Coyle chapter 4 powerpoint slides

Chapter Supply Chain Relationships Learning Objectives After reading this chapter, you should be able to the following:  Understand the types of supply chain relationships and their importance  Describe a process model that will facilitate the development and implementation of successful supply chain relationships  Recognize the importance of “collaborative” supply chain relationships  Define what is meant by third-party logistics (3PL) and know what types of firms provide 3PL services Learning Objectives After reading this chapter, you should be able to the following:  Know what types of 3PL services are used by client/customer firms and what types of 3PL providers are used  Discuss the role and relevance of information technology-based services to 3PLs and their clients/customers  Know the extent to which customers are satisfied with 3PL services and identify where improvement may be needed  Understand some of the likely future directions for outsourced logistics services Logistics Relationships  Types  vertical relationships:   of Relationships these refer to the traditional linkages between firms in the supply chain such as retailers, distributors, manufacturers, and parts and materials suppliers horizontal relationships:  includes those business agreements between firms that have “parallel” or cooperating positions in the logistics process  Range of relationship types  Transactional:  Both parties in a vendor relationship are said to be at “arm’s length”  Collaborative:  the relationship suggested by a strategic alliance is one in which two or more business organizations cooperate and willingly modify their business objectives and practices to help achieve long-term goals and objectives  Strategic:  represents an alternative that may imply even greater involvement than the partnership or strategic alliance Figure 4-1 Relationship Perspectives Relational Transactional Vendor Partner Strategic Alliance Regardless of form, relationships may differ in numerous ways A partial list of these differences follows:          Duration Obligations Expectations Interaction/Communication Cooperation Planning Goals Performance analysis Benefits and burdens Source: Copyright 2001, C John Langley PhD Used with permission Figure 4-3 What Does It Take to Have an Area of Core Competency? Drivers defined as “compelling reasons to partner”; all parties “must believe that they will receive significant benefits in one or more areas and that these benefits would not be possible without a partnership” Facilitators are defined as “supportive corporate environmental factors that enhance partnership growth and development”; As such, they are the factors that, if present, can help to ensure the success of the relationship Figure 4-4 Implementation and Continuous Improvement Ray A Mundy, C John Langley Jr., and Brian J Gibson, Continuous Improvement in Third Party Logistics, (2001) Source: 2005 Tenth Annual 3PL Study, Georgia Tech and Cap Gemini LLC Used with permission Figure 4-11Fourth-PartyTM TM Logistics* + Greater Functional Integration + Broader Operational Autonomy Source: Accenture, Inc Used with permission *TM Registered trademark of Accenture, Inc Figure 4-12 Current vs Projected Logistics Expenditures Directed to Outsourcing Table 4-9 Future 3PL Industry Trends  Continued expansion, acquisition and consolidation of 3PL industry  Expansion of global markets and needed services   Continued broadening of service offerings across supply chain and broad-based business process outsourcing Two-tiered relationship models (strategic and tactical)  Growing range of “strategic” services offered by 3PLs and 4PLs  IT Capabilities to become an even greater differentiator  Increased efforts to update, enhance, and improve 3PL provider-user relationships  Emphasis on relationship reinvention, mechanisms for continual improvement, and solution innovation Summary  The two most basic types of supply chain relationships are “vertical” (e.g., buyer-seller) and “horizontal” (e.g., parallel or cooperating)  In terms of intensity of involvement, interfirm relationships may span from transactional to relational and may take the form of vendor, partner, and strategic alliances  There are six steps in the development and implementation of successful relationships These six steps are critical to the formation and success of supply chain relationships  Collaborative relationships, both vertical and horizontal, have been identified as highly useful to the achievement of long-term supply chain objectives The “Seven Immutable Laws of Collaborative Logistics” provide a framework for the development of effective supply chain relationships Summary (cont.)  Third-party logistics providers may be thought of as an “external supplier that performs all or part of a company’s logistics functions.” It is desirable that these suppliers provide multiple services, and that these services are integrated in the way they are managed and delivered  The several types of 3PLs are transportation-based, warehouse/distributionbased, forwarder-based, financial-based, and information-based suppliers  Based on the results of a comprehensive study of users of 3PL services in the United States, over 70 percent of the firms studied are, to some extent, users of 3PL services  User experience suggests a broad range of 3PL services utilized; the most prevalent are warehousing, outbound transportation, and freight bill payment and auditing Summary (cont.)  While nonusers of 3PL services have their reasons to justify their decision, these same reasons are sometimes cited by users as justification for using a 3PL  Customers have significant IT-based requirements of their 3PL providers, and they feel that the 3PLs are attaching a priority to respond to these requirements  Approximately two-thirds of the customers suggest 3PL involvement in their global supply chain activities  Although most customers indicate satisfaction with existing 3PL services, there is no shortage of suggestions for improvement Summary (cont.)  Customers generally have high aspirations for their strategic use of 3PLs and consider their 3PLs as keys to their supply chain success  There is a growing need for fourth-party logistics relationships that provide a wide range of integrative supply chain services ... financial-based  information-based firms Figure 4- 6 3PL Logistics Market Turnover Growth (US $Billion) $100 $80 $60 $40 $20 $0 1996 1997 1998 1999 2001 2002 2003 20 04 2005 2000 Source: 2005 Tenth Annual... they are the factors that, if present, can help to ensure the success of the relationship Figure 4- 4 Implementation and Continuous Improvement Ray A Mundy, C John Langley Jr., and Brian J Gibson,... permission *TM Registered trademark of Accenture, Inc Figure 4- 12 Current vs Projected Logistics Expenditures Directed to Outsourcing Table 4- 9 Future 3PL Industry Trends  Continued expansion, acquisition