2. WHAT IS LOGISTICS?
Logistics is the . . . “process of planning, implementing, and
controlling the efficient, effective flow and storage of goods,
services, and related information from point of origin to point of
consumption for the purpose of conforming to customer
requirements.”
3. • Logistics is basically a process of transporting goods (either raw
material or finished products) from one point to another point.
The two major functions of logistics
are transportation and warehousing
• The operations include planning, implementing, and maintaining
the transportation and storage of goods that include service as well
as information of the initial point and the endpoint. (Easy to
understand, right?)
• Basically, it is an activity that comes under the supply chain system.
If a person works in the field of logistics management, then we can
call him a logistician.
4. IS IT DIFFERENT FROM SCM?
Not really!
“Supply Chain Management deals with the management of
materials, information, and financial flows in a network consisting
of suppliers, manufacturers, distributors, and customers.”
So, Logistics and Supply Chain are equivalent terms.
5. LOGISTICS FUNCTIONS
• Purchasing / Procurement
• Inventory Control
• Warehousing
• Materials Handling
• Facility Location / Network Design
• Transportation
• Customer Service
• Order Processing
6. VISUAL REPRESENTATION OF INTEGRATED
LOGISTICS MANAGEMENT
Supplier
Supplier
Transport
Delivery
Consolidation
Warehouse
Manufacturing
StageI Manufacturing
StageN
Manufacturing
StageII
Finished Goods
Localdelivery
Finished Goods
Storage
RawMaterials Source
Wholesaler
Retailer
Retailer
Transport
RawMaterials Source
Localdelivery
Material
Handling
Rawmaterials
or PartsStorage
Customers
Warehouse
Manufcaturing
NStages
Material
Handling
Delivery
INBOUND LOGISTICS
INTERNAL LOGISTICS
OUTBOUND LOGISTICS
Material Flow Information Flow
Note:
Transport
Transport
Material
Handling
7. NATURE AND CONCEPTS
• Logistics is the management of the flow of goods, information and
other resources, including energy and people, between the point
of origin and the point of consumption in order to meet the
requirements of consumers (frequently, and originally, military
organizations).
• Logistics involves the integration of information, transportation,
inventory, warehousing, material-handling, and packaging, and
occasionally security. Logistics is a channel of the supply chain
which adds the value of time and place utility.
• Today the complexity of production logistics can be modeled,
analyzed, visualized and optimized by plant simulation software
8. TYPES OF LOGISTICS
A. Inbound Logistics
B. Outbound Logistics
C. Third Party Logistics
D. Fourth Party Logistics
E. Reverse Logistics
9. A. INBOUND LOGISTICS
• Inbound logistics refers to the transport, storage and delivery of
goods coming into a business. Outbound logistics refers to the
same for goods going out of a business.
10. • Sourcing and vendor selection for supply of raw materials and
manufacturing parts
• Inbound transportation and procurement planning
• Raw materials warehousing including consolidation warehousing
• Management of Inventory
• Information system for effective support strategic alliances with
the supplies and transporters
11. B. OUTBOUND LOGISTICS
• Outbound logistics refers to the same for goods going out of a
business. Inbound and outbound logistics combine within the
field of supply-chain management, as managers seek to
maximize the reliability and efficiency of distribution networks
while minimizing transport and storage costs.
12. • Outbound logistics system is concerned with the flow of finished products
from factory warehouse to the customers through a distribution network
comprising:
• The wholesalers
• Distributors
• Retailers
• Regional warehouses
• Transporters
• The inventory at all levels
• Sales order processing
• Sales return processing
• Accounts receivable realization and
• Counter flow of information from the customers to the factory
13. C. THIRD PARTY LOGISTICS
• A 3PL (third-party logistics) is a provider of outsourced logistics
services. Logistic services encompass anything that involves
management of the way resources are moved to the areas where
they are required. The term comes from the military.
14. D. FOURTH PARTY LOGISTICS
• This evolution in supply chain outsourcing is Fourth-party
Logistics or 4PL.A 4PL provider is a supply chain integrator. The
4PL assembles and manages all resources, capabilities and
technology of an organization's Supply Chain and its array of
providers. Who handles entire supply chain from start to finish
15. 2 PL
3 PL
4 PL
1 PL
System
Integration
Multiple
Single
S
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r
v
i
c
e
O
f
f
i
c
e
r
High
Low Level of International Cross
linking
16. E. REVERSE LOGISTICS
• Reverse logistics is for all operations related to the reuse of
products and materials. It is "the process of moving goods from
their typical final destination for the purpose of capturing value, or
proper disposal.
17.
