A Case Analysis of the Workings of a Third Party Logistics Industry Essay

Introduction The relevance of tierce grammatical constituenty Logistics (3PL) Providers need non be e characterizationu eitheryplaceemphasized. The logistics sedulousness bring home the bacons a genuinely groovy opportunity for industries to focus much on their aggregate competencies and evidentiaryly reduce their spending while at the same conviction amend their bodys and guest service aspects. Since most of the 3PL companies bring forth pithly the resources that atomic number 18 needful for effectual logistics melt down on top of their human crown it is unceasingly the slick that companies volition definitely gain a good eff on top of learning a pass around of unsanded strategies in traffic with this flake of service. This paper lead go let on the basal theories on Logistics and ternary Party Logistics. Consequently, it will re latish much(prenominal)(prenominal)(prenominal) theories to tangible experiences of a special 3PL Industry leade r Ryder systems Inc. The paper will be discussing its core run, values and divvy up into close analysis two of the operate that they bring forth provided on two of their major(ip) clients. Similarly, the raillery of close towhat of the find factors that argon needful for the phoner will e rattlingplacely be interpreted into account.See moreThe Story of an Hour Literary Analysis endeavorObjectives of the field First amongst of the few objectives of the study will be the schoolchilds capability to communicate the concepts that atomic number 18 relevant in the industry that he or she is working in. Second would be to show how commodious and relevant the trade for the logistics industry is. In relative with this is to illustrate how the keep accomp whatever which the author works in (i.e. Ryder Systems Inc) is able to have a significant shargon in this industry. Part of such(prenominal) objective would be explaining its discussion of business, products and ser ve and primary incarnate values. there should in like manner be train examples to illustrate how is the company is able to maintain its top clients.Significance of the Study It is necessary to provide a scholarly study on the theater of logistics be suit there has not been a lot of studies atomic number 18 conducted in this lawsuit of industry. close of the researches that the author have encountered are primarily skeleton case studies and basic theories that mainly ground on the specific corporations that are doing such type of businesses. Having such, most of the literatures are one sided, that is discussing completely the good experiences that were encountered in dealing with specific clients. It is the authors endeavor to bring by a research paper that is establish on a holistic perspective so that there would be a thorough discussion of both of the positive and negative stadiums indoors the logistics industry.Review of Related literatureLogisticsLogistics is th e movement of administering and fancyling the course of goods, energy, data and some other resources namely products, function and people from a incident company. It would be very hard to c t kayoed ensemble up a particular company without strait-laced logistical function or support. The very rationale of a logistics support primarily lies on proper geographical positioning of raw materials, works in process, and finish inventories at the most reasonable appeal, this breeding is taken from Wikipedias introduction part, coroneted Logistics.Taken from the same reference, Wikipedia categorizes logistics into three types military, business and production logistics.Military logisticsProviding logistical support to the military is more of a matter of life and death. It is very crucial that soldiers supplies of food, terminate and ammunition be delivered in the fastest and safest workable manner if not, such would lead to very serious implications. Good examples of such cases are the US-Iraq war, the Statesn War of Independence and the Second World War. subscriber line LogisticsThere are two different focuses in which logistics function in businesses the internal focus and the external focus which dressings the period of date from originating supplier to end-user. Part of the business is the assurance of the proper coordination of resources in an organization. Two forms of logistics in business that are fundamental for the smooth run of the business are the steady flow of material by means of a network of dishonor links and storage nodes and also the sequence of resources to carry out projects. take LogisticsThe relevance of logistics deep down an industry need not be over emphasized. As industries are constantly changing their machines to achieve cracking force and customer response, it is very necessary to make more cost-efficient the logistics function. For existing plants, the solicitude often find themselves replacing separate ad even ma chines in order to en veritable the quality and rate of productivity. and so it is not only the case that cartridge clipliness of transporting these parts should be taken into consideration but also the cautiousness that is necessary to guarantee that by the time the machine or parts get to the production site, it is windlessness on a perfect working t in ally.For the purpose of this paper, the author will concentrate specifically on two types of logistics function, i.e. the business and the production logistics.Third Party LogisticsIt would be more cost- sound for companies which dont have a particular specialization on imparting and logistics to source exploitation 3PL or tertiary Party Logistics Provider. 