Logistics Management

AN INTRODUCTION
Concept
Logistics Defined:
 The Process of planning, implementing, and controlling
the efficient, effective flow and storage of goods and
services, and related information from the point of origin
to point of consumption for the purpose of conforming
to customer requirements.
 Council of Logistics Management

Logistics Management Defined:

 The managerial responsibility to design and administer a
system to control the flow of material, work in process
and finished inventory to support business unit strategy.
 Bowersox and Closs, Logistical Management
WORLD CLASS LOGISTICS
OPERATION
The case of Bombay Dabbawallahs
Introduction
BDO (Bombay Dabbawallahs Operations) is operated by a group
of 5000 individuals organized in form of a cooperative known as
NMTBSA (Nutan Mumbai Tiffin Box Supplier Association).

About NMTBSA:
History : Started in 1890
Charitable trust : Registered in 1956
Avg. Literacy Rate : 8th Grade Schooling
Total area coverage : 60 Kms to 70 Kms
Employee Strength : 5000
Number of Tiffin's : 2,00,000 Tiffin Boxes
Time taken : 3 hrs
Our Belief
WORK IS WORSHIP

Tiffin basket’s weight:

75-80 kgs.
 Working of NMTBSA
Error Rate : 1 in 16 million transactions
Six Sigma performance (99.999999)
Technological Backup : Nil.
Cost of service - Rs. 300/month ($ 6.00/month)
Standard price for all (Weight, Distance, Space)
Rs. 36 Cr. Turnover approx.
“No strike” record as each one a share holder
Earnings - 5000 to 6000 p.m.
Diwali bonus: one month’s from customers.
Critical Logistical Success Factors
How do they do it …?

Organizational Structure
Operations
The Code
War against Time
(9:00 am – 12:30 pm)
ORGANISATIONAL STRUCTURE

PRESIDENT

VICE PRESIDENT

GENERAL SECRETARY 13 MEMBERS

TREASURER

DIRECTORS ( 9 )

MEMBERS ( 5000 )
Coding System
VLP : Vile Parle (suburb in
Mumbai)

9EX12 : Code for Dabbawalas

at Destination

EX : Express Towers
(building name)

12 : Floor no.

E : Code for Dabbawala

at residential station

3 : Code for destination

Station eg. Churchgate
Station (Nariman Point)
The Flow Logic
Zones for destination
Grant Road 1
(12) 2
Point of 3
Aggregation Churchgate
And Sorting (1-10)
4

5
A E
6
Lower Parel
B C D
(14) 7

Distribution
By Carriers
Collection from home at lunchtime
To offices
Time Management by the Dabbawallahs:
8:30 AM – 9:00 AM –
 The individual dabbawallah visits the pre-assigned set of
household under their area of operation.
 After the collection of approx. 35 lunch boxes, the boxes
are brought to the nearest sub – urban railway station for
sorting and onward transportation.

9:30 AM – 10:30 AM –
 Sorting of the lunchboxes takes places as per the coding
system
10:34-11:20 am
(Andheri Stn.)
 This time period is
actually the journey
time. The dabbawalas
load the wooden
crates filled with
tiffins onto the
luggage or goods
compartment in the
train. Generally, they
choose to occupy the
last compartment of
the train.
12 coach train
4,000 commuters
8,000 disputes
But no excuses,
Duty first
 11:20 – 12:30 pm
(Church Gate Station)
 At this stage, the
unloading takes place at
the destination station
 Re-arrangement of tiffins
takes place as per the
destination area and
destination building
In particular areas
with high density of
customers
(Nariman Pt.,Fort ,
CST), a special crate
is dedicated to the
area. This crate
carries 150 tiffins
and is driven by 3-4
dabbawalas!
1:00 – 3:00 PM
The members hang around (Gossip, play cards, eat
their own lunch)

3:00 PM – 3:30 PM
Here on begins the collection process where the
dabbawalas have to pick up the tiffins from the offices
where they had delivered almost an hour ago.

3:30 – 4:00 PM (At Destination Station)

The dabbawalla’s meet for the segregation as per the
destination suburb.
4:00 – 4:40 pm

 The return journey by

train where the group
finally meets up after the
day’s routine of
dispatching and collecting
from various destination
offices

 Usually, since it is more of

a pleasant journey
compared to the earlier
part of the day, the
dabbawalas lighten up the
moment with merry
making, joking around
and singing.
4:40 – 5:00 pm
( The Origin Station)
This is the stage where
the final sorting and
dispatch takes place. The
group meets up at origin
station and they finally
sort out the tiffins as per
the origin area
Awards and Felicitation
• World record in best time management.

•Name in “GUINESS BOOK of World Records”.

•Registered with Ripley's “ believe it or not”.

• Documentaries made by BBC ,UTV, MTV, ZEE TV,
AAJ TAK, TV TODAY, SAHARA SAMAY, STAR TV,
CNBC TV 18, CNN, SONY TV, TV TOKYO, NDTV.
•CASE STUDY –
• ICFAI Press Hyderabad
• Richard Ivey School of Business - Ontarion
Activities involved in Logistics:
Customers Service
Demand forecasting
Distribution communication
Inventory control
Material handling
Order processing
Procurement
Packaging
Return goods handling
Salvage & scrap disposal
Traffic & transportation
Warehousing & storage
Importance of Logistics:
Increase in the transportation costs
Fundamental changes in inventory
Increased use of computers
Increased awareness in people about the product
Economic regulation reduction
Globalization
Increase in power of retailers
 Objectives achieved through LM
Rapid Response
 Rapid response is concerned with a firm’s ability to satisfy
customer service requirements in timely manner.

