logistics objectives and process

1. MODULE-3
Strategic Logistic plan, Operating objectives of logistics planning, Flow of
logistics planning, Developing Logistic strategy, Logistics System Design
and Administration, logistic environment assessment, Pricing in logistics,
Warehousing– scope, primary functions. Efficient Warehouse
Management System, Types of Warehouses.

2. Strategic logistics
plans
• Strategic logistics plans define
how a business plans to deliver
products or services to
customers. Some businesses
don't require as many steps in
product delivery while others
have many stages and steps.
Address logistics in a methodical
way that allows your business to
scale operations or increase
profitability. While every
company has different needs,
looking at logistics plan
examples help business owners
develop the right strategy for
business development.

3. Operating objectives of logistics planning
• 1. Rapid Response:
• Rapid response is concerned with a firm’s ability to satisfy
customer’s requirement in a timely manner. Instead of stocking
the goods and supplying on demand, orders are executed on
shipment-to-shipment basis. Here IT helps to postpone the
logistical operations to the latest possible time and then execute
rapid delivery as when needed by customer.
• 2. Minimum Variance:
• Variance is any unexpected event that disrupts system. Logistical
operations are disrupted by events like delays in order receipt,
disruption in manufacturing, goods damaged at customer’s
location and delivery to an incorrect location etc. Traditional
solution to deal with variance was to keep safety stock or use
high cost transportation. Such practices were expensive and risky
and thus have been replaced by information technology to
achieve positive logistics control.

4. Operating objectives of logistics planning
• 3. Minimum Inventory:
• The objective of minimum inventory involves asset
commitment and inventory turnover. Asset commitment is
the financial value of inventory developed throughout the
logical system and inventory turnover is the rate of
inventory usage over time. The objective is to reduce the
inventory without sacrificing customer satisfaction.
• 4. Movement Consolidation:
• One of the most significant logistical costs is transportation.
Transportation cost depends on type of product, size of
shipment and distance. Movement consolidation means
grouping small shipments together in order to reduce
transportation cost.

5. Operating objectives of logistics planning
• 5. Quality Improvement:
• Logistics is a prime part of developing and maintaining
continuous TQM improvement. If the quality of product fails,
logistics will have to ship the product out of customer’s
premises and repeat the logistical function again. This adds to
cost and customer dissatisfaction.
• 6. Life-Cycle Support:
• Life cycle support is also called cradle-to-cradle logistical
support. It means going beyond reverse logistics and recycling
to include the possibility of after sale services, product recalls
and product disposal. This means that firms must consider how
to make a product and its package (cradle) and the how to
remake and reuse them (to cradle). E.g. Cold drink industries
use their glass bottle again and again whereas the cans are
reused in making pf paper dishes.

6. Elements of Strategic Logistics Planning
• 1. Inventory Management
• 2. Storage and Distribution
• 3. Distribution Partners
• 4. Material Handling
• 5. Route Planning & Optimization
• 6. Asset Optimization

7. Strategic Logistics Planning – Top 10 Strategies for
Efficiency and Sustainability in 2023
• 1. Smart Automation Done Smartly
• 2. Choose the Right Automation
• 3. Measure to Improve
• 4. Integrated Operations
• 5. Business Intelligence from Business Data
• 6. Sustainability
• 7. Gaining 360-Degree Visibility
• 8. Working with Multiple Carriers
• 9. Optimizing Multiple Variables
• 10. Binding the Loose Ends

8. Objectives of logistics
• 1. Operating Objectives
• 2. Rapid Response
• 3. Minimum Variance
• 4. Minimum Inventory
• 5. Movement consolidation
• 7. Life-Cycle support

9. Logistics Planning Process
• Just as no ideal logistical
system is suitable for all
enterprises the method for
identifying and evaluating
alternative logistics
strategies can vary extensively.
• The logistics planning
process can be segmented
into three phases:
• 1. problem definition and
planning,
• 2. data collection and analysis,
and recommendations and
• 3. implementation. The
following discussion describes
each phase and illustrates the
types of issues encountered.
• To match the changing
environment in the logistics due
to the changes in the markets,
competitors, suppliers and
technology, there is a need for a
systematic planning and design
methodology to formally include
the relevant consideration and
effectively evaluate the
alternatives.
• The logistics relational and
operating environment is
constantly changing.
• Even for the established
industries,
• a firm’s markets, demands, costs
and service requirements change
rapidly in response to the
customer and competitive
behavior.