3PL is a specialise vendor which takes disturbance of the supply management function of a particular companys integrated wareho utilise and transportation, and other services that could be made consort to customers needs prior on market condition and the demands and bringing service requirements for their products and materials. Few of these services are inventory, material use and packaging. According to Hertz, and Alfredsson in their article Strategic initiatement of third caller logistics suppliers, Industrial Marketing vigilance there are four categories of 3PL providers hurtardized 3PL provider this is the most basic form of a 3PL provider. They would perform activities such as, pick and pack, entrepot, and dissemination (business) the most basic functions of logistics. For a majority of these firms, the 3PL function is not their main activity.Service developer this type of 3PL provider will erect their customers advanced value-added services such as tracking and tracing, cross-docking, specific packaging, or providing a unique security system. A solid IT foundation and a focus on economies of scale and scope will enable this type of 3PL provider to perform these types of tasks.The customer adapter this type of 3PL provider comes in at the request of the customer and essentially takes over complete check off of the companys logistics activities. The 3PL provider improves the logistics dramatically, but do not develop a unsanded service. The customer basal for this type of 3PL provider is typically quite small.The customer developer this is the higher(prenominal)est level that a 3PL provider can earn with respect to its processes and activities. This occurs when the 3PL provider integrates itself with the customer and takes over their entire logistics function. These providers will have few customers, but will perform extensive and detailed tasks for them.Ryder System IncCompany OverviewHeaded by their Chairman and CEO Gregory T. Swienton, Ryder System Inc is one of the top hat and lead industries in basis of providing logistics, supply chain management and solutions all over the world. It has been characteristicd in Fortune 500 and has received numerous commendations from its clients and peers within the industry.Few of its customer awards are from Toyota (Best Business Partner of the Year), Mazda (Carrier of the Year), beetle off (Delivery Carrier of the Year), Whirlpool (Gold and Bronze Quality Awards), Alcan (statistical statistical distribution provider of the Year), ARCO (Category 1, Supplier Status), Bombay (Carrier of the Year), Copperweld ( let outstanding Supplier of the Year), Dominos Pizza (Supplier of the Year), etc.Similarly, few of its industry awards came from Forbes, shine Council, The Miami Herald, Commercial Carrier Journal, Hispanic Magazine, Logistics Management, Mercer Management Consulting, Internet Week, E Week, culture Week, Centro de Estudos em Logica, Consumer Goods Technology, CIO, National Safety Council, Latina Style, Information Week 500, Business Week, inbound Logistics Magazine and B to B Magazine.Also, the company has been included in Calvert social Index since 1990, KLD Research & Analytics Domini 400 Social Index (DSI), United States envi ronmental Protection substance and South Florida Commuter function Best Workplaces for Commuters, organization Metrics International (GMI) Highest Global Rating, Department of Defense Employer Support of the admit and Reserve (ESGR) Above and Beyond Award, Network Miami, and World Trade.In similitude with this, Ryder has also been included in InformationWeek 500 of leading business users of information technology and InternetWeeks top 100 U.S. companies for effectiveness in using the Internet to achieve tangible business benefits.As enumerated in Ryders official website the products that the company offers areFleet Management Solutions (FMS), which provides leasing, renting and syllabusmed tending of trucks, tractors and trailers to commercial customers Supply Chain Solutions (SCS), which manages the movement of materials and related information from the achievement of raw materials to the delivery of finished products to end-users and Dedicated Contract pushchair (DCC), w hich provides a turn-key transportation service that includes vehicles, drivers, routing and scheduling.Corporate ValuesOne of the secrets of conquest of Ryder lies on its very strong recognition of the relevance of diversity in the workplace. The company focuses a lot on the relevance of the workforce by proving them a unanimous array of opportunities regardless of color, gender and age.Fleet Management SolutionsAccording to the 2005 Ryder Annual Report on the Financial Statement Section, Ryders Fleet Management Solutions (FMS) accounts to 62% of total yearly revenue of the company, that is analogous to $57 Billion.FMS allows its clients to focus on their central business and direct their capital to other parts of their business process. Ryder provides a whole range of products for leasing, commercial rent and contract maintenance solutions. In relation with this, it also had value-added authorise support services like insurance, vehicle administration, fuel services and a wide selection of used trucks, tractors.FMS caters from small to monstrous scale enterprises. Most of its clients came from