Logistics Management III

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Logistics Management

Prepared by:

Narendra Singh Chaudhary


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Word, Logistics is derived from French wordloger, which means art of war pertaining tomovement and supply of armies.

Logistics means the art of managing the flow ofraw materials and finished goods from thesource to the user

To get goods from where they arise to the right

place in the right form, at the right time, at theright cost, Logistics or physical distribution ordistribution logistics is an integral part ofMarketing Process.


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Definition Of LM

According to Council of logisticsmanagement: Logistics is the process of

planning, implementing and controlling the

efficient, effective flow and storage ofgoods, services and related informationfrom point of origin to point of consumption

for the purpose of conforming thecustomer requirement.


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Logistical management includes thedesign and administration of systems tocontrols the flow of material, work- in

process, and finished inventory to supportbusiness unit strategy.

Logistics is the designing and managing of

a system in order to control the flow ofmaterial throughout a corporation.


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Logistics of an company includesmovement of raw materials, coordinatingflows into and out of different countries,

choices of transportation, and cost of thetransportation, packaging the product forshipment, storing the product, and

managing the entire process.


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Fragmentation 1960-This era was known asfragmentation because every thing that donewas disintegrated

Evolving Integration-At this stage of time newconcepts of Logistical management wereevolving

Total integration-In the present scenariobecause of technological advances logistics hasevolved as part of management


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There are two main phases that are important inthe movement of materials: materialmanagement and physical distribution.

Materials management is the timely movement

of raw materials, parts, and supplies. The physical distribution is the movement of the

firm's finished products to the customers. Bothphases involve every stage of the process

including storage. The ultimate goal of logistics is: "To coordinateall efforts of the company to maintain a costeffective flow of goods."


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Inbound logistics covers the movement of materialsreceived from suppliers.

Material management describes the movements ofmaterial & components within a firm.

Physical distribution refers to movement of goodsoutward from the end of the assembly line to thecostumer.

Supply- chain management is somewhat larger thanlogistics and it links logistics more directly within theusers total communication network & with the firmengineering staff. It includes manufacturer and suppliersbut also transporters, warehouses, retailers andcustomers themselves.


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Importance of logistics

Transportation cost rose rapidly due to therise in fuel prices

Production efficiency was reaching a peak

Fundamental change in inventoryphilosophy

Product line proliferated Computer technology

Increased use or computers


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Increased public concern of products Growth ofseveral new, large retail chains or massmerchandise with large demands & verysophisticated logistics services, by pass

traditional channel & distribution Reduction in economic regulation Growing power of retailers Globalization

The interrelation of different logistics elementand their costs should be based on total costrather than individual costs.


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The objectives of Logistics

Rapid Response-Rapid response is concernedwith a firm's ability to satisfy customer servicerequirements in a timely manner.

Minimum Variance-Variance is any unexpected

event that disrupts system performance.Variance may result from any aspect of logisticaloperations. Delays in expected time of customerorder receipt, an unexpected disruption inmanufacturing, goods arriving damaged at acustomer's location, or delivery to an incorrectlocation-all result in a time disruption inoperations that must be resolved.


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Minimum Inventory-The objective of minimumvariance involves asses commitment andrelative turn velocity. Total commitment is thefinancial value of inventory deployed throughout

the logistical system. Turn velocity involves therate of inventory usage over time. High turnrates, coupled with inventory availability, meansthat assets devoted to inventory are beingeffectively utilized. The objective is to reduce

inventory deployment to the lowest levelconsistent with customer service goals toachieve the lowest overall total logistics cost.


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Movement consolidation-One of themost significant logistical costs istransportation. Transportation cost is

directly related to the type of product, sizeof shipment, and distance. Many Logisticalsystems that feature premium service

depend on high-speed, small-shipmenttransportation.


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Quality improvement-A fifth logistical objectiveis to seek continuous quality improvement. Totalquality management (TQM) has become a majorcommitment throughout all facets of industry.

Life-Cycle support-The final logistical designobjective is life-cycle support. Few items aresold without some guarantee that the productwill perform as advertised over a specifiedperiod. In some situations. The normal value-added inventory flow toward customers must bereversed.


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Essence of logistics in marketing

Marketing Process is successfully completed when

Products are produced and priced to satisfy the identifiedneeds of the segment of buyers

Arrangements are made to supply these goods through

selected distribution channels An awareness is created among the buyers about the

availability of the goods through information facilitation &

Goods are physically supplied to the buyers at the place

& time selected by them. Besides satisfying the customers need, the marketing

process must be profitable to the seller.


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Basic logistical service is

measured in terms of Availability-Availability means having inventory to

consistently meet customer material or productrequirements.

