Evolution of 4 PL / 5 PL Concepts in Logistics

Logistics is a Science, the scope of which is ever expanding and quite soon it will expand to encompass various business functions and will become the Prime Driver of the business model of any organization
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EVOLUTION AND IMPORTANCE OF LOGISTICS

VENDOR INPUTS PROCUREMENT VALUE ADDITION PRODUCT DISTRIBUTION CUSTOMER

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TRADITIONAL TRANSPORTATION
T/SLE
MFG. ORG. PLAN TRANSPORT ACTIVITIES PREPARE SPECS. CONTRACTING TRANSPORTER

HIRE OF WAREHOUSE

WAREHOUSE

APPOINT DISTRIBUTOR

DISTRIBUTION

PAYMENT

CUSTOMER

3 PL CONCEPT
T/SLE PLAN DISTRIBUTION PLAN WAREHOUSING PREPARE SPECS FOR 3PL 3 PL OWN PART TRANSPORT VEHICLES HIRE PART TRANSPORT VEHICLES

PLAN TOTAL TRANSPORT OPERATIONS

CONTRACTING

HIRE WAREHOUSE ORG. MFG. 3 PL AGENCY DELIVER TO DISTRIBUTOR ALL AS PER MFG.COS NEEDS & DESIGNS

DISTRIBUTOR

PAYMENT

CUSTOMER

APPOINT DISTRIBUTOR PAYMENT

A 4 PL agency is retained by a manufacturing organization simply by stating its Logistics needs. The role of a 4 PL agency is as follows: A. Interacting with the marketing function to understand the desired availability of products at different geographical locations at different times. B. Interacting with manufacturing function to understand the production scheduling. C. Depending on A & B, defining the shipment size. D. Hiring of godowns (Bonded or otherwise) at different geographical locations. E. Planning and establishing the logistics hubs which are large and modern warehouses.

F. Hiring the services of 3PL agencies. G. Hiring of Freight Forwarders and Custom House Agents in cases of exports and imports. H. Hiring the services of IT software agencies to develop the appropriate software. Also hiring or owning, IT hardware for inter connecting all hubs, godowns, marketing and manufacturing. I. Understand the transport/handling needs within the premises of the manufacturing organization and outsourcing these to small transporters. J. Doing all the above for multiple clients to reduce the cost to individual manufacturing organizations.

Very often, the 4 PL agency also offers the following services to the manufacturing client: i. ii. iii. iv. v. vi. Repacking. Relabelling. Bar Coding. Quality Assurance. Invoicing. Collection of dues.

vii. Insurance Coverage. viii. Customer Relations Management (CRM).

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4 PL CONCEPT T/SLE SPELL OUT LOGISTICS NEEDS INCLUDING TRANSPORT WITHIN MFG.COS FACTORY 4 PL CONTRACT WITH MFG.CO. PREPARE 4PLS OWN SPECS. PLAN TRANSPORTATION IDENTIFY 3 PL PLAN WAREHOUSING PLAN DISTRIBUTION HIRE DISTRIBUTOR PLAN INFO FLOW CUSTOMER ORDER FULFILMENT DESIGN 3 PL OWN PART TRANSPORT VEHICLES HIRE PART TRANSPORT VEHICLES HIRE WAREHOUSE DELIVER TO DISTRIBUTOR ALL AS PER SPECS DRAWN BY 4 PL DISTRIBUTOR CUSTOMER
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MFG. ORG.

PAYMENT

FUTURE SEVICES OF 4 PL

REPACKING RELABELLING BARCODING QUALITY ASSURANCE INVOICING COLLECTION OF DUES INSURANCE

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The 4PLs are thus basically specialised consulting organisations not owning large resources but having a focused team of experts. Even the interaction with 5 PLs would be done by 4PLs.

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5 PL
1. TRANSPORTATION:Courier, Air, Rail, Road, Inland Waterways, Ocean or Multi-modal - Service provider details - Services offered - Market rates - Different routes - Transshipment points - Transit times - Insurance coverages - Imbalance of containers
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5 PL
2. TECHNOLOGY:- Swipe card system - Bar coding - Packaging 3. IT:-

cont

- Global positioning system

- Specialised softwares (e.g.. Fleet Management) - Tailor-made softwares 4. STATUTORY INFORMATION:- Road permits - Central Govt./ State Govt. taxation - Overloading rules - Pollution control rules
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5 PL
- Cabotage laws

cont

5. REFERENCE DOCUMENTS:-

- Service tax manuals - Concor manuals - ICD/ CFS manuals

6. All other information regarding host of related subjects:- Banking and bill discounting - Financing - Warehousing
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Thus we can say that a 4PL agency is responsible for effective management of the whole value chain of the organisation.

