KWE and Safexpress were evaluated on their innovation competence using a diagnostic tool assessing six key capabilities. KWE scored highest on external relationships but lowest on new value creation. Its overall innovation competence ratio was 86%, meaning it was 14% from ideal. Safexpress emphasized promptly responding to customer needs but had gaps in organizational transition, supply chain performance, and multi-faceted services. Its ratio was 77%, so it was 23% from ideal. Recommendations include Safexpress cultivating close client relationships and collaborating on new services. KWE needs to prioritize all capabilities equally. Both need regular competence assessments to innovate and adapt to changes.

1. A STUDY ON OPPORTUNITIES AND DRAWBACKS
OF THIRD PARTY LOGISTICS IN REFERENCE TO
SHARP ELECTRONICS AND SAFEXPRESS
Submitted By :-
Prashant Verma
2K12MKT06

2. Introduction
 A core company providing services or products is considered the first party; the customer, the second party. A
third-party, then, is a firm hired to do that which neither the first or second party desires to do. A third-party
logistics firm is a firm that provides outsourced or “third party” logistics services to companies for some
portion or all of their supply chain management functions. 3PL typically specializes in custom clearance,
Freight Forwarding, Warehousing, transportation services that can be customized to customer needs and
demand.
 As my work is in reference to SHARP ELECTRONICS a 3PL client and SAFEXPRESS a 3PL provider.
Talking about SHARP ELECTRONICS, Kintetsu World Express (India) Private Limited, provides 3pl
support and on the other side SAFEXPRESS which is largest Indian logistics company provide its services to
Tata Motors, IBM, Acer and Benetton and have more than 5,000 clients. Whereas clients of Kintetsu world
Express (India) Private Limited includes Intel, Panasonic India, Sharp Business Systems India Ltd, 3m India
Ltd, TOYOTA KIRLOSKAR etc.

3. Need & Relevance
 It is complex service process with intensive capital requirements, most of the firms outsource the
logistics functions to third-party logistics service providers (3PLs).There is still a white space in logistics
research literature how 3PL firm innovates as an organization, here in this 3pl innovation competence
model and design a 23 item diagnostic instruments to assess competence of a 3pl firm ,the model and the
instrument allows managers and researchers to assess the degree of importance and the current status of
six core innovation capabilities of a 3PL firm for further innovation efforts.
 The activities most frequently outsourced to 3PL providers are: warehousing, outbound
transportation, customs brokerage, and inbound transportation. In some parts, other frequently
outsourced activities include freight bill auditing/payment, customs brokerage, freight forwarding, and
customs clearance.

4. Objectives
Primary Objective: Studying the Opportunities and Drawbacks of Third Party Logistics in reference to 3PL provided to Sharp
Electronics by Kintetsu World Express (India) and 3PL of Safexpress.
 Finding the innovation competence of 3PL firms.

5. Third Party Logistics
A third-party logistics (3PL) firm is an external supplier that performs all or part of the company's logistics functions.
The definition encompasses providers of services such as transportation, warehousing, distribution and so on. The use
of third party logistics providers has grown dramatically over the last several years and has increasingly become an
effective way to reduce costs and spread risks for traditional, vertically integrated firms.
The major value-added services have been summarized as follows:
 Specialist or niche service, where the operations is specifically designed for a particular product.
 Time reliable services, which are set up to support the just-in-time operations of major manufacturers.
 Assembly that is fulfilled by third-party distributor.
 Refurbishment: in the light of current environmental legislation, many manufacturers have endeavored to reengineer their products so that parts from some used products can be reused in new products
 Repacking, which is another area of value added development, like a torch together with battery.
 Packaging return: collect packaging for reused or disposal.

6. Third Party Logistics Partnership
The 3PL provider is in the middle to connect between two participants which are shippers and suppliers in the
relationship. As a result it is become involved as a third party. The relationship between shippers and 3PL providers’
function is on a continuous scale. It is going from single transaction to integrated service agreements. The left part
of scale focuses only on single transactions and corresponds to the traditional relationship between buyer and seller
on the transport market. The three forms of cooperation on the right side of the scale are regarded as form of strategic
alliance.

7. Types of 3PL Providers
 Transportation Based
• Services extend beyond transportation to offer a comprehensive set of logistics offerings.
• Leveraged 3PLs use assets of other firms.
• Non-leveraged 3PLs use assets belonging solely to the parent firm.
 Warehouse/Distribution Based
• Many have former warehouse and/or distribution experience.
• They would perform activities such as, pick and pack, warehousing, and distribution .
 Forwarder Based
• Very independent middlemen with forwarder roles.
• Non-asset owners that provide a wide range of logistics services.
 Financial Based
• Provide freight payment and auditing, cost accounting and control, and tools for monitoring,
booking, tracking, tracing, and managing inventory.
 Information Based
• Significant growth and development in this category of Internet-based, business-to-business,
electronic markets for transportation and logistics services.

8. THE THIRD PARTY LOGISTICS SERVICES INCLUDE:
 Freight payment.
 Transportation.
 Order processing.
 Inventory replenishment.
 Warehousing.
 Fleet management.
 Shipment consolidation.
 Order fulfillment.
 Labeling and packing.
 Custom clearance and brokerage.

