LOGISTICS Examples

Dominos / Mc Donalds
Britania / Parle-G
Courier companies (professional courier)
Indian Railways
Airline companies
News paper / Milk
Vegetable market (roadways/railways)
Suppliers / Wholesalers / distributors / retailers of
any product

DEFINING LOGISTICS
Logistics is a process of -- strategically managing
the procurement, movement and storage
of materials, parts and finished goods
through the organization and its marketing
channels in such a way that the current
and future profitability are maximized
through cost effective fulfillment of orders
OPERATING OBJECTIVES OF LOGISTICS
Rapid response
Minimum variance
Delay in customer order receipt
Goods arriving damaged at customers location
Delivery to incorrect location
Unexpected disruption in manufacturing process.
Minimum Inventory
Movement consolidation
Quality
Life cycle support





Functions of Logistics (remember
names of all chapters)
Inventory management
Warehousing
Packaging
Transportation
Assignment
Facility location
Information
Customer service
Logistics costing and performance measurement


Michael Porters Value chain analysis
Inbound & Outbound logistics
Inbound logistics (upstream logistics)
Concerned with procurement cycle.
Task involves sourcing, order placement,
transportation & receiving
Outbound logistics (Downstream logistics)
Concerned with physical distribution
Distribution of finished goods, warehousing,
customer delivery, scheduling

Three Cs in logistics
ASSET & UTILISATION ASSET & UTILISATION
COMPANY
COMPETITOR
Needs seeking benefits at
acceptable prices
CUSTOMERS
VALUE
VALUE
COST DIFFERENTIALS
The 3 Rs of Logistics
Responsiveness

Reliability

Relationship




3 dimensions of customer service
Availability
Operational performance
Speed
Consistence
Flexibility
Malfunction recovery
Reliability

Sound Inventory Policy
Customer segmentation

Product requirement

Transport integration

Time based requirement

Competitive performance

Logistics performance cycle
Procurement cycle (materials management)

Manufacturing cycle

Physical distribution cycle
Procurement cycle
SOURCING
ORDER
PLACEMEMENT
SUPPLIER
TRANSPORTATION RECEIVING
Manufacturing cycle
Inventory from
store
Factory
warehouse
Finished goods WIP
Physical distribution cycle
CUSTOMER ORDER
ORDER
TRANSMISSION
ORDER
PROCESSING
(Check credit/inv)
ORDER SELECTION
(Check back order)
RECEIVING
ORDER
TRANSPORTATION
Physical distribution - Concept
Revolves around:
Transportation
Inventory control
Warehousing
Packaging
Material handling
Location analysis
Integrated Logistics
The suppliers, the firm, its suppliers
connected to each other office / factory
(nodes)
Nodes connected in the form of
communication links, transportation links,
human links (Links)
Defining Integrated Logistics
The process of anticipating customer needs
and wants, -- acquiring the inputs to meet
those needs and wants, -- optimising goods
and services, -- developing a network to fulfill
the customer requirement -- and utilising this
network to fulfill the customer requirement in
a timely manner
Concept of Integrated Logistics
INVENTORY FLOW
INFORMATION FLOW
PROCUREMENT MFG SUPPORT
PHYSICAL
DISTRIBUTION
S
U
P
P
L
I
E
R
C
U
S
T
O
M
E
R
CONCEPT OF REVERSE LOGISTICS
Customer returns new products
o Manufacturing defects
o Product not meeting specifications as per sample
o Product recalled by the company
Customer returns used products
o Short term rentals
o Warranty returns
o Exchange offers
o Unit sent to manufacture for product upgrade
o Take backs (unnecessary packaging / pallets)

Concept of Reverse Logistics
Customer returns Re-usable products:
o Reusable products soft drink bottles
o Returns sent to manufacturer


Information flow
Primary objective is to plan & execute
integrated logistical operations

Within individual logistics areas, there are
different requirements w.r.t. order size, inv
availability, urgency of movement etc.

Thus, logistics information involves 2 major
types of flows:
Logistics Information
1) Planning & coordination flows:
- Strategic objectives
- Capacity constraints
- Logistical requirements
- Inventory deployments
- Manufacturing requirement
- Procurement requirements
- Forecasting

Logistics Information
2) Operational flows:
- Order management
- Order processing
- Distribution operations
- Transportation & shipping
- Procurement
Concept of Supply Chain Management
COMPANY
UPSTREAM
(SUPPLIERS)

DOWNSTREAM
(CUSTOMERS)
SHIRT MANUFACTURING COMPANY
WEAVERS OF FABRICS / CLOTH
DISTRIBUTORS / RETAILERS / CUSTOMERS
Produces value chain in the form of products & services in the hands of ultimate consumers
Supply Chain Management
Management of upstream & downstream
relationships with suppliers & customers
to deliver superior value at least possible cost
to the supply chain as a whole

Network of organisations that are involved
in different processes and activities that
produce value in the form of products &
services to ultimate customers
LOGISTICS Vs SCM
Concerned with getting
goods & services where they
are needed at the desired
time.
No manufacturing or
marketing can be
accomplished without
logistical support.
Adds value only when inv is
correctly positioned to
facilitate sale.
Mainly concerned with
optimizing flows within the
org.
Concerned with all activities
associated with movement of
goods from RM to end user.

Includes sourcing,
procurement, scheduling,
order processing, inv mgmt,
WH, customer service.
Adds value at each stage

Concerned with flow of
material from a multitude of
suppliers

Barriers to internal integration of Logistics
Organisational structure
Measurement systems
Inventory ownership (each dept differs)
Information technology (limited data base
not accessible on cross functional basis)
Knowledge transfer capacity
End of Introduction Chapter