10. Phase 1: Problem Definition and Planning
• Internal review
• Market assessment & competitive evaluation: The
objective is to document and formalize customer
perceptions and desires with regard to the changes
in the firm’s logistical capabilities. It’s the review of
the trends and service demands required by
customers by the use of interviews with the
selected customers or through customer surveys.
The assessment focuses on the external
relationships with the suppliers, customers
(wholesalers and retailers) and consumers (final
consumer). The assessment not only considers
trends in requirements and processes but also the
enterprise and the competitor’s capabilities.
• Technology Assessment: It
focuses on the application
and capabilities of the key
logistics technologies,
including transportation,
storage, material handling,
packaging, and information
processing. The assessment
considers the firm’s
capabilities in terms of
current technologies and
the potential for applying
new technologies. The
objective of the
assessment is to identify
advancements that can
provide effective trade —
offs with other logistics
resources such as
transportation and
inventory.
Phase 1 of logistics planning process provides the
foundation for the entire project. A thorough and
well-documented problem definition and plan are
essential to all that follows.
1. Feasibility Assessment
a) Situational analysis:

11. b) Supporting logic development: The second feasibility assessment task is
development of a supporting logic to integrate the findings of the internal review,
external assessment and technology study. Supporting logic development builds on
this comprehensive review in three ways
• First – supporting logic
development forces a critical
review of the potential
opportunities for logistics
improvements and a
determination of whether
additional investigation is
justified, using logistics principles
such as tapering principle,
principle of inventory
aggregation. The resulting
benefits or costs should be
clearly identified.
• Second – it critically evaluates
current procedures and practices
using comprehensive, factual
analysis and evaluation that isn’t
influenced by opinion and thus
help in identifying areas with
improvement potential which in
turn provides a foundation to
determine the need for strategic
adjustment. The deliverables of
this evaluation process include
classification of planning and
evaluation issues prioritized into
primary and secondary categories
across short and long range
planning horizons.

12. • Third – the process of
developing supporting
logic should include
clear statements of
potential redesign
alternatives such as:
– Definition of current
procedures and
systems
– Identification of the
most likely system
design alternatives
based on leading
industry and
competitive practices
– Suggestion of
innovative
approaches based on
new theory and
technologies
• c) Cost benefit estimate: The final feasibility
assessment is a preplanning estimate of the
potential benefits of performing a logistics
analysis and implementing the
recommendation. Benefits should be
categorized in terms of:
• Service improvements – It includes results
that enhance availability, quality or capability.
Improved sciences increase loyalty of existing
customers and may also attract business.
• Cost reduction – Cost reduction benefits may
be observed in two forms:
•
– First, they may occur as a result of a one time
reduction in financial or managerial resources
required to operate the existing system for e.g.
Reduction in capital deployed for inventory and
other distribution related assets
– Second, cost reductions may be found in the
form of out – of – pocket or variable expenses.
For e.g. new technologies for material handling
and information processing often reduce
variable cost by allowing more efficient
procedures and operations.

13. • Cost prevention – Cost
prevention reduces
involvement in programs and
operations experiencing cost
increases. Any cost
prevention justification is
based on an estimate of
future conditions and
therefore is vulnerable to
some error for e.g. many
material — handling and
information technology
upgrades are at least partially
justified through financial
analysis of the implications of
future labor availability and
wage levels.
• In the final analysis, the
decision to undertake in
— depth planning will
depend on how
convincing the supporting
logic is, how believable
estimated benefits are,
and whether estimated
benefits offer sufficient
return on investment to
justify organizational and
operational change. These
potential benefits must be
balances against the out
0- of pocket cost required
to complete the process.

14. • 2. Project Planning:
• Logistics system
complexity requires
that any effort to
identify and evaluate
strategic r tactical
alternatives must be
planned thoroughly to
provide a sound basis
for change. Project
planning involves five
specific items:
• Statement of objectives:
• Statement of constraints:
• Measurement standards:
• Analysis procedures:
• Project work plan: