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SUBJECT SEMESTER CLASS
: Elements of Logistic and Supply Chain
: V : T.Y.B.M.S. : : 2010 Prof-Nitin Kulkarni.. : 30/06/2010
YEAR SUBMMITTED TO: DATE
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03 16 26 27 48 Topics Covered 1) Operating Objectives 2) Logistical Mission 3) Logistical Performance Cycle Procurement Cycle Manufacturing Support Cycle Physical Distribution Cycle Page | 2 . Bhosale. Ashwini V.Name of Students SR. Desai. 2. Ainapure. Kadam. Yashshree S. 5.NO NAME ROLL NO 1. Abhilasha A. 3. Namrata R. Arpita P. Desai. 4.
Nitin Kulkarni. We would like to take this opportunity to thank Prof. We intend our sincere and affectionate thanks to our sir. Page | 3 .ACKNOWLEDGEMENT It is indeed a pleasure to bring out such beautiful idea on such a subject. We would heartily welcome helpful criticisms and suggestion from all of you for further improvement of our project. We would like to thank the VIVA COLLEGE for giving us this opportunity.
and occasionally security. In ancient Greek. language.Introduction to Logistics Meaning:Logistics is the management of the flow of goods. Logistics is considered to have originated in the military’s need to supply themselves with arms. The Oxford English dictionary defines logistics as: “The branch of military science having to do with procuring. and packaging. The Chartered Institute is one of the professional bodies or institutions. Logistics involves the integration of information. transportation. Roman and Byzantine empires.” Logistics management:Logistics management is that part of the supply chain which plans. ratio. ammunition and rations as they moved from their base to a forward position. logistics is commonly seen as a branch of engineering which creates “people systems” rather than “machine systems. inventory. Logistics is a channel of the supply chain which adds the value of time and place utility. information and other resources between the point of origin and the point of consumption in order to meet the requirements of consumers (frequently. phrase and more specifically from the Greek work “logistiki” meaning accounting and financial organization. A professional working in the field of logistics management is called a logistician. The Chartered Institute of Logistics & Transport (CILT) was established in the United Kingdom in 1919 and was granted a Royal Charter in 1926. there were military officers with the title Logistikas who were responsible for financial and supply distribution matters. warehousing. implements and controls the efficient. maintaining and transporting material. Origins and definition:The term “logistics” comes from the Greek “logos” meaning speech.” Another dictionary definition is: “The time-related positioning of resources.” As such. for the logistics and Page | 4 . military organizations). services and related information between the point of origin and the point of consumption in order to meet customer & legal requirements. effective forward and reverse flow and storage of goods. rationality. and originally. material-handling. reason. personnel and facilities.
warehousing. Business logistics:Logistics as a business concept evolved only in the 1950s. The main functions of a qualified logistician include inventory management. One optimizes a steady flow of material through a network of transport links and storage nodes. or external focus (outbound logistics) covering the flow and storage of materials from point of origin to point of consumption. calling for experts in the field who are called Supply Chain Logisticians. There are two fundamentally different forms of logistics. that offers professional qualifications or degrees in logistics management. firms have the capacity to postpone logistical operation to the latest possible time and then accomplish rapid delivery of required inventory. purchasing. Rapid response capability shifts the focus of operations to customer requirement on Page | 5 . Operating Objectives In order to fully exploit logistical competency. This can be defined as “having the right item in the right quantity at the right time at the right place for the right price in the right condition to the right customer” and is the science of process and incorporates all industry sectors.transport sectors. In business. consultation and the organizing and planning of these activities. Logisticians combine a professional knowledge of each of these functions so that there is a coordination of resources in an organization. managers within an enterprise must achieve some specific objectives referred to as operating objectives. transportation. supply chains and resultant efficiencies. Because of development in information technology. This was mainly due to the increasing complexity of supplying one’s business with materials and shipping out products in an increasingly globalized supply chain. logistics may have either internal focus (inbound logistics). In terms of logistical design and administration. The goal of logistics work is to manage the fruition of project life cycles. each firm must simultaneously achieve at least six different operational objectives namely: 1) Rapid response : It is concerned with the firm’s ability to satisfy customer service requirement in a timely manner.
