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 DEFINITION OF LOGISTICS MANAGEMENT

 CONCEPT OF LOGISTICS MANAGEMENT


 ROLE OF LOGISTICS MANAGEMENT IN AN
ORGANIZATION
 ROLE OF LOGISTICS IN SCM & INTEGRATION OF
LOGISTICS OPERATIONS
 THE FIVE ARMS OF LOGISTICS MANAGEMENT
TRANSPORTATION,
WAREHOUSING,
MATERIALS HANDLING,
INFORMATION &
PACKAGING.
 PHYSICAL DISTRIBUTION MANAGEMENT
 BULLWHIP EFFECT
DEFINITION
 Logical extension of transportation and related
areas to achieve an efficient and effective goods
distribution system
 Design and operation of the physical, managerial,
and informational systems needed to allow goods
to overcome time and space (from the producer
to customer).
 Logistics is the process of strategically managing
the procurement, movement and storage of
materials, parts and finished inventory( and the
related information flows) through the
organization and its marketing channels in such a
way that current and future profitability are
maximized through the cost-effective fulfillment
of orders
Integrated Logistics
 The process of anticipating customer
needs and wants; acquiring the
capital, materials, people,
technologies, and information
necessary to meet those needs and
wants; optimizing the goods or
service –producing network to fulfill
customer requests; and utilizing the
network to fulfill customer requests in
a timely way.
 Inbound logistics
Formal Definition of
logistics management
 Design and operation of the physical,
managerial, and informational
systems needed to allow goods to
overcome time and space (from the
producer to consumer)
 Integrated view of a number of
activities/functions may be required.
Decisions in logistics
management
1. Product Design (moulded plastic water
tanks)
2. Plant Location
3. Choice of Markets/Sources
4. Production Structure (cement
manufactures)
5. Distribution/Dealer Network Design (two
wheeler)
6. Location of Warehouses (two wheeler)
7. Plant Layout
8. Allocation Decision
9. Production Planning
10. Inventory Management – Stocking Levels
11. Transportation – mode Choice,
Shipment Size and Routing Decision,
and Transport Contracting
12. Packaging
13. Materials Handling
14. Warehouse Operations
Key Actors in effective
logistics system
 Shippers
 Suppliers

- Carriers (rail, road, air,water,


pipeline)
- Ware house providers
- Freight Forwarders
- Terminal Operators (Ports etc.)
Government (regulator of logistics)
Role of government
(legislations that affect
logistics)
 Central Sales Tax and Local Sales Tax
 Consignment Tax
 Excise Duties
 Octroi and Entry Tax
 Use of Packaging Material
 MODVAT (modified value added tax)
 Motor Vehicles Act and similar acts for
other models
 Distribution Policies
Classification of logistics
applications
 Decision – wise
 Actor – wise
 Inbound logistics and outbound
logistics
 Private vs public sector
 Single vs multiple plants
 Nature of the product
 Made to stock vs made to order
Total Logistics Cost
 Product inventory at source
 Pipeline inventory
 Product inventory at warehouses and
dealers
 Transit losses/insurance
 Storage losses/insurance
 Handling and warehouse operations
 Packaging
 Transportation
 Customer’s shopping
DAY 2
 Explain the integrated logistics model
 Discuss the major activities associated
with integrated logistics
 Discuss the service response logistics
concept
 Discuss the value added concept in the
context of integrated logistics
 Explain the financial impact of logistics on
the firm
 Identify and discuss the major interfaces
with logistics
THE INTEGRATED LOGISTICS
MODEL