18. MAJOR FEATURES OF FOR
LOGISTICS MANAGEMENT
• Smooth flow of all types of goods such as raw mareials, work-in-
process and finished goods
• Meeting customer expectations about product and related
information requirements
• Real time flow of information about products’ demand and
availability
• Delivery of quality product in required quantity without excessive
safety stock
• Best possible customer service at the least possible cost
• Integration of various managerial functions for optimization of
resources
• Movement and storage of goods in appropriate quantity
• Enhancement of productivity and profitability
19. CROSS DOCKING
Cross docking is a logistics procedure where products from
a supplier or manufacturing plant are distributed directly
to a customer or retail chain with marginal to no handling
or storage time
20. INTEGRATED LOGISTICS MANAGEMENT
• Integrated Logistics is viewed as a method to create a
sustainable competitive advantage over the company's
competition
• Logistics strategy must be integrated with corporate strategy
because corporate strategy sets the basic requirement to the
Logistics system of a strategy
21. • The logics process is becoming more demanding and complex,
so is the business environment in which the logistics has to
operate
• Highlights seven critical factors including that are contributing to
the complexity of logistics system operations
• Escalating customer demand
• Cycle time reduction
• Globalization
• Restructuring
• Supply Chain Partnerships
• Productivity pressures and
• Environmental awareness
22. STRATEGIC LOGISTICS
PLANNING
• Strategic logistics planning is essentially concerned with the
deployment and management of logistics resources to met the
desired cost effective service performance of the system
• This may involve, number and location of warehouses, mode and
carrier selection, Inventory positioning, inventory planning, sub
contracting of services, sourcing, equipment and facilities
planning, order management and Information systems planning
etc.
23. • This is also includes such decisions as location and capacities of
company owned plants and warehouses, acquisition or long term
hiring of carriers like ships barges, trucks etc, acquisition of
martial handling system and facilities, balancing facilities to
maximize throughput and flexibility and introduction of system to
help, reductions in response time and in process inventory
• Choice of supply, transport mode, strategic alliance with both
suppliers and customers also form parts of these strategic
logistics planning process.
24. • The process of strategically managing the acquisition, movement
and storage of materials, parts, finished goods inventory, and
related information flows through the organization and its
marketing channel in such a way that current and future
profitability is maximized through the cost-effective fulfillment of
orders.
25. MAIN OBJECTIVES OF LOGISTICS
PLANNING ARE:
• Cost reduction: - This strategy is directed towards minimizing
the variable costs associated with the movement and storage.
The best strategy is to evaluate the alternative courses of
action and select the optimum one keeping profit
maximization as the prime goal in mind.
• Capital reduction: - This strategy is directed towards
minimizing the level of investment in the logistics system.
• Service improvements: - This strategy recognizes that the
revenue is a function of the logistics service provided and
develops an effective service strategy that is different from the
one provided by competitors
26. ISSUES FOR GLOBAL LOGISTICS
• Movement of product
• The flow of information
• Time /Service
• Cost competitiveness
• Integration
• Different culture
27. MAIN FEATURES OF LOGISTICS
• A fragmented logistics
• Optimization of physical operations
• Economical perspectives
• Skills & dimensions
28.
29. The mission of logistics management
• The mission is to plan and coordinate all those activities necessary
to achieve desired levels of delivered service and quality at lowest
possible cost. Logistics must therefore be seen as the link between
the marketplace and the operating activity of the business. The
scope of the logistics spans the organization, from the management
of raw materials through to the delivery of the final product.
30. The marketing and logistics interface
• Interface between Logistics Marketing– The connection between
marketing and logistics management, logistics concerns the market
marketing, marketing facilitator logistics, in series to achieve
marketing, satisfy customer demand, promote effectively, obtain
the product value to support customer loyalty and so on all
necessary to be resolved, logistics and marketing for the logistics
management plan and marketing strategy implementation of the
great role in promoting.
31. • Marketing is the practice of understanding what customers need and then
communicating how the company can achieve those needs.
• While advertising, social networking and product packaging design are all
part of marketing, so is the analysis of sales and response data to figure out
what customers like and want so that the outgoing messages can be adjusted.
• Logistics and marketing are normally concerned with entertaining the
customers’ needs and wants, respectively by their supply and demand
purposes in a marketing channel.
• The interface between logistics and marketing is perilous to the delivery of
customer service. The major goal of conflict for logistics and marketing
interface is related to 5Ps (product, price, place, promotion, and packaging)
of marketing.
• Without the successful link of logistics and marketing, the firm may be
unable to provide good customer services, resulting in dissatisfied customers
or a lost sale.
• For organizations to be successful in delivering higher customer value,
logistics and marketing functions must be integrated because the right
product must be at the right price, advertised through proper promotions,
provided in the right packaging, and must be available at the right place.
32. Customer service
• Logistics is a crucial component in the efficiency of many
companies. Without a good logistics plan as part of your supply
chain, then getting goods to markets – or receiving raw goods –
becomes a difficult task. But in order for logistics activities to
operate smoothly, there is another crucial component to be
considered: customer service.
• Without a good level of communication and an efficient level of
customer service, then any logistics chain will not operate as well
as it should. Providing good customer service and communications
as part of your logistics services is essential to success.