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Today in India, the 3 PL concept is getting established, the 4 PL agencies are just coming up and 5 PLs are on the horizon.

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CONTINUOUS IMPROVEMENT IN LOGISTICS

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i. ii.

Marketing Information Technology

iii. Capital Expenditure iv. Manufacturing v. Human Resources Management

vi. Finance & Accounting vii. Sourcing & Procurement viii. Product Development

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e-logistics is the process, carried out over digital media for planning/implementing/controlling/monitoring effective flow of input materials, work-in-progress (WIP), inventory and finished goods from the point of origin to the point of consumption for the purpose of fulfilling the requirements of customers AND suppliers.

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e-LOGISTICS
FLOW OF MATERIALS SUPPLIER INBOUND TRANSPORT

PROCUREMENT

MFG. PROCESS

OUTBOUND TRANSPORT

VALUE ADDITION

WAREHOUSING

2nd LEG TRANSPORT

INVENTORY CONTROL & DISTRIBUTION

AFTER SALES SPARES

CRM MARGINS FLOW OF FUNDS FLOW OF INFORMATION

CUSTOMER

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TIER-3 SUPPLIER TIER-2 SUPPLIER TIER-1 SUPPLIER

VALUE CHAIN
SUPPLIERS

SUPPLIERS

MFG. ORGANISATION

VALUE ADDITION

CUSTOMERS TIER-1 CUSTOMER CUSTOMERS TIER-2 CUSTOMER TIER-3 CUSTOMER

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e-BUSINESS VIS--VIS LOGISTICS:

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e - BUSINESS
MFG.CO. SELLER e-CRM e-MARKET PLACE ALLIANCE WITH A 4 PL PROVIDER 4 PL SERVICES

e-CATALOGUE SPECIFICATIONS MODEL NOS. PAYMENT TECH DETAILS PRICES EXPECTED DELIVERY BUYER CUSTOMER e-CRM

DELIVERY OF GOODS

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LEAN MANUFACTURING VIS--VIS LOGISTICS

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PACKAGING-- AN IMPORTANT PART OF LOGISTICS:

Standardisation of sizes Standardisation of packaging materials Reuse Reverse logistics Disposal

Over packing Under packing Standardisation of specifications: . Bursting strength . GSM of paper . Quality of paper . Ply details . Printing details

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e-MARKET PLACES AND THEIR DEPENDENCE ON LOGISTICS

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OUTSOURCING OF PROCUREMENT FUNCTION VIS--VIS LOGISTICS

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MULTIMODAL LOGISTICS

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OCEAN FREIGHT

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OCEAN TRANSPORTATION (End to End Operation)

CONTAINERS TRANSPORT (FULL) CONTAINER TRANSPORT (EMPTY) STUFFING OF FCL CONTAINER CONSOLIDATE FREIGHT FORWARDER TO FCL,IF REQD. CONTAINER SHIPPING LINE SHIPPING LINE AGENT CONTAINER PARKING YARD

EXPORTER CUSTOM HOUSE AGENT B/L TO BANK PAYMENT SHIPPED ON BOARD ADVICE INDIAN PART OVERSEAS CUSTOMER OVERSEAS PART
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B/L

EXPORT DOCUMENTATION CUSTOMS CLEARANCE SHIP OCEAN SHIPMENT

BANK

ALL PREVIOUS ACTIVITIES IN REVERSE ORDER

THE ROLE OF FREIGHT FORWARDERS

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THE ROLE OF THE CUSTOM HOUSE AGENTS

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AIR FREIGHT

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RAIL FREIGHT:
- Own rakes - Freight express - CONCOR - Subsidies (Passenger Vs Freight) - Classifications/ Codification - Industry feedback & Rly. budget

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ROAD FREIGHT:
- Cost models (Rs / t / Km) - Seasonality - Sensitivity to fuel rates - Sensitivity to backhaul - Sensitivity to bonus/penalty - Large capacity modern vehicles -- limitations - ODCs

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ROAD FREIGHT

FREIGHT
ANNUAL RATE

JAN

JULY

DEC

MONTH
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WAREHOUSING:
- Storage should be minimum - Shared facilities - Segmentation & placements - Computer operated hoists - IT linkages and softwares - Fire fighting facilities - Ventilation facilities - A.C. facilities - Handling facilities
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Logistics is a Science, the scope of which is ever expanding and quite soon it will expand to encompass various business functions and will become the Prime Driver of the business model of any organization
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