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Supply chain management


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Supply chain management

  2. 2. 2 Index 1. Research Objective 2. Introduction 3. Logistics Management 3.1. Importance 3.2. Functions 3.3. Advantages 4. Logistics Management Process 5. Supply Chain Management 5.1. Objectives 5.2. Competitive Performance 6. Third party logistics (3pl) 6.1. Introduction 6.2. Evolution 6.3. Prospects in Indian Mkt. 6.4. Outsourcing Logistics 6.5. Integrated Logistics 7. Company Profile 7.1. CONCOR 7.2. Worldwide Logistics 8. Observations 8.1. SWOT analysis 9. Research Methodology 10. Abstract 11. Conclusion Bibliography
  3. 3. 3 Acknowledgment Talent and capabilities are of course necessary but opportunities and good guidance are two very important things without which no person can climb those infant ladders towards progress. I take this opportunity of expressing my profound gratitude to my guide Prof. Khatavkar and Prof. Yuvraj Lahoti of Vishwakarma Institute of Management, whose support has been a constant source of motivation for me. I am highly obliged for providing valuable guidance and attention to me. I would like to express my deep sense of gratitude to my Director Dr. Sharad Joshi for allowing me to carry out this project work in the institute. I extend my regards to my external guide Mr. Rajesh Goyel & Mr. Kuldeep Sharma (General Manager) M/S Worldwide Logistics Pvt. Ltd. for their guidance and suggestion in the project work. I would like to thank Mr. Ritesh Goyel and entire staff of WWL for supporting me thru out the training. Last but not the least, my sincere thanks to my family, friends and colleagues without whose support this project would not have become a reality. Ankit Govila
  4. 4. 4 1. Objective of the Research Main objective of the research is to create a need in the existing & prospective client for the dynamic field of logistics and supply chain management. The research is carried out to create awareness among customers for logistics that covers the basics in the warehousing, transportation, inventory, packaging and material handling, supply chain management, operation, information and organization. It includes all activates to move product and information to, from, and between members of supply chain. Fundamental Objectives: - Presenting a comprehensive description of existing logistics practices within the private and public sector. Describing ways and means to apply logistics principals to achieve competitive advantage. Providing a conceptual approach for integrating logistics as a core competency in enterprise strategy.
  5. 5. 5 2. Introduction In early part of 1991, the world was given a dramatic example of the importance of logistics. As a precursor to the Gulf war it had been necessary for the US and its allies to move huge amounts of materials great distances in what were thought to impossibly short time frames. Half a million people and over half a mn tons of material and supplies were successfully airlifted 12,000 KMS with a further 2.3 tons of equipment moved by sea - all of this achieved in a matter of months. Throughout the history of mankind wars have been won and lost through logistics strengths and capabilities or a lack of them. It has been argued that the defeat of the British in the American War of Independence can largely be attributed to logistics failure. In the Second World War too logistics played an important role. The Allied Forces' invasion of Europe was a highly skilled exercise in logistics. However whilst the Generals and Field Marshals from the earliest times have understood the critical role of logistics, strangely it is only in the recent past that business organizations have come to recognize the vital impact that logistics management can have in the achievement of competitive advantage. The Bombay Dabbawallahs operation is widely recognized as an outstanding example of excellence in Logistics. It is often quoted as a standard example of six sigma implementation in the Indian context. It serves as a benchmark for all the companies trying to excel in the field of logistics and supply chain management. Because of its popularity Prince Charles of the United Kingdom paid a visit to the operations site during his official visit to India in 2003.
  6. 6. 6 4. Logistics Management Logistics and Supply Chain Management have always been an integral part of any business, although they have mainly remained in the background. But today, both Logistics and Supply Chain Management are beginning to gain momentum. Indian businesses are fast getting competitive and the only way one can stay ahead is to be quick, efficient, and flexible. The best way to achieve this is to have an efficient logistics system in place. This holds more importance as every industry is realising that not only can substantial savings be gained from this area, but also a good logistics system can push the business to the top slot. Definition: - Very simply put, Logistics Management is a bridge between Demand and Supply. That is it conveys the demand to the Supply point and reaches the supply to the Demand point. Logistics can be defined as: 'Logistics is the process of strategically managing the procurement, movement and storage of materials, parts and finished inventory (and 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 Management provides a major source of competitive advantage - in other words a position of enduring superiority over competitors in terms of customer preference may be achieved through Logistics. There are many definitions of logistics and each places a different emphasis on the relationship of strategy, tactics, movement and production.
  7. 7. 7 Logistics: The science of planning and carrying out the movement and maintenance of forces. In its most comprehensive sense, the aspects of military operations which deal with: a. Design and development, acquisition, storage, transport, distribution, maintenance, evacuation and disposition of materiel b. Transport of personnel; c. Acquisition or construction, maintenance, operation and disposition of facilities; d. Acquisition or furnishing of services; and e. Medical and health service support. "Logistics is * strategically managing the procurement and movement of goods and storage of inventory in all forms." * 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" * The study and management of goods and service flows and the associated information that set these in motion." These definitions give the idea of the wide range of functions that logistics covers. A simple definition is: "Logistics is the delivery of the required goods, at required place, at required time, in required state and to the required person efficiently." Logistics is "the process of planning, implementing and controlling the efficient, effective flow and storage of raw materials, in-process inventory, finished goods, services and related information right from the point of origin to the point of consumption (including inbound, out bound, internal and external movements) in order to satisfy customer's requirements.
  8. 8. 8 LOGISTICS is also defined as time related positioning of resources. The whole concept of Logistics is based on 7 R's which are:- Right place Right time Right quantity Right quality Right price Right condition Right customer If one considers that logistics comprises both the building up of stocks and capabilities and the containment of weapons and forces, then it is clear that a distinction can be made between two important aspects of logistics: the first one dealing with production and the second one with consumption. The following definitions of these aspects enjoy widespread acceptance: - Production Logistics (also known as: acquisition logistics that part of logistics concerning research, design, development, manufacture and acceptance of materiel. In consequence, production logistics includes: standardization and interoperability, contracting, quality assurance, procurement of spares, reliability and defence analysis, safety standards for equipment, specifications and production processes, trials and testing (including provision of necessary facilities), codification, equipment documentation, configuration control and modifications. Consumer Logistics (also known as: operational logistics) That part of logistics concerning reception of the initial product, storage, transport, maintenance (including repair and serviceability), operation and disposal of materiel. In consequence, consumer logistics includes stock control, provision or construction of facilities (excluding any material element and those facilities needed to support production logistic facilities), movement control, reliability and defect reporting, safety standards for storage, transport and handling and related training.
