Learning Objectives • Principles of materials management, logistics and supply chain management • Logistics interface with other functions• Inventory management principles and systems• Warehousing management fundamentals• Transportation management practices• How IT enables the logistics function• Understand about the performance measurement of the logistics function
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Learning Objectives• Principles of materials management, logistics
and supply chain management • Logistics interface with other functions • Inventory management principles and
systems • Warehousing management fundamentals • Transportation management practices • How IT enables the logistics function • Understand about the performance
o Product design and pricing o Customer service policies o Sales forecasts and order processing o Inventory policies and location of warehouses o Channels of distribution and despatch planning o Transportation to reach products to customers
• Production wants larger production runs tominimise time spent on set up changes on the
machines. Marketing wants smaller runs of avariety of products.
Logistics Plan Outline• Internal analysis (current position)
o Organisation o Human resources o Transportation o Relations with internal customers o
Quality of product
o Quality of Service • External / situation analysis
o Competitor logistics performance o Trends o External environment / economy o Public, private and contract warehouse o Public, private and contract carriage
Order processing Spare parts and service support After sales Customer servicesupport Demand forecasting Distribution communications Return goods handling
Plant and warehouse site location ProcurementInventory control Materials handling Salvage and scrap disposal Traffic and transportation Warehousing and storage
Logistics may be confined to the company whereasSCM extends beyond
• To provide desired level of customerservice at the lowest possible total cost
• It is that part of the firm’s logistics system thatstores products (RM, Packing Materials, WIP,FG) at and between point of origin and pointof consumption and provides info tomanagement on the status, condition anddisposition of items being stored
Reasons for WarehousingService related Cost related
Maintain source of supply Support customer service policies Meet changing market conditions Overcome time and spacedifferentials Support JIT programs of suppliersand customers Provide customers with the rightmix of products at all times Temporary storage of materials tobe disposed or re-cycled
Achieve production economies Achieve transportation economies Take advantage of QuantityPurchase discounts and forwardbuys Least Logistics cost for a desiredlevel of customer service
• Movement of goods from the market orcustomer back to the company
• The need: o Increased awareness of the environment o Stringent legislationo For some it is part of the business o Profitability of dealing with scrap, surplus
• Surplus, obsolescence can result due to: o Over optimistic sales forecasts, change in product
specs, errors in estimating material usage, lossesin processing or overbuying based on incentives