The objective is to reduce the inventory development to the lowest level consistence with customer service goal to achieve the lowest overall the total logistics costs. Logistical systems that feature premium service depend on high speed.shipment-to-shipment basis.. 3) Minimum inventory: The objective of minimum inventory involves the commitment of assets in the form of inventory deployed throughout the logistical system and the relative velocity which is the rate of inventory usage overtime. rather than producing in anticipation of demand based on the forecasting and keeping inventory to meet the anticipated future demand. Concepts like zero inventory are increasingly becoming popular with the managers who seek to reduced inventory deployment. an a unexpected disruptions in manufacturing goods arriving in a damage conditions at the customer’s locations or delivery to a wrong location-all result I a time disruption of operation that must be resolved. size of shipment and distance transported. A traditional solution to accommodate variance is to hold safety stock inventory or used high cost premium transportation. Such traditional practices have been replaced by using I. For eg. Page | 6 . All the operating areas of logistical system are subject to potential variance. 2) Minimum variance: Variance is any unexpected event that disrupts system performance. It is directly related to the type of a product. The object is to reduce and manage inventory to the lowest possible level while simultaneously achieving desired operating objectives. to achieved positive logistic control and thereby minimized variance and improved logistical productivity as a result of economic operations. Variance may result from any aspects of logistical operations. However inventories can provide the some important benefit in a logistical system such as improved return on investment when they result in economies of scale in manufacturing or procurement. 4) Movement consolidation: Transportation cost is one of the most significant logistical costs. delay in expected time of customer order receipt.T. High turn rates together with the inventory availability means that the assets devoted to inventory are being effectively utilized.
Logistics becomes a prime part of developing and maintaining continuous improvement of TQM. Page | 7 . 6) Life -cycle support:Majority of products are sold with some guarantee that the product will perform as advertised over a specific period (Life of the Product). the commitment to lifecycle support constitutes a versatile and demanding operational requirement. it is necessary to achieve movement consolidation. 5) Quality:Logistical objectives include the objective to seek continuous quality improvement. to reduce transportation cost. Hence. For firm’s marketing consumer durables or industrial equipment. Therefore. When quality fails. which is accomplished through commitment to TQM throughout all facets of industry.small-shipment transportation which involves high cost. the logistical performance need to be reversed and then repeated.
THE LOGISTICAL MISSION Logistics of a firm is an integrated effort aimed at helping to create customer value at the lowest cost. The limiting factor for resources is economics and not technology. But such high level of customer service would be extremely costly and not necessary to support most marketing and manufacturing operations. Technology enables new ways to achieve high. The more significant to service failure impact upon the customer. Basic logistics service is measured in terms of the following factors:- 1) Availability:Means having inventory to consistently meet customer requirements of materials and products. Hence.the. Page | 8 . The cost benefit impact of logistical failure is directly related to the importance of service performance to the customer involved.: 1) A dedicated inventory can be maintained in a warehouse close to a major customer. Logistics managers seek to achieve the desired quality of customer service through state –of. For e. 2) A fleet of trucks can be held in a constant state of readiness for quick delivery.art operating competency. High inventory availability does not necessarily mean high investment in inventory. the greater the priority placed on logistical performance. The level of logistics service depends on the amount of resources a firm is willing to commit.g. logistical service must be viewed as a balance of SERVICE PRIORITY and COST. Logistics exists to satisfy customer requirements through relevant manufacturing and marketing operations.
& decisions that must link to create an operating system. Within nodes. necessitating a variety of different types of material handling and at least limited storage. a firm’s operational performance is viewed in terms of FLXIBILITY. 3) Service Reliability:It is concerned with the quality attributes of logistics. the firm’s logistics performance can also continuously meet its customer expectations. customer firms seek first consistency of service and then delivery speed . the measures to assess inventory availability and operational performance must be identified . In addition to nodes and links. To achieve service reliability. The key to quality is accurate measurement of availability and operational performance. Performance cycles become dynamic as they accommodate input /output Page | 9 .If the management is committed to continuous improvement. they also emphasise of fast delivery. The facility locations that performance cycles linked together are referred to as nodes. Logistical Performance Cycle Performance cycle is the primary unit of analysis for integrated logistics. inventory is stocked or flows through the node. To achieve smooth operation. It involves delivery SPEED and CONSISTENCY. a logistical performance cycle requires inventory. Operational performance is also concerned with how a firm handles all aspects of customer needs including service failure on a day to day basis. suppliers. Performance cycles provide a basic perspective of the dynamics.2) Operational Performance:It is concerned with elapsed time from order receipt to delivery. At a basic level. the firm and its customers are linked together by communications and transportation.Also. Even though many customers want fast delivery. interfaces.