the following industries beverage, newspaper, grocery, lumber, wood products, home finishing and metal.Since FMS is divided to three major regions across the whole United States also adding Puerto Rico, the company holds a bulky 137,000 US fleet of commercial trucks, tractors, trailers that are leased or rented. individually major region is segmented into 8-16 Business Units (BU) and consequently, each BU has 7-15 Branch Offices.The BU are pretty much like a one-stop store because not only that it has a maintenance facility or a shop office, it also provides services for refueling, safety inspections and preliminary maintenance checks as head as a place for preventive maintenance and repairs.Through FMS Ryder is able to provide the most cost-effective business logistics solutions on top of timeliness, quality and A-one service.Full Service LeasingThe total se rvice leasing program that is still based on the 2005 Ryder Annual Report is a custom made program which caters perfectly to any demand or need of a particular enterprise. This particular program helps companies to strategize their fleet management function or contract their fleet without necessarily having to allocate a specific percentage of their annual capital.Assessing enterprises qualifications would depend in their corporate press out of matter of affairs, their companys size, relaxation size and a balance sheet treatment. Based on these qualifications, a leasing program will be created. After such would be the leasing of trucks that are custom engineered relative to the needs of the enterprise and normally would last for 3-7 year.The full service lease of Ryder has very good leveraging since the company has a good buying power since it purchases vehicles in bulk.Other related services include contact maintenance which primarily deals with the repairs of vehicles, predic tive and preventive assessments based on the type of the truck and driving habits of the enterprise, and also Ryder can switch any truck which temporarily went out of service. other additional feature of this program is the contact related maintenance which are additional services that are not within the agreed contract but is provided needed by the enterprise.Supply Chain SolutionsThis aspect of the services provided by Ryder pertains to the direct movement of international funds and related information from the science of raw materials to the delivery of finished products to end users.The estimated market for this business is estimated to be $237 Billion and accounts to 29% of the companys total annual revenue. There are three categories in which Ryder operates in this particular service. The Professional Services provided by the company focuses on the classification, analysis, and improvement of its clients supply chain solutions in order to assure the enterprises consistency , efficiency and flexibility. This service is comprised of full consultants who conduct extensive case studies, reviews to create a extremely effective supply chain strategy. Another service provided by the company is Distribution Operations wherein few of the services being catered upon are warehouse facilities, administering the flow of products, coordinating warehousing and transportation for inbound material flows, handling trade and export for international embarkment, replenishment of component parts for manufacturing and ., and a whole lot more. The transportation services on the other hand take care on almost all of the factors that are necessary for an effective and timely transportation network. From planning and execution, Ryder also makes sure that the shipment consolidation, pack scheduling and delivery confirmation are real-time and accurate through the use of various(a) technological and web-based solutions. Ryder has the best transportation consultants who work in partnership with the Freight Brokerage Department.Analysis Having a discussed a shortened background of the necessary foundations of an effective logistics company and having elaborated on the basic workings of Ryder System Inc, the author would like to have a brief case analysis of two of the long-time clients that the company have served for their logistics solutions Whirlpool and Philips. In relation with this, the author would also discuss the jeopardize factors that are inevitable in this type of business.Risk Factors The author would like to discuss some of the things that view the logistics business at Ryder. One relevant factor would be the financial revenue of the company and its stability. Some changes in market conditions such as the rental or sale of used vehicles, ability to withstand customers and maintain appropriate utilization rates. It could also be the case that crank interest rate and money exchange rate might cause financial instability. Sometimes occ asional labor strikes, sudden changes in fuel prices and fuel shortages could be vital determiners of fluctuations. It is also a necessity that new growth initiatives in Fleet Management Systems (FMS) Business segment be a constant endeavor for the company. By having the company restructure the practicable and sales teams, realigning business processes and organizing management it will be assured that the FMS will still be up to date and will still appease to be the biggest contributor for the companys annual revenue. Another risk factor that the company has to deal with is the residual risks on the value of their trucks. If the market for buying used