Logistic Management

PRESENTED BY- KAMAL SONI INMANTEC, Ghaziabad

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Logistics is the . . . “process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.“ Council of Logistics Management 2

Subdivisions of logistics management Business Logistics • •Procuring, moving and storing of R/M and transporting, warehousing and distribution of F/G •Facilitation of relevant manufacturing and marketing • Making finished goods available to the customers in the market 3

• Procuring, moving and storing of agricultural products • Providing competitive edge in commodities market  Event logistics - The net work of activities, facilities and personnel required to organize, schedule and deploy the resources for an event to take place and to efficiently withdraw after the event 4

 Service logistics - the acquisition, scheduling and management of the facilities/assets, personnel and materials to support and sustain a service operation  Military logistics - design and integration of all aspects of support for the operational capability of the military forces [deployed or in garrison] and their equipment to ensure readiness, reliability and efficiency 5

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Logistical mission Achievement of business objectives at minimum logistical cost [delivering- QCD expectations of customers at minimum logistical costs, i.e. creating customer value at minimum cost

• Set of goals to be achieved at a particular type of market responsive to competition 7

• Mission focus is on out put of the system • Logistics Mission is achieved by ‘single plan’ for the entire organization • Mission of logistics is providing a means by which customer satisfaction is achieved

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Inbound logistics •Procurement operations in procurement cycle • potential avenues for reducing systems costs • value of inventory is low • trade off between cost of maintaining inventory in transit and low cost transport exists

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Sourcing

Order placement & expediting

Vendor (Supplier)

Receiving

Transportation

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Outbound Logistics

• Value added goods are to be made available in the market distributed through the network of warehouses and retailers’ shops

•Value of the inventory is very high as during conversion value is added

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Activities in distribution performance cycle Order processing

Order transmission

Customer order

Order selection

Order transportation

Customer delivery

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Logistical cost analysis Conventional Approach • Focus on function •Conventionally costs of logistical functions are apportioned • Impact of decisions at function level on the system is not considered • Cost information tends to get hidden out of fear that it may highlight functional weakness • Cost in no man’s land is never owned 14

• Cost cutting is fragmented so doesn’t reduce system cost •Customer dissatisfaction, competitive edge is lost by the organization

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Total cost approach Modern approach to logistical costing • Focus on reduction of cost of output of the system [product delivery to customer]

• Provides competitive edge to the company • Reveals several trade off points in the system & further areas of improvement  Transportation - Inventory  Warehousing – Customer service FTL/LTL and cost of transportation FTL/LTL and cost of inventory

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Different logistics performance objectives Order winners are factors that directly and significantly help products to win orders in the marketplace. Customers regard such factors as key reasons for buying that product or services.

Order qualifiers are factors that are regarded by the market as an ‘entry ticket’. Unless the product or service meets basic performance standards, it will not be taken seriously.

PRICE

LOGISTICS PRODUCT

MARKETING PROMOTION

PLACE

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Interface with marketing • A common wall, surface or area with another body, concept or function - area of common interest or concern

• Four Ps of marketing and logistical interface • Price - marketing can re offer the price to beat the competition with superior logistical support

• Product & Packaging- size shape &

weight/volume ratio of the product has major impact on logistical cost

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Promotion - promotional strategies of marketing need to be decided by working closely with logistics Place - whether to distribute through wholesalers or through retailers is a marketing decision with impact on logistics Customer Service - another area of interface between marketing & logistics 20

Interface with operations SHORT RUNS

LOGISTICS SEASONAL DEMAND

OPERATIONS SUPPLY SIDE INTERFACE

PACKAGING

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Interface with operations

*Short production runs • Very strong logistical support is needed to operate Just In Time •Short runs lead to inventory reduction * Seasonal demand • Inventory should be mutually accepted * Supply side interface • Prevent shortages * Packaging • Protective packaging • Third party alternatives 22

Role of planning in logistics management

• Role of planning is central to logistics management

• Mission of logistics is to achieve desired levels of service and quality at lowest possible cost. • Logistics makes one plan, that replaces traditional concept of planning in pockets 23

What can Logistics do?

HIGH

S E R V I C E

SERVICE LEADER

SERVICE & COST LEADER

OK OK

HAPPY HAPPY COST LEADER COMPANY CUSTOMER

SAD

LOW

HIGH

Whom shall I buy from?

OK

COST

LOW

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Attributes of Logistics Department

# Scope is wide spread- functions of logistics are spread across various stages of value chain in the organization # Provides interface between marketing and customers, marketing and operations, operations and supplier # Provides competitive edge to business in the current environment # Handles flow of information and materials # Large avenue for cost reduction 25

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