in such case the cycle is designed implemented and then abolished once the transaction is complete. Depending on the operating mission of a particular performance cycle. System output is the level of performance expected from the logistical operation. and different types of performance cycle a firm uses to satisfy its logistical requirements. The performance cycle is the basic unit of design and operational control. the performance cycle structure is effective in accomplishing its mission. required activity may under the complete control of a single firm or may involve multiple firms. When requirements are highly predictable or relatively low. It is important to satisfy logistical requirements. Other performance cycles represent long term arrangements. The input to a performance cycle is an order that specifies requirements for a product or a material. The three points are important to understand the architecture of integrated logistical systems. Efficiency is related to resource expenditure necessary to achieve logistical effectiveness. Performance cycle span the overall supply chain and link participating firms. In contrast performance cycle related to physical distribution and procurement normally involved customer or suppliers participation. For example. The effectiveness and efficiency of performance cycles are key concerns in logistical management. the overall performance cycle structure required to support a large retail enterprise like Wal-Mart is far more complex than the operating structure requirements of a direct mail-order company. Some performance cycles are established to facilitate a onetime purchase or sale. the performance cycles required to provide logistical support can be simplified.requirements. Page | 10 . A high volume system will typically require a variety of different performance cycle arrangements to satisfy overall order requirements. Regardless of the no. 1) The performance cycle is the fundamental unit for integrated analysis of logistical functions. To the extent that operational requirements are satisfied.
2) The performance cycle structure in terms of link and node arrangement is basically the same whether one is concerned with physical distribution. manufacturing support and procurement performance cycle are discussed below. Page | 11 . parts and/or finished inventory from supplier to manufacturing and assembly plants. manufacturing support. or procurement. essential interfaces and control processes must identified and evaluated in terms of individual performance cycle arrangements when seeking the process integration. 3) Regardless of how vast and complex the overall logistical systems structure is. in government organisation it is called procurement and in retailing and whole selling it is called buying. These activities are related to product and materials from outside suppliers. All these three term namely purchasing procurement and buying are referred to as inbound logistics. Types of Logistical Performance Cycle To better understand the similarities and differences in the nature of physical distribution. The acquisition process is called purchasing in manufacturing organization. (vi) Receiving and inspection (vii) Storage and handling. 1) Procurement cycle (Inbound):Procurement is concerned with purchasing and arranging inbound movement of materials. (v) Inbound transportation. (ii) Supply sourcing. (iii)Order placement. negation. It includes(i) Resource planning. warehouses or retail stores. (iv) Quality assurance.
are limited to movement under internal management control. as contrasted to either physical distribution or procurement. Manufacturing support logistics is typically captive to firm. not the how. whereas the other two performance areas must deal with behavioural uncertainty of external customers and suppliers. Manufacturing support is significantly different when compared with either physical distribution or procurement. and when of production. It is important to once again stress that the mission of logistics manufacturing support is to facilitate the what. Manufacturing can be viewed as being positioned between the physical distribution and procurement operations of firm. procurement provides materials and externally manufactured components when and where needed. the manufacturing support system may require a vast network of performance cycles manufacturing support operations. The justification for focusing on performance cycles to support manufacturing is found in the unique requirements and operational constraints of modern production strategies. where. Even in situation when contract manufacturing is used to augment internal capacity. Manufacturing logistical support has the primary objective of establishing and maintaining an orderly and economic flow of materials and work in process inventory to support production schedules. Page | 12 . The isolation of manufacturing support as a distinct operating area is a relatively new concept in logistic management.2) Manufacturing support performance cycle:The manufacturing support performance cycles provides production logistics. Within a typical manufacturing organization. Once a firm's manufacturing operation is initiated. overall control is greater than in the other two operating areas. When a firm has multiple plants that specialize in specific production activities. subsequent requirements for interplant movements of materials or semi finished products are classified as manufacturing support.
It resolves marketing and manufacturing initiatives into an integrated effort.3) Physical Distribution Performance Cycle (Outbound Logistics):Physical distribution operations involve processing and delivering customer order. The interface between marketing and manufacturing can be conflictive. Page | 13 . Physical distribution is integral to marketing and sales performance because it provides timely and economical product availability. The overall process of gaining and maintaining customers can be broadly divided into transaction creating like advertising and selling and physical fulfilment activities. The expectation is that zero defect service will be achieved and customer focused marketing efforts will be supported. On the other hand marketing is dedicated to delighting customers. From the logistical prospective physical distribution links a firm with its customers.
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