LOGISTICS

LOGISTIC means The branch of military science having to do with PROCRUING,MANTAINING,& TRANSPORTING materials, personnel & facilities. Council of logistic Management (CLM) defines: Process of PLLANNING, IMPLEMENTING, and CONTROLING the EFFICIENT, COSTEFFETIVE, FLOW and STORAGE OF RAW MATERIAL, IN-PROCESS INVENTORY, FINISHED goods and POINT OF CONSUMPTION for the purpose of confirming CUSTOMER REQUIREMENTS. LOGISTICS involves two major operations 1- Material Management 2- Physical Distribution Management

COMPONENTS OF LOGISTICS LOGISTICS

Material Management Manufacturing& Supply Services Suppliers
- Raw Material - Sub-Assemblies - Manufactured Parts - Packaging Material In bound Out bound
Transit depot Finished goods Intermediary CUSTOMER -Other equipment Manufacturer -- End User Govt.

Physical Distribution Management Customer Service

Inventory in the field

Work in Material Progress

Flow

Production

Finished goods

LOGISTICS ACTIVITIES
- Procurement

- Plant and Warehouse Selection - Demand Forecasting -Customer Service - Order Processing - Traffic and Transportation - Inventory Control - Ware housing and Storage - Packaging - Material Handling - Distribution Communication - Return of goods handling - Parts and Service Support
- Salvage and Scrap disposal

DIFFERENCE BETWEEN PHYSICAL DISTRIBUTION AND LOGISTICS

PHYSICAL DISTRIBUTION
1) Management of Movement inventory Control Protection & Storage of raw material & Processed or finished goods to & from the product line. Narrow scope than logistic Concerned with creation of time and place utilities

LOGISTICS
1) Process of planning, implementing & controlling the efficient, cost effective flow and storage of raw material, in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of confirming customer requirements 2) Large Scope 3) Creates time, place, form and possession utilities 4) Deal with in bond and out bound activities.

2) 3)

4) Deal with out bound activities only

LOGISTIC INFORMATION
Information's are related to eight elements of Logistics ORDER PROCESSING  Order form Specification of the products.  Delivery schedules  Location of delivery LOCATION ANALYSIS  Cost of transportation of raw material & finished goods.  Govt. regulation and taxation. INVENTORY MANAGEMENT

 On hand inventory  Quantity, Quality  Lead time

MATERIAL HANDLING
 Type of Material  Material Breakage  Cost of meterial handling

PACKING
 Packing material requirement  Cost of packaging

TRANSPORTATION
 Mode of transportation  Sped of transportation  Cost of transportation  Urgency of the product to customer Ware housing

Ware housing
 Location of the wear house  Inventory level at ware house  Availability of space  Information on allied services

CUSTOMER SERVICE
 Service Quality  AMC  Guaranty & Warranty

TRANSPORTATION WARE HOUSING & STORAGE Inexpensive, efficient and easily accessed transportation services activates is the critical driver of economic activity. PRINCIPLES OF TRANSPORTATION FUNCTION By : Fair and Williams (1981) 1. Continuous Flow (Un interrupted flow of products) 2. Optimize unit of cargo - Vehicle capacity - Utilize the best choice of vehicles - Material handling equipment - Manpower 3. Maximum Vehicle Unit - Operating costs of transportation vehicle do not increase in proportion to load size. - Service cost like material handling, routing, dispatching, and documentation remain unchanged regardless of the load size

4. Adaptation of Vehicle unit to volume and nature of traffic. - Highway system - Minimizing cost 5. Standardization: Standardized tracks, ships and rail transport provide an economic method of transportation 6. Compatibility of unit load equipment : Material handling equipment should be placed in transport vehicle and should be fitted in such a way that cubic space should be properly utilized. 7. Minimum of dead weight to total weight (light weight body & design) 8. Maximum utilized of capital, equipment and personnel. RELATIONSHIP OF TRANSPORTATION TO OTHER BUSINESS FUNCTIONS 1. Traffic Management and Transportation Traffic manage has to perform the following responsibilities.  Freight Classification  Rate negotiation

 Equipment Scheduling  Documentation  Auditing  Claim and fleet management

Vehicle capacity have direct bearing on the function 2. Warehouse receiving and shipping 3. Purchasing Purchasing decisions have a direct impact on transportation.
 Containerization  Cost of transport  Capacity of transport  Method of packing (to reducing damage) 4. Customer Service - Time - Cost

5. Product Pricing 6. Distribution Location ( Location of plant, warehouse) depend on transport available 7. Inventory Planning : E. O. Q., safety stock level depends upon transport., J. I. T. depends upper Transport TRANSPORTATION MANAGEMENT FUNCTION
Transport pricing (securing correct rate, which will be advantageous)  Rate negotiation (amount & money)  Routing (Depend upon mode, destination etc.)  Transportation operation (own transport or rented)  Diversion (change the route of final destination)  Risk and claim ( Insurance, damage)  Export & Import  Analysis of transportation cost and services.

LEGAL TYPES AND MODE OF TRANSPORTATION Four Legal types of Transportation 1. Common Carriers. Provides transport service to general public at a fixed rate. 2. Contract Carriers : - Transport Service for a negotiated price to selected customers, defined by contract agreement. - Rates are less than common carriers rates. - Transport for specific product, deliver schedules 3. Exempt Carriers : - Does not regulate with respect to routes, areas served and rate. - Exempt status based on, agricultural products, poultry, or livestock or on the area of operation. 4. Private Carriers : - Companys own vehicle

Mode of Transport
Road way Rail way Air Water Pipe line Rope way

TRANSPORT MODE SELECTION Objective : - To achieve lowest possible transits cost & maximum service. General principles for mode of transport selection 1. Shipment characteristics and mode of transport, speed & reliability. 2. Cost cutting & service improvement 3. Selection should be traffic related, shipper related and service related Traffic Related - Consignment Weight - Value Shipper related Size of firm Marketing Strategy Service related Speed Reliability

Traffic Related Urgency Perishability Type of Packing

Shipper related Availability of rail

Service related Cost Customer relationship Geographical Coverage

Availability of mode of transport Ancillary service (storage)