Logistics Service Providers (LSPs)

These are those entities who provide the logistics services to organisation. These logistical services may include:

 Transportation

 Warehousing

 Material Tacking

 Inventory Management

 Terminal operations

 Freight forwarding

 Procurement

 IT support

These LSPs can be from within the organisation for example: a separate division taking care of logistics, warehousing or a department within a division or simply a logistics manager (usually in a small company.  e.g. Sachin and Binny Bansal delivering books on their own during the early days of Flipkart) or can be outsourced to a third party such as DHL, Arshiya International etc.

According to the ownership and hence their relation with the client, LSPs may be classified into 5 Types:

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1PL (First Party Logistics)

A 1PL is usually a seller (an importer, trader, retailer, manufacturer or a distributor) that owns a transportation fleet and distributes the product to the required destination. e.g. a milkman delivering milk at your place. Occasionally it can be the customer when he himself who takes the delivery form the seller and delivers it at his destination. e.g. You going to the milkman’s dairy and taking the milk. Apart from transportation it may also perform other logistical functions mentioned above

2PL (Second party logistics)

A 2PL is a carrier company that owns assets necessary for the transportation of goods and operates the fleet. Such a company is often contracted or hired by a 1PL since it results in elimination of unnecessary expenditure on the competencies required for transportation by 1PL. e.g. a Ship Carrier company, an Airline company.

3PL (Third Party Logistics)

A 3PL too concerns itself with the transportation of goods from a seller/supplier/consigner to the buyer/consignee but in addition to that it provides other services that are warranted in a supply chain as well. A 3PL is hired to oversee all or part of a supplier’s (1PL) logistics, including operations, storage and transportation. For example, a 3PL might run a warehouse where a vendor’s large items are stored, and hire a 2PL to deliver them to customers’ homes. 3PLs provide the management skills along with the physical assets, labor, and systems technology to provide professional logistics services, relieving companies of the responsibility of performing these services themselves.

Services of a 3PL may include some or all of the logistical Services and in addition to them they may also provide

 Cost management and optimization

 Rate negotiations

 Contract management service

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4PL (fourth party logistics)

Sometimes a firm contracts out (outsources) its logistical operations to two or more specialist firms (the third party logistics) and hires another specialist firm (the fourth party) to coordinate the activities of the third parties. So essentially a 4PL organisation assembles and integrates the resources, capabilities and technological abilities of its own organisation and other organisations to design, build and run comprehensive Supply Chain Solutions for its Clients.

5PL (fifth party logistics)

Much the same as 4PLs, and a new term circulating within the supply chain industry. They plan, organise and implement logistics solutions on behalf of the contracting company. They have widespread end-to-end tracking of containers which allow customers and the contractor to receive constant updated information on the container shipment process. Essentially, a 5PL manages networks of supply chains with an extensive  e-business focus across all logistic operations, other than 3PLs and the parent company.

-Ankit Verma, Management Development Institute

 

 

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3D PRINTERS – THE FUTURE OF MICRO-MANUFACTURING?

Additive manufacturing (AM) is the umbrella potential to redefine traditional manufacturing methods. The concept of making products in large, complex plants could become term for technologies that fabricate products by building up thin layers of materials from three-dimensional, computer-aided designs. A subset of these tech­nologies, 3D printing builds objects on machines that “print” succes­sive layers of materials such as molten plastic.

3D printing has evolved rapidly over recent years. Now it is being used to create product prototypes and to manufacture certain specialized items. From a supply chain perspective, however, the most exciting applications are in finished product manufacturing, outmoded as companies adopt the more flexible AM model.

3D printers – transforming technologies:

What if you could click the printing function on your computer and instead of a paper sheet being dis­gorged from the inkjet printer, a three-dimensional product prototype started to take shape? Unlikely as it may seem, this is a routine operation for companies that use 3D print­ing, a technology many see as a precursor to a new industrial revolution.

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3D printing is part of the AM family of technologies that makes objects from computer models by adding successive layers of materials, hence the “additive” descriptor. Traditional production methods, such as where the technology is slowly gaining ground. If 3D printing becomes a common feature of large-scale manufacturing operations, the technology will have a huge impact on all phases of supply chain management. Companies will find it much easier and more cost-effective to make customized items in limited quanti­ties. Global networks of 3D printing installations will give enterprises the ability to respond rapidly to shifts in market demand and to introduce new products quickly and inexpensively.

More versatile design processes could unleash a new wave of prod­uct innovation. In the longer term, the technology has the machining, subtract material when fabricating products. In the 3D printing process, a digital file of the computer-aided de­sign is sent to a printer that creates the object by depositing successive layers of materials a few microns in thickness. Each layer is a cross-section of the object. The “ink” from which items are fabricated is formed in various ways. Metal pow-
der is treated with a laser beam to turn it into a stream of material, or filaments of molten plastic are used, for example.

The technology is less wasteful than traditional production methods where items are injection molded or formed from a block. Since each object is sculpted individually, 3D printing offers great potential for customization and short-run production. Moreover, it dramatically lowers the cost of entry into markets, because new products can be made in limited quantities without the need to make major invest­ments in new tooling.

Although 3D printing has been around since the 1990s, until fairly recently it was more of a curiosity than a commercial proposition. As more efficient machines have emerged, 3D printing has started to take off as a bonafide manufacturing process. The range of materi­als used – which already includes ceramics, composites, metals, and plastics is expanding, and printer prices are coming down.

Future Scopes:

Current industrial applications of 3D printing are largely confined to markets for customized, short-run items, such as dental products, hearing aids, and jewelry. There is also a thriving consumer market served by specialist outlets, such as production shops that print objects from customer designs. An important market for the technology is product prototypes. Companies are using 3D printing to create models of new or modified designs in a fraction of the time it takes using conventional methods such as service bureaus. Moreover, the process is being used in international operations. Digital prototyping compresses the design cycle; an important plus in markets such as fashion apparel where demand shifts quickly and time-to-market is a key competitive weapon.

A much bigger prize in global terms is large-scale, production-grade operations. The major question, therefore, is whether AM will be­come a primary source of finished products; and, if so, when this is likely to happen. The question has huge supply chain implications. Additive fabrica­tion processes such as 3D printing provide a fast, flexible, and low-
cost alternative to traditional production methods.

-By Ankur Shrimali, Management Development Institute