The Case of Seeking the Fourth Party Logistics
Several successful cases of the fourth party logistics: In the United States, Ryder integrated logistics and information technology giant IBM and Accenture, the initiator of the fourth party logistics, formed a strategic alliance, which enabled Ryder to have professional knowledge in technology and supply chain management, but without the participation of the fourth party logistics, Ryder would need decades to accumulate these professional knowledge. In Europe, Accenture and Fiat's subsidiary, New Holland, set up a joint venture, New Holland Logistics Company, specializing in service spare parts logistics. The company is 80% owned by New Holland and 20% owned by Accenture. New Holland has invested in warehouses, 775 employees, capital investment and joint venture operation and management capabilities in six countries. Accenture has invested its expertise in management, information technology, operation management and process reengineering. Spare parts management business includes planning, purchasing, inventory, distribution, transportation and customer support. The total return on investment in the past seven years is $67 million. About 2/3 of the savings come from the reduction of operating costs, 20% from inventory management, and 15% from the savings of freight. At the same time, New Holland Logistics has achieved more than 90% order completion accuracy. In Britain, Accenture and ——Connect 2020, a subsidiary of Time Water Co., Ltd., have also cooperated with the fourth party logistics. Thames Water Company is the largest water supply company in Britain, with a turnover of over $2 billion. Connect 2020 was established to provide logistics and procurement services for the water supply industry. Connect 2020 outsources all its services to ACTV, which is managed and operated by Accenture. ACTV's annual turnover is150,000 USD, and its main business includes purchasing, order management, inventory management and distribution management. At present, the operating results include: the total cost of supply chain is reduced by 10%, the inventory level is reduced by 40%, and the unfinished orders are reduced by 70%. Who can become the fourth party logistics? The prospect of the fourth party logistics is very attractive, but the threshold of becoming the fourth party logistics is also very high. The experience of the United States and Europe shows that in order to enter the field of "fourth party logistics", enterprises must have strong core competence in one or several aspects and have the ability to easily enter other fields through strategic partnership. Experts listed some necessary conditions for becoming a fourth-party logistics enterprise: 1. World-class supply chain strategy formulation, business process reengineering, technology integration and human resource management capabilities; 2. Enterprises in a leading position in integrating supply chain technology and outsourcing capabilities; 3. There are a large number of experienced supply chain management professionals in business process management and outsourcing implementation; 4. Be able to manage multiple different suppliers at the same time; Good relationship management and organizational skills; 5. Have the ability of geographical coverage and globalization support; 6. Have a deep understanding of organizational change and management skills. In fact, the emergence of the fourth party logistics is the result of market integration. In the past, enterprises tried to meet the growth of customer service demand by optimizing inventory and transportation, using regional service agents and third-party service providers. But today, the services that customers need include e-procurement, order processing ability, virtual inventory management and so on. Some enterprises often find that third-party logistics providers lack the comprehensive skills, integrated technologies, strategies and global expansion capabilities they need at present. In order to change this dilemma, some third-party logistics providers are taking measures to improve their skills by forming alliances with excellent service providers. The best form is to form an alliance with relevant consulting companies and technology providers. With the continuous development of alliance and team relationship, a new outsourcing option began to appear. They evaluate, design, formulate and operate a comprehensive supply chain integration scheme, which is the fourth party logistics. Therefore, the fourth party logistics is the booster for the development and promotion of the logistics industry in China. The fourth party logistics not only controls and manages specific logistics services, but also puts forward a planning scheme for the whole logistics process, and integrates this process through e-commerce. The forecast shows that in the foreseeable future, it can be used as a strategic partner to connect customers' manufacturing, marketing and distribution data comprehensively and online.