Thanks to the previous article "3PL vs 4PL: Explaining the difference for logistics customers", it’s now easier to talk about 360° vendor assessment. The key thing to remember here is that exactly what we’re evaluating, while mostly similar, will vary – between industries and regions, according to the requirements of the specific project/customer, and based on whether we’re looking at the logistics or the supply chain, i.e. 3PL or 4PL.
KUALA LUMPUR: The coal and fuel supplier to Tenaga Nasional Berhad (TNB) Generation and independent power producers, also a wholly-owned subsidiary of Tenaga Nasional Berhad, TNB Fuel Services Sdn Bhd, said it is on track to tackle national energy challenges and sustainability issues.
We recently received an interesting question regarding the possibility of making a full, 360-degree assessment of the capacities of 3PL and 4PL logistics service providers.
This set me thinking about the fact that these terms "3PL" and "4PL" are thrown around a lot by industry people, but that not everyone who hears them will necessarily have a clear understanding of the differences between the two levels.
"Measurement is the step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it."
The above quote has become so closely linked to KPIs, I think if I didn’t use it I’d lose credibility.
KPIs can help you to understand areas of success and challenge and adjust plans based on the outcomes. KPIs are a concise way of reporting the status of activities and sharing success stories within the team, executives and stakeholders. Internal goal setting becomes easier and clearer to communicate with standardised KPIs. External benchmarking also requires KPIs in order to be effective.
A major output of the strategy development process is a set of functional strategic objectives, including procurement strategy objectives. As procurement managers interact with other members within their business, as well as with corporate executives, a major set of strategic directives should begin to emerge.
The process of aligning procurement goals with business objectives is especially important for procurement managers. These managers often face some very broad directives from corporate management, for example, to reduce costs or improve quality. The strategy development process takes place on four levels as outlined below.
The need for procurement to develop processes, which enhance an organization’s competitive position through strategic sourcing, is greater than ever. From this perspective, an effective sourcing process means more than simply promising maximum efficiency or lowest cost. Given the diversity of available strategies, an effective sourcing process is one that fits the needs of the business and strives for consistency between the internal capabilities and the competitive advantage, which is sought, as defined by the business strategy.
What a year it’s been! People have talked about the industry being ‘broken’ and needing a ‘quantum shift’ to move forward to support international trade effectively. Many people have spoken about logistics being a commodity, and a zero sum game for the good of trade. However, significant steps have taken place to move the industry forward. Here are 5 key changes that have taken place.
Low-value Procurement (also known as tail spend) is usually considered as low risk and not strategic to be controlled, therefore the process is decentralized with huge total amount of spending and high risk to audit findings. This was a case study presented during our last Procurement Quarterly Meetup by Lily Sastriyanti, who is the Procurement Manager of CNOOC SES.
Lily has spent more than 10 years of assignment in Procurement Department working with Oil & Gas operators in Indonesia, specializing in the area of Contract Management and Cost Control. She has been leading her team in the development of Procurement Strategy for the required Services and Goods.
In her 30-minutes presentation, she presented a case study of her procurement transformation initiative. She shared her learnings on how she centralized the tender process for low-value procurement services to create more controllable spending, including challenges on the business process changes. The new centralized procurement process has resulted on the significant decrease of the number of SO per year, which in turn have contributed to improved compliance and avoidance of 75% yearly average spending cost of low value procurement to her company.
So, you aren’t a logistics person and you don’t know the red flags to be aware of when undertaking an international trade. Here are the things that you should focus on to make sure that your logistics service provider is acting in your interest.
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