MBA Student-INDUSTRIES IN TRANSTIONFREIGHT .ppt

ITS, UC Irvine INDUSTRIES IN TRANSTION:FREIGHT TRANSPORTATION INTERMEDIARIES IN THE INFORMATION AGE Jiong Song and Amelia C. Regan Metrans 2nd Annual Transportation Conference Feb. 2, 2001 Outline Third Party Logistics “Third-party Logistics is simply the use of an outside company to perform all or part of the firm’s materials management and product distribution function.” -- Simchi-Levi (2000) “A relationship between a shipper and third party which, compared with the basic services, has more customized offerings, encompasses a broad number of service functions and is characterized by a long-term, more mutually beneficial relationship” -- Murphy Poist (1998) Third Party Logistics Characteristics of 3PL Perform outsourced logistics activities Process management / Multiple activities More customized services Mutually beneficial and risk-sharing relationship Long-term commitments (1~ 3 years) Why is it needed? Advantages Cost reduction Focus on core competency Improved efficiency, service and flexibility Industry-specific application – “build-to-order” systems and e-merchants Disadvantages Loss of control Impact on in-house workforce Current State -- Service Offerings Dedicated Contract Transportation / Transportation Procurement Inventory Management Logistics Management and Consulting Freight Audit and Bill Payment Customs Services Shipment Tracking and Tracing Reverse Logistics and Value-added Services Current State -- Market Size Current use of 3PL by industry Current Industry Status Niche Markets – Online Logistics Providers Online Freight Marketplaces Spot market Auction and RFQ Exchange Meta-marketplaces Application Service Providers (ASPs) Purchasing Consolidation Market Infomediaries The Freight Transportation Industry is Ideally Suited e-commerce High Fragmentation of Shippers and Carriers Many Intermediaries Complex Supply Chains High Search Costs Significant Opportunities for Economies of Scale Several Models Emerging S