The Realtime Company

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Collaboration among Logistic Service
Providers Alex Van Breedam Managing Director VIL
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Collaboration

• Partnerships have evolved, also in SCM
• -90 companies focused on their inside.
• 90-00 horizontal partnerships integration of
  subsequent partners in the chain.
• 00- vertical partnerships collaboration among
  peers.
• The new business model
• Collaborate in some markets, compete in other
  markets.
• Partners become loosely coupled
• ICT plays an important role
• Collaboration among logistics service providers

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Collaboration

• Types of collaborations for logistic service
  providers
• Horizontal collaboration traditional logistic
  outsourcing partnerships
• E-fulfillment 3PL is the e-fulfiller in a
  vertical e-market with a lot of partners
  (suppliers and customers)
• Vertical e-market market with direct goods for a
  specific industry, e.g. www.naturabella.com
• ICT-requirements are high.
• Exchange supply and demand for transport
  capacity e.g. www.teleroute.com, www.dat.com
• Auction of
• Individual orders on exchange
• Tender processes via market place e.g.
  www.e-briviate.com
• Collaborative networks

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Collaboration

• Collaborative networks/logistics
• Co-ordination of transaction within a community
  of shippers and/or carriers.
• Competitors-shippers and competitors-carriers
  pass on their orders to the community.
• Internet (XML) is an appropriate medium
• On-line information availability and transparency
  is crucial
• A third, impartial leader/referee is mandatory.
• The role of the leader/referee in collaborative
  networks
• Responsible for order visibility to both shippers
  and carriers.
• Referee in case of conflicts.
• Assigns the orders to the most appropriate
  carrier.
• Provides the appropriate tools for the community
  (e.g. optimisation, document management,
  reporting,)

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Collaboration

• Major advantages of a collaborative
  networks/logistics
• Optimisation of capacity and assets utilisation
• Savings of costs up to 19 have been obtained
  (Lynch, 2001).
• The margins of the logistic carriers can improve
  considerably, for the same transaction price paid
  by the shipper.
• Problems with collaborative networks
• The role of the leader/referee.
• Reluctancy of logistic carrier to hand over its
  orders, containing crucial information.
• Delay in information availability.
• Order volume is too low.
• Substantial quality differences among logistic
  carriers

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Collaboration

• Special case of collaborative networks
  Consolidation centres

Community of retailers
Point of sales Retailer X
Point of sales Retailer Y
Consolidation centre
Community of logistic carriers
Community of suppliers
Supplier A
Supplier B
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Collaboration

• Consolidation centres 1 central platform, most
  often dedicated to the type of goods (food,
  non-food,)
• Retailers
• Efficient replenishment
• No inventory ownership
• Grabbing goods at best convenience
• Higher variety of products available
• Arrangements for promotions goods can be
  assigned on beforehand
• Direct deliveries to point of sales.
• Suppliers
• Cost savings if entire inventory is stored at
  consolidation ?
• Full load transport to consolidation centre.
• Remain owners of inventory risk remains high
  (obsolence,).
• Responsible for stockouts.

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Collaboration

• Consolidation centres
• Logistic service provider
• Higher complexity of pick-up at suppliers and
  deliveries at point of sales full load and
  distribution.
• A lead and impartial 3PL-function is required to
  run the consolidation centre and the community of
  carriers, for planning and control
• Responsible for all handling activities in
  consolidation centre.
• Open questions
• Who runs the centre? The community of carriers?
• Who is the ideal owner of the inventory, the
  community of carriers, suppliers or shippers?
• Is it feasible to create communities in order to
  have a supplier stored all its goods at the
  centre?
• Who takes the overall lead? The lead logistics
  service provider or the one with the biggest
  buying power?
• Are all benefits shared between all communities?
• Communication between and within the communities.

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Collaboration

• Concluding remarks
• Awareness of the low margins and the need for
  collaboration.
• First  organic  collaborations among 2-3
  carriers. Problems
• Who will be the leader/referee? The largest, a
  joint venture, a 4PL,?
• In case of distrust of the hand over of orders,
  the partnership collapses rapidely.
• Carriers must be peers, by preference.
• Some retailers are urging for consolidation
  centres.
•  Forced  collaboration through acquisitions,
  e.g. Deutsche Post.
• Cool and freeze transports
• Collaboration among former competitors for
  international transportation.
• Consolidation centres Food.Net.
• The virtual courier service a community of small
  couriers connected via cheap on-line ICT tools to
  a data center.

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• Vlaams Instituut voor de Logistiek
• Flanders Institute for Logistics
• Jordaenskaai 25
• B-2000 Antwerpen (Belgium)
• Tel [phone]
• Fax [phone]
• www.vil.be