9. REASONS FOR OUTSOURCING LOGISTICS ACTIVITIES
Business
focus
related
Asset
utilization
and
efficiency
related
Operational
flexibility
related
Cost and
revenue
related
Top Five
Reasons for
Outsourcing
Logistics
Activities
Service
related

10. Reasons for Not Outsourcing Logistics
 Loss of control: Loss of control is the most commonly mentioned problem to discourage organizations from
outsourcing logistics activities. As the number of outsourcing business activities being increased, the ability to
retain the control over their 3PL providers is decreasing.
 Ascertaining the true cost: Organizations may underestimate or overlook the costs easily, because the variations
of outsourcing engagements, and it is hard to allocate the internal costs of outsourcing logistics
activities, especially when outsource information technology.
 Logistics is the only core competency in the firm: If logistics is one of the core competencies of the
company, then outsourcing these activities will make no sense to the company.
 A negative impact on employee moral: This negative impact was related to fear of job loss that accompanied a
decision to outsourcing.

11. METHODOLOGY
Collection of Data through Available Primary Sources
 An executive interview tool with 23 questions is developed from the diagnostic items and used to assess
quantitatively the innovation capabilities of a 3PL.
 Since 3PL service innovation must be led and driven by mid-level managers or executives in a 3PL as they act as a
bridge between lower and high level staff, the interview tool is designed and targeted for the managers or mid-level
executives to gain high quality information regarding the innovation of a 3PL.
 The interview questions are designed by using a seven-point Likert measurement scale. Each question contains two
types of query. The first type is to ask the interviewed executive to indicate the importance of the diagnostic
item stated in the question to his/her company by giving an integer score between one and seven, that is,
the higher the score, the greater the importance.
 The second type asks for his/her assessment of the company’s current status regarding the diagnostic item
asked in the question, again, by using the same measurement scale.

12. CONTD.
 An executives from each firm who possesses the experience and knowledge of the logistics innovation
specific to that firm was chosen to fill out the questionnaire. The questionnaire is explained interactively to the
interviewee in each case to guarantee a full understanding of all questions and the validity of the survey result.
Collection of Data through Available Secondary Sources
 Secondary data are the data which are available through sources other than the research work carried in the study.
Secondary data was collected through online medium like internet, journals and books as well as the publications
provided by the organization.

13. SCOPE OF THE STUDY
Scope of the study is confined to the Delhi & NCR as both the companies visited have their offices and warehouses
itself in this region.
Limitations of the Study:
 Time Limitation was the issue as the executives were busy in meeting and follow ups.
 The study was limited to operations in Delhi & NCR region.
 The interview process was confined to only executives so a biasedness may arise.
 Unavailability of data due to confidentiality policy of the companies.

14. Logistics Performance Measurement
A competence (or competency) is a persistent pattern of behavior resulting from a cluster of knowledge, skills,
abilities, and motivations. A core competence is the result of a specific set of skills or production techniques that
deliver value to the customer. 3PLs could demonstrate innovation by introducing process improvements, adding
technology, improving execution, or offering new services. But shippers no longer see these as truly innovative,
instead seeking disruptive innovation: a new product or service idea that when implemented significantly disrupts a
market and/or value chain by simplifying, automating, generating value, or reducing costs. Many 3PL-shipper
relationships are not set up to support innovation. They are tactical rather than strategic, offer insufficient visibility
and are limited by metrics, contract terms, and risk mitigation strategies.

15. SIX KEY INNOVATION CAPABILITIES OF A 3PL
 New value creation (NVC).
 External relationships (ER).
 Jobs-to-be-done (JB).
 Organizational transition (OT).
 Multi-faceted dimensional service offerings (MSO).
 Supply chain performance (SCP).

16. COMPANY PROFILE
SAFEXPRESS
Safexpress is India’s Leading Logistics Company and is renowned for its domain expertise and experienced
manpower in the LSCM sector. Safexpress totally understand one’s Logistics and distribution requirements and offers
the most suitable Logistics model and solution to you. Safexpress has the largest network coverage all over India
traversing over 3,50,000 km each day and covering over 550 locations through more than 750 routes operating 24
hours a day 365 days a year and reaching these locations through its fleet of 3000 vehicles operating on it. All
Safexpress vehicles are all-weather proof containers for safe transit. Safexpress also operates through Air to locations
directly covered by flights and to all other locations on a multi modal basis.

17. KWE (Kintetsu World Express (India) Private Limited)
KWE India is a Japanese based Freight Forwarding and Logistics Company. KWE India was formed in the year
1997. Since inception, KWE India has expanded its operations considerably with headquarters in Bangalore and
offices in 9 cities including regional offices in New Delhi, Mumbai, and Chennai. Today, the company has
established itself as one of the leaders in total supply chain management. KWE India is the only company in the
world that has vast global network of company owned facilities.
They handle all normal cargoes and heavy, over-sized, or otherwise unconventional cargo so that it arrives on time
anywhere in the world.
 Fully integrated international freight and logistics services by Air, Sea and Road.
 Real-time-web-enabled tracking and tracing interfaced with supply chain partners.
 Expert assistance in cargo insurance, permits and regulatory obligations.
 Network of worldwide offices provide fully integrated global logistics services, including customs brokerage,
warehousing, distribution, and inventory management.