  9. 9. 9 What Can Logistics do for A Company? Logistics includes all the processes required to go from raw materials to end customer delivery, including purchasing, inventory management, warehousing, shipping and even customer returns. All product-oriented businesses have logistics as a cost of doing business. Some may think it only applies to large businesses, but companies of any size can benefit from logistics improvements. Purchasing and Procurement: Purchasing is a key function in optimizing overall Logistics and Supply Chain Management operations; here we provide a listing of relevant resources in the purchasing field. Inventory management: A significant cost to most organizations is the inventory it carries to support customers and sales. Effectively managing and minimizing this inventory investment can provide competitive advantage to your firm in the marketplace. Review these inventory management links to learn more. Warehouse Management: A warehouse Management system is a critical component of an effective overall supply chain management systems solution. Warehouse management is now, or will soon be, a must-have for your logistics operations to remain competitive. We offer warehouse management resources, information and a listing of organizations that support warehouse management professionals. The good news is that any improvement in logistics you make results in savings in your cost of doing business. Best of all, these savings drop right to your bottom line as profits. Some examples of how logistics can help your company includes: Cost savings Reduced inventory Improved efficiency Improved delivery time, which improves customer satisfaction and can be a competitive advantage if your competitors can't deliver as quickly
  10. 10. 10 3.1 Importance Logistics is the one important function in business today. No marketing, manufacturing or project execution can succeed without logistics support. For companies, 10 per cent to 35 per cent of gross sales are logistics cost, depending on business, geography and weight/value ratio. Logistics is comparatively a new term, but not the operation. Logistics has existed since the beginning of civilization. Raw material and finished products had always to be moved, though on a small scale. Things began changing with the advance in transportation. Population began moving from rural to urban areas and to business centers. No longer did people live near production centers, nor did production take place near residence centers. The geographical distance between the production point and consumption point increased and logistics gained importance. Another factor has come into play recently. Since the early 1990's, the business scene has changed. The globalization, the free market and the competition has required that the customer gets the right material, at the right time, at the right point and in the right condition at the lowest cost.
  11. 11. 11 3.2 Logistic Functions: It is important to recognize that the various logistic functions come together to form the totality of logistics support. For example, logistic planning originates in national or MNC policy guidance and has to be coordinated with all the staff branches concerned, whether they be operational, administrative or logistic, military or civil. A brief examination of the main functions of logistics shows this clearly. 1. Materiel Function of Logistics Production or acquisition logistics covers materiel, from the first phase of the life cycle to its final disposal from the inventory. The first part of the cycle, from specification, design and production is clearly a function of production logistics. Reception of the equipment into service, its distribution and storage, repair, maintenance and disposal are clearly a consumer logistic task. However, the initial design of the equipment which is part of production logistics has to take account of the consumer aspects of repair and maintenance, and therefore involves both disciplines. 2. Supply Function of Logistics Supply covers all materiel and items used in the equipment, support and maintenance of military forces. The supply function includes the determination of stock levels, provisioning, distribution and replenishment. 3. Service Function of Logistics The provision of manpower and skills in support of combat troops or logistic activities includes a wide range of services such as combat re-supply, map distribution, labor resources, postal and courier services, canteen, laundry and bathing facilities, burials, etc. These services may be provided either to one's own national forces or to those of another nation and their effectiveness depends on close cooperation between operational, logistic and civil planning staffs.
  12. 12. 12 4. Engineering Function of Logistics The area of logistic engineering, while not exclusively a logistic function will require close coordination with logistics as the mission is very closely aligned with logistics in terms of facilitating the logistic mission of opening lines of communication and constructing support facilities. The engineering mission bridges the gap from logistics to operations and is closely related to the ultimate success of both. 5. Medical Function of Logistics This function entails the provision of an efficient medical support system to treat and evacuate sick, injured and wounded personnel, minimize man days lost due to injury and illness, and return casualties to duty. An effective medical support system is thus considered a potential force multiplier. Though medical support is normally a national responsibility, planning must be flexible and consider coordinated multinational approaches to medical support. The degree of multinational will vary depending on the circumstances of the mission, and be dependent upon the willingness of nations to participate in any aspect of integrated medical support. 6. Contracting Function of Logistics Contracting has become increasingly important to the conduct of operations, It is a significant tool that may be employed to gain fast access to in-country resources by procuring the supplies and services.
  13. 13. 13 3.3 Advantages Competitive Advantage The source of competitive advantage is found firstly in the ability of the organization to differentiate itself in the eyes of the customer, from its competition and secondly at a lower cost and hence at a greater profit. That is successful companies either have a productivity advantage or a value advantage or a combination of the two. Productivity Advantage Productivity Advantage gives a lower cost profile. Traditionally it has been suggested that the main route to cost reduction was by gaining greater sales volume and there can be no doubt about the close linkage between relative market share and relative costs. However it must also be recognized that Logistics Managers can provide multitude of ways to increase efficiency and productivity and hence contribute significantly to reduced unit costs. Value Advantage It has been an axiom in Marketing that 'Customers don't buy products they buy benefits'. Put another way, the product is purchased not for itself but for the promise of what it will deliver. Unless the product or the service that we offer is distinguished from its competitor in some way, there is a strong likelihood that the market will view it as a 'commodity' and so the sale will tend to go to the cheapest supplier. Hence the importance of adding value to our offerings to mark it out from the competition. An extremely powerful means of adding value is service. Increasingly we are finding that markets are becoming more service sensitive. And this of course poses particular challenge for Logistics Management. There is trend in many markets towards a decline in the strength of 'brand' and a consequent move towards 'commodity' market status.
  14. 14. 14 This simply means that it is becoming progressively difficult to compete purely on the basis of brand or corporate image. A number of companies have responded to this by focusing on service as a means of gaining a competitive edge. Service in this context relates to the process of developing relations with customers through the provision of an augmented offer. This augmentation can take many forms including delivery service, after sales service, financial packages, technical support and so forth.
  15. 15. 15 Value Advantage Productive Advantage Fig.1 Logistics and Competitive Advantage In practice what we find is that the successful companies will often seek to achieve a position based upon both a productivity advantage and a value advantage; a useful way of examining the available options is to present them as a simple matrix (Fig 1) Let us consider these options in turn: - For companies who find themselves in the bottom left hand corner of our matrix the world is an uncomfortable place. Their products are indistinguishable from their competitors' offerings and they have no cost advantage. These are typical commodity market situations and ultimately the only strategy is either to move to the right on the matrix i.e. to cost leadership, or upwards into a 'niche'. Often the cost leadership route is simply not available. This particularly will be the case in a mature market where substantial market share gains are difficult to achieve. Cost Leadership, if it is to form a basis of a viable long term marketing strategy, should essentially be gained early in the market life cycle. This is why market share is considered to be so important in many industries. The other way out of the 'commodity' Service Leader Cost and service leader Commodity Market Cost Leader
  16. 16. 16 quadrant of our matrix is seek a 'niche' or segment where it is possible to meet the needs of the customers through offering additional values. This value addition is mostly through service. There is unfortunately no middle ground between cost leadership and niche marketing. Being caught in between is quite a bad news. Finally, perhaps the most defensible position in the matrix is the top right hand corner. Companies who occupy that position have products that are distinctive in the values they offer and are also cost competitive. It is a position of supreme strength. Gaining Competitive Advantage through Logistics. Logistics Management has the potential to assist the organization in the achievement of both a cost/productivity advantage and a value advantage. In the first instance there are a number of important ways in which productivity can be enhanced through logistics. It provides opportunities for better capacity utilization, inventory reduction and closer integration with suppliers at planning level. Equally the prospects for gaining a value advantage in the market place through superior customer service should not be underestimated.
