This document discusses key concepts in logistics and supply chain management. It covers topics like demand planning, sourcing, production planning, distribution, developing logistics as a core competency, life cycle planning framework, basic service capabilities like availability and on-time delivery, transport functionality and principles, regulations, transport economics and pricing strategies, warehousing functionality and operating principles. The overall document provides an overview of the different components and considerations involved in effective logistics and supply chain management.

1. Introduction
Plan Source Make Deliver
Demand Plan
Supply Plan
S&OP
S&OE
Replenishment
/Deployment
Strategic Sourcing
Key
Commodities
Value added
ingredients
Tactical Sourcing
Indirect Sourcing
Initiate
reengineering
Production
planning and
control
Plan vs actual
Inventory
control
Primary
Distribution
Warehouse
sourcing and
mgmt.
Secondary
Distribution

2. Developing logistics as a core strategic
competency
4 Ps – Product/Service, Promotion, Price and Place
The key to formulating an effective mix strategy is to integrate resources
committed to these activities into an effort that maximize customer impact.
Logistic is a process that satisfies the broad requirements of time and place utility.
Outcome of logistic services become customer service
Logistical competency is a tangible wat to attract customers that place a
premium on time – place related performance
Logistical performance is an integral part of all strategies because no ownership
transfer can occur without fulfilling time and place requirements.

3. Life Cycle Planning Framework
Product
Sale
Introduction Growth
Saturation/
Maturity
Obsolescence
Decline

4. Life Cycle Planning Framework
Growth Stage
The product achieves a degree of market acceptance and sales become somewhat more
predictable.
Logistical emphasis typically shifts from a need to service at any cost to more
balanced service/cost performance
This stage of growth cycle has maximum opportunity to design logistical operations to help
leverage profits
Saturation/Maturity
Intense competition
Logistical performance becomes highly selective
Obsolescence – Decline
Management is balancing the alternative of product closeout or restricted continued
distribution.
Logistical performance must be positioned to support on going business without taking
excessive risk

5. Basic Service Capabilities
Availability – Stock availability when it is desired by a customer
The appropriate number, location, and stocking policy of warehouse is oneof the
basic issues in logistical system design.
Inventory can be classified into 2 groups
1. Base stock determined by forecasted requirements and held to support basic
availability
2. Safety stock to cover demand that exceed forecasted volumes and to
accommodate unexpected operational variances
Expectation: NO STOCK OUT AND NO OVER STOCK
OTIF
Q

6. Transport Functionality
Product movement
Whether the product is in the form of materials, components, assemblies, work-in-
process, or finished goods, transportation is necessary to move it to the next stage of
the manufacturing process or physically closer to the ultimate customer.
The major objective of transportation is to move product from an origin location to a
prescribed destination while minimizing temporal, financial, and environmental resource
costs. Loss and damage expenses must also be minimized. At the same time, the
movement must take place in a manner that meets customer demands regarding delivery
performance and shipment information availability.
Product Storage
A less common transportation function is temporary storage.
In circumstances where warehouse space is limited, utilizing transportation
vehicles ,ay be a viable option.

7. Principles
Economy of scale: It refers to the characteristic that transportation cost per unit
of weight decreases when the size of the shipment increases. For example,
truckload (TL) shipments (i.e., shipments that utilize the entire vehicle’s capacity)
cost less per pound than less-than-truckload (L TL) shipments (i.e., shipments
that utilize a portion of vehicle capacity). It isalso generally true that larger
capacity transportation vehicles such as rail or water are less expensive per unit
of weight than smaller capacity vehicles such as motor or air.
Economy of distance: It refers to the characteristic that transportation cost per
unit of distance decreases as distance increases. For example, a shipment of
800 miles will cost less than two shipments (of the same combined weight) of
400 miles. Transportation economy of distance is also referred to as the tapering
principle since rates or charges taper with distance.

