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Logistic and Supply Chain Management

Supply chain activities transform natural resources, raw material and components into a finished product that is delivered to end consumer.

A set of approaches used to efficiently integrate Suppliers Manufacturers Warehouses Distribution centers So that the product is produced and distributed In the right quantities To the right locations And at the right time System-wide costs are minimized and Service level requirements are satisfied



End User

Ware housing

Selling & Distribution

Reduced inventory Increased revenue Lower order management costs Higher Gross Margin Better forecast accuracy Better allocation of promotional budgets

Reduced inventory Lower warehousing costs Lower material acquisition costs Fewer stockout conditions

Lower freight costs Faster and more reliable delivery Lower capital costs Reduced depreciation Lower fixed costs

Improved customer service More efficient use of human resources


Supply Chain Design Resource Acquisition Long Term Planning (1 Year ++)`


Production/ Distribution Planning Resource Allocation Medium Term Planning (Qtrly, Monthly)


Shipment Scheduling Resource Scheduling Short Term Planning (Weekly,Daily)


Velocity Acceleration Collaboration Empow erment

The 3 Ts



Information(eg. open schedules) Accountability

Key Ingredients For Improving Supply Chain Efficiencies

Understanding the process Transparency Ability to see the real situation

Inventory and back-order levels fluctuate considerably across the supply chain even when customer demand doesnt vary The variability worsens as we travel up the supply chain Forecasting doesnt help!
Multitier Supplier s Manufacture r Wholesale Distributor s Retailer s Consumer s







Sales Time

Bullwhip Effect

Volatility amplification along the network Increase in demand variability as we move upstream away from the market Mainly because of lack of communication and coordination Delays in information and material flows

Factors contributing to the Bullwhip Effect:

Forecast Errors Lead Time Variability Batch Ordering Price Fluctuations Product Promotions Inflated Orders

Methods intended to reduce uncertainty, variability, and lead time:

Vendor Managed Inventory (VMI) Just In Time replenishment (JIT) Strategic partnership

The relabeling perspective simply renames logistics; what was logistics is now SCM.



Logistics originated in military The word logistics has originated from the Greek word Logistikos and the latin word logisticus meaning the science of calculating and computing. In ancient time it was more in connection with the art of moving armies and supplies of food and armaments to the war front. The usage of this word can be traced back to the 17th century, when it was probably used in the first time by the French army .

Logistics is the management of the flow of goods between the point of origin and the point of destination in order to meet the requirements of customers or corporations. Logistics involves the integration of information, transportation, inventory, warehousing, material handling, and packaging, and often security.

Refers to interrelation & management of all activities involved in making products and raw materials available for manufacturing and in providing finished products to customers when, where and how they are desired.


Inbound logistics: This includes movement of raw materials and components for processing from the supplier to manufacturer.
Order Placement & Expediting

Vendor Supplier




Process logistics: This includes storage and movement of raw material and components within the manufacturing premises.

3)Outbound logistics: This includes warehousing , transportation, and inventory management of finished goods.
Order Processing
Order Transmission

Customer Order

Order Selection

Order Transportation

Customer Delivery


pick up Security Check

In Scan

Data Entry

Bagging Scan

Origin airport

Transfer challan

Connection Scan

In Scan


Out Scan

Dest. Airport

In Scan

Out Scan

Transfer challan

Area In Scan

Out Scan

Consignee Delivery

Delivery Sheet

Logistics covers the following functional areas, termed as Logistics Mix by Martin Christopher. 1. Information Maintenance: Collection and storage Data analysis 2. Warehousing Space determination Warehouse configuration Stock layout and planning

3. Inventory Management : Stock level policies Short term sales forecasting Product mix by location Stocking location 4. Protective Packaging: Design for handling Design for storage Design for protection

5. Transportation: Mode & carrier selection Carrier route planning Vehicle scheduling

1. Inventory Reduction: Through the financial accounting perspective, inventory is an asset and does not cause any appreciable disadvantage, even when stocked in excess.

Traditionally, firms carry excess inventory for the purpose of extending excellent customer service. Efficient and reliable logistics will help eliminate costs of maintaining excess inventory and excellent customer service even without excess inventory.

2. Reliable and consistent delivery performance- to retain customers: Timely delivery is crucial to the customer to keep up his production schedule This will help in building customer confidence and contribute to creating long term relationships. 3. Freight economy: Freight is the major cost element in logistical cost. This can be reduced by adopting measures like freight consolidation ,transport mode selection, route planning, long distance shipments etc.

4. Minimize product damages: Product damage adds to the logistics cost. The reason for product damages are improper logistical packaging, frequent consignment handling, etc. 5. Quick response: This aspect is related to the capability of the firm to respond to the customer in the shortest time frame. The usage of latest technologies in information processing and communication will enhance the capabilities in terms of accuracy and time. Faster decision making results

1. External: Globalisation Technology Challenging nature of the work force Environmental concerns 2. Internal: Customer service and quality Third party networks Supply chain management Changes in management and organization style

1. Performance: Better service for customers Improved productivity Assess just in time and quick response needs 2. System structure: Better relationship with vendors, customers and third parties to more effectively manage the supply chain Better relationship within and across the organization. 3. Technology integration: Better information systems that connect functions and organizations Combine information and material handling systems for increased efficiency and effectiveness.

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