supply chain management students Chapter 12.pptx

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1. Supply Chain Management, 11e Chapter 12 : Aligning Supply Chains ©2021 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

2. Discussion Outline Types of supply chain relationships Model for developing and implementing successful supply chain relationships Imperative for collaborative relationships The third-party logistics (3PL) industry

3. Alignment in Supply Chain Management Supply chain & Organizational strategies Supply chain & Trading partners Supply & Demand

4. Range of Relationship Types Source Figure 12.1: Copyright, C. John Langley Jr., Ph.D. Used with permission.

5. Model for Developing and Implementing Successful Supply Chain Relationships

6. Process Model for Forming Logistics Relationships Source Figure 12.2: Copyright, C. John Langley Jr., Ph.D. Used with permission.

7. Model for Successful Supply Chain Relationships Steps 1–3 Step 1: Perform Strategic Assessment Involves the conduct of a logistics audit, which provides a perspective on the firm’s logistics and supply chain needs and a wide range of useful information. Step 2: Decision to Form Relationship Decision involving external logistics service provider focuses on whether or not to have a relationship (core competency assessment) Decision involving channel partners focuses on type of relationship that works best. Step 3: Evaluate Alternatives Thorough assessment of the company’s needs and priorities in comparison with the capabilities of each potential partner. A broad representation and involvement of people throughout the company

8. Model for Successful Supply Chain Relationships Step 2: Decision to Form Relationship (1 of 2) Core competency assessment is key in relationship decision that involves an external provider of logistics services. Source Figure 12.3: Copyright, C. John Langley Jr., Ph.D. Used with permission.

9. Model for Successful Supply Chain Relationships Step 2: Decision to Form Relationship (2 of 2) “Drivers” and “facilitators” are identified in relationship decision that involves channel partners. Drivers: Compelling reasons to partner Asset/cost efficiency; customer service; marketing advantage; profit stability/growth Facilitators: Supportive corporate environmental factors that enhance partnership growth & development Corporate compatibility; management philosophy; mutuality of commitment; symmetry on key factors (e.g. size) Neither drivers nor facilitators present: More transactional, or “arm’s length” Common drivers with facilitating factors: More structured, formal relationship

10. Model for Successful Supply Chain Relationships Steps 4–6 Step 4: Select Partner(s) Select a logistics or supply chain partner only after very close consideration of the credentials of the most likely candidates. Ensure that everyone involved has a consistent understanding of the decision made. Step 5: Structure Operating Model The activities, processes, and priorities that will be used to build and sustain the relationship. Examples of components are: Planning Communication Risk/reward sharing Contract style Financial investment Step 6: Implementation & Continuous Improvement Depending on the complexity of the new relationship, the overall implementation process may be relatively short, or it may be extended over a longer period of time.

11. Model for Successful Supply Chain Relationships Step 6: Implementation & Continuous Improvement Future success of relationship is a direct function of the ability of involved organizations to achieve both continuous & breakthrough improvement. Source Figure 12.4: Adapted from Ray A. Mundy, C. John Langley Jr., and Brian J. Gibson, Continuous Improvement in Third Party Logistics, 2001.

12. Imperative for Collaborative Relationships

13. Imperative for Collaborative Relationships Elements of Successful Collaboration Well-understood goals and objectives Trust and commitment Organizational compatibility and communication Equitable sharing of gains and losses Benefits greater than going it alone Dedication to continuous improvement Strategic plan to provide direction to the collaboration

14. Imperative for Collaborative Relationships Barriers and Benefits Benefits Focus on core competencies of supply chain organizations Increased sharing of information and knowledge Greater responsiveness to customers’ needs Creation of competitive advantage over competing supply chains More productive and satisfying relationships Barriers Resistance to change Conflicting business objectives Inconsistent goals and key performance indicators Lack of trust Unwillingness to share information Lack of managerial support Turf protection

15. Seven Immutable Laws of Collaborative Logistics Real and recognized benefits to all members Dynamic creation, measurement, and evolution of collaborative relationships Co-buyer and co-seller relationships Flexibility and security Collaboration across all stages of business process integration Open integration with other services Collaboration across essential logistics flows

16. Imperative for Collaborative Relationships Three Important Types of Collaboration Source Figure 12.5: Copyright, C. John Langley Jr., Ph.D. Used with permission.

