What is the third-party logistics process?

This paper briefly introduces the development of third-party logistics, focusing on the procurement process of third-party logistics services, and taking Procter & Gamble as an example, it makes an analysis. 1. Introduction Third-party logistics (TPL), also known as "social logistics" and "contract logistics", refers to the business model of logistics enterprises providing logistics services except the supply and demand sides [1]. Due to the globalization of the market, enterprises' emphasis on core competitiveness and the development of information technology and e-commerce, the rapid development of the third-party logistics industry has been promoted. According to the investigation report of the third party logistics in 2003, the third party logistics is in the growth period or maturity period of the market life cycle. At present, the proportion of applying third-party logistics services in Europe is about 79%, that in North America is 70%, and that in the Asia-Pacific region is 58%, and its demand is still increasing year by year [2]. The third-party logistics service provider is an independent economic entity, which has a reliable logistics network and information system, manages and controls the whole logistics operation, has efficient logistics specialization ability, provides warehousing management, transportation management and value-added logistics services for external customers, and can create value for customers, improve operational efficiency and customer service, and enhance the core competitiveness of customer enterprises. Industrial and commercial enterprises choose third-party logistics service providers, hoping to save costs, increase production capacity, improve operational efficiency and improve customer service. In the process of purchasing third-party logistics services, enterprises can reduce the transaction cost in the outsourcing process according to the standardized procurement process, improve the standardization and credibility level of service procurement, and thus choose the appropriate third-party logistics service provider. 2. The third-party logistics service procurement process The five steps of the third-party logistics service procurement process are: defining the logistics service demand; Formulate logistics demand suggestions; Select a provider; Implement third-party logistics services; Manage relationships and performance evaluation. 2. 1 Defining the demand for logistics services and the scope and requirements of procurement services is the premise for the successful operation of the procurement of third-party logistics services. The definition of service requirements mainly includes the following four aspects: (1) the definition of function description. Define the service functions to be purchased, such as transportation, warehousing or value-added services. (2) Definition of activity description. Clarify the supply process of third-party logistics services, that is, how to provide services. (3) Definition of service level. Determine the logistics service level, such as delivery consistency, order lead time, goods damage and inferior quality. (4) The definition of ability. According to the logistics demand of the enterprise, determine the service ability of the provider, that is, whether the third-party logistics enterprise has the ability to provide transportation, warehousing and value-added services to meet the logistics demand of the enterprise [3]. Through the definition of service demand, enterprises are more targeted when choosing providers. Because logistics services involve many departments of the company, such as purchasing, production and marketing, and their functions overlap with each other, all relevant departments of the company need to participate in the procurement decision-making team with the support of the company's senior leaders when defining the needs. 2.2 Develop logistics demand, and suggest that enterprises put forward the targets to be achieved in purchasing third-party logistics services, such as performance targets and cost targets. According to the target, the criteria for selecting third-party logistics service providers are set, including price, response time, operation and management structure, effectiveness of top management, quality assurance system, information technology system, financial stability, response to unforeseen environment, etc. By formulating standards, the range of third-party logistics service providers suitable for enterprises can be established, which can generally be set as Top 10, that is, the top 10 service providers suitable for enterprises, or the number of available service providers can be increased or decreased according to the actual situation. Make a Request for Proposal (RFP) according to the defined service requirements, established objectives and selection criteria. A proposal is a document that describes the logistics service requirements of an enterprise in detail and conveys the requirements to service providers to seek solutions. It will eventually become a part of the logistics service contract, which can facilitate each provider to fully understand the buyer's requirements. Logistics demand proposal generally includes the basic introduction of the enterprise, such as organizational structure, customer information transmission demand, project description, product process, transaction information and computer system information. It also includes the suggestions and requirements of enterprises on logistics service demand, such as warehouse location, transportation route and transportation scale. 