Logistics in the information age


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Logistics in the information age

  1. 1. Logistics in the Information Age Presented By: Jatin Kathuria Ankit Narula
  2. 2. Logistics Sector • Logistic is defined as business function that deals in transfer and its supporting activities of goods and services Global Logistic Sector Indian Logistic Sector Global logistic cost is lower in countries like U.S. and Europe The average logistics cost in India is around 13% of GDP China got the 26th rank in the World Bank International Logistics Performance Index Ranked as low as 46th among 155 countries in the World Bank International Logistics Performance Index Turnaround time from ports 7-10 hrs. (Hong Kong) Indians Port 4.67 days (major ports in 201011)
  3. 3. Manufacturing Firm • A Manufacturing firm without taking help from a service provider. Custom Clearance Incoming product Customer Warehouse Importing Raw Materials Manufacturing Plant
  4. 4. THIRD PARTY LOGISTICS • A Logistic Service provider will work provide customized services to a client including Warehousing, product delivery, fleet management etc. Single Site Warehouse Foreign Supplier Activities 1. Labor and Supervision 2. Receiving Storage 3. Value added Services 4. Inspection sorting Bulk Warehouse OUTSOURCED Indian Customer Facility Final Product Benefits 1. Lower Cost (Variable and fixed) 2. Focus
  5. 5. COMPLEX TPL SERVICE Supplier Hub Supplier1 Supplier 2 Custom Clearance Bonded Warehouse Supplier 2 Incoming Materials Activities 1. Same as single site warehouse 2. Custom clearance 3. Fleet management 4. Freight consolidation Outsourced Point of Use / Customer Different Location Benefits 1. Delayed Payment duties and taxes 2. Pay on production sale 3. Data on Product availability 4. Faster custom clearance
  6. 6. INTERNATIONAL DIRECT SHIPMENT • Many semiconductors suppliers have hired express delivery companies to perform international direct shipment of Integrated circuits from their factories to customers in US & Europe. • Activities performed by LSP  LSP will pick outbound product from the factory  Transportation to destined market  Custom Clearance  Deconsolidate the consignment & deliver it to customer •     Benefits Shorter cycle time Elimination of inventory stocking points Postponement of final packaging Smoother new product introduction, discontinuance
  7. 7. PARTS BANK • Many manufacturing companies are using small express delivery companies for both warehousing and delivery of spare parts known as “partsbank”. • Activities performed by LSP  Warehousing  Transportation  Cross-docking  Tracking & tracing  VAS-returns, sorting •      Benefits Reduced cycle time Decreased inventory levels Lower transportation cost Improved visibility of inventory Smoother new product ramp, discontinuance
  8. 8. TRANSPORTATION VS INFORMATION TECHNOLOGY • IT is not only a substitute for, but also a complement to, transportation. Lets understand this through an example. CASE:• Mr. Park living in San Francisco wants to send a bouquet to his daughter Sandra in Boston on her Birthday. • Three possible options are:1st option- To purchase a bouquet in San Francisco, pack it, and mail it to Boston.
  9. 9. TRANSPORTATION vs INFORMATION TECHNOLOGY • 2nd option:Order at a local Florists shop in SF SF Florist will forward the order to Florist in Boston Boston Florist will deliver the bouquet to Sandra • 3rd option:- DROP SHIP MODEL Mr Park will place order with C & C for bouquet C & C will bypass the order to the flower farm Flower Farm will mail flower directly to the Boston
  10. 10. MERGE IN TRANSIT Monitors LSP Merge Centre Point of Sale CPU coordinate multiple products when the components are sourced from different manufacturing and/or warehousing locations.
  11. 11. CROSS DOCKING Cross-Dock operations were first pioneered in the US trucking industry in the 1930s, and have been in continuous use in LTL (less than truckload) operations ever since. Wal-Mart began utilizing crossdocking in the retail sector in the late 1980s
  12. 12. Sales Agent Model Dealer Customer Plant RDC Customer Dealer
  13. 13. Route Optimization By Consolidation  Routing Before Consolidation  Routing After Consolidation Benefits:  Scale Economy in Volume  Scale Economy in Miles
  14. 14. Economics of Logistics Transportation economics and pricing are driven by multiple factors that influence rates. The primary factors are distance, weight, and density. Distance Weight Density
  15. 15. Efficient Transportation Infrastructure Investment Increased transportation capacity, efficiency, reliability and level of service Transportation cost saving Transit time savings Increased Productivity Increased Competitiveness Increased Economic Growth Business Expansion
  16. 16. Freight mode share 120 100 1 30 80 1 14 1 6 36 48 60 47 40 20 37 22 0 57 CHINA U.S.A ROAD RAIL WATER INDIA AIR Source: Wef Renders the economy less efficient and competitive
  17. 17. The Indian logistics sector • The logistics sector in India has evolved over the past two decades from being a pure transportation / warehousing functional service to provision of more value added offerings like customs clearance, domestic / international freight forwarding, crossdocking, reverse logistics, freight consolidation, warehousing of modern standards etc. • India estimated to spend 13 per cent of its GDP on logistics creating an industry size of around Rs. 4,068 billion • The sector has been witnessing double digit y-o-y growth rate since 2002 and is expected to be more than USD 120 billion (approx Rs.5,400 billion) by 2015
  18. 18. Emergence of a global manufacturing hub Development of SEZs Big retail boom Growth of the Economy projected at 9-10% Growth Drivers Logistics management as a strategic tool
  19. 19. FUTURE OF LOGISTICS 4PL Order to deliver supply chain services Transition & support services Provider managed services 3 PL Services Distribution Operations and Carrier services Transportation routing and scheduling Freight pay and audit Forwarder services Transportation execution Trade management Brokerage services Warehouse management Others The 4PL will serve as the single point of contact for customers, managing a comprehensive set of supply chain and logistics services that are executed by other providers