logistics & scm ( introduction )

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Logistics & SCM Management

Prof: S.B.Choughule

EMIB-IIFT-New Delhi

Member of Logistics Committee

Maharashtra Chambers Of Commerce & Industry

Logistics

• India’s logistics sector is in thetremendous growth path. Logisticsactivities are expanding due to,

• Globalization –

• Expansion of manufacturing base in India

• Logistics hub• Fast growing retail sector

Elements of Logistics Activities included in Logistics Management

• Procurement- Sourcing & purchasing

• Warehousing & Storage of finish product

•Material Handling at warehouses ports & ICD• Transportation goods with various mode

• Inventory Control –Minimization

• Physical Distribution of finish product

• Information & Communication

• Packaging

Defination of Logistics

The management of the storage and flows of goods, services and informationthroughout from origin of suppler to the

end user of finish products3 R in Logistics

1) Right time

2) Right quantity

3) Right place Mumbai’s Dabewala is bestlogistics service provider

Types of Logistics

• Inbound –

• From procurement of raw material at originto the factory (production centre ) withvarious mode of transport

• Outbound

• Supply of finish product from factory todistribution centres

• ESSAR steel Ltd is best example in India

Procurement

• Domestics market – Quality & price

• Foreign market –Transportation cost Import duty

• Order processing –job order

• Vendor selection based on following two

• Lead time

• Economic Order Quantity

WAREHOUSE

• A warehouse is a commercial building for storage of goods. Warehouses are used bymanufacturers,importers, exporters, wholesalers

, transport businesses, customs• The warehousing sector is another vital link in

the logistics chain, one which is evolving at arapid pace. Where once a big shed and a forklift

was all that was needed

• Repacking is done in warehouseType of warehouse –Public and bonded warehouses

General view of warehouse

Transportation

• Goods must be transported from their place of production to the many locationsof their consumers. This operation is an

important marketing function. Primarycarriers are those using their ownequipment for the transportation of goods.There are five types of primary carriers for

the transport of goods: railroads, waterwaycarriers, motor-freight carriers, pipelinesand air-freight carriers.

Transportation

• Various mode of Transport

• Sea

• Road• Rail

• Air

• Pipeline• Electronic

Sea Transport

• Used by firms for delivery of goods fromdistant suppliers, mostly conducted incontainers of varied size. This mode is

ideal for transportation of heavy and bulkygoods and suitable for products with longlead times.

• Used by suppliers to deliver goods in a costeffective manner and best suited for shortdistances. Many transport companies haveexpertise for fast delivery, packaging etc. for

making scheduled delivery.

Rail TransportIndian Railway have 10 zones

CONCOR is carrying containers only

Govt has issued 15 private companies to transport goods includingcontainers

• Used mostly for delivery of high value andtow volume goods from distant suppliers,usually not connected by any other mode

of Transportation. It is also suitable for emergent item to be imported for somespecific requirement.

Cargo handling

• It is important to carefully arrange the stowage of packaged cargo, such as cartons, cases anddrums, in order to maximize the use of availablespace. This will effectively maximize freight

capacity while helping to prevent cargo fromshifting during transportation. Finally, in order toavoid cargo displacement and other subsequentdamage, which can be caused by externalfactors during transport, it is essential to secure

cargo within the container. Certain normalmethods of stowage and securing are explainednext

Palletization

• The loading of cargo, traditionally performedmanually, has been expedited by the use of pallets and forklifts.

Moreover, compared to manually loaded cargo,the palletized form is more likely to preventdisplacement or damage.

To maximize space, it is imperative to utilizepallets that can be loaded into containers withoutleaving unfilled space.

Inventory Control

• Inventory movement

• Forecasting

• Inventory control –minimum inventory atgiven point

• Infrastructure in India affecting inventory

country

Physical Distribution

• Out bound logistics

• Distribution Channels• Whole sellers

• Retails

• End User Customer

Information

• Communication from every stage

• Helps for production planning

•IT• Website

• Internet

Logistics cost

• Break up of cost• Transport -40%• Inventory 24%

• Order processing and Administration -10%• Warehousing 10 %• other cost -16%• ------------------------------------------

• Total 100%• ---------------------------------------------• Which cost can be saved?

Logistics Cost

• India INC increasingly looking to cut their logistics costs in a bid to improve their profit margins, Thus role of Logistics is

important

• According to Logistics expert , evencompany save 1 % of logistics cost India

will save rs 25,000 crore

Logistics cost % of GDP

• USA -8%

• North America -10.77

• Europe -11.79• Asia pacific -11.64

• Remaining 11.74

• India -13 -14 %

3rd Party Logistics

• Third Party Logistics (3PL) provider handles allor most of freight of the organizations includingthe management of information by the thirdparty, freeing the company from day to dayinteraction with carriers, and having to overseehundreds or thousands of shipment.

• New and cheaper information flow resulting frominternet enabled solutions, will lead not onlyachieving immediate cost reductions inoperations but also to enormous productivitygains over the next few years.

3rd Party Logistics market

• Outsourcing of 3rd Party Logisticsbusiness (3PL) in India is all set to acquirea size of US$ 90 million by 2012 as the

concept introduced in US and Europe isfast catching up the pace to increase theefficiency of domestic corporates through

efficient logistic functions, according to the ASSOCHAM.

Development of SCM

• Material Management -1970

• >Purchasing & stock keeping >Allocation & scheduling

• Extended Material Management -1980

>Production planning & control

• Logistics Management -1090

• >Order processing control & distribution

• Supply Chain Management –After 1990

• >Supplier’s Suppliers to Customer’s Customers

SCM Integrated approach

• SCM is the integrated approach of planning , sourcing making and deliveringproduct from raw material to end user

customer

• SCM considering supplier’s supplier tocustomers Customers

• Example 1) Garware Marine Industries Ltd

• Re logistics is part of SCM

Drivers of SCM

• There are 4 drivers of effective SCM

• Inventory –Cost of holding and availability

•Transport –Moving inventory from place to placespeedily

• Facilities –places where inventory is stored, assembledor fabricated –factory- warehouse –ports –CFS –ICD

• Information -information flows from one place of SCMto other –supplier to manufacturer –transporter wareoperator -distributor retailers

Case study

• There are 20, 000 imported containers are lying atJNPT to evacuate from port to ICD

• What would be the impact on logistics management of

manufacturing company located at New Delhi ?

• And comments on

• 1) facilities• 2) cost

• 3)inventory

ICD Patpargang –New Delhi

Logistics & SCM

• Transport is a back bone of Logistics &logistics is a sole of SCM

• SCM is a key word of to days business

Thanks

• 5 April 2010• Prof: S.B. Choughule

• Shamc2001@yahoo.co.in

logistics & scm ( introduction )

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