  17. 17. 17 4. Logistics Management Process Material flow Information flow a) Fig 2: Logistics Management Process. The above figure illustrates the total systems concept. Logistics Management, from this total systems view point, is the means whereby the needs of the customer are satisfied through the coordination of materials and information flow that extend from the market place, through the firm and its operation and beyond that to the suppliers. To achieve this company wide integration clearly requires a quite different orientation than that typically encountered in the conventional organization. For example, for years marketing and manufacturing have been seen as largely separate activities within the organization. At best they have co existed at worst there has been open warfare. Manufacturing priorities and objectives have typically been focused on operating efficiency, achieved through long production runs, minimized setups and change over and product standardization. On the other hand marketing has sought to achieve competitive advantage through high service levels and frequent product changes. . Suppliers Procurement Processing Distribution Customer
  18. 18. 18 5. Supply chain management Supply chain management (SCM) is the combination of art and science that goes into improving the way your company finds the raw components it needs to make a product or service and deliver it to customers. The following are five basic components of SCM. 1. Plan This is the strategic portion of SCM. You need a strategy for managing all the resources that go toward meeting customer demand for your product or service. A big piece of planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less and delivers high quality and value to customers. 2. Source Choose the suppliers that will deliver the goods and services you need to create your product. Develop a set of pricing, delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships. And put together processes for managing the inventory of goods and services you receive from suppliers, including receiving shipments, verifying them, transferring them to your manufacturing facilities and authorizing supplier payments. 3. Make This is the manufacturing step. Schedule the activities necessary for production, testing, packaging and preparation for delivery. As the most metric- intensive portion of the supply chain, measure quality levels, production output and worker productivity. 4. Deliver This is the part that many insiders refer to as logistics. Coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoicing system to receive payments. 5. Return The problem part of the supply chain. Create a network for receiving defective and excess products back from customers and supporting customers who have problems with delivered products.
  19. 19. 19 A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Supply chains exist in both service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry and firm to firm. Traditionally, marketing, distribution, planning, manufacturing, and the purchasing organizations along the supply chain operated independently. These organizations have their own objectives and these are often conflicting. Marketing objective of high customer service and maximum sales dollars conflict with manufacturing and distribution goals. Many manufacturing operations are designed to maximize throughput and lower costs with little consideration for the impact on inventory levels and distribution capabilities. Purchasing contracts are often negotiated with very little information beyond historical buying patterns. The result of these factors is that there is not a single, integrated plan for the organization---there were as many plans as businesses. Clearly, there is a need for a mechanism through which these different functions can be integrated together. Supply chain management is a strategy through which such integration can be achieved.
  20. 20. 20 5.1 Objectives of supply chain management A well-designed supply chain is expected to support the strategic objectives of: Reduced Costs Shorter Lead Time Best of Quality Flexibility Enhanced Service Better Product Availability Better Product Reliability The best configuration of the chain will vary from individual chain to chain and individual organization to organization. But, in all the case the architecture of the chain would include the following three elements - System, Technology, Relations. Supply chain management is typically viewed to lie between fully vertically integrated firms, where a single firm, and those own the entire material flow where each channel member operates independently. Therefore coordination between the various players in the chain is key in its effective management. Cooper and Ellram [1993] compare supply chain management to a well-balanced and well-practiced relay team. Such a team is more competitive when each player knows how to be positioned for the hand-off. The relationships are the strongest between players who directly pass the baton, but the entire team needs to make a coordinated effort to win the race.
  21. 21. 21 5.2 The Supply Chain and Competitive Performance The supply chain is the network of organizations that are involved through upstream and down stream linkages, in different processes and activities that produce value in the form of products and services in the hands of the ultimate customer. Thus for example a shirt manufacturer is a part of the supply chain that extends upstream through the weavers of fabrics to the manufacturer of fabrics; and downstream through distributors and retailers to the final consumer. Each of these organizations in the chain are dependent upon each other by definition yet paradoxically by tradition do not do not closely cooperate with each other. Clearly this trend has many implications for logistics management, not the least being the challenge of integrating and coordinating the flow of materials from a multitude of suppliers, often off shore and similarly managing the distribution of the finished product by way of multiple intermediaries. In the past it was often the case that relationships with suppliers and downstream customers (such as distributors and retailers) were adversarial rather than cooperative. It is still the case today that companies will seek to achieve cost reductions or profit improvement at the expense of their supply chain partners. Companies such as these do not realize that simply transferring costs upstream or down stream does not make them any more competitive. The reason is that ultimately all cost will make their way to the final market place to be reflected in the price to be paid by the end user. The leading edge companies recognize the fallacy of this conventional approach and instead seek to make the supply chain as a whole more competitive through the value it adds and the costs that it reduces overall. They have realized that the real competition is not company against company but supply chain against supply chain. Supply chain management is an extension of the concept of logistics management. Logistics Management is primarily concerned with optimizing flows within the organization whilst supply chain management recognizes that internal integration by itself is not sufficient. Many firms are starting to focus on the effective and efficient supply chain management in Asia. The main results reveal that firms prefer agile suppliers. Also, most
  22. 22. 22 of the logistics costs incurred are on transportation and warehousing. Firms that have instituted logistics departments are making an effort in upgrading their logistical systems and are more pervasive in using technology to manage logistics as compared to firms without formalized logistics departments. The factors hindering logistics development include inefficient logistics information systems, acute transportation bottlenecks, and the lack of logistics management expertise. Finally, future logistics managers need to be competent in modern technology and possess logistics specific skills. The transport infrastructure will provide the necessary capacity for freight movement and handling. However, the increase in the physical infrastructure alone is not a sufficient condition for the improvement of logistics systems. The logistics information capability, which facilitates the seamless flow of information, is a very important element in further enhancing the efficiency of logistics activities and in potentially reducing the demand for the transport infrastructure itself. Reviews the existing logistics information practices and describes recent nation-wide efforts to build an integrated logistics information system (ILIS). The increased efficiencies to be gained in improving logistics have pushed managers to explore a number of new ideas, technologies, and methods of information management and computerization. However, many companies in Asia are indicating that responsiveness and flexibility are the keys to responding to markets which are rapidly changing and where customers are requiring a range of services. Studies several local and international logistics firms elsewhere as a way of developing a better understanding of their difficulties and reasons for success. Illustrates why certain larger companies which have the capability to develop more sophisticated information and computer systems do not; instead, they chose to rely on more flexible systems which allow for learning and adaptation. Note: that logistics has emerged as a subject of considerable interest - particularly in terms of strategic advantage and that, as a result, logistics strategy has received increased emphasis.