2.3 Select suppliers to investigate and study the top 10 service providers that are suitable for the enterprise, understand the expertise and characteristics of suppliers, and focus on the following four aspects: ① Whether the third-party logistics enterprise has similar values to the enterprise; (2) Whether it has an updated information technology system; ③ Whether there is a stable and reliable core management; (4) Whether * * * agrees to establish a long-term cooperative relationship. Among them, whether the corporate culture and management concept of both partners are close to the choice of logistics providers is particularly important. Similar corporate culture and management concepts are conducive to communication and learning between the two partners, and improve organizational ability and operational level. Through public bidding and interactive selection, suppliers will be further screened, and the target will be reduced to 2-3. Enterprises submit logistics demand proposals to these suppliers and ask them to submit logistics solutions. On the basis of comparing various logistics solutions, choose the most suitable third-party logistics service provider. Because third-party logistics involves considerable business risks for both buyers and providers, in order to protect their own interests and reduce risks, both parties must carefully negotiate the rights and obligations in the process of cooperation, describe the service items, service levels, remuneration, organization and processes in detail, such as performance objectives, reward and punishment mechanisms and risk sharing methods, and negotiate a service contract that is beneficial to both parties. 2.4 Contract Execution and Control In the process of service implementation, the enterprise should jointly supervise and inspect the implementation of the contract with the provider, and the provider should also give timely feedback on the problems in the process of service implementation. If it is necessary to modify the original contract terms due to some unexpected factors, such as modifying the warehouse layout and changing the delivery date, both parties should still fully communicate and cooperate to solve the problem and eliminate the unfavorable factors, otherwise the change that is indifferent to the purchaser may bring huge losses to the supplier; Similarly, the supplier's request for changes will also make the procurement face great difficulties. Communication in execution can be a link between purchasing enterprises and service providers, expand their contact area and promote their cooperation. 2.5 Relationship Management and Performance Evaluation Enterprises use third-party logistics services to reduce the burden of enterprise logistics work, but enterprises still need to carefully monitor the work of suppliers to ensure that problems are found and solved in time, and establish an information communication mechanism to ensure the stability of services, improve the reliability and quality of services, reduce operating costs, achieve continuous improvement of logistics processes, and strengthen the relationship between the two parties. In relationship management, it is an effective management method to establish a team joint task team. Enterprises and suppliers often exchange and communicate information about cost, operation plan and quality control. Relevant personnel of both parties discuss and solve various problems encountered in the supply process, establish a good cooperation atmosphere, increase the flexibility and adaptability of the system, and maintain and improve the cooperative relationship between the two parties. Enterprises should establish a performance evaluation system to evaluate the performance of third-party logistics service providers. Performance evaluation system generally consists of two parts: qualitative evaluation and quantitative evaluation. Qualitative evaluation mainly includes service reliability, timeliness, convenience, ordering interval, flexibility and financial stability; Quantitative evaluation mainly includes service price, response time, etc. [2]. Enterprises formulate standardized and standardized supplier evaluation standards, and conduct multi-level, multi-channel and all-round performance evaluation of suppliers, so as to provide a basis for achieving performance evaluation and incentives for suppliers. Through evaluation, if the third-party logistics service provider not only meets the needs of enterprises, continuously improves service quality and operational efficiency, but also realizes close cooperation with enterprises and becomes an inseparable part of enterprise operation, enterprises can consider establishing long-term cooperative partnership with them. Otherwise, after the contract expires, we can consider whether to change our partners. 