Group HR 1 Tata Motors GEMS – Operations Session 7 : 20 th of November 2012 Logistics and 3PL

Group HR Objectives of today’s session What are 3PL’s Why use them Tips for implementation of 3PL’s 4PL’s 2

Group HR 3PL Providers - Transportation based Transportation Based – Services extend beyond transportation to offer a comprehensive set of logistics offerings. – Leveraged 3PLs use assets of other firms. – Non-leveraged 3PLs use assets belonging solely to the parent firm. – Examples: Ryder, Schneider Logistics, FedEx Logistics, UPS Logistics 3

Group HR 3 PL Providers – Warehouse / Distribution based Warehouse/Distribution Based – Many have former warehouse and/or distribution experience. – Examples: DSC Logistics, USCO, Exel, Caterpillar Logistics, IBM 4

Group HR 3PL Providers – Forwarder Based Forwarder Based – Very independent middlemen with forwarder roles. – Non-asset owners that provide a wide range of logistics services. – Examples: AEI, Kuehne & Nagle, Fritz, Circle, C. H. Robinson, Hub Group 5

Group HR 3PL Providers – Financial based Financial Based – Provide freight payment and auditing, cost accounting and control, and tools for monitoring, booking, tracking, tracing, and managing inventory. – Examples: Cass Information Systems, CTC, GE Information Services, FleetBoston 6

Group HR Information Based – Significant growth and development in this category of Internet-based, business-to-business, electronic markets for transportation and logistics services. – Examples: Transplace, Nistevo 3PL Providers – Information based 7

Group HR Logistics? Logistics: Managing the flow of information and goods inbound from suppliers and outbound to customers. Why be good at this? Core competency? 8

Group HR Why Use 3PL’s? Save time – Don’t need to invest in: Trucks Training Development Help expand – New markets – International No roads 9

Group HR Why Use Cont. Narrow your focus – Allows you to focus on your strengths – Don’t get spread too thin Reach more customers more effectively – Can ensure delivery times – can help a company run leaner 10

Group HR Management Focus Furthering your company Consider potential benefits and drawbacks 3pl’s can increase profitability Can you be a 3PL to someone else? 11

Group HR Levels of Outsourcing Transactional Outsourcing: Based on transactions, with no long term contracts and no bonding between the 3PL and the outsourcing company. Tactical Outsourcing: Outsourcing on a long term basis with negotiated contacts and integrated IT systems to facilitate free information flow and create supply chain visibility. Strategic Outsourcing: Based on long-term relationships with successful outcomes, 3PL companies become partners in supply chain management and establish transactional transparency. 12

Group HR 3PL Defined Can be ambiguous as there are many definitions – Some say “all or a significant part” – Some say “at least one part” Best definition is probably a combination: – Businesses that provide one or many of the following logistics services: Transportation Management Public/Contract Warehousing Distribution Management Freight Consolidation 13

Group HR How is a 3PL Differentiated From a Transportation Provider? Transportation provider gets product from point A to point B Could be considered a 3PL Just one function of logistics 3PL provider assists in multiple functions 14

Group HR Successful Implementation of 3PL Why you want to select the right provider the first time – Only about 65% of companies believe their provider is doing a “good” job. – 55% of logistics outsourcing contracts end in 3-5 years – The source had a list of 14 key tips for success, but we are going to focus on the 5 most important issues. 15

Group HR Tips for Successful Implementation 1) Have an outsourcing strategy. Know what your outsourcing strategy is. It needs to be well thought out and measured against in house solutions and capabilities. SWOT analysis. As a company you should understand the strengths, weaknesses, opportunities and threats of outsourcing logistics, rather than keeping them in house. 2) Do your homework. Do a comprehensive study - Clearly document advantages, challenges, costs and benefits. Document expectations - Set down expectations in clear terms and include current costs. 16

Group HR Tips Continued… 3)Create a robust selection process. Invite companies in to give a formal presentation without giving requirements. This can help document their strengths and weaknesses. Make a site visit to the 3PL, and talk with its existing customer. 4) Measure and review performance Have a efficient and accurate measurement system. - Qualitative measures that focus on effectiveness and quantitative measures that focus on efficient utilization. Have an efficient costing system - This will help you to understand the costs involved in outsourcing. “Are we making money doing this?” 17

Group HR Tips Continued… 5) Create an Implementation Strategy Create a project plan road map - Be clear who does what, create a project management team with members from both organizations and review progress vs. planned milestones. 6) Nurture the Relationship Both Parties must nurture the relationship to make outsourcing successful. - Create mutual trust, respect and a sense of integrity. 18

Group HR 4PL Providers Manage and direct the activities of multiple 3PLs, serving as an integrator Refinement on the idea of 3PLs 4PLs are not asset based like 3PLs Assembles and manages the resources, capabilities, and technology of its own organization and other organizations to design, build and run comprehensive supply chain solutions 19

Group HR 20 THANK YOU SEE YOU ON November 27th SAME TIME, SAME PLACE