  23. 23. 23 The Changing Logistics Environment The environmental change has had a considerable impact on Logistics Management. Infect of the many strategic issues that confront the business today, the most challenging are in the field of Logistics Management. Broadly these challenges can be summarized as under: · The Customer Service Explosion. · Time Compression · Globalization of the Industry · Organizational Integration. Customer Service may be defined as the consistent provision of time and place utility. In other words products don't have value until they are in the hands of the customer at the time and place required. There are clearly many facets of customer service, ranging from on-time delivery through to after sales support. Essentially the role of customer service should be to enhance 'value-in-use', meaning that the product becomes worth more in the eyes of the customer because service has added value to the core product. The attainment of service can only be achieved through closely integrated logistics strategy. In reality, the ability to become a world class supplier depends as much upon the effectiveness of one's operating systems as it does upon the presentation of the product, the creation of images and the influencing of customer perceptions. Time Compression Product life cycles have shrunk and are shorter as never before and industrial customers and distributors require just in time deliveries, and end users are ever more willing to accept a substitute product if their first choice is not instantly available. In the case of new product introduction there are many implications for management resulting from this reduction of the time 'window' in which profits may be made. Globalization of industry there is an increasing trend towards globalization. And with Internet it has become very easy for companies to go global. For global companies logistics management is an issue of prime concern. The challenge lies in achieving cost advantage of standardization while still catering to local market.
  24. 24. 24 6. Third-party logistics (3PL) or logistics outsourcing is gaining importance as more and more Corporations across the world, unable to manage their complex supply chains, are outsourcing Logistics activities to the 3PL or logistics service providers. By outsourcing logistics activities, corporations are able to not only concentrate on their core business operations, but also achieve cost-efficiency and improve delivery performance and customer satisfaction. The 3PL revenue around the world was $141 billion in 2003, and it is expected to touch $300 billion in 2006. The largest market is the U.S., which was about $80 billion in 2003 accounting for nearly 60% of the world market. The 3PL market in India is least developed and highly fragmented. However, there is an immense potential for growth of 3PL in India about 20% per annum, and if the logistics cost can be brought down from the current level of 13% of GDP to 8.7% (level in the U.S.), the savings would be around $20 billion resulting in a potential 4.3% cut in prices of Indian goods globally making them more competitive. The objective of the current survey was to assess the 3PL market in India, its growth prospects, opportunities and threats. Data were collected to assess the strengths and weaknesses of the 3PL providers in terms of their asset base, services offered, industries served, coverage and IT capability. That the 3PL market in India is fragmented clearly came out from the survey as it was found that 20% of the respondents cornered about 90% of the total 3PL revenue of all the respondents in 2003-2004. The 3PL revenue as well as the volume of cargo handled by the respondents was growing over the years, registering growth rates of 18.25% and 20.33%, respectively, in 2003-2004 over the previous year. The most important roadblock to the growth of 3PL in India, identified by the respondents, was poor transportation and communications infrastructure, and the most important opportunity for growth of 3PL in India was indicated as the increasing awareness of the Indian firms towards the benefits of logistics outsourcing.
  25. 25. 25 6.1 Introduction Third-party logistics (3PL) refers to outsourcing transportation, warehousing and other logistics-related activities to a 3PL service provider that were originally performed in- house. More and more corporations across the world are outsourcing their logistics activities due to various reasons, some of which are outlined in the next page. Due to globalization, corporations across the world are increasingly sourcing, manufacturing and distributing on a global scale making their supply chains very complex for them to manage. Hence they have to outsource their logistics activities to experienced 3PL providers, who have global operations. Today s 3PL providers with their sophisticated IT capabilities and state-of-the-art transportation and material handling equipment and warehousing facilities offer complete supply chain solutions. Logistics outsourcing is used to complement the logistics activities the corporations do not have competency in, and also to increase the geographic reach. When a corporation expands business overseas, it may not be conversant with the customs duties, tax structures, rules and regulations, import/export policies of the government, and culture of the foreign country. A 3PL provider, who has long been operating in that country, will be better able to carry out the logistics operations. Logistics may not be one of the core activities of a corporation. So, inefficiency may creep in if it is looked upon as a secondary activity. By outsourcing logistics, corporations may focus on their core competencies. Logistics outsourcing may also reduce costs as the 3PL providers can get the advantage of the economies of scale, which is otherwise not available to the corporations. Since the 3PL providers are now offering a number of value-added services such as customs clearance, freight forwarding, import/export management, distribution, after sales support, reverse logistics and so on, corporations can outsource all these activities, and concentrate on their core business operations. Due to an incredible growth in electronic retailing since the late 1990 s, many firms around the world with virtually no distribution systems rely heavily on the 3PL providers for delivery of the merchandise at the customer s doorstep. This has resulted in a significant growth in the order fulfillment sector of the 3PL service industry.
  26. 26. 26 A systematic and effective four- stage approach to determine the logistics requirements of clients and design customized solutions for them. This approach involves a detailed study and analysis of the current system and drawing up of an efficient plan that can be easily put into practice. The stages involved are shown in Fig.3
  27. 27. 27 6.2 Evolution of 3PL The concept of logistics outsourcing can be traced back as far as one goes down the history of mankind. In Europe, a number of logistics service providers can trace their origins back to the middle Ages. We restrict ourselves to the recent decades, and trace below the evolution of 3PLfrom the 1950 s 1950 s & 1960 s Logistics outsourcing was limited to transportation and warehousing. The transactions were mainly short-term in nature. 1970 s Emphasis was on improved productivity, cost reduction 1980 s Value-added services such as packaging, labeling, systems support and inventory management were on offer. 1990 s to present Outsourcing has picked up momentum, and more value-added services are being offered. Some of them are import/export management, customs. 3clearance, freight forwarding, customer service, rate negotiation, order processing, assembly/installation, distribution, order fulfillment, reverse logistics, consulting services that include distribution network planning, site selection for facility location, fleet management, freight consolidation, logistics audit etc.
