Six Sigma – Introduction to Analyze Phase
The Six Sigma philosophy believes in statistical facts. There is no room for error and therefore there is no room for guessing or judgement. Therefore the few inputs that were guessed for being the critical ones in the earlier stages of define and measure now need to be confirmed with statistical analysis. The purpose of […]
Enterprise Resource Planning (ERP) – Meaning, its Need and Advantages
There are various ways in defining an Enterprise Resource Planning System. This is how it has been defined by American Inventory and Production Control System (APICS) dictionary: “Enterprise Resource Planning: An accounting oriented information system for identifying and planning the enterprise-wide resources to make, ship and account for customer orders.” Again in Internet encyclopedia, it […]
How to Effectively Use Five Whys?
Although the 5 Why’s is an elementary tool when it comes to six sigma methodology, it is nonetheless important. Since there is a high degree of subjectivity involved with the usage of the tool, it is suggested that it be used only by a team of cross functional experts to obtain best results. Here is […]
Contract Logistics RFQ Process
Outsourcing of core Logistics function of Warehousing is fast becoming popular not only for Multi National Companies with global operations but all organizations in medium and small sector too. Outsourcing may fall into two categories. One category would be the flow through warehouses, merging and distribution centers that are but a consolidation points in the […]
The German Small and Medium Enterprises (SME) Story
Germany has the second largest exports in the world. They are second only to China. This is remarkable given the fact that Germany is a first world country with very high labor costs. The Chinese pay slave wages to their workers and make them work for longer hours. On the other hand, the Germans pay […]
Procurement Logistics, Manufacturing Logistics and Finished Goods Logistics functions are managed by different independent departments in a company. Though the duties of the departments involve common activities like transportation etc., however, the processes and nature of logistics functions are specific to each function besides the requirements and sensitivities of delivery times, schedules, etc.
With the emerging trends and availability of third party logistics providers has pushed the companies to adapt the practice of outsourcing all supply chain components and logistics functions termed as noncore functions to their logistics providers.
In this topic we shall examine the role and functions of Third Party Service Providers a little closely to understand how they make a difference to the supply chain activities.
Third Party Logistics field is a multi-layer or multi-tier integration of various players who have the niche segment expertise to manage any one or many functions of Logistics. In any Logistics Contract or Supply Chain Network, you will not find one single service provider being able to manage the entire chain of activities. You can have a lead logistics service provider who will further tie up with and manage other service providers to provide a single window service to the client organization.
At all levels, a lot of components of logistics get outsourced by these service providers to contractors and local players. Like for example in a contract logistics facility, the third party logistics provider who has secured the contract may not own and operate the facility himself. Labor is often outsourced along with other operations like Loading/ Unloading, Yard Management, Fleet Management, etc.
Logistics further also works with the concept of the 4Party Logistics providers in the market who take up large projects spanning huge volumes and multiple locations and services as the lead service providers. They draw up the operating plans, requirements, and specifications for the services and, in turn, choose the best service provider in each segment or function for each of the locations and thus manage to provide the entire gamut of logistics services to the customer.
Normally in Logistics, the lead players front ending the businesses would be the Freight Forwarders, Transport Companies (generally in long haul segment only) and Warehousing Service Providers. In many cases Freight Forwards own and manage warehousing facilities too.
Freight forwarders are those agencies who consolidate the cargo and book the cargo for onward freight using an airline or a shipping line or use ground transportation network including rail services wherever required.
Freight forwarders do not own any mode of transportation services. They book the space with airlines and shipping lines and negotiate the freight. They play the key role of providing origin and destination services coupled with single window client services using other third party service providers. Most of them also have in-house customs clearance division to support ground logistics operations.
Without the support of the freight forwarders who are multinational companies capable of managing your supply chain with ability to provide services in any country, any location across the globe, supply chain would not be able to function efficiently, for it is impossible for companies to coordinate and manage each leg and every activity in so many locations and manage so many vendors and interfaces.
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