Operational performance-Operational performancedeals with the elapsed time from order receipt todelivery. Operational performance involves deliveryspeed and consistency. A firm's operational performancecan be viewed in terms of how flexible it is inaccommodating unusual and unexpected customerrequests.

Service reliability-Service reliability involves the qualityattributes of logistics. For logistics performance tocontinuously meet customer expectations, it is essentialthat management be committed to continuousimprovement


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There are four logistics concepts

The systems concept-The systemsconcept is based on all functions of aorganization working together in order to

maximize benefits. This conceptsometimes requires certain components ofthe organization to operate sub optimally

in order to achieve maximum goals of thesystem.ii.


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The total cost concept-The total cost concept is basedon the systems concept; however goal achievement ismeasured in terms of cost.

After-tax concept-A variation of the total cost concept is

the after-tax concept. This goal of this concept is after-tax profit. This concept is becoming very popularbecause of the many different national tax policies.

The trade-off concept links the system together in a waythat is very efficient, but can have trade-offs that might

be inefficient. The advantages of such high efficiencymust be weighed against the risk.


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Logistics sub-systems

Physical Supply or Management of flow of rawmaterials, spare parts, consumable stores andmachinery & tools from suppliers.

Physical distribution or management of finishedgoods from the factory to the buyers &

Logistical Controls for managing the logisticssystem, it helps an efficient co-ordination ofphysical supply & distribution sub-systems.


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Objective of an ideal logistic system is toensure flow of supply to the buyer

In Correct Quantity

At Desired location

At Required time At useable condition

At the lowest total cost

Thus the objectives encompass efforts tocoordinate physical distribution and materialmanagement in order to save money or improveservice.


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Elements of logistics system

Transportation

Warehousing

Inventory Management Packing & Utilization &

Information & Communication


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Forms of logistics management.

Centralized logistics management-Centralizedlogistics management provides that managers that alsohead other divisions of the company head the logisticsoperations. This type of management helps avoidinternal problems by having a central manager that

ultimately decides how logistics and operations arecoordinated. Decentralized logistics management-Decentralized

logistics management is based on the fact that acompany needs to have a division that helps control the

local-adaptation needs. Dealing with different culturesrequires input from the local branch. The managers thatdeal with the cultural differences on a daily basisnormally know what works and what dont.


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Outsourcing-Outsourcing is the final optionfor logistics management. When thishappens, transportation firms concentrate

on logistics, and the company canconcentrate on it's production. There aremany cost savings using this type of

program, however that lack of control cannegatively effect many companies.


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Logistical competency isachieved by coordinating

Network design

Information

Transportation

Inventory

Warehousing

Material handling

Packaging

Work


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Distribution & Warehousing Mgmt

A warehouse management system, orWMS, is a key part of the supply chain andprimarily aims to control the movement

and storage of materials within awarehouse and process the associatedtransactions, including shipping, receiving,put away and picking. The systems also

direct and optimize stock put away basedon real-time information about the statusof bin utilization.
http://en.wikipedia.org/wiki/Supply_chainhttp://en.wikipedia.org/wiki/Warehousehttp://en.wikipedia.org/wiki/Warehousehttp://en.wikipedia.org/wiki/Supply_chain


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Warehousing, material handling, and packagingare an integral part of other logistics areas. Forexample, merchandise typically needs to be

warehoused at selected times during thelogistics process. Transportation vehiclesrequire material handling for efficient loadingand unloading. Finally, the individual products

are most efficiently handled when packagedtogether into shipping cartons or other types ofcontainers.


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When warehouses are required in a logistical system, afirm can choose between obtaining the services of aspecialist or operating its own facility. The decision isbroader than simply selecting a facility to store inventory,

since many activities essential to the overall logisticalprocess are typically performed while products arewarehoused. Examples of such activities are sorting,sequencing, order selection, transportation consolidationand, in some cases, product modification and assembly.

Within the warehouse, material handling is an importantactivity. Products must be received, moved, sorted, andassembled to meet customer order requirements.


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Physical Distribution

The area of physical distribution concernsmovement of a finished product to customers. Inphysical distribution, the customer is the finaldestination of a marketing channel. The

availability of the product is a vital part of eachchannel participant's marketing effort. Even amanufacturer's agent, which typically does notown inventory, must depend on inventory

availability to perform expected marketingresponsibilities. Unless a proper assortment ofproducts is efficiently delivered when and whereneeded, a great deal of the overall marketing

effort can be jeopardized.


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It is through the physical distribution process that thetime and space of customer service become an integralpart of marketing. Thus physical distribution links amarketing channel with its customers.

To support the wide variety of marketing systems thatexist in a highly commercialized nation, many differentphysical distribution systems are utilized. All physicaldistribution systems have one common feature: they linkmanufacturers, wholesalers, and retailers into marketing

channels that provide product availability as an integralaspect of the overall marketing process.

Logistics Management III

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