Drop Shipping

One form of retailing that has become very popular with the advancement of e-commerce is drop-shipping. The process in which a retailer markets a product, collects payment from the customer and then orders the item from a supplier, to be shipped directly that customer. The retailer's profit is the difference between the amount collected and the amount spent. No inventory is held and the retailer is not involved in the shipping.
The biggest appeal of drop shipping for the retailer is that there is no inventory to stock. This frees up cash as it allows the retailer to collect the money before purchasing the wholesale product. Because it is the supplier's responsibility to ship the merchandise to the customer, the retailer is free from any transport headaches that may occur.
One issue retailers may find in working with a drop shipper is the lack of control. Drop shipping isn't risk free and when problems arise it can become frustrating to simply play middleman. Retailers may still be faced with back-orders, returns and customer refunds. Some drop shippers assess a drop shipping fee or even a membership fee to the orders which may erode profits.

Critical Success Factors for Retailers

1) Maintaining a low cost operations.
2) Investing in appropirate & cost effective technology.
3) Focusing on customer service and loyalty.
4) Building a reliable supplyc chain and logistics systems.
5) Making adequate capital investments.
6) Effective positioning of the retail outlets.
7) Efficient human resource training & retention.
8) Creating & nurturing private lable brands.
9) Reducing shrinkage & pilferage.

More on 3PL

In India, almost every other fleet operators calls themselves a 3PL service provider. This has led to lot of confusion and poor customer satisfaction. 3PL service provider other than providing the standard transportation services also provides necessary supporting services like cross-docking, reverse transportation, warehousing, inventory management, packaging etc. The clients benefits from the extensive experience & knowledge base of 3PL service provider.

The factors that should be considered before outsourcing to 3PL are:

1) Price of 3PL services.

2) Depth of knowledge & experience.

3) Range of available value added services.

4) cultural & strategic fit with 3PL provider.

5) Available information technologies and compatibilities.

Some of the problems being faced by the companies using the services of 3PL's are:

1) Service Level commitments not realized.

2) Lack of continuous, ongoing improvements and achievements in offerings.

3) Cost reduction has not been realized

4) Information technologies capabilities not sufficient.

5) Lack of project management skills.

6) Unsatisfactory transition during implementation stage.

7) Ineffective management of key Performance Indicators (KPI)

8) Lack of global capabilities.

For successful implementation of 3PL services it is imperative to:

1) understnad the goals & objectives.

2) Clear communication between the parties involved.

3) Trust & commitment of top mangement

4) Have shared decision making & ability o reach consensus on matters of importance.

5) Have effective process meassurement & management (KPI)

The contract or agreement with the 3PL provider generally addresses the following issues:

1) Rates & compensation details.

2) Service standards and performance requirement.

3) Process of termination

4) Terms for renewal of agreement

5) Penalties for non-performance.

6) KPI's (like on time delivery, order picking accuracy, on time shippring, loss or damange during in the process etc.) to determine compensation and penalties.

7) Information technologies mandates.

KPI's establish customer's expectations in terms of performance, provide an incentive for the service provider, offers an objective way to assess performance, helps compare peformance vis-a-vis other service provider, identify cause of failure and avoid disputes.

Supply Chain at Marico

The company with 6 factories & about 1000 employeers, currently has 9 brnads, produces 125 SKU's with its 15 subcontracting manufactuers, selling through 3500 distributors to 1.6 million retail outlets. Thus it becomes crucial for the company to have an efficient supply chain management. With the increase in competition & product mix the company faced tremendous challenge in mainting the same service levels which resulted in stock out, rising inventory, inaccurate forecast, delays in response to market requirement causing dissattisfied customers. To overcome this the company implemented my sap SCM across all locations in a big bang way. The implemention started in 1999 and was completed in 2 years time. The result was improved forecasting, reduced forecast cycle from 30 days to 15 days, enhanced decision making, decreased stock outs, reduced lost sales, low inventory and improved customer satisfaction. In future the comany plans to implement my SAP VMI (vendor managed inventory) which will link the distributors to companies system thus further reducing the forecasting cycle to 10 days leading to further boost to Maricos top & bottomline

3PL

3PL
What is 3PL?
Also known as contract logistics, 3PL or 3rd party logistics is the supply chain practice where one or more logistics functions of a firm are outsourced to a 3PL provider. Typical outsourced logistics functions are: inbound freight, customs & freight consolidation, distribution, and management of outbound freight to the client’s customers. Other value added services can be provided, such as: repacking, assembling and return logistics. The 3PL provider manages and executes these particular logistics function using its own assets and resources, on behalf of the client company.
The benefits include lean organization (without owning much assets), focus on core competencies and reduced operational costs.
3PL is gradually evolving into 4PL wherein the supply chain service provider that searches the best logistical solutions for its client, typically without using own assets and resources. Relatively new is the term 5PL or even 7PL, indicating total supply chain management.
Four categories of 3PL provider
Standard 3PL provider: This is the most basic form of a 3PL provider. They would perform activities such as, pick and pack, warehousing, and distribution (business) – the most basic functions of logistics. For a majority of these firms, the 3PL function is not their main activity.
Service developer: This type of 3PL provider will offer their customers advanced value-added services such as: tracking and tracing, cross-docking, specific packaging, or providing a unique security system. A solid IT foundation and a focus on economies of scale and scope will enable this type of 3PL provider to perform these types of tasks.
The customer adapter: This type of 3PL provider comes in at the request of the customer and essentially takes over complete control of the company’s logistics activities. The 3PL provider improves the logistics dramatically, but do not develop a new service. The customer base for this type of 3PL provider is typically quite small.
The customer developer: This is the highest level that a 3PL provider can attain with respect to its processes and activities. This occurs when the 3PL provider integrates itself with the customer and takes over their entire logistics function. These providers will have few customers, but will perform extensive and detailed tasks for them.

Collaboration the key to success:
Supply chain collaboration between a 3PL and a customer occurs when both organizations work toward a common set of goals and objectives, and when there is a meaningful exchange of information relating to planning, management, execution, and performance measurement. Collaborative relationships thrive on the dedication of both parties to share responsibilities of people, process and technology, in order to drive change and improvement in the overall business relationship. To be effective, the collaboration process should involve not only 3PL and their customers, but customers-customers, suppliers and other key stakeholders. In reality, 3PL’s are in a great position to facilitate collaboration between customer organizations and its trading partners.
Benefits of collaboration
1) A seamless, 360 degree view of supply chain (upstream to suppliers and downstream to customers)
2) Access to 3PL’s experience and expertise.
3) Improved customer service at lower cost
4) Reduced inventory and stockouts as a result of collaborative forecasting activities.
In general, the executives believe that benefits of 3PL outweighs cost.

The logistics providers in India includes:
www.neccgroup.com www.ktcgroup.com www.lakshmicargo.com
www.namakkaltransport.com www.omlogistics.co.in www.indiatrans.in
www.nyklogistics.com www.indoarya.com www.exlindia.com
www.dtdc.com www.sgtpl.com www.groupinland.com
www.diliproadlines.com www.psts.in www.tcil.com
www.hexcargo.com www.tvslogisticsservices.com, www.tvslogistics.com
www.vrllogistics.com www.patel-india.com www.afl.co.in
www.reliancelogistics.com www.safeexpress.com www.Aramex.com
www.Bluedart.com www.Capricornlogistics.com www.Kailashshipping.com
www.sical.in www.secl.net www.serl.com www.tll.co.in www.totallogistics.in