  28. 28. 28 Third party logistics is the activity of outsourcing activities related to Logistics and Distribution. The 3PL industry includes Logistics Solution Providers (LSPs) and the shippers whose business processes they support. Companies opt for Third Party Logistics for the following reasons: Focus on core competence Resource constraints Cost saving / cost optimization For large and global coverage For more professional and scientific approach to logistical problems For improvement in service levels with improved response time Efficient management of inventory resulting in better utilization of working capital Using a 3PL provider allows a company to: - Concentrate on its area of expertise, leaving the problem of logistics to the professionals. Create greater competitive flexibility release working capital. Provide nimbleness to compete. Service providers can ensure better know- how and develop scale efficiencies. A good 3PL provider ensures an all India network, efficient and reliable service and efficient IT system that is capable of tracking every consignment. Over the years, World Wide Logistics emerged as a leading 3PL and Integrated Logistics Solution Provider due to its flexible solutions and a host of other value added services.
  29. 29. 29 Problems in the growth of the 3PL market in India There are some operational and regulatory roadblocks to the growth of the 3PL market in India. The major problems are outlined below. The Indian firms are still wary of outsourcing their logistics activities due to lack of trust and awareness. The 3PL activity is less than 10% of the total logistics operations in India, whereas the corresponding figures for the U.S., Europe and Japan are 57%, 40% and 80% respectively2. According to a TCI-MDI survey6of 130 Indian firms, 55.4% respondents indicated that their firms use 3PL services. The mostly used 3PL services are inbound and outbound transportation and customs clearing and forwarding. Outsourcing of other value-added services such as warehousing, inventory management, distribution and order processing is yet to pick up. The poor infrastructure of India acts as a deterrent for attracting investments for the logistics sector. The national highways constitute 1.4% of the total road network, but carry 40% of the total freight movement by roadways. Owing to a bad condition of roads and inadequate communications infrastructure, 3PL providers would not be able to provide quality service to their clients, and hence would not be able to attract business from the Indian firms. The unwillingness of the Indian firms to outsource logistics operations due to lack of trust and awareness and the unwillingness of the 3PL providers to bring in more investments due to a poor infrastructure constitute a vicious cycle and act as a major roadblock to the growth of the 3PL market in India. The logistics firms offer limited services. In order to attract more business, they have to offer more value-added services, namely packaging and labeling, order management, order fulfillment, distribution, customer support, fleet management, freight consolidation, reverse logistics and logistics consulting. The 3PL providers in India are caught on the wrong foot because of the differential sales tax policy of the Indian Government. Currently, the 3PL providers have to set up warehousing facilities in a number of states to avoid double taxation, thus losing the advantage of the economies of scale. Outsourcing logistics to a 3PL provider will attract a service tax, which was increased in the last budget from 8% to 10%, thereby increasing the outlay in service
  30. 30. 30 taxes should a firm decide to outsource its logistics operations. In the changed scenario, the firm may find it cost-effective to keep logistics operations in-house. 6.3 Prospects of the 3PL market in India Despite the problems mentioned above, the 3PL market in India is poised to grow at over 20%compared to the average world growth rate of 10%7. Some of the large Indian corporate such as Reliance, Tata, Mahindra and Mahindra, TVS Group and Essar Shipping have already forayed into the logistics business. Initially these corporate formed divisions to handle internal logistics, but sensing the potential of the market, they have started offering logistics solutions to other Indian corporate and have already turned these logistics divisions into profit centres8. Some large express cargo and courier companies such as Transport Corporation of India Ltd. (TCIL), Gati, Safe express and Blue Dart have also started offering 3PL services. Owing to the large asset base and distribution networks that are already put in place, it was just a matter of time for these companies to venture into the logistics business. Some of the reasons for the prospects of the 3PL market in India are given below. Indian firms increasingly realize the importance of reducing cost and staying competitive in the world market. One of the means of reducing cost is through outsourcing logistics, which also improves delivery performance and customer satisfaction. The Indian GDP is growing steadily at 6% compared to the world GDP growth rate of 3%, which even beats the GDP growth rates in the U.S. (3.3%), U.K. (2.6%) and Japan (1.3%)9. This eventually will translate into more outputs and more demand for specialized logistics services. The Indian Government has focused on infrastructure development. One of the initiatives is the golden quadrilateral project of the National Highway Development Programme, which will connect all the four metros and will act as East-West and North- South corridors. Once completed, it will give a boost to the road transportation network in India. 3PL services come under the purview of the BPO sector. The BPO sector in India, mainly IT and ITES, is growing at a rapid rate, and the Indian Government has declared many sops including allowing 100% FDI though with certain restrictions in some cases.
  31. 31. 31 This is in contrast with China where foreign investment in domestic logistics is still not permitted. Almost all the large global 3PL providers have their presence in India doing mainly customs clearance and freight forwarding for their international clients. With the logistics market growing at a rapid rate and infrastructure developing, it is just a matter of time before global 3PL providers invest in domestic logistics. The possible routes may be acquisitions, quick and easy for the fragmented logistics market, and forming wholly owned subsidiaries or joint ventures. The Indian Government is working towards a uniform VAT regime. Once implemented, it will enable the 3PL providers to consolidate the warehousing facilities currently maintained in different states bringing in economies of scale. Some of the most preferred 3PL applications and their advantages include: Automate Rating and bidding to maximize benefits for your shippers benefits -On time deliveries, service levels/price points, and reduced cost per lane. Internally, your operations is transformed to an automated platform that can electronically receive RFQs from Shippers, send out bids to Carriers and receive their Quotes, Select/commit to carrier partners for specific lanes upon receiving your authorization- using an integrated workflow for approvals. Optimizing for Profitability while enabling maximum capacity utilization of carrier/fleets and ensure shipper s demand (delivery reliability) fill full truck-loads even in LTL situations helping reduce unused miles and cost-to-serve. Web Portals for Shipper/Carrier Management provides a simple yet universal view of events that happen within your supply chain network, and partners with a logistics planning-to-execution cycle for increased visibility to monitor and control movement of your shipper s freight. Load Plan, Build and Routing Optimization based on a mathematical modeling technique that deliver assured profitability gains and improved asset utilization for lowering costs including personnel (workload management) in warehouses/D.C.s, pools etc.
  32. 32. 32 Automated Dispatch to Manage On-time Deliveries, Performance indicators while reducing Operational Congestion to absorb impact propagated due to uncertainties or delays. Automated dispatch and scheduling systems offers tremendous productivity, compliance and efficiency gains for 3PLs. Lower Transportation and Logistics Costs for your customers by increasing Supply chain Visibility, Inbound and outbound costs from improving Operation Effectiveness and maximizing Revenue margins from improved utilization of your capacity and fleet. Delivering Continuous Move opportunities that help implement Supply Chain Network Optimization and attain a Supply Chain Flawless Execution to evaluate private fleet decisions.
