Project on : “MARKET LOGISTICS”

RADHIKA GUPTA

32 - MBA

Contents :

• Market logistics ( defination )

• Objectives of logistic management

• Integrated logistics systems

• Market-logistics objectives

• Fact

• Market-logistics decisions

• Logistics for business excellence

• Scope of logistic

• Logistics process of CIPLA

MARKET LOGISTICS

Market logistics includes planning the infrastructure to meet

demand, then implementing and controlling the physical flows

of materials and final goods from points of origin to points of

use, to meet customer requirements at a profit.

Market Logistics

• Interrelated Aspects Associated with Market Logistics:

– Physical distribution

– Supply chain management (SCM)

– Value network

– Demand chain planning

– Market logistics

– Integrated logistics systems (ILS)

Vendor

Purchase

Stores

RM

Customer

Warehousing

Stores

FG

Inbound Logistics Out bound logistics

OPERATIONSP

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Material flow Material flow

Information flow

Supply Chain

Market logistics planning has four steps

Deciding on the company's value proposition to its customers. (What

on-time delivery standard should we offer? What levels should we

attain in ordering and billing accuracy?)

Deciding on the best channel design and network strategy for reaching

the customers. (Should the company serve customers directly or

through intermediaries? What products should we source from which

manufacturing facilities? How many warehouses should we maintain

and where should we locate them?)

Developing operational excellence in sales forecasting, warehouse

management, transportation management, and materials management

Implementing the solution with the best information systems,

equipment, policies, and procedures

Objectives of Logistic management

• Inventory reduction

• Reliable and consistent delivery performance

• Freight economy

• Minimum product damage

• Quick response

Integrated Logistics Systems

• It includes material management, material flow system&

physical distribution, aided by information technology.

• It plays a crucial role in managing market logistic, especially

through computers, point of sale terminals, uniform product

bar codes, satellite tracking, electonic data interchange,&

electronic funds transfer.

Market-Logistics Objectives

It means “getting the right goods to the right places at the right

time for the least cost.”

Market-logistics costs interact and are often negatively related.

For example:

• The traffic manager favors rail shipment over air shipment

because rail costs less. However, because the railroads are

slower, rail shipment ties up working capital longer, delays

customer payment, and might cause customers to buy from

competitors who offer faster service.

• The shipping department uses cheap containers to minimize

shipping costs. Cheaper containers lead to a higher rate of

damaged goods and customer will.

Given the market-logistics objectives, the company must

design a system that will minimize the cost of achieving these

objectives.

Each possible market-logistics system will lead to the

following cost:

M= T+ FW+ VW+ S

where,

M = total market-logistics cost of proposed system

T = total freight cost of proposed system

FW = total fixed warehouse cost of proposed system

VW= total variable warehouse costs

(including inventoly) of proposed system

S = total cost of lost sales due to average

delivery delay under proposed system

Fact

• In a manufacturing org. the business process starts with the flow of material from the suppliers, progress to the plant, then to the customer through the distribution channel the department may excel in their respective function but org. as a whole their performance may be dismal.

Reason

Lack of Co ordination in their activities

They have different goal to cherish

There is no single agency that coordinates their functions and homogenizes them.

How to overcome ?

Use of Logistic as a system

Market-Logistics Decisions

The firm must make four major decisions about its

market logistics:

How should we handle orders (order processing)?

Where should we locate our stock (warehousing)?

How much stock should we hold (inventory)?

How should we ship goods (transportation)?

Order Processing:

• Involve following activities

Order checking for any deviation in agreed on negotiated term

Technical details;price;delivery period;payment terms;taxes etc

Checking the availability of material in stock (material requisition)

Production & material scheduling for shortage

Acknowledging the order, indicating deviation if any

• It is routine operation but require great deal of planning training of people involved and investment to bring about efficiency & accuracy

• In a large organization a system capable of handling thousands of voluminous orders with minimum human involvement or without human involvement is a must involving shortened order fulfillment cycle to have edge over rivals

Warehousing:

• A storage place wherein finished goods are stored till they are sold.Effectiveness of an organization`s marketing strategy depends on making the right decision regarding warehouse.

• Nowadays

• Warehouse are treated as switching facilities rather than storage place.It is a major cost center, many customer problem are the direct result of improper warehousing management.

• Major decision of ware house are as follows:-

Location ,Size & Number of warehousing facilities

Warehouse layout

Design of building

Ownership of the warehouse

Inventory management

• Management needs to know how much sales & profits would

increase as a result of carrying larger inventories & promising

faster order fullfillment times , & then make a decision.

• Determine reorder point, relevant cost comparison, optimal

order quantity.

Transportation

• For the movement of goods from supplier to buyer ,

transportation is the most fundamental and important

component of logistic.

• E.g. for low unit value products the transportation cost

component is 20% of the product cost.

• In logistic cost its share varies up to 65-70% in case of mass

consumed very low unit price products.

Mode of transportation ( Cost & time factor)

Own fleet or Outsourcing

Route Planning

Vehicle scheduling

• Are the few decision which are involved in transportation

Logistics for Business Excellence

• For Business Excellence logistics operation need to be

integrated on the following two fronts

Integration of logistic into business

Integration of components of logistics

• To achieve the objective of making available right product at

the right place and at a right time at low cost , every business

is required to integrate logistics into the business process.

• For logistic operation to run smoothly, proper integration

amongst the component of logistic process is a must.

Scope of Logistic

• It is of critical importance to the organization how it delivers products & services to the customer , whether the product is tangible or intangible.

• Effective & efficient Physical movement of the tangible product will speak of intangible services associated with the product and the organization which is delivering it.

• In Case of intangible product , the delivery of tangibles at the right place & right time will speak about its quality.

• On the macro level infrastructure such as various modes of transport , transportation equipment, storage facilities, connectivity & information processing are contributing to a large extent in the physical movement of goods produced in manufacturing , mining & agriculture Sectors.

• “ Public distribution system in the country needs logistical support for delivering goods at right place on time and the lowest cost.

• At Micro Level logistic plays a critical role in the value delivery system of business organization to provide superior customer service i.e. to achieve a desired level of delivered services and quality at the lowest possible cost.

• In a nutshell any productivity improvement that could be achieved in any part of logistic system,at the micro or macro level would help in cost reduction and proper deployment of scare national resources to the productive purposes.

NOTE:

Amongst most of the Indian companies logistics outsourcing has now become an accepted trend for the following reasons:

• Cost Saving

• Focus on core Business

• Paucity of funds

• Reduction in liabilities

• Wider Geographical coverage

• Cross pollination of better available practice

Logistics Process Of CIPLA

MANUFACTURING

PROCUREMENT

OUTPUT/ FINISHED GOODS

WAREHOUSING

TRANSPORTATION

DISTRIBUTION

LABORATORIES RETAILERS

CUSTOMERS

MEDICAL STORES

BIBLOGRAPHY:

• Marketing management – A South Asian Perspective By Philip

Kotler, Kelvin Lane Keller, Abraham Koshy & M Jha,14th

Edition Pearson(2014),india

• Marketing management by Dr. K Karunakaran , Himalaya

Publishing House