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1. Logistics and Supply Chain
Management
Prepared by:
RAJEEV RANJAN

3. "Logistics means having the right thing,
at the right place, at the right time."

4. Definition Of LM
 According to Council of logistics management:
“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 the customer requirement”.

5.  Logistical management includes the design
and administration of systems to controls the
flow of material, work- in – process, and
finished inventory to support business unit
strategy.
 Logistics is the designing and managing of a
system in order to control the flow of material
throughout a corporation.

6.  Logistics of an company includes movement
of raw materials, coordinating flows into and
out of different countries, choices of
transportation, and cost of the
transportation, packaging the product for
shipment, storing the product, and
managing the entire process.

8.  Fragmentation 1960-This era was known as
fragmentation because every thing that done was
disintegrated
 Evolving Integration-At this stage of time new
concepts of Logistical management were evolving
 Total integration-In the present scenario because of
technological advances logistics has evolved as part of
management

9.  There are two main phases that are important in the movement
of materials: material management 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. Both phases involve
every stage of the process including storage.
 The ultimate goal of logistics is: "To coordinate all efforts of
the company to maintain a cost effective flow of goods."

10.  Inbound logistics covers the movement of materials
received from suppliers.
 Material management describes the movements of material
& components within a firm.
 Physical distribution refers to movement of goods outward
from the end of the assembly line to the costumer.
 Supply- chain management is somewhat larger than
logistics and it links logistics more directly within the user’s
total communication network & with the firm engineering
staff. It includes manufacturer and suppliers but also
transporters, warehouses, retailers and customers
themselves.

11. Importance of logistics
 Transportation cost rose rapidly due to the rise in
fuel prices
 Production efficiency was reaching a peak
 Fundamental change in inventory philosophy
 Product line proliferated
 Computer technology
 Increased use or computers

12.  Increased public concern of products Growth of
several new, large retail chains or mass merchandise
with large demands & very sophisticated logistics
services, by pass traditional channel & distribution
 Reduction in economic regulation
 Growing power of retailers
 Globalization
 The interrelation of different logistics element and their
costs should be based on total cost rather than
individual costs.

13. The objectives of Logistics
 Rapid Response-Rapid response is concerned with a
firm's ability to satisfy customer service requirements in
a timely manner.
 Minimum Variance-Variance is any unexpected
event that disrupts system performance. Variance
may result from any aspect of logistical operations.
Delays in expected time of customer order receipt, an
unexpected disruption in manufacturing, goods
arriving damaged at a customer's location, or delivery
to an incorrect location-all result in a time disruption

14.  Minimum Inventory-The objective of minimum
variance involves asses commitment and relative turn
velocity. Total commitment is the financial value of
inventory deployed throughout the logistical system.
Turn velocity involves the rate of inventory usage over
time. High turn rates, coupled with inventory
availability, means that assets devoted to inventory are
being effectively utilized. The objective is to reduce
inventory deployment to the lowest level consistent
with customer service goals to achieve the lowest
overall total logistics cost.

15.  Movement consolidation-One of the most
significant logistical costs is transportation.
Transportation cost is directly related to the
type of product, size of shipment, and
distance. Many Logistical systems that feature
premium service depend on high-speed, small-
shipment transportation.

16.  Quality improvement-A fifth logistical objective is to
seek continuous quality improvement. Total quality
management (TQM) has become a major commitment
throughout all facets of industry.
 Life-Cycle support-The final logistical design objective
is life-cycle support. Few items are sold without some
guarantee that the product will perform as advertised
over a specified period. In some situations. The normal
value-added inventory flow toward customers must be
reversed.

18. Essence of logistics in marketing
o Marketing Process is successfully completed when Products are
produced and priced to satisfy the identified needs of the
segment of buyers.
o Arrangements are made to supply these goods through
selected distribution channels
o 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.
o Besides satisfying the customers need, the marketing process
must be profitable to the seller.

19. Basic logistical service is measured in
terms of :-
 Availability-Availability means having inventory to
consistently meet customer material or product requirements.
 Operational performance-Operational performance deals
with the elapsed time from order receipt to delivery.
Operational performance involves delivery speed and
consistency. A firm's operational performance can be viewed
in terms of how flexible it is in accommodating unusual and
unexpected customer requests.
 Service reliability-Service reliability involves the quality
attributes of logistics. For logistics performance to
continuously meet customer expectations, it is essential that
management be committed to continuous improvement

20. There are four logistics concepts
The systems concept-The systems concept
is based on all functions of a organization
working together in order to maximize
benefits. This concept sometimes requires
certain components of the organization to
operate sub optimally in order to achieve
maximum goals of the system.

