Third-Party Logistics Services (A): CreoScitex

The outsourcing of the logistics activities has recently been accelerating. While outsourcing offers great potential for cost savings for the manufacturer, the danger of customer service degradation should not be underestimated. The logistics service provider (3PL), on the other hand, should have flexible and efficient processes so as to achieve the service requirements of its client in a profitable fashion. The case provides an appropriate background to discuss ways to obtain a mutually beneficial contract in outsourced logistics services.

Identifying the logistics needs of CreoScitex, including its products, its customers, delivery requirements, after-sales service requirements, manufacturing processes, and its supply base Determining service levels for CreoScitex's key needs Establishing key performance indicators with the goal of reaching a service level agreement. Understanding the expectations and commitments of both parties for total logistics management services Drawing of a contract that formalizes these service requirements together with payment and penalty terms Identifying Flying Cargo's capabilities in meeting these service requirements Determining Flying Cargo's requirements including supplier and customer information, IT investment, and contract duration