 The process of anticipating customer


needs and wants; acquiring the capital,
materials, people, technologies, and
information necessary to meet those
needs and wants; optimizing the goods
– or service – producing a network to
fulfill customer requests; and utilizing
the network to fulfill customer
requests in a timely way.
 Creates a sustainable, competitive,
strategic advantage
Logistics management of
services
 Process of coordinating nonmaterial
activities necessary to the
fulfillment of the service in a cost –
and customer service – effective
manner
 Service response logistics activities
waiting time
capacity
delivery
Models in logistics
management
 Forecasting models
 Mathematicals programming models
location models
allocation models
distribution network design models
 Inventory Models
 Routing Models
 Scheduling Models
Financial impact of
integrated logistics on the
firm
 Macro level impact
 Micro level impact
Superior integrated logistics
1.
accounting system
How do integrated logistics costs affect
contribution by product, by territory, by
customer, and by salesperson?
2. What are the costs of additional customer
service? What trade-offs are necessary and
what are the incremental benefits or losses?
3. What is the optimal amount of inventory? How
sensitive is the inventory level to changes in
warehousing patterns or to changes in customer
service levels? How much does it cost to hold
inventory?
4. What mix of transport modes/carriers should be
used?
5. How many field warehouses should be used and
where should they be located?
6. How many production setups are required?
Which plants will be used to produce each
product? What are the optimum manufacturing
plant capacities based on alternative product
mixes and volumes?
Supply chain (logistics
network)
 Supply chain is defined as the
sequence of business processes and
information that provides a product
or service from suppliers through
manufacturing and distribution to the
ultimate customer.
 (marketing, logistics, production)
 Buy-make-move-store-sell
Characteristics of supply
chain
 Decision in each part of the supply chain
affect the other parts
 Accelerator or Bullwhip effect

Demand changes by the end user create an


accelerator effect in the supply chain
which magnifies the size of demand
changes on upstream supply chain
elements (wholesalers,
Warehouses, factories)
 Reduce total replenishment time

(the sc to react rapidly to real demand


changes and reduces the inventory needs)
Supply chain management
vs logistics management
 CLM
The process of planning, implementing and
controlling the efficient, cost effective flow
and storage of raw materials, in-process
inventory, finished goods, and related
information from point of origin to point of
consumption for the purpose of
conforming to customer requirements
SCM seems to be replacing more of the
traditional terms of management of
material and service flows.
SUPPLY CHAIN
STRATEGY
 DELL VS CAMPBELL SOUP
 SUPPLY CHAIN SHOULD BE STRUCTURED
TO MEET THE NEEDS OF DIFFERENT
PRODUCTS AND CUSTOMER GROUPS
 The efficiency of the supply chain can be
measured based on the size of the
inventory investment in the supply chain
 Inventory turnover & weeks-of-supply
 Inventory turnover = cost of goods sold/
average
aggregate
inventory value
 The cost of goods sold is the annual
cost for a company to produce the
goods or services provided to
customers
 The average aggregate inventory
value is the total value of all items
held in inventory for the firm valued
at cost. (includes the raw material,
work-in-process, finished goods, and
distribution inventory owned by the
company)
 Weeks of supply is a measure of
how many weeks worth of inventory
4 types of supply chain
strategies
 Efficient supply chains

 Risk-hedging supply chains

 Responsive supply chains

 Agile supply chains


Efficient supply chain
 Highest cost efficiency
 Non value added activities should be
eliminated
 Scale economies should be pursued
 Optimization techniques should be
deployed to get the best capacity
utilization in production and distribution
 Information linkages should be established
to ensure the most efficient, accurate,
cost-effective transmission of information
across the supply chain
Risk-hedging supply
chains
 Pooling and sharing resources in a
supply chain so that the risks in
supply disruption can be shared.
 Alternative supply sources reduce
the risk of disruption
 Sharing the safety stock with other
companies
 IT is important for the success

(Hydro electric power, food produce)


Responsive supply
chains
 Responsive and flexible to the
changing and diverse needs of the
customer
 Companies use build to order and
mass customization processes as a
means to meet the specific
requirements of customers
(Fashion apparel, computers, popular
music)
Agile supply chain
 Supply chains that utilize strategies aimed
at being responsive and flexible to
customer needs, while the risks of supply
shortages or disruptions are hedged by
pooling inventory and other capacity
resources.
 Ability to be responsive to the changing,
diverse, and unpredictable demands of
customers on the front end, while
minimizing the back-end risks of supply
disruptions