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Mr. Rolf Habben-Jansen
CEO Damco (AP Moller-Maersk Group)
These days, buzzword 4PL is replacing 3PL. Can you help us understand its role in the future logistics, and services evolving around this concept?
We have seen the process of outsourcing develop over the past few years into a fundamental business strategy for all industries across the globe. The process of outsourcing began with fringe activities but as the world has seen the benefits over the years, today the industry players have started outsourcing more and more core activities as well.
The emergence of 4PL and LLP´s (Lead Logistics Providers) is a result of this trend coupled with the increase in complexity of global supply chains. Earlier a company could afford to manage a panel of outsourced 3PL service providers since their supply chains were geographically confined to a smaller area and involved few stake holders. But today the supply chains have become global with both procurement of raw materials, production and distribution being carried out across multiple continents involving a wide array of service providers across customs clearance, trucking, warehousing, ocean freight, air freight and domestic distribution. Selection and management of logistics service providers across such a wide spectrum has become a difficult task. Over and above, it has become difficult to drive analysis and improvement of supply chains with a strategic vision while managing the diverse supply chain operational requirements.
This situation is what makes a 4PL or LLP relevant in today’s times. By combining processes and technology the 4PL or LLP brings value and a reengineered approach to the customer’s need by being neutral and by managing the entire logistics process, regardless of what carriers, forwarders or warehouses are used. The 4PL or LLP acts as an extended arm of its customers supply chain team and manages the entire process of 3PL selection, setting performance metrics, linking systems to provide visibility of agreed metrics and periodic evaluation of the selected 3PLs.
So organizations outsourcing their logistics activities need to ask some basic questions – Should we outsource a function or a process? A 3PL focuses on the function, where as a 4PL, on the other hand, targets the process, which basically is the true need of the customer. Organizations should probe in detail if there are processes in place? If yes how good are these processes? How do they work? What are their shortcomings? How can these be overcome?
In what ways has ‘Environment Friendly’ concept been core to your CSR agenda?
As a global freight forwarding and supply chain management company, we are highly conscious of our responsibility to protect the environment. We want to be at the forefront of environment sustainability practices to be able to advise our customers and be recognized as thought leaders within green logistics. Thus to cater to the customer’s needs we have designed specific supply chain products - SupplyChain CarbonCheck, SupplyChain CarbonDashboard and Packaging Optimization Service. Through these value propositions we strive to reduce our customers’ carbon footprint across their entire supply chain processes leading to not only monetary savings but also helping them to contribute favorably towards environment.
Damco, as an organization, understands its responsibility well towards environment sustainability and through a five-point strategy (mentioned below) we aim to achieve the targets that we have set for ourselves.
o Focus on global environmental KPIs including carbon footprint and air miles
o Reduction of carbon intensity to meet our goal of a 30% reduction by 2014
o Mapping of main suppliers’ sustainability practices
o Introduction of environmental criteria in supplier selection
Supply chain carbon footprint
o Helping customers to assess and reduce their carbon footprint
o Development of low-carbon supply chain solutions
o Establishment of partnerships with environmentally renowned institutions
o Sharing sustainability best practices with competition
Green product portfolio
o Assessment of sustainability opportunities for existing product portfolio
o Introduction of new services with a lower environmental impact
It’s been very insightful speaking on the textile logistics with you, Mr. Jansen! Thanks a bunch for your time and enlightening comments.
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