Minimum Variance
 Variance is an unexpected event that disrupts performance
of the system.

Minimum Inventory
 The aim of LM is to reduce and manage inventory to the
lowest possible level while simultaneously achieving
desired operating aim.
Logistics vs. Supply Chain Management
Logistics is typically considered as the sub-set of SCM.
SCM has five key functions:
 Procure
 Make
 Move
 Store
 Service

 Logistics is involved at various stages of supply chain;

from supplier to plants, from plants to distribution
centres, from distribution centres to stores, from stores
to customers.
Complexity of a Typical Global Supply Chain
Freight Ocean

Customs
Forwarder Agent liner

Supplier Plant Port

Roadways Roadways Airways Road
+

Rail

Home Consumer Customer Customer’s DC

(Retailer) Warehouse Roadways
 Cross Functional Nature of Logistics
 Front end - Distributor Purchasing and
Supplier Marketing Interface
 Middle - Warehousing and Transportation
 Back end - Customer Contact (Marketing)

FRONT END MIDDLE BACK END

Functions of Logistics
 The Logistics Flow Chart

SALES PURCHASING
SUPPLIERS FUNCTION TRANSPORTATION FUNCTION
(SUPPLIER)
(DISTRIBUTOR)

PURCHASING SALES
FUNCTION TRANSPORTATION FUNCTION WAREHOUSING
(CUSTOMER) (DISTRIBUTOR)
 Logistics Goal: Close Gaps in the Supply Chain

Retailer Requirements Supplier Requirements

 Speed to compliance  Customer / retailer

 satisfaction
Lower inventory
 Operational
 Cross-docking
productivity
 Value-added services
 Transportation

Imperfect
Higher number of efficiency
SKUs Information
 Improved in-stock
 Direct-to-consumer positions
 Configure-to-order  Lower inventory
 Flexible business
practices
 Traditional Distribution Systems Used
Multi-Tiered Warehousing
Bulk
Finished Goods
Manufacturer’s
Distribution
Center
Manufacturer

Bulk
Shipments

Local
Retail Outlet Store Retail
Distributions Distribution
Center

 Hold inventory
 Value added services
Traditional Distribution Center Process

 Inbound receipt of 2 Storage of 3 Bulk outbound

goods
goods shipments

3
 Quick Response Initiatives
Streamline Distribution Process

Manufacturer’s
Distribution
Center
Manufacturer

 Advanced shipping notice

er
ry
il ve

m
 Bulk or discrete

u
e
eD

ns
r

Co
to shipments
ts

-
rec

to
 Store specific pricing
Di

ct-
re
Di
Local
Retail Outlet Retail
Distribution
Center

  Cross-docking
Lower inventory
 Flow-through
 Greater availability
 Value-added Logistics Center Process
1 Inbound shipment 4 Storage of goods 7 Order packing
tracking 5 Order picking 8 Pack and hold
2 Yard management 6 Value-added services 9 Outbound customer
3 Inbound receipt of compliant shipments
goods

4
2 8

5
1 9 7 6
 FIGURE 16-1
Relating marketing channels, logistics management, and supply
chain management
 Key Logistics Decisions
How many plants and/or warehouses?

Where should the plants and/or warehouses be

located?

What volume throughout should each plant and / or

warehouse have?

Which plant should service what warehouse and

which warehouse should service what customers?
Factors to be considered for Logistical Excellence
Availability – This denotes having inventory to
consistently meet the need of the customer material or
product requirements.

Operational Performance – It means the elapsed time

from order receipt to delivery. A firm’s operational
performance can be measured in terms of how flexible
it is in accommodating unusual and unexpected
request of customers.

Service Reliability – It pertains to the quality attributes

of logistics.
Logistical Sub-systems
Physical Supply – Management of flow of raw
materials, spare parts, machinery and tools from
suppliers.

Physical Distribution – Management of finished goods

from the factory to the customers

Logistical controls – Efficient co-ordination of physical

supply and distribution sub-systems
Parties involved in Logistics
Shippers
Suppliers
Carriers
Warehouse providers
Freight forwarders
Terminal operators
The Government
Customers
Logistics Value Proposition
Service
Cost Minimization
Logistics Value Proposition
Service
Cost Minimization

Supply Chain Logistics Management

Logistics Value Proposition
Service
 Logistics Service Quality Process Dimensions
 Logistics Service Quality Outcome Dimensions
Cost Minimization
Logistics Value Proposition
Service
 Logistics Service Quality Process Dimensions
Procedures
Contact
Information
Discrepancy
 Logistics Service Quality Outcome Dimensions
Cost Minimization
Logistics Value Proposition
Service
 Logistics Service Quality Process Dimensions
 Logistics Service Quality Outcome Dimensions
Timeliness
Availability
Condition
Accuracy
Cost Minimization
Logistics Value Proposition
Service Benefits
Cost Minimization