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Industrial Engineering Management Systems Approach to the Enterprise Vision
L | C | LOGISTICS ENTERPRISE SUPPLY CHAIN MANUFACTURING & COMMERCIAL LOGISTICS OPERATIONS …._____ _ PROCESS INNOVATION-OPTIMIZATION & ENGINEERING PROJECTS MANAGEMENT….
Industrial Engineering Management E-Book
INDUSTRIAL ENGINEERING MANAGEMENT FUNDAMENTALS AND HOW IT WORKS
February 2015
Expertise in Process Engineering Optimization Solutions & Industrial Engineering Projects Management
Supply Chain Manufacturing & DC Facilities Logistics Operations Planning Management
Chapter IX OUTSOURCING TO A LOGISTICS OPERATOR
Systems Approach to the Enterprise Vision
Chapter IXOUTSOURCING TO A LOGISTICS OPERATOR
Manufacturing and Marketing Services companies, once they reach a size where their operational management becomes complex,
will normally change their management strategy to outsource their operations management,
transfer their staff and assets,
closing a deal with a service contract for several years, based on an open book accounting base plus a margin
Systems Approach to the Enterprise Vision
Chapter IXOUTSOURCING TO A LOGISTICS OPERATOR
This deal allow them to focus on their Manufacturing and Marketing services of trading and distribution, with the support of an inter-link manager and a few supervisors to manage the logistics operator performance and track costs
Systems Approach to the Enterprise Vision
Chapter IXOUTSOURCING TO A LOGISTICS OPERATOR
The added values provided by the logistics contractor are the efficiencies and productivity gains from their professional management, operational performance and financial strength to invest in needed assets, systems and human resources
Systems Approach to the Enterprise Vision
Chapter IXOUTSOURCING TO A LOGISTICS OPERATOR
The way the 3rd party logistics operator works is:
Open book accounting + a fixed % management service fee, which ranges between 6% and 10%
Fix assets investments bring down costs below the average industry service provider prices, such as a transporter, and a warehouse operator as their net margins are much higher
Cost of capital is also lower from the contractor
Systems Approach to the Enterprise Vision
Chapter IXOUTSOURCING TO A LOGISTICS OPERATOR
Consultants and project manager required to evaluate the operational systems are made available to explore specific functions and implement required changes
and to introduce new technologies at reasonable professional fees in line with the company senior managers income level
Productivity and efficiency gains are measured by Key Performance Indicators and reviewed weekly
Systems Approach to the Enterprise Vision
Chapter IXOUTSOURCING TO A LOGISTICS OPERATOR
Most companies normally have all the human resources to achieve the same results or even superior results given the support from the upper management levels to the company middle management and supervisor’s level But the fact remains that; the company real gains are in the focus of their business, to achieve greater urban numeric distribution, market share and higher net profit margins
Systems Approach to the Enterprise Vision
Chapter IXOUTSOURCING TO A LOGISTICS OPERATOR
The logistics operator business is to manage their client operation, absorbing their head count, making fixed asset investments in delivery trucks and other warehousing storage equipment's and materials handling vehicles, as well as in IT hardware and software systems.
All charged at cost plus a profit margin under the open book concept
Systems Approach to the Enterprise Vision
Chapter IXOUTSOURCING TO A LOGISTICS OPERATOR
Their marketing strategy is based on their quality to map and evaluate their client’s customer services, warehousing, delivery and transport operational status, define threats and opportunities to upgrade their client’s competitiveness and reduce waste through out these basic operations
Systems Approach to the Enterprise Vision
Chapter IXOUTSOURCING TO A LOGISTICS OPERATOR
Most contractors normally service a few dedicated clients in their portfolio, although logistics consultancies are provided to a great number of companies, with the final aim to service their account and get a contract to manage their warehouse and delivery operations In this respect everyone gain, as their consultancy services are of high quality standards, made by professionals and logistic specialists within a relative short period of time, and an accurate understanding of the company’s priority needs
Systems Approach to the Enterprise Vision
Chapter IXOUTSOURCING TO A LOGISTICS OPERATOR
The typical Industry service provider, such as a transporter looses to the logistics operator because it does not price its services under the open book concept and
their overall net margins are much higher,
also they normally fail to have an in-house logistics specialist and project manager who can help the company to improve overall their logistics
Systems Approach to the Enterprise Vision
Chapter IXOUTSOURCING TO A LOGISTICS OPERATOR
Bidding for a contract should always involve one or two above average Industry service providers, and one or two logistics operators to balance the contract price proposal
However, the company must do their own analysis and case study before it opens a bid for a logistics contract
Systems Approach to the Enterprise Vision
Chapter IXOUTSOURCING TO A LOGISTICS OPERATOR
Transportation is the main cost-saving service in the 3rd party logistics services,
followed by an increase in inventory turns due to the introduction of an accurate demand plan process,
optimal procurement planning mechanisms, MRPI, production plan schedules and MRPII systems, and finally standard warehousing and customer service operations Warehousing alone and customer services operations will never bring enough financial benefits to the company to justify the 3rd party logistics operator management fees
Industrial Engineering Management Systems Approach to the Enterprise Vision
L | C | LOGISTICS ENTERPRISE SUPPLY CHAIN MANUFACTURING & COMMERCIAL LOGISTICS OPERATIONS ….
_____ _ PROCESS INNOVATION-OPTIMIZATION & ENGINEERING PROJECTS MANAGEMENT….
Industrial Engineering Management E-Book
INDUSTRIAL ENGINEERING MANAGEMENT FUNDAMENTALS AND HOW IT WORKS
February 2015
Expertise in Process Engineering Optimization Solutions & Industrial Engineering Projects Management
Supply Chain Manufacturing & DC Facilities Logistics Operations Planning Management
THANK YOU
Chapter IX OUTSOURCING TO A LOGISTICS OPERATOR
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