LOGISTICS – AN OVERVIEW

Logistics - Definition• Logistics is one of those aspects of business,

whose importance is many times greater than what it would seem to be.

• It involves the technique of managing and controlling the flow of goods, energy, information and other resources like products, services and people from the source of production to the marketplace.

• It is the time related positioning of resources• It is the design and operation of the physical,

managerial and informational systems needed to allow goods to overcome time and spaces

Logistics

Business Logistics

Importance of Logistics

•Create Customer Value & Loyalty•Build strong relationships with product

suppliers•Logistics managers are involved in

▫Boundary & organization spanning teams▫Strategic Planning▫Alliance Building

Importance of Logistics

•Logistics has a Huge Impact on the Domestic & Global Economy

•Logistics is of Critical Importance to Human Survival

•Logistics Greatly Impacts our Quality of Life

•Logistics Affects our Success in a Wide Variety of Endeavors

Logistical Competitive Advantage•Logistics activities are represented as

part of the value chain•The Chain consists of a series of activities

that create and build value•They culminate in the total value

delivered by an Organization

The Value Chain

Receiving stores

V1

V2

Operation

Finished Goods Stores

W1 W2 W3

R1 R2 R3 R4 R5

V3

V5

V4

R6

Market

INFO

INFO

INFO

INFO

INFO

INV

INV

INV

INV

INV

Outbound Logistics

Inbound Logistics

PROCUREMENT

OPERATION

DISTRIBUTION

V

W

R3

Vendor

Warehouse

Retailer

Strategic Logistics Planning Process

Communication with stake holders and Executives

Getting

Started

Preliminary Planning

Strategizing

Authoring

Monitoring and Marketing

Strategic Plan

Document

Yes

FeedbackFeedback

YesYes

NoNo

Components of the strategic logistics plan• A management overview describing the logistics

strategy and its relationship to the other major business functions.

• A statement of logistics objectives related to cost and service for both products and customers.

• A description of the individual customer service, inventory, warehousing, transportation, supplier partnership and supplier development strategies to support the overall plan.

• An outline of the major logistics programmes or operational plans.

• Forecasts of necessary labour resources and capital requirements.

• Financial Performance Criteria

Life Cycle Support

•Logistics functions is also expected to provide life cycle support to the product after sale, that includes:▫After sales service▫Reverse logistics or Product Recall

Operational Objectives

•Rapid Response•Minimum Variance•Minimum Inventory•Movement Consolidation•Quality

Components of Logistics Management•Customers•Shippers•Suppliers•Transport Providers•Transport Infrastructure Operators &

Providers

Functions of Logistics Management•Inventory•Sales•Transportation•Import / Export•Purchasing•Functional Management•Utility/Value/Warehousing•Information Systems

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

TRANSPORTATION- Water, Road, Rail,

Pipeline & Air

NETWORK DESIGN

- Suppliers, operations, warehouses

Logistics Integration• In order to perform various functions of

logistics bringing all functions of logistics under one operational command is important.

• Performance in isolation loses sight of overall picture.

• It is like trying to solve a jigsaw puzzle without complete picture before you.

• What do we integrate? Information flow, inventory flow, procurement, operations support, physical distribution.

Logistics Integration

Inventory flow

Physical distribution

Manufacturing support Procurement

Information flow

Customer Suppliers

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.