  33. 33. 33 6.4 Outsourcing logistics is the new weapon in the corporate arsenal. It is an easy access to World-Class Logistics capabilities and better control over the distribution system through an external agency offering specified services, which could be constantly improved upon. This would mean: Revenue maximization by tapping promising opportunities and fending off competition through effective and improved services. Cost reduction can be achieved by availing to the benefits offered by the specialist. This translates into reduction in operating cost, interest cost and increase business focus. Companies could get their services done at lesser costs, because an LSP (Logistics Service Provider) would pass on to the company benefits of specialization and economies of scale. Reduce inventory levels and storage cost would translate into a chain of benefits, namely- reduced operating cost, interest cost and to increase business focus, even manufacturing cost. Outsourcing helps the company to focus on its core competencies and better utilize its financial and non- financial resources. By investing its valuable time on core functions, the management can now identify and respond to bottlenecks. What s more an LSP can also help the company overcome those bottlenecks within given parameters. The LSP also provides some augmented services which are incidental to its main line of business. It provides value added services like inventory information, handling excise and sales tax matters, doing the tagging and MRP labeling.
  34. 34. 34 Scope of Outsourcing: Logistics forms a vital cord in the company s operation. Efficient logistics performance has rightly been recognized as a source of competitive advantage and a crucial strategic imperative for the success of firms. This is because, beyond a certain level, improvements in manufacturing alone are not sufficient. The importance of the distribution/logistics function is considerable for firms in all sectors. However within certain industries the logistics is far more important due to the following characteristics, they are: Perishable goods Requirement of extensive distribution High cost of distribution v/s manufacturing cost Short product life cycle Requirement of multi-modal transport Short lead-time Large product range 6.5 Integrated Logistics Customized solutions are the need of the day. WWL looks into the customer requirements in detail and chalks out a comprehensive plan. Then it works towards seamlessly integrating all the four stages of your business- Procurement, Production, Distribution and After Sales Services. Improved Supply Chain visibility. Reduced product obsolescence and damage. Customized warehousing solutions Just In- Time Inventory. Returns Management, Physical Security. Ready built or built- to suit distribution facilities and services. Improves the distribution speed and efficiency while cutting costs. In today's more turbulent environment there is no longer any possibility of manufacturing and marketing acting independently of each other. The internecine disputes between the
  35. 35. 35 'barons' of production and marketing are clearly counter productive achievement of overall corporate goal. Third party logistics is a two way process in which the firm not only need to deal with the suppliers but also with end user consumer.Various Components of the Charts and their functions are shown below: - 2) Information Flow a) Order Registration b) Order checking & Editing c) Order processing d) Coordination 3) Ware housing a) Material Storage b) Material Handling c) Site selection & network planning d) Site selection & network planning e) Dispatch documentation 4) Inventory Control a) Material requirement & planning b) Inventory level decision (for customer service only) 5) Packaging a) For handling b) Prevent damages c) For communication d) For inter-model transportation 6) Transportation a) Rout planning b) Mode selection c) Vehicle Sheduling
  36. 36. 36 Changing logistics landscape in India India is already a heavyweight globally in the services sector. Manufacturing still makes up only a relatively small proportion of GDP about 20 per cent and exports. India's container trade has been growing at around 15 per cent over the past five years. That means the logistics services business will be growing at a multiple of the box trade, probably around 20 per cent and more per year. The growth in demand presents significant opportunities for compared to China's 45 per cent but it is growing, both in terms of domestic focus the logistics industry, as also challenges. Looking ahead, India is going to play an increasingly important role in driving world economic trade, maybe even rivaling the phenomenal growth and transformation of China a manufacturing superpower. India's current trade profile provides important clues about the development of logistics industry. The US is the biggest origin and destination market for both import and export and China is rapidly rising on both fronts. But the key fact is that a big chunk of India's trade remains confined to textile products and apparel, low-end manufacturing, with imports naturally dominated by raw materials. A big part of the manufacturing sector has been focused on the domestic market. In some areas, notably, apparel exports, there is vital emphasis on logistics and speed to market for the delivery of time-dependent 'perishable' goods. For the bulk of trade into and out of India, it is not the case; relatively inefficient, individual transport services can be cobbled together to get goods to the market. This will change. As the trade profile changes, so will the need for more reliable, seamless supply chain solutions that offer real-time visibility along the pipeline. We have seen in other locations globally that the key driver of demand for world-class logistics services is a critical mass of MNCs whose bottom line success requires low-cost manufacturing locations, connected to highly efficient supply lines. Secondly, some pieces of hardware are either missing or not up to the global standards. Ports, for example, are for the most part choked up or not set up for increased container transportation. Road and rail connectivity is patchy and waterways, while exciting, are not yet big on the radar screen as far as volumes are concerned. Add to that a lack of capabilities or competition in some segments of the supply chain, absence of common
  37. 37. 37 standards for equipment and technology, and intra-provincial barriers. These are the key factors playing on the minds of MNCs looking for alternative lower- cost sourcing locations or wanting to reduce their dependence on China and other Asian countries. Broadly, the elements of integrated supply chain include: * Supply chain management design * International ocean/air transportation * Consolidation/distribution * Document delivery * Deconsolidation distribution * Multimodal transportation * Warehousing * Delivery to point-of-sale An effective logistics provider should have the expertise and global connectivity to manage cargo through an integrated network from the time it leaves the warehouse to delivery at destination to customer locations and distribution centers. Expertise in freight analysis, audit and payment, plus service-level reporting is the customer's weapon in the everyday battle to move freight more efficiently.
  38. 38. 38 The Marketing and Logistics Interface The ultimate purpose of any logistics systems is to satisfy a customer. Needless to say that everybody in the organization has a stake in customer service. Indeed many successful companies have started to examine their internal service standards in order everyone who works in the business understands that they must service someone. The basic objective should be to establish a chain of customers that link people at all levels in the organization directly or indirectly to the market place. Typically marketing is described as the management of 4 P's - product, price, promotion and place. Though this still is very much true, there are visible signs that this view is rapidly changing as the power of customer service as a potential means of differentiation is increasingly recognized. It is getting more and more difficult to maintain a competitive edge through product alone. Customer service has started to provide the distinctive difference between ones company's offer and that of its competitors. The future What will be logistics for future? This can be discussed at length, but, looking at the trends today, four pillars can be recommended: 1. Train, develop and maintain a team of logistics experts in your company. Make this team a part of strategy developers. 2. Develop and make your suppliers, of materials and services, aware to work and respond as a link in your logistics. 3. Make your logistics as an IT-based operation. Remember that information flow is the crux of efficient and effective logistics. 4. Have a goal of your logistics as customer satisfaction rather than meeting marketing men's targets, fulfilling demands etc.
