basic info about logistic

7/30/2019 Basic Info About Logistic

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LOGISTICS & SUPPLY CHAIN

MANAGEMENT


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Well . . . . Is This Logistics ?
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Actually . . . . . This Is Logistics


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Logistics Management

LOGISTICS IS THE PROCESS OF PLANNING IMPLEMENTING ANDCONTROLLING THE EFFECTIVE AND EFFICIENT FLOW AND STORAGE OFGOODS, SERVICES AND RELATED INFORMATION FROM THE POINT OFORIGIN TO THE POINT OF CONSUMPTION FOR THE PURPOSE OFCONFORMING TO CUSTOMER REQUIREMENTS.

( COUNCIL OF LOGISTICS MANAGEMENT/USA)

ITS ORIGINS BELONG TO MILITARY OPERATIONS RELATING TO THECOMPLETE SYSTEM OF MOVING, SUPPLYING AND QUATERING TROOPSAND ALL THE RESOURCES THEY NEED.

IN TODAYS HIGHLY COMPETITIVE INDUSTRIAL SCENARIO OF GLOBALCOMPETITIVENESS, LOGISTICS HAS TRULY BECOME A STRATEGICWEAPON AND MOST IMPORTANT FACTOR IN THE SUPPLY CHAIN


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Contd

Getting the right product to the right place in theright quantity at the right time, in the bestcondition and at an acceptable cost.

(The Chartered Institute of Logistics & Transport)

Logistics involves 8 Rs- Logistics involves

getting, in the right way, the right product, in theright quantity and right quality, in the right placeat the right time, for the right customer at the

right cost.


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Global : Logistics Industry Scenario The logistics industry is valued at US$ 3.5 trillion.

The U.S., which contributes to over 25% of the global industry value, spends close to 9% ofits GDP on logistic services.

The sector currently employs over 40 million people in the world

Countries Logistics Cost/GDP

India/China 13-15%

U.S 9.90%

Europe 10%

Japan 11.40%

Technology19%

Retail17%

Industrial19%

Health Care

4%

Consumer23%

Chemical4%

Automotive10%

Others4%

Global Industry Verticals - Logistics Activity

Countries Logistics Cost /GDP


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India : Logistics Industry Scenario

Total GDP US$ 3 Trillion. India spends 13% of its GDP on logistics compared to an average of

10% in other developing countries.

India logistics market to double by 2012.

The industry would need 4,20,000 skilled people in the SeniorResource Category in warehouse management it self, by 2015.

Currently, India logistics industry has only 14,000 WarehouseManagers but required are approx. 35,000 .

Technological change in the logistics industry demands a trained

workforce in all areas of the sector. Indian logistics industry is at an inflection point and will reach a

market size of over $125 billion in year 2010.

The organized logistics, which is about 6% of the total logisticsmarket, is growing @ 15-20% a year.


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Logistics Mix

Logistics covers the following functional areas,and are termed as Logistics Mix by MartinCristopher.

1. Information flow- Order registration, orderchecking & editing, order processing,coordination

2. Warehousing- Material storage, materialhandling, site selection & network planning,despatch documentation

3. Packaging- Handling & damage prevention


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Logistics Functions

The major logistics functions are:

1. Order processing

2. Inventory management3. Warehousing

4. Transportation

5. Material handling & storage system6. Logistical Packaging

7. Information


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Objectives of LogisticsManagementThe objective of Logistics management are:

1. Inventory reduction

2. Reliable and consistent delivery

performance

3. Freight economy

4. Minimum product damages

5. Quick response


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What is Supply chain?

Consists of all parties involved, directly orindirectly, in fulfilling a customer request,include not only manufacturers & suppliers,

but also transporters, warehouses, retailers& even customers.

Supplier Manufacturer Distributor Retailer Customer


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Is supply chain so simple?




Upstream Downstream


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Reverse Logistics

After SalesLogistics

Suppliers Production Distribution Sales ChannelValue-Added

ServicesEnd UserDistribution

DistributionLogistics

ManufacturingLogistics

InboundLogistics

SupplyLogistics

Basic Supply Chain Process

Manufacture& Raw Materials

Export &ImportActivities

PrimaryMovement

DistributionCentres

SecondaryMovement

B2B & B2CDistribution

After-SalesServices


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Definition Of Supply Chain

American Production & Inventory ControlSociety(APICS) defines Supply Chain as:

The processes from the initial raw materials

to the ultimate consumption of the finishedproduct linking across supplier-usercompanies

The functions within and outside a companythat enable the value chain to make products& provide services to the customer


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SUPPLY CHAINMANAGEMENT(SCM)

Supply chain management involves planning,

design,& control of flow of material,information and finance along the supplychain to deliver superior value to the end

customer in an effective & efficient manner


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Evolution of Supply ChainManagement

Statement made by the chief executive of anautomobile industry:

Our aim is always to arrange the material &

machinery and to simplify the operations sothat practically no orders are necessary. OurFinished inventory is in transit. So is most of

our raw material inventory. Our productioncycle is about eighty-one hours from themine to the finished machine(automobile) inthe freight car.


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Contd.

