LOGISTICS IN SERVICE INDUSTRY

By, AIYESHA AYYUB KHAN MBA/IBTLG/002/IITTM

Contents 1. INTRODUCTION2. LOGISTIC -DEFINITION3. TYPES OF SERVICES PROVIDED BY LOGISTICS 4. REASONS THAT LEAD TO DEPENDENCE UPON LOGISTICAL

SERVICES 5. SERVICE INDUSTRY – DEFINITION6. TYPES AND CHARACTERISTICS OF SERVICE INDUSTRY7. KEY DISTINGUISHING CHARACTERSITICS OF SERVICE INDUSTRY8. CURRENT SCENARIO IN SERVICE INDUSTRY9. CURRENT SCENARIO IN LOGISTIC INDUSTRY10. CHALLENGES FACED BY LOGISTICS INDUSTRY11. POSSIBLE SOLUTIONS12. CASE STUDY 13. CONCLUSION14. REFERENCE

Introduction•Logistics has a pivotal role in the service

industry.•The service industry sector contributes to

52% to the Gross Domestic Product (GDP) in 2014-15.

•It has emerged as the largest and one of the fastest-growing sectors of the economy.

•The service sector consists of trade , hotel and restaurants , transport , storage and communication , financing , business services and service associated with construction.

•This presentation is all about how the logistic services helps in smooth running and rendering of the service industry by attaining maximum customer satisfaction.

Logistic -Definition LOGISTIC : Planning , execution and control of the

procurement , movement and stationing of personnel , material and other resources to achieve the objectives of a campaign , plan , project or strategy. It may be defined as the ‘management of inventory in motion and at rest’.

Types of Services provided by logistics•Express Mail : It is primarily used for shipment by air or

sea to deliver receipts , documents , and packages.

•Cargo and Storage : It provides large scale shipping services

for materials that normally weigh more than 50 kg. It uses every means of transportation including air , sea , land and rail.

•Continuous Support Services Management (Supply Train Services Management):

Provides a number of integrated services such as

Continuation extending support in material shipment

which includes : Warehouse management Internal and External Support services Application and Requests management Other valuable services such as product

assembly , packaging and labeling.

5PL: Fifth Party Logistics

• Much the same as 4PL, 5PL is a new term circulating within the supply chain industry. A 5PL will plan, organize and implement logistics solutions on behalf of the contracting company with a focus on utilizing the most appropriate technologies. Essentially, a 5PL manages networks of supply chains with an extensive e-business focus across all logistic operations, other than 3PLs and the parent company.

• The central ethos of 5PL is its commitment to collaboration and to obtaining a higher degree of resource utilisation in order to achieve savings and open up opportunities to secure the best possible solution at minimum cost/carbon etc.

• E.g., BCR

Reasons that lead to dependence upon logistical services •The inability to provide human resources

and necessary capital to provide services at the desired level internationally.

• Corporations entered into new markets and areas of activity with radically different logistical needs than they were accustomed to.

•Obtaining logistical services from an outsourced third party is more economical than integrated logistical techniques.

Service Industry - DefinitionAn industry made up of companies that

primarily earn revenue through providing intangible products and services .

Service industry companies are involved in retail , transport , distribution , food services , as well as other service-dominated businesses.

Types and characteristics of Service Industry•Consumer Services : Consumer services principal purpose is to

provide services to individual consumers who desire them and can afford to pay for them. Two main types of consumer services are retail services and personal services.

Retail and whole sale services Education Services Health Services Leisure and Hospitality Services

•Business Services :Business services principle purpose is to

facilitate other businesses. Producer services and transportation services are two main types of business services.

Professional Services Financial Services Transportation and Similar Services

•Public Services

Six key distinguishing characteristics of services are as follows :

Intangibility

Inseparability

Variability

Perishability

Heterogeneity

Lack of ownership

Services cannot generally be seen, tasted , felt , heard or smelt before being bought. Eg., Car

RepairMarked distinction between physical goods and services in terms of sequence of production and

consumption

Quality of service depends on who provides it and how its provided.

Services cannot be stored for later sale or use. As services are performances they cannot be

stored.

Each ‘unit’ of a service may differ from other ‘units’

It is the basic difference between a service industry and a product industry.

Current Scenario of Service Industry• The service sector is expected to perform well in

FY16.• Improvements in global growth and recovery in

industrial growth will drive service sector to grow 7.4 per cent in FY16.