vehicles suddenly declines there would be a sure loss on Ryder.In relation with this would be with regard to SCS revenue. Since a significant portion of SCS revenue came from a small number of customers, umpteen of which are in the automotive industry, it could be accomplishable that failure to view as these clients would result t o huge financial loss.One of Ryders clients which belong in this category is General Motors sess (GM) accounting for 35% of Ryders SCS total revenue and 18% of SCS operating revenue. The loss of any of this customer or a significant reduction in the services provided to on this company could pretend Ryders domestic and international operations and adversely touch on SCS financial results. While the company still focuses on diversifying their customer base both outside and within the automotive industry, the company may not be successful in doing so in the short term.In relation with this is the downward price pressure that might come from current SCS customers could result in low revenues. For instance it could be the case that since all SCS services are provided under contractual arrangements that are based on certain assumptions regarding the scope of services, production volumes, functional efficiencies, productivity and other factors. If, as a result of subsequent changes i n our customers business needs or operations or market forces that are outside of our control, these assumptions prove to be invalid, Ryder could have note margins than anticipated. Attracting and retaining drivers could also be an issue since there has been a really tight competition in toll of their availability. The company could either opt to addition their salaries or let trucks sit idle, utilize lower quality drivers or face difficulty meeting customer demands, all of which could adversely affect growth and profitability.Ryders attempt to continue to fly off the handle international operations may result in additional risks. Since the company is committed to meeting customers global needs by continuing to grow our international operations in Canada, Europe, Asia and Latin America and by submission into new markets such as China. The companys international operations, in particular in Latin America and Asia, are subject to adverse developments in foreign political, gover nmental and economic conditions, varying competitive factors, foreign currency fluctuations, capableness difficulties in identifying and retaining qualified managers and personnel, potential adverse tax consequences and difficulties in protecting intellectual property rights.Since the company operates in a highly competitive industry it is likely the case that the business may corroborate if the company will be unable to adequately address potential downward pricing pressures and other competitive factors.Ryder competes with many other transportation and logistics service providers, some of which have greater capital resources than the company does some of the competitors periodically reduce their prices to gain business, which may limit the companys ability to maintain or increase prices. In relation with this, advances in technology may require increased investments to remain competitive, and the companys customers may not be willing to accept higher prices to cover the cost of these investments.Ryder operates in a highly regulated industry, and be of conformity with, or liability for violation of, existing or future regulations could importantly increase their costs of doing business. The business is subjected to regulation by various federal, state and foreign governmental entities specifically the U.S. Department of Transportation and various state and federal agencies exercise broad powers over Ryders motor postman operations, safety, and the generation, handling, storage, treatment and disposal of waste materials.The company may also shape subject to new or more restrictive regulations imposed by the Department of Transportation, the Occupational Safety and Health Administration, the Environmental Protection Agency or other authorities, relating to the hours of service that our drivers may provide in any one-time period, security and other matters. Compliance with these regulations could substantially impair equipment productivity and increase the companys costs.New regulations judicature scan emissions could adversely impact the business. The Environmental Protection Agency has issued regulations that require progressive reductions in exhaust emissions from certain diesel engines through 2007. Emissions standards require reductions in the sulfur satisfy of diesel fuel beginning in June 2006 and the introduction of emissions after-treatment devices on newly-manufactured engines and vehicles utilizing engines built after January 1, 2007. Each of these requirements could result in higher prices for tractors, diesel engines and fuel, which are passed on to customers, as well as higher maintenance costs and uncertainty as to reliability, all of which could, overtime, increase costs and adversely affect business and results of operations.Case StudiesWhirlpool CorporationThe dilemma of Whirlpool Corporation primarily stems out to a highly fragmented warehousing and distribution network. The main warehousing facility of the com pany is primarily located in La Porte Ind, while having other packaging facilities all over the states. When vendors ship and deliver the parts needed for production, some are flat dropped in the packaging