The First Revolution(1910-1920): The FordSupply Chain

The Second Revolution(1960-1970): TheToyota Supply Chain

The Third Revolution(1995-2000): The DellSupply Chain


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Objective of Supply Chain

Objective of every supply chain should be tomaximize the overall value generated. Thevalue a supply chain generates is the difference

between what the final product is worth to thecustomer and the costs the supply chain incursin filling the customers request

Reduced inventory, reduced lead times,reduced warehouse costs, helps in forecastaccuracy.


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Contd..

Objective is to be able to have the right productsin the right quantities (at the right place) at theright moment at minimal cost.


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Major Drivers of Supply Chain

The major supply chain drivers are:

1. Production

2. Inventory

3. Location

4. Transportation

5. Information


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Importance of the Supply Chain

Major trends that have emerged to makesupply chain management a critical successfactor in most industries:

1. Proliferation in product line2. Shorter product life cycles

3. Higher level of outsourcing

4. Shift in power structure in the chain

5. Globalization of manufacturing


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Decision Phases in a SupplyChainSuccessful supply chain management

requires many decisions relating to the flowof information, product & funds. The

decision falls in three categories:1. Supply chain strategy or design:

2. Supply chain planning

3. Supply chain operation


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Process views of a Supply Chain

There are two ways:

1.Cycle view: Customer order cycle,

replenishment cycle, manufacturing cycle,procurement cycle

2. Push/pull view: Pull are initiated bycustomer order & push by anticipation ofcustomer orders


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Process ViewCustomer

Retailer

Distributor

Manufacturer

Supplier

Customer

Order Cycle

Replenishment

Cycle

Manufacturing

Cycle

ProcurementCycle


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Push vs Pull process

Push process ,execution is initiated inanticipation of customer orders whereas pullis initiated in response to a customer order

Pull process customer demand is knownwith certainty whereas in push, demand isnot known and must be forecast

Pull process is referred to as reactive & pushas speculative process.


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Logistics Versus Supply ChainManagement

Four unique perspectives on the relationshipbetween logistics and SCM.

Four perspectives: traditionalist , relabeling

,unionist , inter-sectionist The result of an international survey of logistics /

SCM experts are reported.

For logistics educators, researchers and

practitioners


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SCM versus Logistics: FourPerspective

Traditionalist Re-Labeling

Unionist Intersectionist

Logistics=SC

M

SCM Logistics

SCM

Logistics

Logistics

SCM


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TRADITIONALIST

Traditionalist position SCM within logistics

SCM is one small part of logistics. SCM as Logistics outside the firm & this reduces SCM to

a special type of Logistics, external or inter-organisationallogistics

LOGISTICS

SCM


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Re-labeling

The relabeling perspective simply renames logistics;what was logistics is now SCM.

Logistics Manager = Supply Chain Manager Supply Chain = Logistics Network

Re-labeling narrows the scope of SCM, since SCMequals logistics

LOGISTICS= SCM


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Unionist

This perspective treats logistics as a part of SCM;

SCM completely subsumes logistics.

SCM= purchasing+ logistics+ operations+marketing+..

SCM

Logistics


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Mentzer et al. (2001)

all the traditional business functions should be included

1. Marketing & Sales

2. Research & development 3. Forecasting 4. Production 5. Purchasing 6. Logistics 7. Information systems 8. Finance 9. Customer service


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According to Council of Logisticsmanagement

SCM encompasses the planning andmanagement of all activities involved in sourcingand procurement, conversion, and all LogisticsManagement activities.

Importantly, is also includes coordination andcollaboration with channel partners, which can be

suppliers, intermediaries, third party serviceproviders, and customers.


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Intersectionist

The intersection concept suggests SCM is not the unionof logistics, marketing, operations managementpurchasing and other functional areas.

SCM Logistics


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SCM is not the union of logistics, marketing,operations management, purchasing and other

functional areas. Rather it includes strategic,integrative elements from all of these disciplines.For example purchasing area, and in logistics areahiring a third party logistics

At the intersection, SCM co-ordinates cross-functionalefforts across multiple firms. SCM is strategic, nottactical


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Method of survey Researchers created lists of topic/technique items.

Combining these lists yielded over 120 items. This list was trimmed to 88 survey items,. Rated from 0 (no importance) to 5 (very high

importance) for both Logistics & SCM

The 88 Survey Items: Strategic management, Supplierdevelopment, Supply chain management(SCM),Information technology..

Total sample = 208(logistics educators) were sent viafax

All members of the CLM(Council of LogisticsManagement).

Total of 98 usable surveys was received, response rateR = 98/208 = 4.47%

Survey recipients were from North America, Europe,


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Results

34 survey items, significantly more important for SCMcompared to logistics. (SCM>Logistics)

16 items, significantly more important for logisticscompared to SCM. (Logistics>SCM)

38 survey items, there were no significantdifferences in importance between logistics andSCM.

the top 10 lists, share seven common items:Customer service, Logistics management, Inventorymanagement, Information technology Cycle timereduction, e-commerce, Supply chain management


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Conclusion Logistics typically refers to activities that occur within the

boundaries of a single organization and supply chainrefers to networks of companies that work together andcoordinate their actions to deliver a product to market.

Logistics focuses its attention on activities such asprocurement, distribution, maintenance & inventory

management. Supply chain management acknowledgesall of traditional logistics and also includes activities suchas marketing, new product development, finance andcustomer services.

Supply chain management views supply chain and theorganizations in it as a single entity. It brings a systemapproach to understanding and managing differentactivities needed to coordinate the flow of products and

i t b t th lti t t

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