The word logistics is derived from Greek word “logisticos” means- to reason logically.
Supply chains encompass the companies and the business activities needed to design, make, deliver, and use a product or service.
Supply chain management is a term that has emerged in recent years that captures the essence of integrated logistics and even goes beyond it. SCM emphasizes the logistics interactions that take place among the functions of marketing, logistics and production within a firm and those interactions that take place between the legally separate firms within the product flow channel.
Logistics is the part of supply chain process that plans, implements and controls the efficient, effective flow and storage of goods, services and related information from point of origin to the point of consumption in order to meet customers’ requirements.
Logistics is the function which enables the flow of materials from suppliers into an organisation,through operations within the organisation out to the customers.
Supply Chain Management
“ A supply chain comprises alliances between partnering organisations. let us begin with the simple supply chain which links company with its suppliers,distributers and customers.
According to Beamon- “SCM is an integrated process wherein manufacturers, suppliers, distributers and retailers work together in an effort to acquire raw materials,convert these into finished products and deliver these goods to the consumers.
Components of supply chain
Types of supply chain `
Important decisions in SCM
Production -What products does the market want? How much of which products should be produced and by when?
Inventory -What inventory should be stocked at each stage in a supply chain? How much inventory should be held as raw materials, semi finished, or finished goods?
Location -Where should facilities for production and inventory storage be located? Where are the most cost efficient locations for production and for storage of inventory?
Transportation -How should inventory be moved from one supply chain location to another?
Information -How much data should be collected and how much information should be shared?
Benefits of SCM
Supply chain management bridges the gaps between suppliers and customers.
It allows businesses to conduct operations at an appropriate time and place for the benefits of suppliers and customers.
Due to it, wholesalers get the best prices from manufacturers, retailers get the best prices from wholesalers and the lead time is reduced.
Retailers get a choice of goods and can also offer good services to customers.
It makes movements simple, cost-effective and efficient as transport is simpler.
Expertise can be developed in a particular type of operation.
Example-The Mumbai Dabbawalas
The Dabbawalas of Mumbai are from one of the best examples of logistics management.Neatly stacked dabbas (Tiffins/lunch-boxes) are a common sight at most of the railway stations, late every morning in Mumbai. A man who is illiterate/semi-illiterate delivers hot lunch at the doorstep of subscriber. It is an error-free system and virtually there are no mismatches.
“ The Mumbai Tiffin Box Suppliers Association” is a 38 years old organization with 4500 members and a huge loyal customer base. The customer base includes office goers, students, shopkeepers etc.Instead of carrying their own lunch in early morning, they prefer to subscribe this dabba service. For a small fee, the dabbawala picks up the fresh lunch from subscriber’s house and delivers it to his/her office at lunch time. Once lunch is over, the empty dabba is again collected by the dabbawala. This is done by the Mumbai’s extremely efficient railway system-Mumbai locals. There are special trains known as the “Dabbawala Specials”. The dabbas change many hands and off-loaded many times before the final delivery.
There is scientific method of putting an identification mark on each dabba. Each dabba lid is marked with a particular code format-DBOF where D-dabbawala number, BO-building/office and F-floor where tiffin has to be delivered. The lid is also marked with a number denoting the railway station where the box has to be off-loaded, followed by the number denoting the station from where the tiffin has to be picked up.
The fee for all this unbelievable-just 150-300 Rs. depending upon the distance covered.
The service was started by a Parsi Banker when he employed a carrier to fetch his lunch every afternoon.The idea caught on and soon inspired many unemployed people to become dabba-carriers.
“ The Mumbai Tiffin Box Suppliers Association” formed in 1968,which transport 1,75,000 boxes in a three-hour period with its 5000 semi illiterate Dabbawalas,travelling 25 kilometeres using public transport,daily.
In 1998,Forbes Global Magazine conducted an analysis on its service and gave the Dabbawalas a “SIX-SIGMA” efficiency.