Logistics Management

1. Logistic Management
An Supply Chain Imperative
By
Subhash Raje
Asstt. Prof.
Academy of e-learning solutions Pvt. Ltd
sraje10@gmail.com
9028007445,9405030300

2. LOGISTICS
Defined
Planning implementing and controlling the physical flow of material and finished goods
from point of origin to point of use to meet customer`s need at a profit
By “Philip Kotler”
It is essentially a planning process and an information activity
So A integrative process that optimizes the flow of material and supplies through the
organization and its operations to the customer

3. The word logistic has originated from Greek word
‘Logistikos’ and the Latin word ‘Logisticus’ which
means science of computing & calculating
In ancient times it was used more in connection
with moving armies, the supplies of food &
armaments to the war front.
During World War II logistics gained importance
in army operations covering the movement of
supplies , men & equipment across the border
Today
It has acquired the wider meaning and is used in the
business for the movement of material from
suppliers to the manufacturer and finally the
finished goods to the consumers

4. Scope of Logistic
It is of critical importance to the organization how it delivers
products & services to the customer , whether the product is
tangible or intangible.
Effective & efficient Physical movement of the tangible
product will speak of intangible services associated with the
product and the organization which is delivering it.
In Case of intangible product , the delivery of tangibles at the
right place & right time will speak about its quality.
On the macro level infrastructure such as Various modes of
transport , transportation equip., storage facilities,
connectivity & information processing are contributing to a
larg3e extent in the physical movement of goods produced in
manufacturing , mining & agriculture Sectors.

5. Scope of logistics
This speed & reliability in distribution of products &
services contribute to a great extent in the growth
of a country`s domestic & international trade .
Logistic cost as a percentage of GDP across the
world is shown in the following table
Country
Logistic cost as a percentage of GDP
Korea
China
Japan
India
France
UK
USA
16
15
14
13
12
11
10

6. Scope of logistics
India spent nearly $ 50 billion to move material
from one use to another.
So the “ Public distribution system in the country needs
logistical support for delivering goods at right place on
time and the lowest cost.
At Micro Level logistic plays a critical role in the value
delivery system of business organization to provide
superior customer service i.e. to achieve a desired level
of delivered services and quality at the lowest possible
cost.
In a nutshell any productivity improvement that could
be achieved in any part of logistic system,at the micro
or macro level would help in cost reduction and proper
deployment of scare national resources to the

7. Fact
In a manufacturing org. the business process starts with
the flow of material from the suppliers, progress to the
plant, then to the customer through the distribution
channel the department may excel in their respective
function but org. as a whole their performance may be
dismal.
Reason
 Lack of Co ordination in their activities
They have different goal to cherish
There is no single agency that coordinates their functions
and homogenizes them.
How to overcome ?
Use of Logistic as a system

8. Logistic –A system approach
Logistic recognizes that all the activities of material
movement across the business process are
interdependent and needs close coordination and these
are to be maintained as a system and not the functional
Silos.
System is shown as logistic Mix including following
functional Areas
Order Processing
Information Flow
Warehousing
Inventory control
Packaging

9. Order Processing
Involve following activities
Order checking for any deviation in agreed on negotiated
term
Technical details;price;delivery period;payment terms;taxes
etc
Checking the availability of material in stock (material
requisition)
Production & material scheduling for shortage
Acknowledging the order, indicating deviation if any
It is routine operation but require great deal of planning
training of people involved and investment to bring about
efficiency & accuracy
In a large organization a system capable of handling thousands
of voluminous orders with minimum human involvement or
without human involvement is a must involving shortened order

10. Information Flow
It is basically information based activity of inventory
movement across the supply chain. Hence role of
information system plays a vital role in delivering superior
customer service
This function is required to facilitate the following
information needs
Order Registration
Order checking & editing
Order processing
Coordination means to integrate the total supply chain of
the company with informational needs as to time ,quantity,
value e.g Lead time, rate of consumption , delivery schedule
& price of the material , Transportation time & cost etc.

11. Warehousing
A storage place wherein finished goods are stored till they
are sold.Effectiveness of an organization`s marketing
strategy depends on making the right decision regarding
warehouse.
Nowadays
Warehouse are treated as switching facilities rather
than storage place.It is a major cost center, many
customer problem are the direct result of improper
warehousing management.
Major decision of ware house are as follows:Location ,Size & Number of warehousing facilities
Warehouse layout
Design of building


12. Inventory management
Point order problem
That is
How much to order
When to
order
For this we require
Dependable IMS
Independent IMS
Purchase Control
Stores control
Issue
management
ABC Analysis
VED Analysis
Level Management

13. Packaging
It is also a critical element in physical
distribution of the product , which
influences the efficiency of the logistic
system this is done with the view of
following : Foe handling and damage prevention
For communications
For inter modal transportation
Storage space economy
Thus to reduce packaging cost

14. Transportation
Foe the movement of goods from supplier to buyer ,
transportation is the most fundamental and important
component of logistic.
E.g. for low unit value products the transportation
cost component is 20% of the product cost.
In logistic cost its share varies up to 65-70% in case
of mass consumed very low unit price products.
Mode of transportation ( Cost & time factor)
Own fleet or Outsourcing
Route Planning
Vehicle scheduling
Are the few decision which are involved in