8. Regulations
MOTOR VEHICLES ACT, 1988: Transportation in India is primarily governed by the Motor
Vehicles Act, 1988, the Central Motor Vehicles Rules, 1989 and various state rules. The Act
creates two levels of regulation at the Central and State Levels.
The Carriage by Road Act, 2007: An Act to provide for the regulation of common carriers, limiting their
liability and declaration of value of goods delivered to them to determine their liability for loss of, or
damage to, such goods occasioned by the negligence or criminal acts of themselves, their servants or
agents and for matters connected therewith or incidental thereto
Central Road Fund Act and Rules: An Act to give statutory status to the existing Central Road Fund
governed by the Resolution of Parliament passed in 1988, for development and maintenance of
national highways and improvement of safety at railway crossings, and for these purposes to levy and
collect by way of cess, a duty of excise and duty of customs on motor spirit commonly known as petrol,
high speed diesel oil and for other matters connected therewith.
No. 51 - The Motor Vehicles (Amendment) Act, 2019:
Archival and Retention Policy for Transactional Data: The objective of the draft policy of Data
Retention, Archival and Destruction is to provide guidance on retention, preservation, archival and
disposal of the transactional data related to the e-Transport Non-Schematic Interventions i.e., Vahan,
Sarathi, PUCC and eChallan thereby achieving efficiencies and eliminating the storage of unnecessary
and outdated Records. This shall also ensure that valuable transactional data is available when
needed, protect against allegations of selective records destruction, help in cost management and
provide for the routine destruction of unnecessary and outdated records

9. Transport Economics and pricing
Economics Factors
Distance: Distance is major influence on transportation cost since itdirectly
contributes to variable cost, such as labour, fuel, and maintenance.
Volume: The second factor is load volume. The management implication is that small
loads should be consolidated into larger loads to take advantage of scale of economies.
Density: The third economic factor is product density, which incorporates weight and
space considerations. In terms of weight and space, an individual vehicle is
constrained more by space than by weight.
Stow ability: It refers to product dimensions and how they affect vehicle space utilization.
Odd sizes and shapes, as well as excessive weight or length, do not stow well and
typically waste space.
Handling : Special handling equipment's, packing of product, storage etc
Liability: It includes characteristics that primarily affect risk of damage and the
resulting incidence of claims.
Market Factors: Market factors, such as lane volume and balance, influence
transportation cost. Back – haul and deadhead

10. Pricing Strategies
Cost of Service Strategy
It is build up approach where the carrier establishes a rate based on the costof
providing service plus a profit margin.
Value of Service Strategy
It is an alternative strategy that charges a based on perceived shipper value rather than
the cost of actually providing the services.
Combination Strategy
It establishes the transport price at some intermediate level between the costof
service minimum and the value of service maximum.
Net rate pricing
It established discounts and accessorial charges are built into the netrates.

11. Rating
Class Rate
Rates are based on product nature and classification
Rate administration
Once a classification a ratting is obtained for a product, the specific rate must be determined.
The rate per hundred weight is usually based on the shipment origin and destination.
Commodity Rates
When a large quantity of a product moves between two locations on a regular basis, it is common
practice for carriers to publish a commodity rates.
Exception rates
Freight all kinds rates
Local, joint, proportional, and combination rates
Transit Services: Transit services permit a shipment to be stopped at an intermediate point
between its initial origin and final destination for unloading, storage, and/or processing.
Diversion and Reconsigenment
Split Delivery
Demurrage and detention
Accessorial Services: COD

12. Warehouse Functionality
Economic Benefits: Economic benefits of warehousing result when overall
logistical costs are directly reduced by utilizing one or more facilities. It is not
difficult to quantify the return on investment of an economic benefit because it is
reflected in a direct cost to cost trade off. Basic economic benefitsare
Consolidation
Shipment consolidation is an economic benefit of warehousing. The consolidating warehouse
receives and consolidates materials from a number of manufacturing plants destined to specific
customer.
Break Bulk and Cross dock
This operation is similar to consolidation except that no storage is performed.
Processing/Postponement
Warehouses can also be used to postpone, or delay production by performing processing and light
manufacturing activities. A warehouse with packaging or labelling capability allows postponement
a final production until actual demand is known.
Stockpiling
To manage seasonal demand by storing goods

13. Warehousing Operating Principles
Handling Technology
The second principle focuses on the effectiveness and efficiency of material
handling technology.
The elements of this principle concern movement continuity and movement scale
economies.
Storage Plan