• The Indian facilities management market is expected to grow at 17 % CAGR between 2015 and 2020 and surpass the $19 billion mark supported by booming real estate , retail and hospitality sectors.

• The Central Govt. is considering a two-rate structure for the goods and service tax (GST) under which key services will be taxed at a lower rate compared to the standard rate , which will help to minimize the impact on consumers due to increase in service tax.

Current scenario in logistics • Due to rapid growth in economy , increase in

outsourcing of logistics , steady supply side changes , significant government investment in core infrastructure projects and land mark changes in tax and regulatory policies.

• The growing emphasis on alternative transport modes , thrust on outsourcing driven by growing business complexity , significant drop in fuel prices and the imminent roll-out of GST are expected to be positive enablers for the sector.

• The Government’s ‘Make in India’ campaign and the launch of mega-infrastructure initiatives in the sector are expected to lay a foundation for growth of the sector.

Key challenges faced by logistics industry•Poor infrastructure – Insufficient

integration of transport networks , information technology (IT) , warehousing and distribution facilities.

•Trade Regulations – Regulations exist at a number of different tiers , imposed by national , regional and local authorities. Regulations often differ from city to city , hindering the creation of national networks.

•Trained manpower – Both in Third party logistics sector and the manufacturing and retailing sectors is very weak at a practical level.

•Lack of Training Institutions – The disorganized nature of the logistics sector in

India , its perception as a manpower –heavy industry and lack of adequate training institutions has led to a shortfall in skilled management and client service personnel.

•Poor Warehousing and Storage – Poor facilities and management are to blame for

higher levels of loss , damage and deterioration of stock , especially in the perishables sector. Part of the problem is due to insufficient equipment .i.e., proper refrigerated storage and containers.

•Lack of research and development (R&D) of the industry – The field of logistics is still under penetrated as far as research is concerned.

Possible solutions to some of the challenges :

• Infrastructural Improvements – Focus needs to be given on building world-class road networks ,

integrated rail corridors , modern cargo facilities at airports and creation of logistics park which need to be given a status equivalent to Special Economic Zones.

• Creating Awareness and Establishing Training Institutions – Gaps in training have to be filled not only at the entry level but also in the management cadre which could be made possible through specialized graduation and post graduation courses focused on operations and Supply chain management.

• Improving Warehousing facilities – Good storage and warehousing facilities are essential to the growth of the logistics industry. And the changing dynamics of JIT manufacturing , global procurement and new models of sales and distribution.

• Encouraging Research and Development (R&D) – More focus needs to be given on research in process excellence which can help eliminate inefficiencies and bring Indian logistics on par with global practices.

Case study on Adidas with UPS Supply chain solutions

Case study on Adidas Adidas :Adidas – Salomon AG, based on Herzogenaurach,

Germany , is a global leader in the sporting goods industry , delivering high performance footwear , apparel and accessories to virtually every country in the world.

Geographic Area Served – United StatesClient Challenge :Improve the supply chain performance of a

leading athletic apparel company to accommodate rapid growth and efficiently meet the requirements of major retailers and team distributors throughout the United States.

Solution and Results Consolidate the distribution system into a

single , streamlined network, outfitted with automated inventory and order fulfillment systems to allow the company to rapidly scale its services and add enhancements to the supply chain as needed.

Increased order accuracy rateBoosted on-time deliveryEnhanced visibility throughout supply

chainImproved customer satisfactionAdded flexibility to operations

Conclusion•Therefore , from the above case it is quite

evident that logistics forms the backbone for the service industry.

•With the appropriate type of logistics for the respective service industry fields will provide not only smooth operation but also customer satisfaction.

References • http://www.ibef.org/industry/services.aspx• http://logisticsdegree.net/2012/logistics-wha

t-it-is-and-why-its-important-to-your-company/

• http://cerasis.com/2013/08/08/3pl-vs-4pl/• https://www.kpmg.com/IN/en/services/Tax/u

nionbudget2015/Documents/KPMG-Union-Budget-TL-PoV-2015.pdf

• http://projectvendor.com/indian-logistics-industry-current-scenario-future-outlook/

• http://www.yourarticlelibrary.com/services/services-characteristics-6-key-distinguishing-characteristics-of-services/34008/

• http://lewishistoricalsociety.com/wiki2011/tiki-read_article.php?articleId=80