15. Three Forces
Which have change the perspective of logistics
Globalization
Focus on Supply chain Management
Outsourcing of Non Core
Competency Functional Area

16. Globalization
The entire world has become a global village
for marketers because of the liberalization
of economics of most countries and the
emergence of WTO which is forcing business
organizations to supply products beyond the
national boundaries wherever there is a
market opportunity.
In such conditions the role of
LOGISTICS
Will be to provide time and place time and
place utility of the product to the customer

17. Focus on Supply Chain Management
Business the world over are striving for
competitiveness. In their struggle for survival their
focus has shifted to the supply chain
I.e.
Integrating the process of Procurement , processing
& distributing to deliver value for money to the
customer
Two key roles logistics planning & support
are
Value delivery process
success of supply
chain
management

18. Outsourcing of Non Core Competency functional
Area
Outsourcing is a acceptable trend in business.
Corporation have realized that doing everything by
themselves does not result in effective & efficient use
of scare resources available to them.
It is better to outsource functional area to experts
who can do job at the lowest cost and that to
efficiently & Effectively.
LOGISTICS
Is one such area where most of business org. do not
have enough expertise thus needs to be outsourced
Thus Logistics have shaped into different service
industry offering complete & customized logistics

19. Value Chain
It is understood now that an organization`s
competitive Success could only come through
either cost leadership or offering differentiated
product and services
LOGISTIC MANAGEMENT
Can provide both the benefits simultaneously
Through its value chain activities
Which can be categorized into different types
Inbound logistics
operations
Out bound logistics
Support activates e.g HR, Accounts & finace, IT &

20. Infrastructure
O
A&F
p
e
r
operations
a
S&M
t
i Out bond
In bound
o Logistics
logistics
n
s
Technology
M&M
HR
Services
Customer Value

21. Supply Chain
Stores
Procurement
Vendor
I n b ou n d
L og istics
Operations
Stores
Warehouse
Customer
O u t B ou n d
L og ist ics

22. Supply Chain
M at er ial flow
S tor es
RM
P u r ch ase
V en d or
P
r
o
c
u
r
e
m
e
n
t
M ater ial flow
O PE RAT IO N S
I n for m ation flow
I n b ou n d L og ist ics
D
S tor es
is
FG
tr
i
b
uW ar eh ou sin g
ti
o
n C u stom er
O u t b ou n d log istics

23. Logistics for Business Excellence
For Business Excellence logistics operation need to
be integrated on the following two fronts
 integration of logistic into business
Integration
of components of logistics
To achieve the objective of making available right
product at the right place and at a right time at low
cost , every business is required to integrate
logistics into the business process.
For logistic operation to run smoothly, proper
integration amongst the component of logistic
process is a must.

24. Logistic
HR
A/
Cs
FinanceUtilities
Marketing PPC
QC
Mat. Mng.
IT
Others
Organizational Functions
In process Log.
Suppliers
Procurement
Processing
Distribution
In Bound Log.
Customer
Out Bound Logistic
Logistic System Component
Transportation
Material Handling & Storage
Logistical Packaging
W
arehousing
Information
Inventory Mang.
LOGISTIC FUNCTION
Order Processing

25. Objectives of Logistic management

Inventory Reduction
Reliable and consistent delivery
performance
Freight economy
Minimum product damage
 quick Response


26. NOTE:
Amongst most of the Indian companies
logistics outsourcing
Has now become an accepted trend for the
following reasons:
Cost Saving
Focus on core Business
Paucity of funds
Reduction in liabilities
Wider Geographical coverage
Cross pollination of better available practice

27. Warehousing
Nowadays warehousing is used as a switching facility rather than as a long term storage
house.
Attention is paid to
1
2
3
Higher
lower
shorter
inventory turnover operating cost
cycle time
And in light of these warehouse`s performance is judged by its productivity and cost
performance while trying to achieve 2 polemic goals.
Customer`s satisfaction
1
lower cost of operation
2

28. We have to decide on 2 factors
Whether to have
Centralized
decentralized
warehouse
warehouse
It ensures tight control
distribution
On inventories and can
Operate on EOS
multiple
centers
location of sites

29. Objective
Main
better customer service
low operating
cost
Ancillary objective
Maximum utilization of storage space
Higher labour productivity
Maximum Asset utilization
Reduction in material handling
Increase in inventory turnover
Reduce order filing time

30. Warehousing Function
3 Functions
Material Storage Function
Material Handling Function
Information Handling Function

31. Material Storage function
Due to non synchronization of Manufacturing cycle
with that of the consumption cycle of the material ,
storage of the material remains a big hurdle
So material storage is required to accommodate the
following functions:
Holding
Consolidation
Postponement
Break Bulk
packing
Cross Docking
Mixing

32. Material Handling function
This involves three function
1.
Loading & unloading
2.
Material Movement
3.
Order filing

33. Information handling function
For this following information is required
Goods inward
Inspection & auditing
Goods outward
Excess Stock
Invoicing
Warehouse expenses
Transit damage & Breakage
Consignment tracking
This all information facilitate quick decision