Chap. 2 - Typologies and Markets of LS Flashcards
What are the possible classifications of Logistics Service Systems and Logistics Service Providers?
A classification is possible….
- According to the number and variability of shippers and/or consignees (open vs. dedicated and module vs. network based)
- According to the structure of relations between sources and sinks in the logistics service network (point-to-point, mesh, Hub-and-Spoke)
- According to the degree of integration and customization
(1 PL, 2 PL, 3 PL,…) - According to shipment sizes resp. weight classes (CEP, FTL, LTL,…)
How would you characterize the main differences between an “open” vs. a “closed” logistics system?
In an open logistics service system demand is „derived“ dependent, but
- …stochastic, not to be controlled by the provider
- …often „out of balance“ due to the geographical distribution of sources and sinks …
- …not protected against the inevitability of „rotating“ transport equipment
The more „open“ the system, the more heterogeneous the client population, the less predictable the demand.
The more „closed (dedicated, individualized)“ the system, the harder to apply „industrial“ concepts of standardization and mass-production (EoS, price?; responsibilities?)
What is a “dedicated” logistics system?
Please name the important characteristics and examples!
A “dedicated” logistics system is e.g. a transportation system, which is “closed” an customized for a specific “single-user”.
An example would be in passenger transportation the use of a private owned car as a transport system or, in commercial freight transportation, a specialized transport by a transportation company for concert tour-equipment.
What is a “multi-user-warehouse”?
What is the logistics concept behind this construction?
Multi-Client warehousing (or multi-user warehousing) is the outsourced management of warehousing operations to a facility that is typically shared with multiple clients, but includes value-added services such as kitting, bulk packing, cross-docking and more.
Such warehouses are often operated by LSPs as a mean to balance the fluctuating demand of their clients. The goal is to maximize the available storage capacity of a warehouse by combining clients with high demand peaks with clients with lower demand curves at the same time.
What are the most important characteristics of “private haulage” transports?
- The goods transported are owned by the transporting company or they should be sold, bought, rented, leased, produced etc. by the transporting company
- The transportation is a delivery of goods to or from the company
- The vehicles are driven by own personnel
- Transportation is not the core competence of the company
What are the most important characteristics of “commercial freight” transports?
- Commercial freight needs allowance:
- dependable
- financial performance
- qualified
- Commercial freight companies need insurance contracts and other means for financial risk protection
- Commercial freight is all freight transportation, which is not private haulage (e.g. transportation of construction goods to the construction site, in which the transporting company isn’t involved in like a craftsman)
What are the advantages of “private haulage”?
The biggest advantages of a “private haulage” with own assets and drivers are:
- Guaranteed capacity at all times because of own assets and drivers
- More direct impact on customer service, because of higher controlling on value-adding service processes and personnel qualification
- The ability to design a truck fleet according to the specific needs today and for the future developments of the market
- Better recognition of the brand and possibility to use the own equipment for marketing purposes
- Higher flexibility in transport planning and additional tasks for the drivers
What are the disadvantages of “private haulage”?
The main disadvantages of a “private haulage” truck fleet are:
- Higher costs because of more fix-cost investments in assets, maintenance and drivers
- Probably expensive training and high-tech equipment consumes time and money
- Driver recruitment gets more and more difficult
- Increasing complexity in planning because of more and more regulations dealing with driving time and protection of equipment/labor-force
Please name different geographical structures of logistics service networks and corresponding transportation tasks!
Different geographical structures and corresponding transportation tasks are:
- Point-to-Point transports between a dedicated source and a dedicated sink. This is often the transport task for an FTL shipment.
- Point-to-Area (few-to-many points) transports between a dedicated source and a lot of sinks in an area/region. This kind of geographical structure corresponds to the distribution from a distribution center to the final consignees - like in the Amazon model for the last mile.
- Area-to-Area (many-to-many points) transports between a lot of sources and a lot of sinks. This kind of structure needs a pre-haul consolidation for the main-haul (FTL-) transport and a post-haul de-consolidation for the final distribution. An example would be the transportation task of a CEP-provider.
What design options do you know for logistics networks with an “Area-to-Area”-transport task?
An Area-to-Area structure needs networks that have the possibility to connect a lot of sources and a lot of sinks. Such structures could be:
- Mesh-Systems in which all sources are connected directly with all sinks. This is only efficient if the transport volume between the sources and sinks maximizes the capacity usage of the transport mean in both directions (high parity of transports).
- Hub-and-Spoke-Systems in which the transport has to be split in a pre- and a post-haul transport using depots and hubs as transhipment points for a higher degree of consolidation in both directions.
What are the characteristics of an LLP resp. 4PL-provider?
Lead logistics service providers or 4PL providers:
- DEFINE processes and MANAGE the provision of complex logistics services
- SELECT and MANAGE LSPs to execute, on behalf of the client, transparent and auditable
- FIRM COMMITMENT to choose best-in-class execution partners,
- FINANCED by a management fee and / or gain share
What are the weight classes for CEP, General LTL and Part Load/Truck Load?
The weight segments for ONE shipment are
- For CEP between 0-31.5 kg (B2C) resp. 0-70 kg (B2B)
- For LTL between 50 kg - 2,500 kg
- For Part Load / Truck Load between 2,500 kg - 25,000 kg (often FTL is based on contracts around 8,500 kg)
Why are LSPs called “Integrators”? Please define the term!
Integrators are vertically integrated express companies that provide time-definite, door-to-door services and, for that purpose, perform their own pick-up and delivery services, operate their own fleet of aircraft and trucks and tie it all together with advanced information and communication technologies.
This definition contains the most important characteristics of integrators, namely:
- integrated door-to-door service;
- own transport assets;
- strongly developed ICT-skills (e.g. tracking and tracing)
Reference: Onghena, E. (2008): The Integrator Market. In: Proceedings of the third international conference on research in air transportation, 01.-04.06. 2008. p. 490-491.
Please explain in brief the network characteristics of Logistics Service Providers!
- Networks of LSPs are multi-directional
→ Possibility to plan round-trips for empties or loading units - Networks of LSPs are based on a “Many-To-Many” architecture
→ The need for high volume in in-/outbound - The network architecture of LSPs enables the operation of “round-trip” transports → Problem of backloads
- Transports are subdivided at least two times (pre-haul, long-haul, post-haul) → additional handling times and costs
- Networks of LSPs are based on multi-user concepts
→ The problem of the heterogeneous object spectrum - Networks of LSPs are multi-client oriented
→ Challenges to manage the contact to shipper / receiver - Networks of LSP are “stockless” – and have therefore not the possibility to compensate demand fluctuations → sensitivity about seasonal fluctuations
- Networks of LSPs are designed according to the “pull-principle” which determines the latest starting and arrival times at the nodes → The need for standards restricts flexibility
- Networks of LSPs are urged to compensate demand fluctuations by a mix of over-capacity and time-buffers → Constraints are managed by FIFO-principle
- Shipments in the networks of LSPs have a definite shipper-receiver constellation → Reduced possibility of cross-docking concepts
How would you characterize the market and business model of “Network Based Services”?
- Saturated markets
- Priced based competition because of standardized service products
- Fixed costs intensive business with a tendency for short term direct costing
- Low calculation risks (high share of SOPs)
- Short-term contracts, because of the low costs of changing the LSPs
- High dependency on EoS in transport
- Cost-leader strategies; “Critical mass” as a market entry barrier
- The pressure of market consolidation to offer pan European networks
