someTitle
138 PART TWO LOGISTICS AND SUPPLY CHAIN OPERATIONS
CARRIER RESPONSIBILITIES
Once freight leaves a consignor, it is up to responsible LSPs to ensure that it reaches the
consignee in the right condition, at the right time, etc. (recall the eight ‘rights’ description
of logistics in Chapter 1). Unlike passengers, freight cannot, of course, speak for itself
(although we will see in Chapter 11, which deals with technology in the supply chain,
that advances are being made in intelligent tracking systems at the individual item
level). Documentation (either in physical or soft format) will need to accompany the
freight so as to ensure that anyone who comes into contact with the freight will know
where it comes from, what it comprises, where it is going, and how it is going to get
there. Customs and security agencies, who do not have time to physically check each
consignment, will also want to know the various details about individual consignments
that are moving over international borders. Chapter 12 will again consider ca
ier
esponsibilities and in particular review transit documentation and introduce incoterms.
SELECTING LOGISTICS SERVICE PROVIDERS AND
SERVICES
Decision making is an ongoing and important part of many logistics managers’ jobs: for
example, trying to decide which routing to use for a particular shipment, which ca
iers
to use, and how much inventory to hold. Different people, depending on their role in
the supply chain, will have varying views on what the optimum decision is, and it is the
job of the logistics manager to reconcile these conflicting views.
With regard to using LSPs, a strategy that is often used by logistics managers is to give a
large share of their business to one ca
ier, and the remaining smaller share to a com-
petitor ca
ier. This has two advantages: firstly if there are any problems (for example
delays) with the prefe
ed ca
ier, then they can, if necessary, switch traffic to the alter-
native ca
ier; secondly this dual approach has the advantage of keeping both ca
iers
‘on their toes’, because they know there is an alternative available if their performance
starts to weaken.
More generally, companies also need to decide which 3PL(s) to use. The list below gives
some of the many factors that have to be considered when selecting LSPs.8 Contracts
with LSPs can often be worth large amounts of money and obviously cover an important
area of a company’s activities, therefore it is essential to choose the right partner(s).
● Services to be provided (geographical areas, volumes including fluctuations,
time frame, etc.)
● Costs and costing approach (open book, gain share, penalties, inflation/cost
increases, etc.)
● Terms of ca
iage, applicable Incoterms, insurance (responsibility for damage
and shrinkage)
● Speed/transit time
● Performance metrics and service levels, reliability
Mangan-c07.indd XXXXXXXXXX/22/ XXXXXXXXXX:45:21 PM
Mangan, J., & Lalwani, C. L XXXXXXXXXXGlobal logistics and supply chain management 3e. Retrieved from http:
ebookcentral.proquest.com
Created from kingsowninst-ebooks on XXXXXXXXXX:09:26.
C
op
y
ig
ht
©
2
01
6.
W
ile
y.
A
ll
ig
ht
s
e
se
v
ed
.
someTitle
CHAPTER 7 LOGISTICS SERVICE PROVIDERS 139
● Information systems (especially with regard to systems integration), other
technology issues (e.g. capability to ‘track and trace’ freight and requirement to
use advanced technologies such as RFID), and documentation requirements
● Core versus value‐adding services required
● Staffing issues (e.g. transfer of undertakings with respect to previous employees,
legal responsibilities, company image and responsibility, union recognition,
disruptions)
● Reverse logistics issues (packaging, returns – damaged and faulty goods, failed
deliveries, etc.)
● Implementation/termination/ability to alter conditions
● Details on the logistics service provider’s history, client references, etc.
In the next chapter we will look more generally at the various stages in procuring
products and services; the various steps outlined there can also be applied in the pro-
curement of logistics services also.
Chapter 12, which will deal with performance management, will discuss the role of
service level agreements in the ongoing management of LSPs. Obviously once the
appropriate providers are selected the next and important stage is to manage them
effectively.
As well as deciding which LSP(s) to use, logistics managers also often need to decide
which transport mode(s) to use. We say often, not always, because sometimes consign-
ors do not know exactly which transport mode their freight travels on; they leave this
decision to the 3PL. Furthermore, it is often not a simple matter of trading off one mode
against another. Sometimes multiple transport modes are used in combination – in air
transport, for example, the concept of air trucking is quite prevalent whereby freight is
transported by road (sometimes over a relatively long distance) to a hub airport from
where it travels onwards by air. Direct cost comparisons between alternative modes and
services can be complex – this is the concept of generalised costs which will be dis-
cussed further in Chapter 12. In addition we will look at decision making in logistics
(e.g. how to choose a ca
ier or route) in Chapter 17.
This chapter described the important role played in supply chains by logistics ser-
vice providers (LSPs). We discussed the various, and overlapping, types of LSPs
and noted in particular the growth of a category of LSPs called 3PLs; the latter we
described as LSPs who generally offer multiple logistics services, often in an inte-
grated fashion. We then considered the raft of different services which such 3PLs
actually provide, with transportation/delivery being just one of the many services
offered. The concept of fourth‐party logistics was then explored and we noted the
eality that in many instances it is actually 3PLs that often offer 4PL® type solutions.
LEARNING REVIEW
Mangan-c07.indd XXXXXXXXXX/22/ XXXXXXXXXX:45:21 PM
Mangan, John, and Chandra L. Lalwani.
GLOBAL LOGISTICS AND SUPPLY CHAIN MANAGEMENT 3E
i>, Wiley, 2016. ProQuest Ebook Central,
XXXXXXXXXXhttp:
ebookcentral.proquest.com/li
kingsowninst-ebooks/detail.action?docID=4901892.
Created from kingsowninst-ebooks on XXXXXXXXXX:15:26.
C
op
y
ig
ht
©
2
01
6.
W
ile
y.
A
ll
ig
ht
s
e
se
v
ed
.