planning building & operating 3rd party warehousing

PLANNING - BUILDING & OPERATING

3rd Party Logistics Centre Riyadh 2010

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Functional Assessment 5Ws & 1H

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What?

Why?

Who?

Where?

When?

How?

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WHAT?The What Series

What is?

• Supply ChainNetwork that ensures the flow of products

• Third Party LogisticsOutsourcing to a Logistics Provider the flow of goods and information from sourcing raw materials to end consumer

• Main elements: Freight Forwarding – Warehousing – Local Delivery –Transportation Overland/intercity & (Water, Rail, Air cargo)

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• What type of Logistics Centre?

Operational Specifications

…The What Series (continued)

Cannot Start the logistics centre without pre-defining its operational specifications

…The What Series (continued)

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• What are Operational Specifications? Product Mix Master File– What Type of Goods?

Hazardous, Pharmaceuticals, Food, Raw Material, Semi-Finished, Assembly manufacturing, Perishables …– What Types of Storage & Handling?

Transit, repository,, stockholding, accumulation, Dry, Frozen, Chilled, Open Yard, Bulk, Palletized, Heavy, Light… Pallet in/out, Carton, Container, Piece picking… Pre-Manufacturing & Post-Manufacturing warehousing

• What will then be the Engineering & Technical Guidelines?– Tall, Big, High, Raised Floor, Plot to Construction Ratio, Docks to Floor Ratio, Office

to Floor Ratio, Mezzanine, Crane truss & beams, Future Development Strategy-Outside Expansion-Inside Changes

5

Notes• Standard type of DC cannot serve the totality of businesses

An Engineering Compromise could widen the serviced categories

Standards for Engineering Design Decision• Maximum Cubic Capacity• Fastest Method of Handling Goods • Lower Cost/InvestmentMeeting the max Productivity & Utilization and Cost Efficiency of Operations

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…The What Series (continued)

3rd Party Logistics

Operational Benefits

Financia

lBenefit

s

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WHY?The Why Series

Why go for 3rd Party Logistics? Customer’s Benefits

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…The Why Series (continued) Why go for 3rd Party Logistics?

Keywords of the mission and vision statements of a 3PL

For Customer’s INVESTMENT – Will save cash flow allowing development in Manufacturer’s core business

For Customer’s OPERATIONS– Full Utilization /productivity of Space, Equipment & Manpower– High Accuracy in Live Inventory Balances – Proper Inventory Cycle – systems offering visibility & control

• Investment in Productive Assets = Higher Production Capacity (Higher Market Share)

• Higher Utilization and Productivity (Decrease in Operating Costs)• Accurate Lead Times in receiving and shipping (Customer Satisfaction)

• Better fulfilment rates(Customer Satisfaction)• Minimum strategic inventory (Higher Cash Flow)

• Minimum Stock Expiration (Lower Cost)• Minimum Near Expiry Date Deliveries(Customer Satisfaction)

Results Results Results Results

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…The Why Series (continued) Operational Solutions Translated into Financial Results

Operations

Customer Service

Logistics Efficiency

Just-In-Time Logistics

Assets Investment & Utilization

Financial Transaction

Higher Sales

Lower Cost

Lower Inventory Level

Lower Fixed Assets

Financial Result

Profit

Lower Capital Employed

ROI

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…The Why Series (continued)

Why launch a 3PL in KSA ?

• Large Economy of 400 billion $ GDP

• Governmental efforts for diversification increasing non-oil sectors

• 3PL success stories in smaller economies

• Early bird catches the worm – Competition still minimal

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WHO?

3rd Party Logistics

Logistics

Operations

Management

Long Term Investment

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…Who? (continued) INVESTMENTS• Facilities Construction & Infrastructure• MHEs, Racking Systems, Refrigeration & Fire Systems and Information systems& Hardware

are tools necessary for operating the business and require major investments as well, Transportation vehicles, maintenance equipment & workshops

• Availability of Working Capital awaiting the Cash Inflow from Sales

MANAGEMENT• Define the guidelines for construction & equipment• Implement Clear Operational Cycle and related Processes• Manage day to day operations• Implement a logistics management systems• Implement & Manage Operations & Support Depts • Promote Productivity, Quality & Cost Efficiency• Issue & communicate reports providing full visibility & Analysis• Introduction to Logistics KPIs• Health, Safety & Environment awareness• Recruit, Train, Motivate and Develop

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WHEN?

NOWMeeting the trends

• Logistics costs = 10% of GDP

an emerging business worthy to explore

• in USA: 63% of firms now either partially or fully outsource their logistics and trends go towards the termination of this function within commercial and industrial firms

Customer’s need for:

Capital Leverage & Operations Quality

•Project InitiationI•Information GatheringII•Design & DevelopmentIII•DeploymentIV•Training & EducationV•Go LiveVI

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HOW?

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…How? (continued)

Implementation ProcessPhase I: Project Initiation

Documents Produced

Project Initiation Document:

KSA Logistics Market Overview

Recommended project scope objectives and deliverables & Location

Business Plan : Market Overview

Technical Overview

Financial Overview

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…How? (continued)

Implementation Process

Phase II: Information Gathering• Data Gathering – Product Mix Master File of the designated Location

(research, questionnaires & surveys)• Defining Engineering & Technical guidelines• Defining handling requirements Vehicles, MHEs, Racking & Refrigeration &

Fire Systems ,IT and Manpower requirements

• Documents Produced:

Business Review Document (BRD) & Revised cash flow projection with necessary funding requirements

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…How? (continued)

Implementation ProcessPhase III: Design & Development• Developing final:

Engineering & Technical Plans

• Documents Produced:– Warehouse, offices & Staging Yard Plans– Business Review Document (BRD), the New Process phase.– Functionality Review Documents (FRDs), Systems customizations

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…How? (continued)

Implementation ProcessPhase IV: Deployment• The Phase of warehouse & staging yard Construction converting the

outputs of the Design & Development Phase to a concrete solution• Recruiting, filling the preset org chart• Implementing SOPs & Systems

• Documents Produced:– Operation Procedures and Manuals– Information Systems User Accepted Testing (UAT) scenarios & results– System Integration Testing (SIT) scenarios & results– Org Chart by name and function

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…How? (continued)

Implementation Process

Phase V: Training & Education:

• Documents Produced: Training & Education Report

Phase VI: Go Live:• The Phase of putting into operation the designed solution in the

previous Phases

• Documents Produced: Go Live Report

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Outsourcing Logistics is the current trend all over the world. Results Financial: Higher ROIOperational: Productivity, Just in Time & Zero ErrorBefore launching a Logistics Centre you need

to know its target operation.

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CV

The team has over 25 years of experience in Logistics Management

o Construction of mega warehouses and logistics centreso General management Levels in multinational end to end

supply chain corporations (warehousing, Transport & Freight)

o Field managers of logistics centres and FMCG companieso Field Managers of information systems, planning and

interfacing hundreds of 3PL & 4PL projectso Managers in logistics finance and feasibility studies with

multinational companies

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QuestionsTimelines for Implementation Process 1&2:1 3:3 4&5&6:18 - Pilot Project – Performance Assessment Standards – Renewable Services Management Agreements – Service the full supply chain (Storage, Delivery, transportation & freight forwarding)

?

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Thank You ?Questions