INTRODUCTION OF LOGISTICS MANAGEMENT Logistics is the art and science of managing and controlling the flow of goods, energy, information, other resources. Logistics is the process of getting products and services where they are required and when they desired Logistics is the process of strategically managing the procurement, movement and storage of materials, parts and finished inventory (and the related information flows) through the organization and its marketing channels in such a way that current and future profitability are maximized through the cost-effective fulfillment of orders"
Logistics - Science of managing (controlling) the movement and storage of goods(or people) from acquisition to consumption.Goods: Raw Materials Final products, and everything in between. Logistics for services & people similar to goods logistics. Ex. Police, fire, ambulance, passenger airlines, taxi cabs, etc.Movement = Transportation (between locations).Storage = Inventory, Warehousing (at locations).Difference between acquisition and consumption is a matter of space andtime.Focus: Best way to overcome space and time that separates acquisitionand consumption.
Logistics embodies the effort to deliver: the right product in the right quantity in the right condition to the right place at the right time for the right customer at the right cost
DEFINITION The process of planning, implementing, and controlling the efficient, cost-effective flow and storage of goods, services, andrelated information, from point of origin to point of consumption, for the purpose of conforming to customer requirements.
LOGISTICS AS A PART OF SUPPLY CHAIN Logistics Management is the part of Supply chain management that plans, implements and controls the efficient, effective, forward, and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers requirements. It involves the integration of information , transportation, inventory, warehousing, material handling and packaging, and occasionally security.
OBJECTIVES OF LOGISTICS MANAGEMENT Cost reduction (variable costs) Capital reduction (investment, fixed costs) Inventory reduction Reliable and consistent performance Minimum product damages Quick responses Delivering customer services-• Customers must be given more importance than the goods and services that have to be delivered.• Product and services are of significance to the customers only when they are available to them exactly when customers need them.
DECISIONS IN LOGISTICS MANAGEMENT Product design Plant location Choice of markets/ sources Distribution/ dealer network design Location of warehouses Plant layout Allocation decisions Production planning Inventory management-stoking levels Transportation mode choice, shipment size and routing decisions and transport contracting Packaging Material handling Warehouse operations
Logistics costThe performance of a supply chain can be illustrated with the help oftotal logistics cost.To define the logistics cost, one must define the desired outputsFrom the logistics system and then seek to identify the costs associatedwith providing those outputs.The manager must understand how the behavior of one cost differs fromthe behavior of another cost and for running a logistics system requiresthe manager to understand and use a variety of cost information.The cost of logistics varies from industry to industry.Cost can be divided in many ways: Fixed, variable and semi-variable, Cash andnon cash, direct and indirect. Each of these costs may reveal important andinformation for making logistics decisions.
Some of logistics cost are: Insurance Handling and warehouses operations Packaging Transportation Customers’ shopping
LOGISTICS FUNCTIONSLogistics is not a single term actually it is a blend of number ofactivities or functions:-Order processingInventory managementWarehousing transportationMaterial handlingLogistical packagingInformation
Models in logistics management1. Forecasting models- these models allow prediction of demand based on past data or other parameters that are independently available. They enable better planning, given the lead time necessary for response.2. Mathematical programming models- under this model, there are three models Location model Allocation model Distribution network design models
(a) Location model-These models help in planning the optimal location of plants orwarehouses, considering the inbound and outbound transportationcosts and infrastructure cost at the locations.Such models can be solved as an integer program or sometimes asa linear program.(b)Allocation models-These models help in optimally allocating commodities from sources todestinations in a multi-source multi-destination environment(c) Distribution network design models-These models are usually comprehensive in nature, deciding between atwo, three or even four stage distribution network, location ofwarehouses and break bulk points, and sometimes even thetransportation mode choice.