1. Transportation Strategy SCMN 4780 1 Parcel Industry Overview Jerry Hempstead Inland Water Observations Comments Issues

2. Transportation Strategy SCMN 4780 2 KIA Motors Logistics Program Mercedes Hernandez Garner Inland Water Observations Comments Issues

3. Transportation Strategy SCMN 4780 3 Wiring Harness Decision Inland Water Assumptions Calculations Recommendation

4. Transportation Strategy SCMN 4780 4 Third Party Logistics (3PL) 3PL

5. Transportation Strategy SCMN 4780 5 3PL Industry Objective Inland Water Third Party Logistics Firm Shipper Logistics Service Provider

6. Transportation Strategy SCMN 4780 6 THIRD PARTY LOGISTICS is an industry to which a shipper (owner of transported goods) outsources various elements of the supply chain to perform some / all logistics management functions including inbound freight, customs, warehousing, order fulfillment, distribution and outbound freight. Initiated in 1980s when companies began looking for opportunities to improver logistics performance. FedEx drew attention to 3PL service by offering JIT delivery FedEx success in 3PL marketplace opened it up to competition Initially primarily domestic coverage, 3PL industry is now global in character with a revenues approaching $150 billion in NA Third Party Logistics Defined Inland Water

7. Transportation Strategy SCMN 4780 7 3PL Industry Characteristics Inland Water

8. Transportation Strategy SCMN 4780 8 3PL Outsourcing Opportunity Inland Water For the shipper … 1.To acquire skills / resources not available internally 2.To achieve competitive advantage through outside expertise 3.To allow company to focus on its core competencies 4.To improve operational productivity and customer service 5.To improve business process efficiency 6.To avoid making capital expenditures

9. Transportation Strategy SCMN 4780 9 There are three types of third party logistics providers: 1.Asset Based – 3PL companies that use their own trucks, warehouses and personnel to operate the client’s business 2.Management Based – 3PL companies that provide the technological and managerial functions to operate the logistics functions of their clients, but do so using the assets of other companies and do not necessarily own any assets 3.Integrated Providers – 3PL companies that can either be asset based or management based that supplement their services with whatever services are needed by their clients Types of 3PLs Inland Water

10. Transportation Strategy SCMN 4780 10 3PL Application to Industry Inland Water 1.Computers 2.Retail 3.Chemicals 4.Medical 5.Automotive

11. Transportation Strategy SCMN 4780 11 1.Freight payment & auditing 2.Warehouse operations 3.Carrier selection & rate negotiation 4.Logistics information systems 5.Shipment planning 6.Fleet management 7.Packaging 8.Customer relations 9.Customer order processing & fulfillment 10.Total supply chain (logistics) management Top 10 Services Outsourced to 3PL Inland Water

12. Transportation Strategy SCMN 4780 12 Top 10 Global 3PL Companies Inland Water #3PL Company HQ LocationRevenueEmployeesWarehousesTractorsTrailers 1UPS SolutionsAtlanta, GA $ 8.90 35,000 100 2,000 4,600 2C. H. RobinsonEden Prairie, MN $ 8.60 8,000 100 n/a 3Expeditors InternationalSeattle, WA $ 5.60 12,600 110 n/a 4DHL LogisticsBonn, Germany $ 4.80 185,000 2,500 45 10,500 5Uti WorldwideLong Beach, CA $ 4.50 20,500 260 1,250 1,825 6Kuehne & NagelSchindellegi, Switzerland $ 3.90 53,000 500 n/a 7Catapillar LogisticsMorton, IL $ 3.50 12,000 130 n/a 8DB SchenkerEssen, Germany $ 3.20 62,000 500 n/a 9Penske LogisticsReading, PA $ 3.00 9,600 150 2,300 4,100 10Panalpina World TransportBasel, Switzerland $ 3.00 14,800 240 n/a

13. Transportation Strategy SCMN 4780 13 3PL Provider Differentiation Inland Water Focus on shipper business performance and value Employ performance measures that track shippers specific business objectives Emphasize flexibility and responsiveness to changing supply chain conditions Open flow / exchange of information (transparency) Target strategic (long-term) solutions

14. Transportation Strategy SCMN 4780 14 3PL Industry – Gap Issues Inland Water Lack of continuous improvements46%19% Service levels not realized46%31% IT capabilities insufficient43%31% Cost reductions not realized36%34% Lack of project management skills35%17% Unsatisfactory transition during implementation31%25% Lack of global capabilities30%21% Benefits not achieved in a timely manner25%18% Promising services they do not have25%n/a Lack of business process integration26% Lack of industry-specific knowledge20%11% Inability to form meaningful / trustful relationships12%13% Shipper 3PLService Issues

15. Transportation Strategy SCMN 4780 15 Shipper Benefits Attributed to 3PLs Inland Water Measureable Benefits2011 Survey Logistics Cost Reduction13% Inventory Turn Improvement9% Logistics Fixed-Asset Reduction25% Order Fill Improvement Rate79% Order Accuracy Improvement87%

16. Transportation Strategy SCMN 4780 16 3PL Industry Status Inland Water Shippers continue to increase use of 3PL outsourced services Demand for transactional / operational logistics services greater than demand for strategic management value-added services 3PL industry revenue will continue to grow at a 10%+ rate per year, almost 5 times the growth rate of US GDP International logistics management is largest growth sector Joint gainsharing contracts have not taken hold Typically, 3PLs rank its relationship with shippers higher than the reverse but the gap is closing A significant logistics talent gap exists for both 3PLs and shippers 4PLs (integrate resources / capabilities / technology) in demand Strategically, nearshoring is growing opportunity for 3PL services