18. RESULT
KWE
SAFEXPRESS
capabilities
STATUS
IMPORTANCE
GAP
STATUS
IMPORTANCE
GAP
NVC1
6
7
-1
5
6
-1
NVC2
6
7
-1
5
7
-2
NVC3
2
3
-1
5
6
-1
ER1
5
6
-1
6
7
-1
ER2
7
7
0
6
7
-1
ER3
7
7
0
5
7
-2
ER4
7
6
1
6
7
-1
JOB1
4
5
-1
6
6
0
JOB2
6
6
0
5
6
-1
JOB3
6
7
-1
5
6
-1
OT1
6
6
0
6
7
-1
OT2
5
7
-2
4
6
-2
OT3
4
6
-2
5
7
-2
OT4
5
5
0
5
7
-2
MSO1
7
7
0
4
6
-2
MSO2
4
5
-1
5
7
-2
MSO3
5
5
0
5
7
-2
MSO4
6
6
0
5
7
-2
MSO5
6
7
-1
5
7
-2
SCP1
4
7
-3
6
7
-1
SCP2
5
7
-2
5
7
-2
SCP3
6
7
-1
4
6
-2
SCP4
4
7
-3
5
6
-1
Total
123
143
118
152

19. RESULTS OF INNOVATION COMPETENCE:KWE
capabilities
NVC
ER
JOB
OT
MSO
SCP
CURRENT STATUS
4.67
6.50
5.33
5.6
5.6
4.75
IMPORTANCE
5.67
6.5
6
6
6
7
competence (capability average)
5.41
6.19
Innovation competence ratio
123/143
86.01
Radar chart for Innovation Competence of
KWE
CURRENT STATUS
SCP
8.00
6.00
4.00
2.00
0.00
IMPORTANCE
NVC
ER
MSO
JOB
OT

20. SAFEXPRESS
capabilities
NVC
ER
JOB
OT
MSO
SCP
CURRENT STATUS
5
5.67
5.33
5
4.8
5
IMPORTANCE
6.33
7
6
6.75
6.8
6.5
competence (capability average)
5.13
6.56
Innovation competence ratio
118/152
77.63
Radar chart for Innovation competence
Safexpress
8
NVC
6
SCP
ER
4
2
CURRENT STATUS
0
IMPORTANCE
MSO
JOB
OT

21. KEY FINDING:
 As a whole KWE got an IC ratio of 0.86, which means its 14% behind its ideal innovation competence level.
 The new value creation (NVC) current status score is the lowest at 4.67, resulting primarily from the low score
of NVC3 (the ability to notice the major regulatory changes, emergence of new technologies, market
disruptions, and environment pressures).
 It shows that KWE may pay less attention to changes in the external environment.
 An innovation competence diagnostic radar diagram is also developed to assist a 3PL innovation team to better
capture and discuss the key gaps among its six core capabilities.
 As a whole Safexpress got an IC ratio of 0.77, which means its 23% behind its ideal innovation competence
level.
 The result shows that Safexpress emphasizes its capability to promptly respond to customers’ needs.
 To shorten the gaps in OT, SCP and MSO, Safexpress needs to enhance its capabilities to support customers’
needs and offer appropriate service to the customers who need urgent logistics. Safexpress requires collaboration
among supply chain partners and team members.

22. RECOMMENDATIONS:
 Safexpress is relatively small firm than KWE so it must cultivate a close relationship with its clients and
channel members.
 Safexpress should get its customers involved in the process of new service development and collaborate
with its customers to deliver innovative service offerings.
 KWE should give equal importance to all factor lead to serve customers and innovate failing and lagging in
any may lead to downfall.
 Both companies should maintain and assess the innovation competence levels regularly so in order to
become experts for their clients, creating new value and fending off risks and uncertainties in an ever
changing world.

23. Conclusions:
In this study a true and fair picture of 3PL is portrayed so that to get a better view of what all operation and
specifications are need to follow in order to maintain a good relationship and further tie up. This study also shows
why some of the firms still fear to partner with logistics companies and shed their load as they can’t excel in the
fields which is out of their core competence but however we are seeing a trend and companies are trying to partner
with logistics companies so that they could control cost and reap benefits of uninterrupted supply of raw material and
finished products at the RIGHT TIME, AT RIGHT PLACE AND AT RIGHT COST. Here we also have how the
logistics companies can innovate and make the innovation as their core competence as in this era the extensive flow
of goods and services is there and hence the companies need to evolve themselves if they want to survive in this
world. The innovation competence model would also allow executives and managers to assess their competence so
that they could make changes accordingly and we can also understand one this as a 3PLs that cannot meet such
demanding customer requirements might be forced to serve as subcontractors to those who can, thus, incur the risk of
lower profit margins, and experience fewer growth opportunities. Through innovation, 3PLs can offer a broader range
of services meeting specific customer demands.