A key to successful corporation with third-party logistics provider is organized steps that have to be taken in order to select and communicate with potential vendors. There are few models and techniques which help to choose a 3PL. Jharkharia and Shankar (2007) have used the analytic network process (ANP), but Jayanthi, Kocha & Sinha (1999) and Parkan and Wu (1998) have used operation competitiveness rating (OCRA) when choosing 3PL. Yung, Selen, Sum & Huo (2006) have used analysis of variance (ANOVA), which helps to measure financial performance of 3PL, Min and Joo (2006) have used data envelopment analysis (DEA), which benchmarks the efficiency. All models and methods mentioned above are mathematical; therefore do not comply with Rotterdam Business School Master in Logistics Management studies, which mean they cannot be used in this thesis. Steps needed to take when selecting and evaluating suppliers (Handfield, Monczka, Giunipero & Patterson, 2011): • Identify supplier evaluation category; • Assign a weight to each evaluation category; • Identify and weigh sub-categories; • Define scoring system for categories and sub-categories; • Evaluate supplier directly; • Review evaluation results and make selection decision; • Review and improve supplier performance continuously. Each step has to be taken carefully and considerately. The more precise selection process goes the biggest possibility to choose the most appropriate 3PL for the company needs. These authors have made models and criteria for choosing supplier and 3PL, but all methods can be applied also to choosing 3PL, as selection process and criteria can be changed and adapted. According to Cross (1995) good 3PL selection decisions may lead to lower costs and in... ... middle of paper ... ...rom my friend who works in logistics field and has access to logistics companies in Baltic States. E-mails were sent to 14 logistics companies asking few questions about their experience and opinions about shipping to Russia, questions can be seen in appendix 6, received answers only from 2 people whom I know personally and have worked together previously, which can be seen in appendix 6. E-mail was sent to Embassy of Russia in the Netherlands asking also about logistics to Russia and asking if could arrange a meeting, after not receiving an answer, phone calls were made and response was to wait for written answer. It was impossible to contact Russian shipping companies and clients because they do not have webpages or their legal name and brand name is different. I got a chance to contact one of them afterall with an e-mail in Russian, did not receive any answer.
Selecting the right procurement route can have a direct impact on the level of success to a project. There are various items that must be factored before making a decision including: size of the project,
Understanding the needed supply chain capabilities before one sets out to operate in a global market place is a good idea, before trying to find and fill the holes in the dike are needed. Implementing a strategic plan that can be rapidly duplicated throughout the organization, strengthen supplier relationships, set quality expectations for suppliers by using a supplier performance score card to measure compliance. Optimize logistics and manufacturing capabilities, synchronize business units using information technology, and in order to drive organizational efficiencies create a culture of action. Set goals for a sourcing strategy. This means internal, or possibly external, personnel who can build new capabilities seamlessly. The following areas of performance can help identify the highest priorities as follows:
Based on the customers’ needs and market conditions, third party logistics provider normally provide the integrated operation, warehousing and transportation services that can be customized and scaled. For instance, the different requirements for delivery services and the different demands for products and materials can be scaled and customized for different customers. 3PL targets a particular function in supply management, such as warehousing, transportation, or raw material provision. (O'Byrne, 2011)
Coyle, J., Langley, C., Gibson, B., Novack, R. and Bardi, E. (2008).Supply Chain Management: A Logistics Perspective. 8th ed. Cengage Learning, p.366.
Organisations that are having a hard time in their logistics functions because of increasing competition in the market, high customer service expectation set by a company’s cooperate strategies has shaped for the requirement of outsourced logistics service. Organisations decide to use 3pl so that they have a wider access to enter new and existing markets expansions, to assess market prospects for production an services, to reduce supply chain costs and have expertise to exploit new trends in developing technological advances in supply chain in supply chain management, the need to know whether their product has competitive advantage. Bolumole (2001).
As organizations move goods from source to place of utilization they enjoy utilities of place and time.According to Branch (2009) firms can choose one or combine several modes of transport to effectively move materials or products for scheduled production and smooth operation. Good transportation facilitates supply chain efficiency by delivering goods to the ultimate customer securely and in an economical way. Inbound transportation should plan for expected lead times to best manage delivery timelines. Baker (2010) states that organizations should have shipment visibility while managing inbound transportation. Additionally they should balance trade-off between imports costs and savings made at destination. This means keen focus on landed costs, customs clearance, shipments lead times and inventory holding costs. Supply chain performance is impacted by transport costs, speed and product delivery consistency. To achieve competitive performance Organizations must move materials in the right order, right quantity, right quality and right time (Bowersox,
When selecting one of these offers Alex has to take into consideration transportation costs as well as product costs. He must also make sure that the company he plans to do business with is financially stable, and has good reputation and experience in the market. He needs to be aware of how much inventory carrying costs each offer would create. A good demand forecast and analyzing expected transit times are also essential in order to determine approximately how much inventory is
There are four approaches that an organization can choose from to analyze logistics systems. These are namely: materials management versus physical distributions, cost centers, nodes and links, and logistics channels.
The third party logistics still have immense demand in the market for producer and other shipping companies due to strong competition between simple logistics firms and dedicated firms. Further there are many reasons for 3PL companies to move towards 4PL market. Suppose increase profitability/returns, competition, value creation, and value added services, low capital investment, customization, and core competencies. Innovation, construct relationship between provider and client, information shearing and performance.
Zanjirani F., Rezapour, S. & Kardar, L. (2011) Logistics operations and management concepts and models, 1st ed. London ; Elsevier.
(2014) deduced that procurement performance can be assessed by focusing ondelivery,flexibility, quality, cost and technology. Optimal performance attainment is dependent onhow current suppliers`relationships aremanaged so asto ensure constant availability of needed quality supplies at the organization. This will ensure that sourced materials are indeed procured at the right costand atthe right time. Procurement performancestrives toenable improvements in the procurement process at the organizationso as to improve on qualitydelivery of firm products and servicesatleast possible time and
Purchasing process is the process of buying the right material, at the right quantity, at the right moment, at the right price and from the right supplier ( Heinritz et al, 1986). It can also be defined as the way an organisation behaves towards it suppliers, as suppliers are the pillar of strength for all organisations at large. According to We...
Hum,Sin Hoon (2000), “A Hayes-Wheelwright framework approach for strategic management of thrid party logistics services”,Integrated Manufacturing Systems,Vol .11/2,pp 132-137
Since mid-90, technology changed procedures for evaluating supplier’s relationships. Before technology, Suppliers relationships used to be an isolated activity disconnected from others companies’ activities highly influenced by conflict of interest. But when technology started to provide accurate data, companies begin the focus on inventory management activities increasing the importance of procurements departments’ evaluation as a way to reduce supply chain cost. With data, procurement can evaluate suppliers and their benefits for the company. In today business environment, the company dilemma is evaluating if the supply chain should be vertical, full outsourced of mix, considering industry maturity impact and price competition (Chopra & Meindl, 2007; Slack & Lewis, 2011).
Step 6, evaluation and selection of a supplier: the evaluation stage of the process could involve the p...