21. The total cost concept-The total cost concept is based on the
systems concept; however goal achievement is measured 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 popular because of the many different
national tax policies.
The trade-off concept links the system together in a way that is
very efficient, but can have trade-offs that might be inefficient. The
advantages of such high efficiency must be weighed against the
risk.

22. Logistics sub-systems
 Physical Supply or Management of flow of
raw materials, spare parts, consumable
stores and machinery & tools from
suppliers.
 Physical distribution or management of
finished goods from the factory to the buyers
& Logistical Controls for managing the
logistics system, it helps an efficient co-
ordination of physical supply & distribution
sub-systems.

23. Primary Activities
 Inbound logistics: materials handling, warehousing,
inventory control, transportation;
 Operations: machine operating, assembly,
packaging, testing and maintenance;
 Outbound logistics: order processing, warehousing,
transportation and distribution;
 Marketing and sales: advertising, promotion, selling,
pricing, channel management;
 Service: installation, servicing, spare part
management

24. Support activities:
• Firm infrastructure: general management, planning,
finance, legal, investor relations.
• Human resource management: recruitment,
education, promotion, reward systems.
• Technology development: research & development,
IT, product and process development.
• Procurement: purchasing raw materials, lease
properties, supplier contract negotiations.

25. Importance of Inbound and Outbound
logistics
 Inbound and Outbound Logistics covers and
supports the following processes and
options:
 All of the processes in the warehouse from goods
receipt through goods issue.
 Option to use RFID to support goods Issue and
goods receipt processes
 Complete stock transparency, to allow companies to
know what is in the warehouse.
 Trace and track the history of the warehouse
processes in Detail for each individual article

26.  Improve the accuracy of deliveries, thus increasing
customer satisfaction.
 Option to use mobile data entry and work in a paper-
free environment.
 Build optimal loads with the routing and scheduling
allowing a close collaboration between shipper and
carrier via optimized carrier selection and tendering.
 Operational shipping, manifesting, freight costing,
freight settlement, and foreign trade are always
transparent to company

27. Objective of an ideal logistic system is to ensure 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 to coordinate
physical distribution and material management in order
to save money or improve service.

28. Elements of logistics system
 Transportation
 Warehousing
 Inventory Management
 Packing & Utilization &
 Information & Communication

29. Forms of logistics management.
 Centralized logistics management-Centralized logistics
management provides the manager, who is a head of other
divisions of the company logistics operations. This type of
management helps to avoid internal problems by having a central
manager that ultimately decides how logistics and operations are
coordinated.
 Decentralized logistics management-Decentralized logistics
management is based on the fact that a company needs to have a
division that helps control the local-adaptation needs. Dealing with
different cultures requires input from the local branch. The
managers that deal with the cultural differences on a daily basis
normally know what works and what don’t.

30.  Outsourcing-Outsourcing is the final option for
logistics management. When this happens,
transportation firms concentrate on logistics,
and the company can concentrate on it's
production. There are many cost savings while
using this type of program.

31. Logistical competency is achieved by
coordinating
• Network design
• Information
• Transportation
• Inventory
• Warehousing
• Material handling
• Packaging Work

33. Logistics Cost

34. Logistics Cost
 As companies continue to manufacture and source
materials from overseas, controlling costs remains a
top priority for those involved in international trade.
 One key factor that should be monitored more closely
is logistics management, which covers all activities
relating to the procurement, transport, transshipment
and storage of goods. Depending on the industry
sector, supply chain logistics costs account from 5% to
50% of a product’s total landed cost.

35.  Some issues effecting logistics costs:
• Fuel prices remain high and ports continue to
experience delays, resulting in higher
transportation fees.
• Increasingly complex international trade laws
and security measurements threaten to
lengthen delivery times and increase
warehousing costs.

36. 10 tips on to reduce supply-chain costs
1 . Understand the true costs of sourcing
overseas- Calculate freight, duty,
brokerage, and inventory-carrying costs to
support these lengthened supply chains.
Factor in such items as the costs of flying
engineers overseas. Once you understand the
true total landed cost and total impact to the
business, buying domestically may look a lot
better.

