Introductory Chapter

7/30/2019 Introductory Chapter

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1. Infrastructure

2. Taxation

3. Inadequate Information

4. Poor management decisions


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What does bad logistics causes? Costly products

Higher cost of capital

Damaged Products

Excessive movements costs

Worst Economy

Black Market

Exploitation


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Elements of Logistics

Information Management

Inventory Control

Transportation

Warehousing

Packaging


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Importance of 3cs Company

Customer

Competition


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Inbound LogisticsActivities associated with receiving, storing and

distributing inputs to the product such as materialhandling, warehousing, inventory control, vehiclescheduling and returns to suppliers.

It takes care of the procurement cycle.The taskinvolves:

Sourcing Order Placement

Transportation

Receiving


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Outbound LogisticsActivities associate with collecting, storing and

physical distributing the product to the buyers.

It includes distribution of finished goods, order

processing, warehousing, material handling, delivery

vehicle operations, scheduling, shipping etc.


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Logistics Performance cycle It Links the facilities in the value chain with each

other.

These facilities are called nodes and these nodes areconnected by links, called LPCs.

These links are the product transportation andinformation f low.

LPCs are sensitive to input and highly responsive tocustomer needs.


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Contd. Procurement cycle

Manufacturing support cycle

Physical distribution cycle


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SUPPLY CHAIN MANAGEMENT The network of organizations that are having linkages,

upstream and downstream, in different processes and

activities that produce and deliver the value in the

form of products and services in the hands of the

ultimate consumer


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Three flows in SCM Product flow

Information flow

Financial flow


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Participants in SCM Suppliers

Manufacturers

Distributors

Customers


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Importance of SCM Reduced inventory

Better flow of information

Customer satisfaction Competitive edge

Builds trust

Avoids wastage

Quick response


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Difference between Logistics Management

& SCM Concerned with getting

goods & services wherethey are required andwhen they are desired

It is a narrower concept

It is conducted withinthe organization

It originated fromMilitary logistics

It encompasses allactivities associated withmovement of goods fromraw materials stage toend user

It is a broader concept

It functions outside theorganization

It originated fromBusiness logistics


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The objective is tominimize cost

2 f lows: Value flow andinformation flow

The objective is tomaximize profitability

3 f lows: Value,information andfinancial flow


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BULL WHIP EFFECT The different objectives between the stakeholders,

dealers and retailers will cause confusion andfluctuation in order placement

Also different in time period of forecasting in demandby different participants can cause variations in order

placement

It results in overload or shortage of stocks in SKUs


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Causes of Bullwhip Effect No communication up and down in supply chain

Lack of coordination

Delay in flow of information and materials Free return policies


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Impact It increases:

Manufacturing cost

Inventory cost Replenishment lead time

Transportation cost

Labour costs

More Stock-outs Negative effect on performance

Loss of customer service & Loss of sales


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Solution Know your customer

Proper forecast

Better information Perfect logistics

Invest in best talent

Analyse Key Data

Modern technique


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Extended enterprise It is loosely coupled, self organizing network of firm

that combine their economic output to provideproduct and service offerings to the market.

All parties connect through a contract and work assingle corporation.

Documents

Introductory Chapter