Week 8 - International Logistics, Global 3PL-4PL & Sourcing International Transport Flashcards
What is a 3PL? (2) (Manzini et al, 2007)
• Stands for third party logistics provider
• Is a firm that provides multiple logistics services for use by customers
What is a 4PL? (Huang, Ren, Lee, Wang, Kuang, & Shi, 2016)
• Stands for a fourth party logistics provider
• Is defined as an integrator that assembles the resources, capabilities and technologies of its and other organisations to design, build, and run comprehensive supply chain solutions
characteristics of 3PL services (4)
• Intangibility
• Inconsistency/heterogeneity
• Inventory/perishability
• Inseparability
What is a meant by ‘intangibility’ as a characteristics of 3PL services? (3)
• Many parts of the service cannot be seen, felt, tasted, heard, smelt, experienced before/during/after purchase
• Lack of physical substance
• Uncertainty of evaluation prior to purchase leads to uncertainty/risk
Implications of intangibility in 3PL services (6)
• Services cannot be easily patented
• The benefits of services cannot be as easily communicated
• It is more difficult for the customer to evaluate competing services
• Perceptions of high risk
• Pricing is difficult
• Price often used a basis for assessing quality
What is a meant by ‘inseparability’ as a characteristics of 3PL services? (4)
• The service is produced and consumed at the same time
• The service cannot be provided until it is already sold
• The service does not exist until used
• Often the customer is present at the time of production
Implications of inseparability in 3PL services (5)
• Customers participate in and affect the transaction
• Customers affect each other
• Employees affect the service outcome
• Decentralisation may be essential
• Mass production is difficult
What is a meant by ‘inventory/perishability’ as a characteristics of 3PL services? (3)
• Services cannot be saved, stored or returned for later sale/use
• If the service is not used is lost forever
• A problem when demand fluctuates
Implications of inventory/perishability in 3PL services (4)
• It is difficult to synchronise supply and demand
• Missed opportunity for sale
• Services cannot be returned
• Service failure
What is a meant by ‘inconsistency/heterogeneity’ as a characteristics of 3PL services? (3)
• As services are performances, often produced by people, thus no two services will be precisely alike
• Inevitable as each service encounter is unique and is difficult to “blueprint”/map each one
• Day to day quality often depends on who provides the service as well as when, where and how - difficult to control
Implications of inconsistency/heterogeneity in 3PL services (5)
(Service delivery, customer satisfaction, service quality)
• Service delivery depends on employee and customer actions
• Customer satisfaction depends on employee and customer actions and interactions
• Service quality depends on many uncontrollable factors
• Difficulty in presenting an image of consistent quality
• There is often no sure knowledge that the service delivered matches what was planned and promoted
What is the main differences between purchasing products and purchasing services
Purchasing services is more risky with further investement and resources needed where success is much more likely through good supplier relationships
Which two needs does 3PL fulfill?
• Improving service levels - by improving flexibility and inventory management
• Reducing costs
5 Examples of 3PL services
• Freight operations
• Storage
• Order preparation
• Final delivery
• Pre and post assemblies
Benefits of using third party logistics (3PL) (4)
• Quickly penetrate new markets
• Reduce the inherent financial investments risks related with owing logistics assets like trucks and warehouses
• Coordinate producers and distributors within a global approach
• Access new technologies and innovative solutions e.g data and telecommunications technologies, sophisticated warehouse operations, or new delivery options
What are the three types of risks associated with 3PL? (3)
• Strategic risk
• Commercial risk
• Management risk
What is the strategic risk with using 3PL (2)
• A producer having a competitive advantage in its logistics operations (I.e the ability to deliver goods to all major European cities in less than two hours) runs the risk of losing this advantage by working with a 3PL firm
• The service firm might offer the same service to the manufacturer’s competitor with the aim of covering investment costs
What is the commercial risk with using 3PL
The manufacturer’s image will inevitably be linked to that of the service firm
What is the management risk of using 3PL?
Costs and the real level of service provided must be visible for both the producer and the service provider
Things to consider when thinking of using 3PL (4)
• Company needs - deciding whether or not logistics is a core competence or not
• Intangible values - are there measurable advantages
• Management commitment
• Service provider capacity
What are the different types of transportation? (4)
• Ocean
• Air
• Land
• Multimodal
3 Characteristics of ocean transportation
• Around 80% of international trade volume is moved from ocean
• Asia is the key to ocean shipment (50% of the total ocean shipment)
• Ocean shipment is well regulated and structured
Recent trend of ocean transportation (5)
• New global design in ocean transportation
• Energy security, oil prices and transport costs
• The need for curing carbon emissions
• Environmental sustainability and CSR
• Maritime piracy
4 Characteristics of air transport
• Expensive
• Rapid
• Reliable
• Small, time sensitive & high value-density goods