  39. 39. 39 Trend analysis- growth in Indian-ASEAN trade Compound annual growth rate (CAGR) of India-ASEAN total trade for the period 1991- 2001 has been a robust 11.1 %, which us more then the CAGR recorded by the India s total trade in the same period. CAGR calculated for the year 2001 to 2004 at 17.05% shows a promising increase that needs to be further accelerated. The potential to increase the trade exists, but there is need to apply grater thrust to trade in focus sectors. Trend analysis India-ASEAN trade Fig.4 (Source: Export import data bank) Observations The compounded annual growth rate (CAGR) required to be maintained from 2004 to 2007 in order to reach the desired trade level of US$ 30 billion in 2007 is 31.30 per cent (down from 32.38 per cent required last year. Trade figures from the DGCI&S show that among ASEAN members, Singapore and Malaysia have been India s most prominent trading partners.
  40. 40. 40 There has not been any significant change in the product composition of India s major exports to ASEAN since 1991-92 with the exception of electronic goods that emerged as one of the leading export items by2000-01. As regards composition of India s imports from ASEAN, electronic goods again have turned out as the single-most important constituent. Edible vegetable oils also gained prominence and experienced an extraordinary increase in the share from 6 percent 1991-92 to 23 percent in 2000-01. Overall, product diversification in India s imports from ASEAN is far less than that of India s exports to the region. Inter-temporal changes in product composition
  41. 41. 41 Classification of products in which India deals in exports & import trade: Chemicals, drugs and pharmaceuticals Base metal and metal articles Transport equipment Textiles and apparel Plastics Optical, precision and instruments Prepared foodstuffs Vegetable products Services Further there are 48 thrust product s divided into 3 groups. Some of them are: - Group A Group B Group C Yarns & threads Apparels woven Apparels knitwear Leather footwear & components Leather garments Dyes & intermediates Bulk drugs Jewellery Data processing machine Television sets. Etc. Fabrics Leather Travel goods Tyer & tubes Essential oils Flavors & perfumes Pesticide Consumers plastics Starch derivatives Imitation Jewellery Consumer electronics Watch. Etc. Preserved fruits & veg. Consumer metallic products. Tufted Carpet Paints Cosmetics Toiletries Glass, pottery, crockery Instrumentation Medical electronics Toys, sports goods. Etc.
  42. 42. 42 Company s Profile 7.1CONCOR - The Multimodal Logistics Professionals Ever since globalization transformed the transport sector, national boundaries have become permeable to penetration by trade, creating the need for flexible transport solutions. Intermodalism and containerization were the by-products of this era and were poised to metamorphosis transport of "general cargo", moving it 'seamlessly' through sea and land arteries. Forty years ago, the physical process of exporting or importing goods was arduous. Goods needed to be transported by lorry to the port, unloaded into a warehouse and then reloaded into the ship 'piece by piece'. Malcolm McLean's idea of containerization changed the basics of cargo transport by standardizing the dimensions of the container and simultaneously improving the productivity of ports by mechanizing handling of container-carrying 'cellular' ships and reducing their handling to a few hours only. Unitization helped elimination of multiple handling of cargo and made transfers quick, cheap and easy. As containerization came to stand for 'cargo care', it grew by leaps and bounds the world over. Indian Railway's strategic initiative to containerize cargo transport put India on the multi-modal map for the first time in 1966. Given the continental distances in India (almost 3000 km from North to South and East to West), rail transport could be the cheaper option for all cargo over medium and long distances, especially if the cost of inter-modal transfers could be reduced. Containerized multi-modal door-to-door transport provided the ideal solution to this problem. It was this idea that saw the Indian Railways entering the market for moving door-to-door domestic cargo in special DSO containers starting in 1966. Though the first ISO marine container had been handled in India at Cochin as early as 1973, it was in 1981 that the first ISO container was moved inland by the Indian
  43. 43. 43 Railways to India's first Inland Container Depot (ICD) at Bangalore, also managed by the Indian Railways. Expansion of the network to 7 ICDs by 1988 saw increase in the handling of containers, and along the way, a strong view had emerged that there was a need to set up a separate pro-active organization for promoting and managing the growth of containerization in India. Container Corporation of India Ltd. (CONCOR), was incorporated in March 1988 under the Companies Act, and commenced operation from November 1989 taking over the existing network of 7 ICDs from the Indian Railways. The company was set up with the objective of developing multi modal logistics support for India's International and Domestic containerized cargo and trade. The task was to provide customers with the advantages of direct interaction and door-to-door services that formed the backbone of road transport, while capitalizing on the robust and more economical option of rail movement on the Indian Railways network. CONCOR currently provides the only means by which shippers may obtain containerized freight transportation by rail in India. Though rail is the mainstay of our transportation plan, road services are also provided according to market demand and operational exigencies. CONCOR also operates container terminals across the country to cater to the needs of the trade, whether in the EX-IM or the domestic business.
  44. 44. 44 7.2 Worldwide Logistics has established itself as a fast track firm in the Cargo Freight, Ocean Freight Shipping Services, Consolidation, Pre and Post Distribution Activities & Freight Forwarding. The firm was incorporated with the objective of providing premium services as Cargo Handlers and Clearing and Forwarding Agents. Since its inception, it has crossed significant landmarks in its spheres of operation. Worldwide Logistics offer the most competitive rates from all destinations through reputed shipping lines, airlines and transport companies. Now they are an established and recognized company engaged in Packing and Consignment Handling, Customs Clearance and Multi-modal Transportation of Cargo. Their competency, loyalty & resourcefulness to satisfy our customers have earned us customer's much needed confidence in them for which WWL will be always thankful to them. We provide the best of professional services with a personal touch. Services WLL cargo handlers offering cargo service in India that include Cargo Freight Services, Cargo Distribution, Consolidation, Clearance, & Freight Shipping Services, Ocean Freight Shipping, Up to Date Shipping Information and Shipment Documentation etc. They have the capacity to handle all kinds of cargo, ranging from a small box to heavy machinery. It assures you timely pick-up and delivery of the cargo. Freight Forwarding Services WWL provide authorized freight forwarding services to offer complete consumer satisfaction which include: Freight Shipping Services Ocean Freight Forwarding Pre and Post Shipping Information Delivery Information Weather Information Custom Clearing Services M/S World-Wide Logistics, look to the matter of cargo clearance at CFS/ICD/Airport not
  45. 45. 45 only on right day but also at the right time. Consolidation of the products is very important part of freight distribution. After and before the dispatch of the freights, they take special care in consolidating the freights in accordance to the customer requirement. Their custom clearing services include: Cargo Distribution Services Cargo Consolidation Services Cargo Clearance Services Road: WLL provide our clients the comfort of cargo transportation for their safe delivery, dispatch and pick up. Doorstep delivery is a special feature of our services. The array of their services comprises of: cargo pick up facility round the clock by owned/hired fleets of close body trucks. With a fleet of more than 50 special -bodied trucks, vehicles and tailors. WWL operates from major cities in India such as Mumbai, Pune, New Delhi, Jaipur, Nasik, Jamshedpur, Chennai, & Kolkata. Sea: As a cargo consolidator, they handle consignment of any size. Whether FCL or LCL, consumer are assured of expert handling from professionals with many years of hands-on experience. Whatever is the size of the consignment? From Customers'' s premises to port or port to receivers door all get our fullest attention because they do not take chances with the cargo.In order to facilitate smooth forwarding/cargo consolidation activities they have arrangements for continuous carting space at the following Locations (CFS) within port premises (all areas Duly Custom Bonded). Air: Worldwide Logistics has built and maintained a strong partnership with the world's premier air carriers. Their confirmed space allocations guarantee you flexibility in routing. WLL offer regularly scheduled consolidation, deferred and expedited services. Their experienced personnel will provide user with accurate detailed documentation from start to finish. As consumer s single carrier, they have one point of contact for all aspects of their shipment and full accountability from WWL.