facilities in which is the ideal situation however a lot of times, the parts are delivered in La Porte which then requires Whirlpool to cross-dock shipments. As result of this, the transportation processes of goods are doubled in addition to iterate the strenuous tasks for inventory.Such a case appears to be ineffective, costly and time consuming because not only that the company is doubling its expenses and is not doing well in terms of time management, but also the primary corporate value which is good customer service is highly compromised. By having late deliveries or goods or merchandise parts, Whirlpool doesnt appear to stand at its best disposition. Whirlpools Financial Managers are very reluctant in having to invest a lot of their capital in improving their warehousing a nd logistics solution, however, something must really be done in order to resolve their logistic problems, and hence this is when Ryder came into the picture. In choosing the right 3PL provider for their logistics solutions, Whirlpool assessed three major logistics provider. They have taken into consideration the contractors experience, strategy, capabilities and resources. Out of all the outsourcing companies assessed Ryder was able to get the contract. The logistics processing service of Ryder to Whirlpool is conducted in this way Once the bulk shipments from offshore suppliers and onshore suppliers such as Mexico and the United States arrived at the distribution centers, the goods received by the warehouse management systems and have them bar-coded. After which Ryder then performs high volume packaging and kitting within the distribution center breaking down shipments such as large cartons containing 500 water pumps into single-item boxes and polybags. In such a manner, Ryder eff ectively sorts out the parts and labels them so that it would be easier to identify them once delivered to Whirlpool clients. For the interest of quality and protection of the goods, they are assembled in blister-pack kits together with other components and accessories such as for instance a water pump, two washers and an installation brochure. The process of packaging is very much a holistic process that allows the parts to be ready for delivery. Once the goods are packed in totes, they are bar-coded and move along the conveyor system. After which they are subjected on the sortation system wherein their bar-codes are matched with the orders entered in the system. The customers orders on the other hand are urbane by Whirlpool and enter them into their systems while providing Ryder a nightly commit in order to identify and sort out the orders to be delivered the following day. In order to monitor their performance, Ryder and Whirlpool follow five aboriginal Performance Indicators (KPI) these KPIs are shipment accuracy, inventory accuracy, service performance/ hire rates, order cycle time and budget performance. In relation with the KPI, Ryder also follows the Net 5 Whirlpool Program which says that every discussion section of operation should generate a net of 5% in cost savings. In sum, by having Ryder took in-charge of the logistics of Whirlpool the company is able to save a net of 7% in their annual logistics operation. Also, as evident, their logistics operations became more proficient and they are able to concentrate on their key competencies which are quality products on top of good customer service.Philips Consumer Electronics of North AmericaThe biggest challenge that Philips faced in terms of their logistics functions are in terms of inventory accuracy, the timeliness of product delivery, security in terms of warehousing and delivery and also cross-border delays.In 2001, the company decided to fully outsource their logistics function by having mor e than 20 contractors bid for the service. Ryder was chosen amongst all of the said 3PL operators because of their relevant past experiences, efficacy in quality control and product management. Consequently, Ryders human resource was also taken into relevant consideration because of its diversity and good account of experience.In order to provide a very effective logistics recommendation to Philips, Ryder made an assessment to Philips network. Results of such are first the transfer of their Close District core (DC) in El Paso Texas and replace with a new and larger distribution center at Alliance Park near Dallas Ft. Worth. The reason for such a change would be the bulk of market segments in which high demands of Philips electronics are purchased. By having the new DC inn Alliance Park, not only those products from offshore sources are received within the earliest possible time but also 80% of Philips clients were able to receive their products within 2 days.Cross-border traffics t hat are often caused by customs are importantly minimized as Ryder has already long-standing relationships with various custom offices all over the continent. Ryder has established Philips designated carriers pick-up station for the freight which usually came from Juarez Mexico. Sometimes this freight is delivered to the DC at Alliance Park while some are directly delivered to Philips customer.The process of dealing with the logistics function of Philips starts with the Electronic Receipt of shipment delivery which tells Ryder exactly the due date for the delivery of the goods consequently, the electronic receipt goes peachy to the order repository system giving Ryder a 48-hr lead time for the delivery after such would be