THIRD PARTY LOGISTICS (3PL)

THIRD PARTY LOGISTICS (3PL) Third Party Logistics (3PL) involves using external organizations to execute logistics activities that have traditionally been performed within an organization itself. Organizations that provide one or many of the following logistics services:  Transportation Management  Public/Contract Warehousing  Distribution Management  Freight Consolidation

THIRD PARTY LOGISTICS Services Provided Service CategoryBasic ServiceSpecific VAS TransportationInbound, OutboundTrack, Mode conversion WarehousingStorage, Facility Management Cross-dock, In transit merge, inventory control Information Technology Provide and Maintain advanced information systems Transportation Management systems, Warehousing Management Systems Reverse LogisticsHandle reverse flows Recycling, Customer returns, Repair/refurbish

THIRD PARTY LOGISTICS PROVIDERS Types  Transportation Based  Warehousing / Distribution Based  Financial Based  Forwarder Based

THIRD PARTY LOGISTICS Advantages Cost Reduction Elimination of infrastructure resources Improved efficiency, service and flexibility Risk Sharing Focus on Core Competency Better Cash Flows Freeing up resources Access to resources not available at one’s own organization

THIRD PARTY LOGISTICS Disadvantages × Loss of control over the logistics function × Impact on in-house workforce × More distance from clients – loss of personal touch × Discontinuity of services of a 3PL Provider × Differences of opinion / perception of the service level of 3PL Provider

THIRD PARTY LOGISTICS Growth Drivers in India Strong GDP growth Increased FDI Inflows Consolidation of raw materials from vendors Better Infrastructure Goods and Service Tax Logistics Parks Entry of MNC 3PL players in India Required focus on Core Competency

THIRD PARTY LOGISTICS The Future!  India spends around 14.4% of its GDP on logistics and transportation as compared to less than 8% spent by the other developing countries.  Indian logistics market is expected to grow at a CAGR of 12.17% by 2020 driven by the growth in the manufacturing, retail, FMCG and e-commerce sectors.  3PL logistics market in India is expected to be worth US$ billion by  The industry as a whole has moved from being just service provider to the position where they provide end to end supply chain solutions to their customers.

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