Elements of Logistical Management

What is logistical Management?

A Function Of Business Management

Business & Business Management

What are business functions? What is function? What is activity?

Logistical Management
Ensuring availability of resources at minimum cost for production Ensuring availability of finished products at minimum cost to the customer

Definition of Logistics as a function of management Logistics is the process of strategically managing procurement and storage of material , part and finished inventory [and related information flow] through organization and its marketing channels in such a way that current and future profits are maximized through cost effective fulfillment of order
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Production and Logistics

What is the most accessible production process known to you?

How Logistics is visualized?

I N F O R M A T I O N

I N V E N T O R Y

C A S H

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V1 V4 V5
Manufacturing Support cycle

V2 Receiving stores

V3

Procurement cycle

Operation Finished Goods Stores

Distribution cycle

W1

W2

W3

R1

R2

R3 Market

R4

R5

R6
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What are logistical functions?

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Inventory Management  Neither stock-out nor stockpiling  Inventory policies, models, systems

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Information management * Fast & accurate information in real time in competitive business supported by Information technology

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Transportation * The most visible of all elements * High contributor to costs of logisticsMovement costs, Preservation costs, Cost of idle asset, Administration costs

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Net work analysis # Number of facilities, their location, communication systems, operational decisions

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Warehousing * Switching facility rather than a storage facility that provides economic & service benefits

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forklift_1.jpg

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Material handling * Receiving, moving, storing, dispatching activities * Impact on cost [capital as well as running]

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Packaging * Types of packaging- consumer packaging and industrial packaging

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Genesis of modern logistics Military planning OR techniques like VA, PERT, CPM etc. Battles are won or lost even before they are fought.Field Marshall Rommel Some logistical feats in history: Indians in the Gulf countries 1991 1776 American war of Independence [4th July1776]
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BERLIN AIRLIFT- 1945

In total, 1,534 tons of provisions were needed daily to keep the over 2 million people alive.

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OPERATION OVERLORD NORMANDY BEACH II World War-1945

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What Causes Bad Logistics? Infrastructure: bad roads, inefficient railways, poor communication lines, congestion in ports Taxation: e.g. Octroi Information: Inadequate information, bad communication Management: Bad management decisions [carrier selection, out sourcing etc.] What Does Bad Logistics Cause? Costly products, shortages Deteriorating economy
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Importance of Logistics Why should we learn logistics? Why is logistics important for management students? 1. Logistics is the bed rock of trade and business 2. Leads to customer satisfaction, D & F expectations of customers 3. Integrates logistical activities 4. Competitive edge in a commodities market 5. Logistics wins or loses wars 6. Supports critical functions like operations and marketing to be JUST IN TIME to the customer
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Importance of Logistics 7. Logistical costs are 5% to 35% of sales depending on type of business, geographical areas of operation etc. 8. Crucial to survival and prosperity in global business 9. Logistics experts are moving up in Corporate Ladder 10. Leads to the concept of supply chain management 11. Indian market is changing- shift from sellers market to buyers market 32

12. Changing customer 13. Competition, internal & external

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Operating Objectives Of Logistics

1. Rapid response Ability to respond rapidly to customers order Short lead-times High flexibility Real time information Concepts of SMED and Kanban
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2. Minimum variance Any event that disturbs flow of supplies to customer is variance Interrupts product delivery Undermines OTD Objective Problems in information flow, traffic snarls, acts of god, wrong dispatches, transit damage How to maintain smooth, undisturbed flow of supplies to customer? Traditional approach Inventory Modern approach Minimum Variance
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3. Minimum inventory Low inventory volume by high inventory turns Kanban as an inventory control tool Single piece flow as practiced by JIT companies

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4. Movement consolidation Movement planning to reduce costs Bulk volume, same product or collection Long runs, eliminating broken short runs Integrating interests of several players in business

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5. Quality Quality of logistics performance - complete fulfillment of order, product, place, time and quantity

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6. Life cycle support [cradle to cradle logistical support to product] After sales service Reverse logistics

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 Reverse logistics
 Rigid quality standards  Transit damage  Product expiration dating Product recall Law against unscientific disposal  Law making recycling mandatory  Erroneous order processing by supplier  Reuse of packaging material What are the drivers of reverse logistics?
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