the determination of the most cost-efficient transportation option that meets the delivery commitment. Part of the challenge in transporting goods is the diversity of the products that needs to be delivered.From palm sized electronics to wide veil televisions, R yder has to make sure that on top of optimizing the truck load space, it has also make sure that the goods will be delivered in a very good shape. In relation with this, there are certain products that are in season because of various factors such as strong advertise campaigns, popularity, etc. Hence Ryder has made sure that there should be effective slotting analysis in order to make the flow of goods in and out of the warehouses more efficient.Security concerns such as robbery or smuggle of products due to its high product value are also taken into relevant consideration. Cameras, door alarms, and actual security guards are always in operation. Also, the most expensive products are caged in a special area wherein entrance and exit areas are highly monitored. Employees are also necessary to pin their IDs all the time specially when entering highly secured areas. Another good thing with Philips partnership with Ryder is the immediate feedback provided to Philips customer service r ight after the good is delivered to the customer. Hence such an act provides a real-time inventory and feedback that is very necessary in dealing with customer inquiry and/or complains.ConclusionThe logistics industry provides a very good opportunity for industries to focus more on their core competencies and significantly reduce their spending while at the same time improving their systems and customer service aspects. Since most of the 3PL companies have all the resources that are necessary for effective logistics function on top of their human capital it is always the case that companies will definitely gain a good experience on top of learning a lot of new strategies in dealing with this type of service.Logistics is the process of administering and controlling the course of goods, energy, information and other resources namely products, services and people from a particular company. Specifically, 3PL is a specialized vendor which takes care of the supply management function of a particular companys integrated warehousing and transportation, and other services that could be made according to customers needs prior on market condition and the demands and delivery service requirements for their products and materials. Few of these services are inventory, material handling and packaging.The research focused on one of the leading providers of logistics function which is Ryder Systems Inc. The company is one of the best and leading industries in terms of providing logistics, supply chain management and solutions all over the world. It has been featured in Fortune 500 and has received numerous commendations from its clients and peers within the industry.As enumerated in Ryders official website the products that the company offers areFleet Management Solutions (FMS), which provides leasing, rental and programmed maintenance of trucks, tractors and trailers to commercial customers Supply Chain Solutions (SCS), which manages the movement of materials and related info rmation from the acquisition of raw materials to the delivery of finished products to end-users and Dedicated Contract Carriage (DCC), which provides a turn-key transportation service that includes vehicles, drivers, routing and scheduling. The research has also discussed the various risk factors that are inevitable in dealing with a third party logistics company. These are the financial revenue of the company and its stability, the need for restructuring the operational and sales teams, realigning business processes and organizing management, residual risks on the value of trucks, SCS revenue, downward pricing pressure that might come from certain SCS customers, attracting and retaining drivers, expand international operations, regulations governing exhaust emissions etc. Similarly, the research discussed two case studies in which 3PL specifically Ryder has done long-term business with such as Whirlpool and Philips.lit CitedHertz, S., & Alfredsson, M., (2003), Strategic development of third party logistics providers, Industrial Marketing Management, (32), 139-149.Sangam VK. (2006). Implementing Third Party Logistics. Retrieved June 22, 2006, from most.com Website http//logistics.about.com/od/thirdparty/a/uc041805a.htmRetrieved from http//en.wikipedia.org/wiki/Third-party_logisticsThird Party Logistics. Retrieved celestial latitude 22, 2006, from Wikipedia. Org Website. Retrieved from http//en.wikipedia.org/wiki/3PLAbout Us. Retrieved December 22, 2006, from Ryder.Com Website http//www.ryder.com/aboutus_home.shtmlManagement Team. Retrieved December 22, 2006, from Ryder.Com Website http//www.ryder.com/aboutus_cinfo_mt.shtmlCustomer Awards. Retrieved December 22, 2006, from Ryder.Com Website http//www.ryder.com/aboutus_cinfo_car.shtmlIndustry Awards. Retrieved December 22, 2006, from Ryder.Com Websitehttp//www.ryder.com/aboutus_cinfo_iar.shtmlProduct Line Brochures. Retrieved December 22, 2006, from Ryder.Com Website http//www.ryder.com/aboutus_cinfo_brochures. shtmlDiversity at Ryder. Retrieved December 22, 2006, from Ryder.Com Website http//www.ryder.com/aboutus_diversity.shtmlInvestor dealings Home. Retrieved December 22, 2006, from Ryder.Com Website http//investors.ryder.com/phoenix.zhtml?c=108468&p=irol-irhome