Sales and Distribution

Management 2e

Tapan K. Panda
Sunil Sahadev

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 Chapter 17

Customer-oriented Logistics
Management

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 Learning Objectives
Understand logistics strategy

Understand logistics planning

Understand facilities planning

Discuss inventory management strategy

Know the main issues in transportation

Understand the importance of supply chain management

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Logistics: Definition and Objectives
Logistics is 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 the point of
origin to the point of consumption for the purpose of conforming to
customer requirements.

Objectives
1. Cost reduction

2. Capital reduction

3. Service improvement

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 Logistics Planning
Inventory management Transportation decisions
Inventory levels Modes of transport
Deployment of inventories Carrier routing/scheduling
Control methods Shipment size/consolidation

Customer
Service
goals

Location decisions
Number, size and location of facilities
Assignments of stocking points to
sourcing points
Assignment of demand to stocking
points

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 Facilities Decisions: Generic types of
outbound logistics strategies
Direct shipment

Warehousing

Cross-docking

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Functions of warehousing operations
Movement Receiving
Transferring
Order picking/selection
Storage Shipping

Information transfer

Stock keeping locations

Inbound and outbound
shipments
Facility space utilization
Order fulfillment data

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Relationship between logistics, cost, and
number of warehouses
Total cost

Total Inventory cost

cost

Transportation cost

Warehousing cost

Number of warehouses

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Inventory Management Decisions: Why do
we need inventories?
Improves customer service

Smoothens the operations of the logistics system

Reduces costs

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Objectives of Inventory Management
Fill rate expression
Costs associated with inventory
Inventory procurement cost
Inventory carrying cost
Out-of-stock stocks
Inventory level decisions

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Objectives of Inventory Management
Push vs pull inventory control
Order quantity decisions
A reorder point model with uncertain demand
Reorder point with uncertain demand and uncertain lead time
Risk pooling
Echelon inventory

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Components of inventory carrying cost
Capital cost Inventory
Investments

Inventory service Insurance and

costs Taxes
Inventory carrying
cost
Storage space costs Warehouse rent,
maintenance charges

Inventory carrying Obsolescence

cost
Damage& Pilferage

Shrinkage

Relocation costs

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 Echelon inventory
Stockist
Stockist Supplier echelon
echelon Inventory
lead time

Stockist

Retailer Retailer Retailer Retailer Retailer

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 Transportation Decisions
Mode selection

Vehicle routing and scheduling

Freight consolidation

Factors affecting transportations costs

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Factors affecting transportation costs
Product related factors
The density of the product
Stow ability
Difficult in handling
Liability
Market related factors
Intramode competition
Location of markets
Balance or imbalance of in freight traffic in and out of the
market
Seasonability of the product movements

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 Supply Chain Management
Identifying difference between logistics management and supply
chain management
Implementing supply chain management
Principles of supply chain management
Efficiency
Reliability
Flexibility
Innovation

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 Supply Chain Management
Generic supply chain management strategies
Rationalization strategy
Synchronization strategy
Customization strategy
Innovation strategy

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 Supply Chain Management
Supply chain techniques
Supply chain network design
Capacity planning
Risk management
Organizational change management
Performance measurement and monitoring

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The Structure of Supply Chain Management

EfficiencyReliabilityFlexibility--Innovation Supply chain principles

RationalizationSynchronizationCustomization--Innovation Supply chain strategies

Supply chain network design

Capacity planning

Risk management SCM techniques

Organizational change management

Performance monitoring and measurement

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Correlation between Supply Chain Strategies
and a Firms Generic Strategies
Customization

Differentiation
Innovation

Focus/Niche Customization

Rationalization

Low cost
Synchronization

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