Study on the third party logistics of oil industry in China

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Study on the third party logistics of oil industry in China


Author: Qi, Ying
Title: Study on the third party logistics of oil industry in China
Degree: M.Phil.
Year: 2008
Subject: Hong Kong Polytechnic University -- Dissertations.
Petroleum industry and trade -- China.
Oil industries -- China.
Business logistics -- Contracting out.
Department: Dept. of Logistics and Maritime Studies
Pages: 117 leaves : ill. ; 30 cm.
Language: English
InnoPac Record:
Abstract: In the transitional period from the centrally planned economy to the market economy in China, large enterprises noticed that there were problems of low efficiency but at high costs in the logistics system. With the advantages of a third-party logistics, the functions of outsourcing logistics to a third party became an international trend prevalent in many industries the world over. Aiming to reduce the cost of logistics and enhance the efficiency, the petroleum industry in China plans to outsource all its functions of supply logistics in order to achieve more efficient management of the logistics system. The decision-makers in those enterprises however may lack the in-depth and comprehensive knowledge or understanding of the third-party logistics. Should an oil company involve in a third party as a whole logistics services provider because of the unique features of oil companies and the advantages of the third-party logistics service? Will the benefits brought by the third-party logistics be higher than the total cost? This research attempts to solve these problems and give some proposals on the efficient management of the logistics functions in the petroleum producing industry of China. This research begins with the mining of the third-party logistics such as drivers and barriers, and focuses on the characteristics of goods supply in the oilfield in China. We study the characteristics in terms of the value, volume and specialty of the oilfield industry and the logistics activities, and proposed to give a framework for analysis and evaluation of the logistics service in the oilfields. First we make a classification of the goods according to three standards, then build a mathematic model to measure the logistics cost for both self-service logistics (refereed as "DIY" or "Do It Yourself) and the total cost of "3PL". Related operational data and parameters are collected from an oilfield in China for analysis. The total cost of DIY and the total cost of "3PL" are compared among different classes of materials for production and products. By simulation on different parameters of the cost function, we have detected their effects on the total logistics cost of DIY and 3PL. The analysis clearly indicates that the logistics cost is very high, and so more attention should be paid to the reduction of the cost of logistics. Logistics services for different materials or products can be given in different ways. The decision on fully outsourced logistics activities for all catagories of goods is not a cost efficient decision. Highly valued and special goods in a large volume can be more efficiently handled by DIY, while low valued and non-special goods in a small volume can be outsourced to a third-party logistics service provider.

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