The 4PL Mini Project Update Robert Mason 20th September 2006

1
The 4PL Mini Project UpdateRobert Mason
20th September 2006
2
Agenda

• Introduce the Project
• What is a 4PL?
• How does the 4PL concept link to McCLOSM?
• Benefits and Concerns of a 4PL
• Case Study Progress
• Next Steps

3
1. Introduce the Project

• Objective
• To Investigate
• the Issues, Benefits and Concerns of
• Introducing and Operating a 4PL
• in a Complex Environment

4
Aims

• To provide a route map of the move from 3PL to
  4PL
• Identify the KPIs to indicate 4PL performance
• Conduct economic and environmental appraisals of
  the impact of introducing a 4PL

5
2. What is a 4PL?

• An integrator that assembles the resources,
  capabilities and technology
• of its own organisation and other organisations
• to design, build and run comprehensive supply
  chain solutions
• (Bumstead and Cannons, 2002).

6
(No Transcript)
7
3. Link to McCLOSM?

• Mass Reduction of Costs
• 4PL achieves this through
• Economies of Scope
• Economies of Scale
• Customisation Improved Tailoring of Solution to
  Individual Customer or Segment of Customers
• 4PL achieves through
• Customising the Interface

8
Customer Value Criteria, Johansson et al, 1993
9
4. Potential Benefits of 4PLs

• Towards the Supply Chain Management Ideal
• Simplifying the Contact Points
• Exploiting the Economies of Scope
• Improved Buying Power
• Economies of Scale
• Risk Transfer
• Access New technology

10
Potential Concerns of 4PLs

• Conflict surrounding how value is maximised?
• Understand clearly the scope of the 4PL
• Agree the allocation of inputs and outputs
• Impact on inter-company relationships
• What happens after the initial wins?
• The control question
• Exit strategy

11
(No Transcript)
12
Relationship (I)
13
5. Corus 4PL Platform

• Achieving transport cost optimisation for Corus
  in the UK

14
Corus Current Transport Organisation Metrics

• Total UK transport spend 76 million
• 60 manufacturing and distribution sites
• Split into 3 main divisions and 15 business units
  
• 30 main contractors used with different
  capabilities, equipment and responsibilities

15
Current Corus Position

• Responsibility for procurement of transport at
  business unit level
• Cooperation only at the margins
• No central view of activity, costs or service
• Transport only seen in local cost terms
• Successful in keeping local costs down

16
Corus Definition of 4PL

• An outsourced, non-asset,
• technology based solution
• for distribution

17
The Corus/TDG 4PL
18
Corus Transport Vision

• Enable enterprise-wide planning
• Effect increased collaboration with both
  suppliers customers to maximise supply chain
  efficiency and remove waste
• Via a central transport management platform
• Corus and TDG worked for over 2 years to refine
  the vision and build the business case

19
Centralised Transport Platform

• One-way of doing things
• Economies of Scale
• Disciplined orders to cash process
• Real-time update of planned events
• Sharing real-time information via the web or file
  transfer
• Management information exchange and review

20
Corus/TDG Model

• Corus / TDG 7 year deal (Project started in
  January 2004 - Deal signed January 2006)
• 4PL transport management platform in Scunthorpe
  operated by TDG
• Utilising existing contractors and using TDGs
  full TMS stack to optimise planning control
• Live 14th August 2006 18 month roll-out

21
How it Works
Corus Legacy Systems Integration Hub
GTSv5 Core TMS
JDE
ESP
Manugistics
WebVis. Interaction

• GTSv5 Core orders to cash TMS
• ESP visual planner allows dynamic adjustment
• Manugistics Optimisation software employed to
  automate the planning and allocation process
• JD Edwards finance system manages invoicing and
  haulier self-bill payments

22
Platform Operational Cycle
Consignments offered to Corus Customers who
accept and booking time agreed
Loads planned optimised and allocated to Hauliers
who receive load/ revenue details and accept
Corus despatch point informed of delivery
sequence despatch updated
Corus send order to TDG system
Delivery/POD details confirmed by Haulier
TDG invoice Corus for order delivery TDG
Self-Bill Haulier
Corus pay TDG TDG pay Haulier
End
23
6. Next Steps

• How can the 4PL project help Corus
  differentiation strategy
• by driving cost out and improving service
  levels?
• We have observed through improving the weak link
  the logistics function can be a service delighter
  the question we pose is
• Can the 4PL be a service delighter?

24
Research Questions

• Whether there is a need for quality relationships
  to be nurtured with all the potential links in
  the set up of a 4PL
• Does it matter that not all these links are
  under-pinned by a contractual arrangement
• How can the necessary degree of relationship be
  best achieved?
• How scalable is the solution to relationship
  success?

25
Methods

• Questionnaire
• Interviews
• Focus Groups
• Archival data

26

• Any
• Questions