Logistics Framework

7/31/2019 Logistics Framework

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LOGISTICS FRAMEWORK

By:

Iqbal AliSanchit Sharma



DEFINITION BY COUNCIL OF LOGISTICS

MANAGEMENT, USA“LOGISTICS MANAGEMENT IS THE PROCESS OF

PLANNING, IMPLEMENTING & CONTROLLING,

THE FLOW & STORAGE OF GOODS, SERVICES &

RELATED INFORMATION IN THE MOST EFFICIENT

& EFFECTIVE WAY, FROM THE POINT OF ORIGIN

TO THE POINT OF CONSUMPTION, AS PER THE

CUSTOMER’S REQUIREMENTS AT THE LOWEST

POSSIBLE COST ’’



OPERATING OBJECTIVES:

RAPID & COMPLETE RESPONSE TOCUSTOMER’S REQUIREMENTS

REDUCTION IN LOGISTICS OPERATIONS COSTS

CONTINUOUS IMPROVEMENT IN QUALITY OF

SERVICES OFFERED

LIFE-CYCLE SUPPORT



NEED FOR LOGISTICS:

IT BRINGS ALL ITEMS FOR SALE TOGETHER ATONE PLACE

IT PROVIDES A WIDE MIX OF PRODUCTS

IT MAKES PRODUCTS AVAILABLE WHEN THEY AREREQUIRED

“TODAY, SALES ARE DETERMINED BY WHAT IS INSTOCKS & NOT BY WHAT PRODUCTS AREPRODUCED & OFFERED BY AN ORGNISATION.”



Role of Transportation in Supply Chain

• Transportation – Movement of product from one location to

another

– Involving movement from the beginning of supply chain to end customer.

– Play a key role in every supply chainbecause products are rarely produced &consumed in the same location

– Freight transport cost in Thailand in 2001

was 14.3% of GDP while such cost in USAin 2001 was 6% of GDP.

– Growth in E-Commerce & home delivery,transportation costs have become moresignificant in retailing.



The International Supply Chain

PhysicalDistributionManagement

Transportation

CorporationSuppliers Customers

Domestic/ImportSourcing

Domestic/ExportDistribution

ThroughflowInboundMaterials

OutboundMaterials

Forward and Reverse Flow of Information, Products, and Funds

PhysicalDistribution

Management

Transportation

Transportation Transportation

OrderProcessing

OrderProcessing

OrderProcessing OrderPlacement

InventoryManagement

MaterialsManagement

CustomerService

Storage StorageStorage InventoryManagement

InventoryManagement

Costumer-FirmInterface

Supplier-FirmInterface



Modes of Transportation

Air Package

Carriers

Truck Rail

Water Pipeline

Intermodal



Warehousing

Traditional concept of warehouse as store or

godown Development of modern concept of

warehouse as facility

Traditionally, consumer maintained his ownstore

Gradually, manufacturer visualized the need

of a buffer between factory and market as

productivity improved

All activities were manual as warehouses did

not receive any engineering attention



Post war thinking made inventory shrink and

production became streamlined to demand and

demand for variety in every product increased

Marketing experienced the need of a warehouse

to stock products and support marketing

Production units started using the concept of warehouse as a facility to optimize production

[minimize cost]



Decades of 1960 & 70 saw engineering focus on

material handling, storage & information

Concept of JIT production system needs

dependable delivery system of which warehouses

are by now an integral part

As we have discussed earlier decade of 1980was a decade of TQM



Warehousing Costs

Handling

Holding

Order Processing

Packaging

Admin

Maintenance



Functions of warehouse [warehousing operations]

Receiving goods – receive and accept responsibility

Identifying goods – place, label, color code

Sorting goods- sort out the received goods for

appropriate storage area

Dispatching goods to storage- for temporary storage

with easy accessibility Holding goods- security against pilferage and

deterioration

Selecting, retrieving, packing- items are retrieved and

grouped according to customer order for dispatch



Marshaling goods- check the items of a single order

for completeness and order records are updated

Dispatching goods- consolidated order is packaged

and directed to right transport

Preparing records and advices- of stocks and

replenishment requirements



Site selection

Location considerations Cost of distribution to market area

Transport requirement and facilities Transport cost

Competition, presence of others Availability of utilities [power, water, gas, sewerage

disposal and cost] Labour supply and cost

I - R climate, labour productivity Customer expectation of ‘D’