17. The Third-Party Logistics (3PL) Industry

18. Third-Party Logistics: Industry Overview “A third-party logistics firm may be defined as an external supplier that performs or manages the performance of all or part of a company’s logistics functions.” Participants who are involved in the buying and selling of outsourced logistics services range from 1PL’s to 5PL’s: 1PL – Shippers or receivers of product moved through supply chain. 2PL – Asset-based logistics providers that physically move product through the supply chain (transport carriers of various modes). 3PL – Firms that manage and/or provide logistics services on behalf of their clients and customers. Most of these organizations are non-asset based. 4PL – Firms that provide broader scope of services to help manage elements of the supply chain, and typically may be more strategically involved than 3PLs would be. 5PL – Companies that aggregate demands of 3PLs into bulk volumes to negotiate better rates with logistics service providers.

19. Third-Party Logistics Evolution of Logistics Outsourcing Source Figure 12.6: Copyright, C. John Langley Jr., Ph.D. Used with permission.

20. Third-Party Logistics (1 of 2) Types of 3PL Providers Transportation-based 3PL providers founded as a subsidiary or major division of a large transportation firm. Examples: FedEx Supply Chain, UPS Supply Chain Solutions, DHL, Ryder Supply Chain Solutions, Schneider Logistics, Penske Logistics, and XPO Logistics. Contract Logistics-based Generally referring to services relating to warehousing and distribution. Examples: CEVA Logistics, DSC Logistics, Exel/DHL, Geodis, Penske Logistics, Saddle Creek Corporation. Freight Forwarding-based Organizations performing services for the daily flow of global commerce, purchasing shipping capacity from asset-based providers, then re-selling to supply chain customers. Examples: C.H. Robinson, DHL, DSV, Expeditors, Hub Group, and Kuehne & Nagel.

21. Third-Party Logistics (2 of 2) Types of 3PL Providers Financial-based Firms providing services such as freight payment and auditing, cost accounting and control, tools for managing shipment visibility, information, and tracking, and consulting and advisory services. Examples: Tranzact Technologies, CTSI, and Cass Information Systems. Information-based A newer, innovative type of third-party provider emerged as a result of growth and development of Internet-based, business-to-business, electronic markets for transportation and logistics services. Example: Transplace, Inc. Corporate Subsidiaries-based 3PL organizations that initially were divisions or subsidiaries of manufacturing or distributor organizations. Examples: Neovia, Inc. (formerly Caterpillar Logistics), IBM Global Business Services, Odyssey Logistics.

22. Third-Party Logistics Logistics Outsourcing Activities Source Figure 12.7: Langley, C. John Jr., and Infosys, 2020 24th Annual 3PL Study.

23. Third-Party Logistics Important 3PL IT Capabilities Shippers Transportation management (planning) Warehouse/DC management Visibility (order, shipment, inventory, etc.) Electronic Data Interchange (EDI) Transportation management (scheduling) Transportation sourcing Providers Transportation management (planning) Visibility (order, shipment, inventory, etc.) Transportation management (scheduling) Electronic Data Interchange (EDI) Warehouse/DC management Customer relationship management (CRM)

24. Third-Party Logistics: IT Gap Source Figure 12.8: Langley, C. John Jr., and Infosys, 2020 24th Annual 3PL Study.

25. Third-Party Logistics Management and Relationship Issues Customers’ Expectations of 3PL Providers Superior service and execution (proven results and performance) Trust, openness, and information sharing Solution innovation and relationship reinvention Capable information technologies to support the relationship Ongoing executive level support Service offering aligned with customer strategy and deep industry knowledge 3PL Providers’ Expectations of Customers Mutually beneficial, long-term relationship with company Trust, openness, and information sharing Dedicating the right resources at the right levels, including executives Access to useful data to design solutions and provide desired services to customers Clearly defined service level agreements Fiduciary responsibility and overall fairness relative to pricing

26. Third-Party Logistics: Future 3PL Industry Trends Continued expansion, acquisition and consolidation of 3PL industry Expansion of global markets and needed services Broadening of service offerings across supply chain, and business process outsourcing Increased efforts to update, enhance, and improve 3PL-customer relationships Growing range of “strategic” services offered by 3PLs and 4PLs Innovation and transformation to meet needs of e-Commerce businesses IT capabilities to become an even greater differentiator Increased adoption of shared service networks and sometimes collaborative initiatives with traditional competitors Emphasis on relationship reinvention, mechanisms for continual improvement, and solution innovation

27. Summary Inter-firm relationships may span from transactional to relational and may take the form of vendor, partner, and strategic alliances. Collaborative relationships have been identified as highly useful to the achievement of long-term supply chain objectives. Third-party logistics providers are “external suppliers that perform all or part of a company’s logistics functions.” 3PLs may be thought of as transportation-based, warehouse/distribution-based, forwarder-based, financial-based, and information-based. The most prevalent 3PL services used are transportation, warehousing, customs clearance and brokerage, and forwarding.