logistics mgmgt

8/14/2019 Logistics Mgmgt

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Logistics

Logistics is concerned with getting the products and serviceswhere they are needed and when they are desired.

It is difficult to accomplish any marketing or manufacturingwithout logistical support.

It involves the integration of information, transportation,inventory, warehousing, material handling, and packaging.

The operating responsibility of logistics is the geographicalrepositioning of raw materials, work in process, and finishedinventories where required at the lowest cost possible.


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Some Logistical Feats in History

Berlin Airlift 1945:A study in logistics.

When the city of Berlin was blockaded by Soviets and all supplylines were cut off, Americans planned and executed a majorlogistics operation to feed the city from air.

Indians in the Gulf countries 1991: 1n 1991, when gulf war broke out, Indian Government evacuated

thousands of Indians from the gulf countries and brought themhome in a massive exercise employing Indian airlines planes.

Operation Overlord-1945:

Allies invasion of Europe and subsequent victory In II World War. American war of Independence

Keeping 12,000 soldiers armed and fed from England was a bigtask; British lost the American war of independence due to badlogistics.


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What causes Bad Logistics?

Infrastructure:

Bad roads, inefficient railways, poor communication lines,and congestion in the ports.

Taxation:

Octroi etc.

Information:

Inadequate information

Management:Poor management decisions


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Why Logistics?

Impact on cost of creating and delivering of product to the customer

Provides competitive edge to business

Crucial to survival and prosperity in global trade and business

Many products have short life cycles

Leads to the concept of supply chain management

Logistics is important in the Indian market due to the sweeping changes,which are taking place.

Competition: Internal as well as external

Shift from sellers market to buyers market

Changing customer

Expanding business, growing exports

Corporate managements shift towards modern management concepts likeLean management, Just In Time, Total Quality Management etc.,


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Logistics: Operational Objectives Rapid Response:

On an average how much time do we need to fulfill one particular type of customers order in ayear? This is a measure of Rapid response

Minimum Variance:The delivery objective of the organization measured as On Time Delivery(OTD). If 100deliveries are made in a month/quarter/year how many reached as per the commitment madeto the customer? This percentage is OTD

Minimum Inventory:This is a component of the cost objective of the organization. Termed as necessary evil, theobjective of minimum inventory is measured as Inventory Turnover Ratio

Movement Consolidation:It is the planning of several small shipments together by integrating interests of several playersin the supply chain. Generally, large shipment size and long distances reduce transportationcost per unit. Movement consolidation shall result into reduction in transportation costs.

Quality:If the quality of product fails logistics will have to ship the product out of customers premisesand repeat the logistics operation again. This adds to costs and customer dissatisfaction. Hencelogistics should contribute to TQM initiative of management


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Operational Objectives (contd...)

Life Cycle Support:

Logistics function is expected to provide life cycle support to the productafter sale. This includes

After sales service: the service support needed by the product once it issold during its life cycle

Reverse logisticsor Product recall as a result ofRigid quality standards [products causing environmental hazards]

Transit damage [leaking containers containing hazardous material]

Product expiration datingRigid laws prohibiting unscientific disposal of items

Rigid laws making recycling mandatory

Erroneous order processing by supplier

Reverse logistics is an important component of logistics planning


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Logistical Functions

LOGISTICS

FUNCTIONS

WARE

HOUSING

- Storage,

Handling,

Packing &

Distribution

INFORMATION

SYSTEMS

- Internal &

External

Information flow

INVENTORY

- When to order?

How much to

order? Just In

Time

TRANSPORTATIO

N

- Water, Road, Rail,

Pipeline & Air

NETWORK

DESIGN

- Suppliers,

operations,

warehouses


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Receiving stores

V

1

V

2

Operation

Finished Goods Stores

W1 W2 W3

R1 R2 R3 R4 R5

V3

V

5

V

4

R

6

Market

I

N

F

O

I

NF

O

I

NF

O

I

N

F

O

I

N

F

O

I

N

V

I

N

V

I

NV

I

N

V

I

N

V

OutboundLogistics

Inbound

Logistic

s

PROCUREMENT

OPERATION

DISTRIBUTION

V

W

R3

Vendor

Warehouse

Retailer


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Logistics v/s SCM

Particulars Logistics management Supply chain management

Scope Inbound logistics, in process inventory[movement from one plant to another],outbound logistics

All players in the supply chain from raw materialsource to finished product consumer, vendors,their vendors, supplier organization [shipper],warehouses, service providers, customers, theircustomers

How this is created? By internal integration of logistics functions

handled by various management functionswithin organization

By external integration of roles of various players

in the supply chain.

Main objective Logistics cost reduction by integratingresources across the pipeline

Supply chain profitability by value creation.

Definition Logistics is the process of strategicallymanaging procurement and storage ofmaterial , part and finished inventory [andrelated information flow] through

organization and its marketing channels insuch a way that current and future profits aremaximized through cost effective fulfillmentof order

Management of upstream and down streamrelationships with suppliers and customers todeliver superior customer value at less cost to thesupply chain as a whole.

Origin A very old concept in military planning. As a logical extension of logistics management

Focus L/M tries to take the product to the consumerat minimum logistical cost. Hence it is supply

driven.

SCM focuses on value creation in the supplychain. Hence this is customer focused or demand

driven.


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Inbound Logistics

Creation of value in a conversion process heavily depends on availability ofinputs on time. Making available these inputs on time at point of use atminimum cost is the essence of Inbound Logistics.

All the activities of a procurement performance cycle come under the scope ofInbound Logistics.

Sourcing

Order placement

& expediting

Supplier

TransportationReceiving


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Outbound Logistics

Value added goods are to be made available in the marketfor customers to perceive value.

Finished goods are to be distributed through the network ofwarehouses and supply lines to reach the consumer through

retailers shops in the market. During conversion, value is added to the raw materials and

as a result the value of the inventory in this case is very highunlike inputs.

Now the size of shipment, modes of transport and delivery

time are different as compared to inputs. Activities ofdistribution performance cycle come under the scope ofOutbound Logistics. They are order management,transportation, warehousing, packaging, handling etc.


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Logistics: Importance of 3 CsC Customers

Look for value, benefit at lowest price

C companyBy effective utilization of assets tries to

create and offer value to customers

C competitorBy effective utilization of assets tries to

create and offer value to customers

Value Value

Cost differentials

The Supplier Company tries to differentiate her products in terms of functional quality and

product cost.

Competition has ensured that technology and human skills are almost same everywhere. Hence

product differentiation in terms of functional quality and product cost is nearly impossible.

But a great opportunity exists for the Supplier Company to differentiate her products by serviceand logistics cost by superior logistics.


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Logistics: Integration In order to perform various functions of logistics in coordinated fashion bringing all

functions of logistics under one operational command is important. Performanceof these functions in an isolated fashion is detrimental to the objectivesorganization. Performance in isolation loses sight of overall picture. It is like tryingto solve a jigsaw puzzle without complete picture before you.

What do we integrate? Information flow, inventory flow, procurement, operations

support, physical distribution.

Inventory flow

Physical

distribution

Manufacturing

support Procurement

Information flow

CustomerSuppliers

If we view the above graphic we see all internal logistical operations in an organization.

We also see their close relationship with each other and the need to perform them in an

orchestrated fashion.


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References

Logistics Management by Bowersox

Logistics and Supply Chain Management by Martin Christopher

Physical Distribution Management by K.K. Khanna

Logistics and Supply Chain Management by G.Raghuram andN.Rangaraj

The Management of Business Logistics by Coyle, Bardi, Langlely


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Thank You

logistics mgmgt

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