Company specific commitments Local taxation

Community attitude Restrictions associated with warehouses



INVENTORY CONCEPTS :

INVENTORY IS A LARGE & COSTLY INVESTMENT.BETTER MANAGEMENT OF INVENTORIES

IMPROVES ORGANISATION’S CASH FLOW &

RETURN ON INVESTMENT.INVENTORY REPRESENTS LARGEST SINGLE

INVESTMENT IN ASSETS ( 20% OF THE TOTAL

ASSETS OF MANUFACTURER & MORE THAN 50%

OF TOTAL ASSETS OF WHOLESALERS & RETAILERS.



OBJECTIVES OF INVENTORY MANAGEMENT:

1. MEETING DESIRED LEVEL OF CUSTOMER SERVICE

2. REDUCING TOTAL OPERATING COST OF LOGISTIC

ACTIVITIES THROUGH IMPROVED INVENTORY

CONTROL

3. TO INCREASE ORGANISATION’S PROFITABILITY



NEED FOR INVENTORY HOLDING :

1. ACHIEVE ECONOMIES OF SCALE IN PURCHASING,

TRANSPORTATION & MANUFACTURING

2. ACHIEVE SPECIALISATION IN MANUFACTURING

3. STRIKE BALANCE BETWEEN SUPPLY & DEMAND

4. BUILDING SEASONAL INVENTORIES

5. PROVIDE PROTECTION FROM UNCERTAINTIES ARISING OUT OFFLUCTUATIONS IN DEMAND & ORDER PROCESSING CYCLE

6. ACT AS A BUFFER BETWEEN CRITICAL INTERFACES IN THE

CHANNEL OF DISTRIBUTION 7. OFFER HIGHER CUSTOMER

SERVICE LEVEL.



PACKAGING IS AN IMPORTANT ASPECT OF LOGISTICS.

MANAGEMENT INTEGRATED PACKAGING & LOGISTICS ACTIVITIES

HELP ORGANISATION TO OPTIMISE OPERATIONAL EFFICIENCY,

IMPROVE CUSTOMER SATISFACTION, MINIMISE OPERATIONALCOST & REDUCE NATIONAL WASTE OF RESOURCES

TWO BASIC FUNCTIONS

1. MARKETING INFORMATION ABOUT PRODUCT & PRODUCT

PRESENTTION THROUGH THE USE OF COLOUR / DESIGN /SHAPE ETC.

2. LOGISTICS PROTECTION & PRESERVATION OF THE CONTENTS

(QUALITY & QUANTITY) FROM OUTSIDE ENVIRONMENTS, TILL

IT REACHES TO THE FINAL COSUMER.



PACKAGING OBJECTIVES :

1.TO INCREASE CUSTOMER SERVICE LEVEL

2.TO ACHIEVE REDUCTION IN OVERALL PRODUCT DISTRIBUTION

COSTS

3. TO FACILITATE EFFICIENT HANDLING / STORING /TRANSPORTATION ACTIVITIES



MAJOR PACKAGING FUNCTIONS:

1. CONTAINMENT PRODUCTS MUST BE CONTAINED BEFORE THEY ARE MOVED FROM

ONE PLACE TO ANOTHER

2. PROTECTION/ PRESERVATION FROM DAMAGES / LOSSES DURING HANDLING /

STORING / TRANSPORTATION

3. APPORTIONMENT TO REDUCE THE OUTPUT FROM THE BULK TO SMALL SIZE

REQUIRED BY THE CONSUMER

4. UNITISATION TO PERMIT PACKAGE TO BE CONSOLIDATED IN TO LARGER

SECONDARY PACKAGE.

5. CONVENIENCE IT OFFERS CUSTOMER CONVENIENCE IN HANDLING / USING THE

PRODUCT

6. COMMUNICATION IT PROVIDES EASY IDENTIFICATION & DIRECTION TO HANDLE /

USE





Documents

Logistics Framework