33. • Communicate Quickly and Thoroughly to Build Trust
• Communication and trust go hand-in-hand. When a client sees that you
communicate all information quickly, even when it may be bad news, then
they will realize that they can trust you in every aspect of your relationship.
• Updating clients at different stages of their logistics experience means they
know your company is thorough. While advising a client of a delay may seem
like a negative, it is also good business practice as it enables them to make
any adjustments to their own schedules. Whether dealing with inbound
logistics or outbound logistics, good channels of communication must be a
constant factor.
• Speed
• Speed is not just about how quickly you deliver goods. It is also about how
quickly you respond to customer inquiries. In the modern logistics industry,
it’s not just about how fast you deliver shipments, but about how fast you
deliver information.
• Consistency
• Consistency has to be present in how you communicate with customers.
Always provide a customer with answers, even when you don’t have one
34. Customer service and customer retention
• Logistics is an industry that is constantly moving and at quick
speeds. They must adhere to tight deadlines and a high level of
proficiency to keep up with demand.
• In today's modern world, the logistics industry has become
essential to our global economy. However, in a time where the
competition is tough, logistics companies have to adapt quickly.
35. • Building Customer Loyalty
• Thanks to the growth of eCommerce, online shopping, and emerging
small businesses, the logistics industry shows no sign of slowing, plus,
consumers have now grown accustomed to specific standards when it
comes to making purchases online.
• Customer Satisfaction
• Business owners understand the fundamental part of their business's
success and growth is the customers. Part of that process is not just
attracting them but keeping them returning for your product or service.
• Fulfillment
• Every industry has particular expectations from the customer that are
unique to their offering. Logistics is no exception. Fulfillment
management should be as streamlined and efficient as possible. From
the purchase to delivery, every step in the process should consider the
customer.
36. • Quick Delivery Times
• The heart of logistics is rooted in how quickly products are delivered.
Now, companies can offer next-day delivery, and in some cases same
day. These offerings drive customers in their purchase decisions, with
45% of customers stating they are more likely to do business with a
company that can provide these options.
• Customer Support
• In an industry such as this, you never want to underestimate the
importance of customer support and communication. Without effective
communication, no one would feel confident in the persons they are
doing business with. In addition, customers want to contact someone at
any time during the process, as they may have questions or need
assistance.
37. • Ease of Use
• The process of placing an order, shipping, and returns should be carried
out with as little hassle to the customer as possible. Returns impact
overall customer satisfaction, with 96% saying it is a significant factor in
purchasing decisions. However, it doesn't stop there; how people interact
with your app or website also affects your customers' experience. A
simple, straightforward interface and design can provide better
functionality for its users.
• Backend Operations that Aid in Retention
• There are many contributing factors to how your customer will feel by the
end of the transaction. The front end of logistics is essential; however, the
back in is as important. Allowing your workflow and employees to
perform at their best comes by putting systems into place that can be
streamlined and enhance the company's overall efficiency.
• Resolving Customer Issues
• With all the care that goes into the process, mistakes can sometimes
happen. Customers generally understand this fact; that is why how you
handle each situation is critical. On the other hand, if a customer can have
the problem quickly resolved and with little effort, they may conclude that
their experience was still satisfactory.
38. Service-driven logistics system
An effective starting point for logistics system design is the
marketplace, in other words, companies must fully understand the
service needs of the various markets that they address and then seek
to develop a low cost logistics solution. The ideal logistics
strategies and systems should be devised in the following steps
39. IDENTIFYING CUSTOMER’S SERVICE NEEDS:- It is important that no
two customers will ever be exactly the same in terms of their service
requirements. However it will often be the case that customers will
fall into groups or “segments” which are characterized by a broad
similarity of service needs. These groupings might be thought of
as „service segments‟.
40. DEFINE CUSTOMER SERVICE OBJECTIVE AND PRIORITIES:
The whole purpose of logistics strategy is to provide customers with the
level and quality of service that they require and to do so at less cost to
the total supply chain. The definition of appropriate service objectives
is made easier if the concept of the perfect order is adopted. Perfect
order is achieved only when each of those service needs meets the
customer‟s satisfaction. One frequently encountered measure of the
perfect order is „on- time, in- full, and error- free‟. In order to calculate
the actual service level using the perfect order concept, performance
on each element is to be monitored and then the percentage achievement
on each element to be multiplied together. Customer service is usually
measured in terms of: The level of availability, The speed and
consistency of the customer‟s order cycle, and The communication that
takes place between seller and customer.
41. DESIGN THE LOGISTICS SYSTEM:
In the final step, ultimate designing the service driven logistics
system takes place which is based on the identifying customer‟s
service needs, customer service objectives, priorities, and their
service standards. Designing the service driven logistics system
boosts the morale of intermediaries and the interest of the customers
as well due to concentrating on the service levels and thereby adding
value at each stage.