  46. 46. 46 8. Observation The firm works on the module of 3rd Party Logistics in which it had to act as a mediator to facilitate import & export for the manufacturer and seller or consumer in India & abroad. Main product in which WWL deals are Stones & Fabrics. 1. Firm is depended on online trading, requisitions, personal, & public relations, Ads & regular customer for business. 2. Checking the material, packaging, booking, loading, clearance, inventory, warehousing, transport for finished goods, production scheduling are some of the functions of the firm 3. Types of goods, distance between destination (origin & final) is required to be kept in mind before deciding mode of transport. Things to which company give the priority: - 0 10 20 30 40 50 60 70 80 90 Others Delivery time & Flexidility Working capital efficiency Improved customer responcivness Reducing logistics cost Percent Fig: 5 Graph for things to which company give the priority WWL- the Smart 3rd Party Logistics Partner WWL Focus today is on Integrated Logistics Solutions. This integration is achieved through state of the art infrastructure, IT- led initiatives, modern, efficient and mechanized systems of working, and last but not the least, an intensive knowledge of the Indian domain.
  47. 47. 47 WWL-Logistics Package This ready to use package provides you with an instant distribution network and a wide system of storage locations and distribution channels. It is ideal for clients looking to distribute goods from multiple locations, as well as those with changing distribution needs. So, whether you are an SME or an MNC entering the market, this is the right package at the right time! Made Ready distribution channel- No big investment. Standardization in the execution at all locations. Locate your inventory closer to your customer. Enter new markets without a large capital investment. Available Shelf Space at over 200 locations. Seasonality in the distribution requirements. Percentage of logistics cost for various individual functions: - 7% 6% 25% 22% 40% Outbound transportation Management Overheads Custom & Packaging Operations Internal Transporation Fig: 6 Individual cost As shown in Figure 6, the largest component of logistics cost is transportation (40 Percent). Outbound and interfacility transport combined account for 62 percent of total logistics cost. Distribution center operations at 25 percent, is the next most significant cost category.
  48. 48. 48 8.1 SWOT analysis from firm s point of view: - 1) Strength: a) Consistency & reliability of delivery b) Availability c) Delivery time & flexibility d) Modernized & centrally located work place e) Ordering convenience f) Order Status Information 2) Weakness: a) Lack of man power b) No control on cost c) Stone trading is less in monsoon d) Involving procedure & accuracy 3) Opportunity: a) Perishable goods b) Ready made garments, c) Furniture & wooden handy craft, d) Stone handy craft, fabrics & showpiece etc. e) Other working areas (location) 4) Threats: a) Competition, b) Size constraints c) Corruption, d) Season & natural calamities
  49. 49. 49 9. Research Methodology Research Methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. It is also stated as a careful investigation or inquiry especially through search for new facts in any branch of knowledge. Research Methodology explained by Redman and Mory are as follows systematized effort to gain new knowledge Research Methodology is original contribution to the existing stock of knowledge making for its advancement. It is the purist of truth with the help of study. Observation, comparison, and experiment. In short also covers the systematic method of finding solution to a problem is research. It also covers the systematic approach concerning generalization and the formulation of the theory. Different stages involved in research consists of enacting the problem, formulating a hypothesis, collecting the facts or data, analyzing the facts and reaching certain conclusion either in the form of solution towards the concerned problem or in generalization for some theoretical formulation. In Research Methodology mainly Data plays an important role. The Data is divided in two parts: a) Primary Data. b) Secondary Data. Primary is the data, which is collected directly by direct personal interview, interview, indirect oral investigation, these are collected afresh and for the first time, and thus happens to be original in character. Secondary is the data, which is collected from the various books, magazine and material, reports, etc. The data that have already been collected by someone else and which have already been passed through the statistical process.
  50. 50. 50 The primary and secondary data method both has been used in this project. Unless the data is collected no project can be complete. So both these data is very important in the project. The research instrument used for the product is observation method, it is the most commonly used method used specially in studies relating to behavioral science. In the project the information in sought by direct observation without asking from the respondent. It is an unstructured observation which is done for exploratory study for the awareness of logistics and supply chain management in organisation.
  51. 51. 51 10. Abstract In today s harsh economic climate, where growth markets are few and where global competitors are making the going tougher, the emphasis in business has swung towards strategies that can create long-term customer loyalty as their focus. The recognition that customer retention is the key to long-term profitability has brought with it an understanding of the crucial importance of customer service. As markets increasingly take on the characteristics of commodity markets, where customers see little difference between the technical features and the functionality of the products, it is through customer service that the organization differentiates itself. And effective customer service is not achieved solely by motivated and customer oriented employees - although clearly that is a pre requisite but through the logistics system that enable the consistent delivery of service in terms of reaching the right product at the right time at the right cost in the right condition (quality) to the right customer. Hence it has become imperative for the organizations to see logistics as a part of its overall marketing strategy. The Companies which have achieved success in this process have already found themselves in a very comfortable position vis a vis the other companies which did not realize its importance earlier.
  52. 52. 52 11. Conclusion Logistics is a trade with huge scope, but due to lack in resources & proper channel the business is suffering. Many industries & productions units , still do not have a tie up with logistics firm. They try to dispatch their material on their own, for which they need to undergo various procedures and heavy expenditures including the problem of arranging a proper mode of transport for delivery of goods. The responsibility of dispatching of material comes under sales department, they need to decide weather they should concentrate on SALES or should look into the distribution matters. This in turn affects company s performance. If company s hire a good logistics firm or outsource these distribution activities, it will help them to function effectively & efficiently. As packaging, dispatching & delivery of material would be the responsibility of an outsource logistics firm. Logistics firm should also create awareness in the industries about their existence and how economically they can help the organization with dispatching problems. The secrete to a successful supply chain is components that arrive just in time
  53. 53. 53 Bibliography 1) Books a) JOE B. HANNA (LOGISTICS) b) DONALD J. BOWERSOX (LOGISTICS MANAGEMENT) 2) Web sites a) b) c)
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