37. 2 . Focus on eliminating the variability from transit
times-The more variable the transit times, the more
likely it is the receiving party is using more premium
freight, building buffers of inventory or ordering
more often and more quantity than necessary to
compensate for the uncertainty.
Understanding these dynamics can lead to the
conclusion that paying higher freight costs to ensure
higher variability actually saves your company in
total costs.

38. 3. Tariff engineering- Strategically source and
manufacture products to take advantage of
classification duty rates and eligibility for special
trade programs such as the North American Free
Trade Agreement.
4. Consolidate- If you have multiple suppliers in one
country, consolidate their goods into one shipment. In
addition, if you always have less-than- container load
shipments out of one country, try to find another Less
than Container Load(LCL) importer of goods from that
country. You may be able to partner and consolidate to a
more cost-effective full- container load shipment.

39. 5. Informed decision-making- Provide to the decision-
makers/customers of your logistics network the cost of freight for
each service level, the reliability of each lane for each service
level, and the true cost of carrying inventory so they can make
informed decisions.
6. Sometimes insurance doesn’t pay-When a company has a
shipment of premium goods, they often tend to use the
carrier’s insurance, which is very expensive. If the
company is self- insured, as most companies are, it
should check its insurance policy to see if it covers
shipment of goods. If it does, the company does not need
to add the extra cost of carrier’s insurance.

40. 7 . Automate complianceprocesses-
Companies that implement software solutions to
automate trade compliance are able to speed the
cycle times associated with tasks being performed
manually, such as document preparation, and
eliminate the associated errors. Automated
compliance procedures also bring fewer delays at
border crossings, resulting in on-time delivery,
adequate inventory levels, increased customer
satisfaction, and the avoidance of fines.

41. 8 . Control your express shipping costs- When a
company runs into a supply-chain issue, it typically will
have an entire shipment sent on an express/expedited
(highest-cost) service basis.
Panicking often results in higher costs. A little bit of
calculating can help the company determine the amount
of goods needed immediately. It can then have that
amount sent using express/expedited services, while the
balance of the shipment can be sent using a standard
(lower-cost) service.

42. 9. Planes, trains and automobiles-Which is cheapest?
In general, rail is more cost-effective than trucking or
air. Water is cheaper than air shipment. No matter the
mode of delivery, always try to get three quotes for
movements.
10. Be aware of non-tariff trade barriers -Companies
need to be more aware of the increasing level of non-
tariff trade barriers that are in force to reduce
sweatshop labor and support human rights and animal
welfare issues. These restrictions can bring importers
increased liability and compliance costs.

44. Distribution & Warehousing Mgmt
 A warehouse management system, or
WMS, is a key part of the supply chain and
primarily aims to control the movement and
storage of materials within a warehouse and
process the associated transactions, including
shipping, receiving, put away and picking.
The systems also direct and optimize stock
put away based on real-time information
about the status of bin utilization.

45.  Warehousing, material handling, and packaging are
an integral part of other logistics areas. For
example, merchandise typically needs to be
warehoused at selected times during the logistics
process.
 Transportation vehicles require material handling for
efficient loading and unloading. Finally, the
individual products are most efficiently handled
when packaged together into shipping cartons or
other types of containers.

46.  When warehouses are required in a logistical system, a firm can
choose between obtaining the services of a specialist or operating its
own facility. The decision is broader than simply selecting a facility to
store inventory, since many activities essential to the overall
logistical process are typically performed while products are
warehoused. Examples of such activities are sorting, sequencing,
order selection, transportation consolidation and, in some cases,
product modification and assembly.
 Within the warehouse, material handling is an important
activity. Products must be received, moved, sorted, and
assembled to meet customer order requirements.

47. Physical Distribution
 The area of physical distribution concerns movement of
a finished product to customers. In physical distribution,
the customer is the final destination of a marketing
channel. The availability of the product is a vital part of
each channel participant's marketing effort. Even a
manufacturer's agent, which typically does not own
inventory, must depend on inventory availability to
perform expected marketing responsibilities. Unless a
proper assortment of products is efficiently delivered
when and where needed, a great deal of the overall
marketing effort can be jeopardized.

48.  It is through the physical distribution process that the time and
space of customer service become an integral part of
marketing. Thus physical distribution links a marketing channel
with its customers.
 To support the wide variety of marketing systems that exist in a
highly commercialized nation, many different physical
distribution systems are utilized. All physical distribution
systems have one common feature: they link manufacturers,
wholesalers, and retailers into marketing channels that provide
product availability as an integral aspect of the overall
marketing process.