Supply Chain Management: Logistics

LOGISTICS Supply Chain Management Distribution Logistics Single Country Single Market • Dependable Mode of Transport • Safe Arrival of Goods • Reasonable Time • Reasonable Cost Such Solution Not Viable For Global Markets • Correct Quantity of Product in Required Time Frame • Physical Distribution Process as Integrated System

LOGISTICS Supply Chain Management Distribution Logistics Global Markets • Multi Modal Transport • Trans-shipments • Regulatory Authorities • Pilferage • Damages • Quality Issues, Storage at Different Climatic Conditions • Control

LOGISTICS Supply Chain Management Transport Costs Transit Time In-Transit Inventory Finance Cost Total Trans. Cost WareHsg. Inventory WareHsg. Rent Real Physical D.C.

Sea $31,790 21 Days $44,289

Air $127,160 3 Days $6,328

$76.079 $126,540 $6,500 $209,119

$133,487

$133,487

*44,000 Units, Value $7.7 m, SGP to LA, Finance Cost 10% i.e.$2,109 per day, Inventory of 30 days at SGP and LA

LOGISTICS Supply Chain Management Distribution Logistics • The management of resources to supply the product and services needs of the end consumer encompassing the supply chain of any physical products and the exchange processes involved RM → Mfgr. / Producer of Goods or • Services → Importer (Intermediary or Wholesaler or Stockist) → Retailer → Consumer Traditional Distribution Chain • Linear chain, unidirectional • Passive Customer at the other end •

LOGISTICS Supply Chain Management Distribution Logistics Limited Channel Mfgr. / Producer of Goods or Services • → Importer → Retailer → Consumer Direct Channel Mfgr. / Producer of Goods or Services • → Consumer

LOGISTICS Supply Chain Management Distribution Logistics Flow Physical Flow, Ownership Flow, Service Flow, • Information Flow, Payment Flow, Promotion Flow Good logistics or SCM techniques needed to • ensure smoother movement of merchandise till it reaches the consumer Customer satisfaction at acceptable costs •

LOGISTICS Logistics Logistic is the process of strategically managing the procurement, movement, and storage of materials, parts, and finished inventory through the organisation and its marketing channels in such a way that the current and future profitability are maximised through the cost effective fulfillment of orders Procure, Store and Transport in cost effective • manner

LOGISTICS Logistics Movement of Goods from Exporter to Importer and From Importer to Exporter FCL LCL Volume Weight

Logistics

LOGISTICS

Cost Structure Total Distribution Cost TDC = TC + FC + CC + IC + HC + PC + MC • TC - Transport Cost - Substantial Fixed element. • Capacity to match volumes • Centralised Distribution • Route Planning • Optimal Schedules • Back Haul • Use of software

Cost

Logistics

LOGISTICS

Cost Structure Total Distribution Cost TDC = TC + FC + CC + IC + HC + PC + MC • FC – Facility Cost • Warehousing, capital cost and running cost related to infrastructure and internal systems to store and pick up stocks • RDC in low cost area • Use of Information Systems, Electronic Data Interchange • Warehouse Management System like radio links. Reduction in wage bill – Refer to HR

LOGISTICS Logistics Cost Structure Total Distribution Cost TDC = TC + FC + CC + IC + HC + PC + MC • CC – Communication Cost – Cost associated with EDI and other communication through the chain. These are administrative costs • IC – Inventory Cost – Direct capital cost for goods purchased and Opportunity cost for carrying inventory. These are cost associated with maintenance and replenishment of inventory

LOGISTICS Logistics Cost Structure Total Distribution Cost TDC = TC + FC + CC + IC + HC + PC + MC • HC – Handling Cost – Cost associated with Damage, Pilferage, Deterioration of stocks • PC – Packaging Cost – Repacking, shrink wrapping, pallets, boxes, containers, tapes, labels etc

LOGISTICS Logistics Cost Structure Total Distribution Cost TDC = TC + FC + CC + IC + HC + PC + MC MC – Management Cost – Cost associated Management of the chain. Ranging from security system to storage conditions to HR, Finance and almost everything where managerial input is needed

LOGISTICS SCM IT in SCM Goldmine - Tanishq • 60 Boutiques, 32 C&F, 29 Cities Challenges • Reduction in cycle time, increasing efficiency, cost reduction in tracking movement of goods and sales indenting, order status, sales visibility, communication (reports) and exception reporting

LOGISTICS SCM IT in SCM Goods in Transit • Details of dispatches to C&F and Boutiques, Tracking stock returns, Monitor loss of goods and stocks in transit Indenting • Automate ordering by boutiques, Online product catalogues and price lists, Stock replenshments, shop specific customer specific indents, POS indenting for each variant as per track record

LOGISTICS SCM IT in SCM Order Status • Visibility of status of orders placed by boutiques, daily synchronization with factory and web-based solution, No emails Sales Visibility • Sales visibility has improved, helps management in evaluating marketing programmes and promotions at boutique level by category and price band. Best sellers are also available on line

LOGISTICS SCM IT in SCM Communication and Exception Reporting • Platform for dissemination of information through uploads, bulletin boards, Market information. 40,000 variants interaction is vital Future Plans • To set up bench mark for the industry. Use of relevant business information in real time in the boutiques during a customer touch

LOGISTICS SCM IT in SCM UPS FEDEX DHL Complete Logistic Management Door to Door Delivery Around The World WareHousing, Inventory, Labour & Technology Integrate Supplies from Various Countries and Despatch, Reduces Time, Inventory, Tracking And Much More………