3. Case analysis: Procter & Gamble is the largest consumer goods manufacturer in the world. From 65438 to 0992, P&G entered the China market and established a large-scale production base in Guangdong. For Procter & Gamble, which has just entered the China market, whether its products can be delivered to all parts of the country in time and quickly is an important link for it to seize the China market quickly. In order to save transportation costs, Procter & Gamble seeks railway solutions besides road transportation, which leads to the demand for transportation logistics services. As a manufacturer of daily products, P&G's logistics service demand has high requirements on response time, service reliability and quality assurance system. According to the logistics service demand and service requirements, there are two main types of logistics enterprises that enter the P&G field of vision: state-owned enterprises and private storage and transportation enterprises that dominate the logistics industry. After investigation and evaluation, Procter & Gamble believes that the state-owned logistics enterprises at that time were single in business, either only engaged in warehousing or only responsible for railway transportation, and the warehousing equipment was backward, the quality assurance system was imperfect, the information technology in transportation was backward, employees lacked service awareness, and the response time and service reliability could not be guaranteed. Therefore, P&G turned its attention to private storage and transportation enterprises. When selecting the third-party logistics enterprises, Procter & Gamble found that Baogong contracted the railway freight transfer station to provide "door-to-door" service, and its operating characteristics were "quality first, customer first and 24-hour service". Therefore, Procter & Gamble submitted a proposal on logistics demand to Bao Gong, and made a tentative investigation on Bao Gong's logistics capability and service level. Focusing on the logistics needs of Procter & Gamble, Bao Gong designed the business process and development direction, and formulated a strict process management system to "protect the products of Procter & Gamble", which met the requirements of Procter & Gamble. At the same time, Bao Gong's long-term desire for good cooperation and serious and responsible cooperative attitude were welcomed by Procter & Gamble, which enabled Bao Gong to pass the inspection smoothly. P&G finally chose Bao Gong as its partner, and the two sides signed a general agent contract for railway transportation and began formal cooperation. In the process of implementing the third-party logistics service, Baogong established a nationwide logistics operation network to provide value-added services for Procter & Gamble to ensure that the goods are operated according to the same operation methods, modes and standards during transportation. After the goods are transported to the destination, Baogong's employees who have received professional training in storage and transportation will receive, unload and deliver the goods, providing "one-stop" service for Procter & Gamble. And in accordance with strict GMP quality management standards and SOP operation management procedures, P&G products will be delivered to sales outlets all over the country quickly, accurately and timely. The initial cooperation between the two sides has achieved quite good results. Bao Gong saved 6 million dollars for Procter & Gamble in one year, and the high-quality and high-standard logistics service demand of Procter & Gamble greatly improved Bao Gong's service level. With the growth of Procter & Gamble's business in China, the demand for warehouse storage has greatly increased, and Baogong's good operating performance has been recognized by Procter & Gamble, and its warehousing business has been further outsourced to Baogong. According to P&G's logistics demand, Bao Gong plans to design and implement a logistics management system, optimize business processes, integrate logistics supply chain, meet P&G's personalized demand with the mode of "tailor-made, integrated operation and personalized service", improve logistics reliability and reduce total logistics cost. Driven by the cooperation between the two parties, Baogong has established a high-level information technology system to help manage and provide a comprehensive and effective information platform, realize real-time online tracking of key logistics information such as warehousing and transportation, realize seamless docking with P&G electronic data, effectively integrate the operation processes and information of P&G and Baogong, and make logistics more efficient, reasonable and systematic. Dongbao's strict and high-quality logistics service greatly reduces P&G's logistics cost, shortens the order cycle and transportation time, and improves P&G's customer service level. Procter & Gamble promoted the continuous improvement of Baogong logistics service level and became the leading third-party logistics enterprise in China. P&G Company chooses Bao Gong as the third-party logistics service provider according to its own needs and cooperates. Under this cooperation mode, the goal of "win-win" has been achieved. With the increasing demand of logistics market and fierce competition in international and domestic markets, the success of Procter & Gamble in applying third-party logistics will set a benchmark for China industrial and commercial enterprises to purchase third-party logistics services and choose logistics service providers. 4. Conclusion Third-party logistics enterprises can reduce logistics costs, shorten order cycle and transportation time, and improve customer response ability; It can also create value for customers. In order to choose a suitable third-party logistics service provider, industrial and commercial enterprises need to accurately define their own logistics needs, then select suppliers that can meet the needs and goals of enterprises, and finally conduct relationship management and performance evaluation on suppliers. The application of third-party logistics in enterprises can not only improve service performance, but also significantly reduce the total logistics cost.