 80 percent of Fortune 500 companies outsource at least one function - the largest such number in history.
BENEFITS OF USING A 3PL
? ? ? ? ? ? ? ?
?
? ?
Reduced total delivered cost for your customer Local expertise in new markets Improved customer service through shorter shipment times Reduced inventory costs through better management. Cost benefits through volume shipping discounts. Improved focus on core competency . Increased shipment visibility . More scalable logistics operation and cost model . Improved variety of technology and service. Risk reduction . Increased expertise in supply chain security .
CASE STUDY - DHL ADVANTAGES AND DISADVANTAGES OF LOGISTICS OUTSOURCING – 3PL, 4PL
BACKGROUND TO THE LOGISTICS OUTSOURCE INDUSTRY
?
The majority of the findings are based on the outcome of a global survey completed mid 2007 by Cap Gemini, Georgia Institute of Technology, SAP and DHL .
?
1,568 supply chain executives in Europe, North America, Asia Pacific and Latin America responded. 82% of the respondents have an outsourced logistic relationship.
A s ia P a c if ic 2 3 %
N o rt h A m e ric a 29%
E uro pe 2 7 %
La t in A m e ric a 2 1%
9
BACKGROUND TO THE LOGISTICS OUTSOURCE INDUSTRY
Market Summary Why is outsourcing of logistics so popular? The majority of today’s industry leaders strongly believe in the outsourcing of logistics Once the decision is made to outsource wins are instant In most organisations logistics is a non-core activity As global trade grows many organisations do not have a presence in new markets Logistic Service Providers welcome the opportunity to move away from a basic commodity-service (e.g. point to point transportation) to a more comprehensive service offering.
?
? ? ?
?
10
BACKGROUND TO THE LOGISTICS OUTSOURCE INDUSTRY (CONT.)
% Of Respondent Activity Outsourced
11
Dom Transportation Int Transportation Warehousing Custom s Forw arding Reverse Logistics Freight Paym ent Order Entry Custom er Service 4PL 0% 14% 13% 11% 10% 20% 30% 31% 25% 51%
83% 79% 69% 67%
40%
50%
60%
70%
80%
90%
% Outsourced
3PL, LLP, 4PL
?
A '3PL' or third-party logistics provider is a supplier of outsourced logistics services that primarily uses its own assets and resources.
?
A ‘LLP’ or Lead Logistics Provider co-ordinates and integrates its own logistics services with those of others with complementary or supporting capabilities.
A '4PL' or fourth-party logistics provider is a supplier of outsourced supply chain coordination and management services that generally does not own or operate the underlying logistical assets and resources. 4th Party Logistics is a term created by global consulting firm Accenture.
?
?
12
OUTSOURCE LOGISTICS- THE ADVANTAGES!
?
? ? ? ? ? ?
In the far majority of cases costs are reduced. Service level and service offering is improved- tried and tested solutions. Management have more capacity to focus on the core business. Capital is made available for other uses( e.g. no warehouse). LSP can also use the organisation’s existing assets to return more value. Access to innovation/expertise in the logistics industry is easier. Emerging markets are more accessible.
Note: In The Survey 85% Of Respondents That Outsource Are Convinced It Was The Right Decision
Average Fixed Assets Value Reduce By 18%
Average Reduction In Cost Of 13%
Average Order Cycle Time Reduced From 14 To 10.3 days 13
WHY DO ORGANISATIONS CHOOSE TO KEEP LOGISTICS IN HOUSE?
? Organisation strategy is to develop logistics as a core business.
? ? ?
?
? ?
Downsizing of operations creates extra capacity. Does not make sense. Model is too complex/ savings are insignificant. Risk of choosing the wrong partner- savings not realised, service level failure, cultural fit. Difficult to trust or rely on an external party for success-low maturity of market. IT systems- would create too much dependency. LSP works with competitors.
Note: In the survey conducted only 42% of European companies that currently do not outsource logistics will consider it in the future.
14
FUTURE TRENDS
Current V's Projected Outsource Expenditure
2010-2012
2007
Latin America Asia Pacific Europe North America
0%
10%
20%
30%
40%
50%
60%
70%
80%
? LSP Information Technology is continually advancing to optimise global supply chains and customers see a large advantage and want to be part of this ? Industries not previously under intense pricing pressure may now need to ensure they are as cost competitive as possible. ? Consolidation of LSP organisations will continue to result in unprecedented capacity, efficiency and scope- again customers want to be part of this ? Collaboration is key- it makes the difference between a good and a great outsourcing relationship!!!!!!
15
doc_844851366.pptx