Bulk Distributor Nov/Dec 18 | Page 4

4 B ULK D ISTRIBUTOR Sector Focus: Chemicals November/December 2018 Medium-sized, chemical companies generally see logistics as a cost centre THE QUICKLY CLEANED AND MAINTAINED ISO TANK CONTAINER JUMPS OVER THE LAZY DOG. COME AND SEE! companies to use the latest technologies for distribution, without having to invest in market analysis and implementation themselves. The report concludes with some guidelines for chemical companies to follow when making ‘make or buy’ decisions in logistics. Providing clarity In order to make the correct decision when outsourcing logistics management tasks, chemical companies must be clear about their own motives. Is it about saving costs, transparency, increasing flexibility or a new transport management system? In addition, they should be aware of the role of logistics in the company and their own corporate culture. It is also necessary to examine the complexity and the internal framework conditions, before the specific contractual arrangement of the co-operation with a logistics service provider can be considered. When 4PL, LLP and 3PL make sense The outsourcing of strategic or tactical logistics management tasks to a 4PL provider or LLP is only useful if logistics are particularly seen as a possible opportunity to stand out from the competition. 4PL providers require a co-operative and process- oriented corporate culture. Generally, LLPs are able to cope with advanced hierarchical-functional structures. Chemical companies should favour carrying out strategic and tactical logistics management tasks themselves if there is a very hierarchical and functional corporate culture. If chemical companies see logistics purely as a cost centre or function that generates downstream added-value services, the outsourcing of operational logistics tasks to a 3PL provider is to be recommended, especially if there is a collaborative, process- oriented corporate culture. If there is a focus on the costs of the logistics, in combination with a very hierarchical and functional corporate culture, then a chemical company should also take responsibility for operational logistics with its own employees and use freight forwarders, shipping companies and warehousing companies selectively. Reduce complexity with LLP S FIND U HERE GERMANY: HUERTH. STADE. SPAIN: ZARAGOZA. UAE: DUBAI. TALKE.COM/CLEANING The high number of players and interfaces, as well as the heterogeneous nature of these, leads to a high level of complexity, particularly in the management of distribution in chemical logistics. A company in the chemical industry can reduce this complexity by using 4PL services. The use of an LLP often proves to be more advantageous than using a 4PL provider, because the LLP can link the bundling effects in its own transport network with that of other partners to optimum effect. In-house or 4PL/LLP? One important component of 4PL services is the informational integration of all relevant processes in a customer’s supply chain, in order to achieve cost optimisations and service improvements through transparency. Open, flexible IT platforms are required for this. A company in the chemical industry can develop and operate these itself. Providers of 4PL services generally already have tried-and-tested IT platforms, so the use of a 4PL provider or LLP can be useful. Whether an in-house IT platform or a 4PL provider or LLP should be favoured depends on the degree of coverage of the supply chain and the performance of the platform. Dynamic management in the supply chain Companies in the chemical industry have to manage different dynamic incidents in their supply chain. These include, on the one hand changes, to production volumes, for example as a result of price fluctuations, changing demand, legal changes or new product launches. On the other hand, supply chain management is required due to fluctuating availability in the area of warehouse and transport capacities. A provider of 4PL services is sometimes better able to balance out these fluctuations than a company in the chemical industry itself. This is possible both with a 4PL provider as well as an LLP. What is crucial here is the actual option to access transport and warehouse capacities, either through a company’s own assets, pooling systems or market power in certain logistics segments. Readjustment of the supply chain If a tactical readjustment of the supply chain is necessary for individual resources and logistics partners, this can be undertaken effectively by providers of 4PL services. Both an LLP and a 4PL provider is suitable for this. Experience and knowledge of the logistics markets and network plans are essential. Innovation skills The future viability of a supply chain is determined not least by its ability to innovate. This can be significantly increased through the use of 4PL service providers. Both 4PL providers and LLPs can be the correct choice here. Chemical companies should assess the innovation skills of their partner, both based on innovative future concepts, as well as actual solutions developed in the past. Neutrality? If strategic aspects such as regular changes to the resources used and long-term logistics partners are needed for 4PL services, then the use of a 4PL provider is to be favoured, as it can make decisions more independently of interests in in-house asset utilisation. However, a neutral consultancy company acts even more independently of any self-interest in this case. The subject of neutrality should be considered in a differentiated way when selecting service partners, ie, what type of neutrality is necessary at what point in the co-operation and how can decision-making in the interests of the client be ensured through contractual agreements and organisational measures? A blanket statement that a certain 4PL provider is generally more neutral than another is not useful. www.camelot-mc.com