Coyle chapter 4 powerpoint slides

Chapter 4 Supply Chain RelationshipsLearning Objectives After reading this chapter, you should be able to do the following:  Understand the types of supply chain relationships and their

Chapter 4 Supply Chain Relationships

Learning Objectives

After reading this chapter, you should be able to do the following:

 Understand the types of supply chain relationships and their importance

 Describe a process model that will facilitate the development and implementation of successful supply chain relationships

 Recognize the importance of “collaborative” supply chain relationships

 Define what is meant by third-party logistics (3PL) and know what types of firms provide 3PL services

Learning Objectives

After reading this chapter, you should be able to do the following:

 Know what types of 3PL services are used by client/customer firms and what types of 3PL providers are used

 Discuss the role and relevance of information technology-based services to 3PLs and their clients/customers

 Know the extent to which customers are satisfied with 3PL

services and identify where improvement may be needed

 Understand some of the likely future directions for outsourced logistics services

 Range of relationship types

 Strategic:

 represents an alternative that may imply even greater involvement than the partnership or strategic alliance

Figure 4-1 Relationship Perspectives

Transactional

Vendor Partner Strategic Alliance

R e l a t i o n a l

Regardless of form, relationships may differ in numerous ways A partial list of these differences follows:

Figure 4-3

What Does It Take to Have an Area of Core Competency?

defined as “compelling reasons to partner”; all parties

“must believe that they will receive significant benefits in one or more areas and that these benefits would not be possible without a partnership”

Facilitators

are defined as “supportive corporate environmental

factors that enhance partnership growth and

development”; As such, they are the factors that, if

present, can help to ensure the success of the

relationship

Figure 4-4 Implementation and Continuous Improvement

Ray A Mundy, C John Langley Jr., and Brian J Gibson, Continuous Improvement in Third Party Logistics, (2001).

 Companies leverage each other on an operational

basis and creates a synergistic business environment

in which the sum of the parts is greater than the

whole

Seven Immutable Laws of Collaborative Logistics

 Collaborative Logistics Networks Must Support:

 Real and recognized benefits to all members

 Dynamic creation, measurement, and evolution of collaborative partnerships

 Co-buyer and co-seller relationships

 Flexibility and security

 Collaboration across all stages of business process integration

 Open integration with other services

 Collaboration around essential logistics flows

Definition of Third-Party Logistics

 Essentially, a third-party-logistics firm may be defined as an

external supplier that performs all or part of a company’s

 Among these, multiple logistics activities are included, those that are included are “integrated” or managed together, and they pro-vide “solutions” to logistics/supply chain problems

Figure 4-6 3PL Logistics Market Turnover Growth (US $Billion)

Source: 2005 Tenth Annual 3PL Study, Georgia Tech and Cap Gemini LLC Used with permission

Figure 4-11Fourth-PartyTM TM Logistics*

+ Greater Functional Integration + Broader Operational Autonomy

Source: Accenture, Inc Used with permission *TM Registered trademark of Accenture, Inc.

Figure 4-12 Current vs Projected Logistics Expenditures Directed to Outsourcing

Table 4-9 Future 3PL Industry Trends

 Continued expansion, acquisition

and consolidation of 3PL industry

 Expansion of global markets and

needed services

 Continued broadening of service

offerings across supply chain and

broad-based business process

outsourcing

 Two-tiered relationship models

(strategic and tactical)

 Growing range of “strategic” services offered by 3PLs and 4PLs

 IT Capabilities to become an even greater differentiator

 Increased efforts to update, enhance, and improve 3PL provider-user relationships

 Emphasis on relationship reinvention, mechanisms for continual improvement, and solution innovation

 Collaborative relationships, both vertical and horizontal, have been identified

as highly useful to the achievement of long-term supply chain objectives The “Seven Immutable Laws of Collaborative Logistics” provide a

framework for the development of effective supply chain relationships.

Summary (cont.)

 Third-party logistics providers may be thought of as an “external supplier that performs all or part of a company’s logistics functions.” It is desirable that these suppliers provide multiple services, and that these services are integrated in the way they are managed and delivered.

 The several types of 3PLs are transportation-based, based, forwarder-based, financial-based, and information-based suppliers.

warehouse/distribution- Based on the results of a comprehensive study of users of 3PL services in the United States, over 70 percent of the firms studied are, to some extent, users of 3PL services

 User experience suggests a broad range of 3PL services utilized; the most prevalent are warehousing, outbound transportation, and freight bill

payment and auditing.

Summary (cont.)

 While nonusers of 3PL services have their reasons to justify their decision, these same reasons are sometimes cited by users as

justification for using a 3PL

 Customers have significant IT-based requirements of their 3PL

providers, and they feel that the 3PLs are attaching a priority to

respond to these requirements

 Approximately two-thirds of the customers suggest 3PL involvement

in their global supply chain activities

 Although most customers indicate satisfaction with existing 3PL

services, there is no shortage of suggestions for improvement