Service Provider Logistics
Week 1:
Third party logistics:
It is a company’s use of other businesses to perform parts of its operations or other
business functions
Third-party logistics providers typically specialize in integrated operation,
warehousing and transportation services
Outsourcing:
Buying goods or services rather than producing goods or performing services within
the organization
To reduce overhead, gain flexibility, take advantage of supplier’s expertise
A 3PL relationship is a form of business process outsourcing focused on the strategic
operation of the client’s supply chain
o Enterprises may contract with a number of 3PL’s to manage specific traffic
segments or customer bases
o Or they can outsource the entire supply chain
Reasons to outsource
o Transfer of risk
o Cost saving
o Access to expertise
o Focus on core processes
o Capacity management
o Technology know-how
o Saving of valuable time
What can be outsourced
o Entire functions
HR
IT
Facilities
Real estate management
Accounting
o Elements of functions
Marketing department
Tele marketing
Web development
Market research
Operations
Computer aided design (CAD)
Drafting
Manufacturing
Engineering
Customer support
Call center functions
Offshoring
, Moving activities to another country
Risks and disadvantages of outsourcing
o Financial costs
May have higher cost due to cost and difficulty in managing suppliers
Transaction costs
Conducting negotiations
Managing and tendering process
Oversight of supplier performance
Loss of control
Possible loss in continuity of supply or quality control should
supplier not perform as expected
o Industrial action
o Bankruptcy
o Not able to supply support
Loss of competitive knowledge
Opens opportunities for competitors
Companies lose ability to introduce new designs based on own
agenda
In using several suppliers may prevent the development of
new insights, innovations, and solutions that usually require
cross functional teamwork
o Conflicting objectives
Increased flexibility (adjust production rates as requested) for buyer,
hence outsourcing; supplier wants long term and stable commitment
o Increase in risk
Loss of in-house expertise that might never be regained
Losing experts may make it difficult to manage contract effectively
May have commercial secrecy and confidentiality with suppliers as
they become more aware of customers’ operations and performance
Balancing act:
Prioritizing
o What is needed, when and how much
Capacity
o Capacity to produce what is needed at the right time
How can differences between priorities and capabilities best be resolved?
Sales and operations plan:
Management sets objectives, the strategic business plan
o Realise the strategic plan and objectives and to give feedback to revise the
strategy
Based on product and marketing plans, production and sales plans are drawn up:
Sales and Operations Plan
This indicated the total volume that should be generated
o The quantities to be produced each month per product family
o Different units of measure can be used
Multi-disciplinary
, o Sales, marketing, R&D, production maintenance, procurement, HRM and
finance
Provides management visibility of production, inventory and backlogs
Who does what?
o .
Sales in airline terms
o PAX capacity sold
o Cargo bookings
Operation plan in airline terms
o Passenger flight schedule
o Bags forecast
o Cargo flight schedule
Relation between the SOP, MPS, MRP and CRP:
SOP
o Sales and Operations Plan
MPS
o Master Production Schedule
MRP
o Materials Requirement Plan
The results from the MPS form the gross
requirements for the MRP-I schedule
CPR
o Capacity Requirements Plan
Schedule drawn up for the planned capacity
Stakeholders:
Assessing operational performance: judge impact an operation has on its
stakeholders
Stakeholders
o People and groups with legitimate interest in operation’s activities
Internal stakeholders
Employees
External stakeholders
Customers
Week 1:
Third party logistics:
It is a company’s use of other businesses to perform parts of its operations or other
business functions
Third-party logistics providers typically specialize in integrated operation,
warehousing and transportation services
Outsourcing:
Buying goods or services rather than producing goods or performing services within
the organization
To reduce overhead, gain flexibility, take advantage of supplier’s expertise
A 3PL relationship is a form of business process outsourcing focused on the strategic
operation of the client’s supply chain
o Enterprises may contract with a number of 3PL’s to manage specific traffic
segments or customer bases
o Or they can outsource the entire supply chain
Reasons to outsource
o Transfer of risk
o Cost saving
o Access to expertise
o Focus on core processes
o Capacity management
o Technology know-how
o Saving of valuable time
What can be outsourced
o Entire functions
HR
IT
Facilities
Real estate management
Accounting
o Elements of functions
Marketing department
Tele marketing
Web development
Market research
Operations
Computer aided design (CAD)
Drafting
Manufacturing
Engineering
Customer support
Call center functions
Offshoring
, Moving activities to another country
Risks and disadvantages of outsourcing
o Financial costs
May have higher cost due to cost and difficulty in managing suppliers
Transaction costs
Conducting negotiations
Managing and tendering process
Oversight of supplier performance
Loss of control
Possible loss in continuity of supply or quality control should
supplier not perform as expected
o Industrial action
o Bankruptcy
o Not able to supply support
Loss of competitive knowledge
Opens opportunities for competitors
Companies lose ability to introduce new designs based on own
agenda
In using several suppliers may prevent the development of
new insights, innovations, and solutions that usually require
cross functional teamwork
o Conflicting objectives
Increased flexibility (adjust production rates as requested) for buyer,
hence outsourcing; supplier wants long term and stable commitment
o Increase in risk
Loss of in-house expertise that might never be regained
Losing experts may make it difficult to manage contract effectively
May have commercial secrecy and confidentiality with suppliers as
they become more aware of customers’ operations and performance
Balancing act:
Prioritizing
o What is needed, when and how much
Capacity
o Capacity to produce what is needed at the right time
How can differences between priorities and capabilities best be resolved?
Sales and operations plan:
Management sets objectives, the strategic business plan
o Realise the strategic plan and objectives and to give feedback to revise the
strategy
Based on product and marketing plans, production and sales plans are drawn up:
Sales and Operations Plan
This indicated the total volume that should be generated
o The quantities to be produced each month per product family
o Different units of measure can be used
Multi-disciplinary
, o Sales, marketing, R&D, production maintenance, procurement, HRM and
finance
Provides management visibility of production, inventory and backlogs
Who does what?
o .
Sales in airline terms
o PAX capacity sold
o Cargo bookings
Operation plan in airline terms
o Passenger flight schedule
o Bags forecast
o Cargo flight schedule
Relation between the SOP, MPS, MRP and CRP:
SOP
o Sales and Operations Plan
MPS
o Master Production Schedule
MRP
o Materials Requirement Plan
The results from the MPS form the gross
requirements for the MRP-I schedule
CPR
o Capacity Requirements Plan
Schedule drawn up for the planned capacity
Stakeholders:
Assessing operational performance: judge impact an operation has on its
stakeholders
Stakeholders
o People and groups with legitimate interest in operation’s activities
Internal stakeholders
Employees
External stakeholders
Customers
