Project Guide

I take this oppurtinity to express my profound gratitude and deep regards to my guide for his exemplary guidance,monitoring & constant dedicated encouragement throughout the course. The blessing,help & guidance given by him from time to time shall carry me in a long way in journey of life on which I am about to embark. Again I would like to express my deep regards to


Sr.No 1 2 3 4 5 6 7 8 9 10 11

TOPICS Overwiew of logistics Logistics management Commercial vehicle operation Containerisation Cross docking Distrubution JIT Logistics Automation Logistics for different field Concept of SCM 3 PL

Logistics is the art and science of managing and controlling the flow of goods, energy, information and other resources like products, services, and people, from the source of production to the marketplace. It is difficult to accomplish any marketing or manufacturing without logistical support. It involves the integration of information, transportation, inventory, warehousing, material handling, and packaging. The operating responsibility of logistics is the geographical repositioning of raw materials, work in process, and finished inventories where required at the lowest cost possible.

Overwiew of Logistics
The word of logistics originates from the ancient Greek logos (λόγος), which means “ratio, word, calculation, reason, speech, oration”. Logistics as a concept is considered to evolve from the military's need to supply themselves as they moved from their base to a forward position. In ancient Greek, Roman and Byzantine empires, there were military officers with the title ‘Logistikas’ who were responsible for financial and supply distribution matters. The Oxford English dictionary defines logistics as: “The branch of military science having to do with procuring, maintaining and transporting material, personnel and facilities.”Another dictionary definition is: "The time related positioning of resources." As such, logistics is commonly seen as a branch of engineering which creates "people systems" rather than "machine systems".

Military logistics
In military logistics, experts manage how and when to move resources to the places they are needed. In military science, maintaining one's supply lines while disrupting those of the enemy is a crucial—some would say the most

Logistics Management Logistics Management is that part of the supply chain which plans. This can be defined as having the right item in the right quantity at the right time for the right price and is the science of process and incorporates all industry sectors. have been largely attributed to logistical failure. effective forward and reverse flow and storage of goods. since an armed force without food. or external focus (outbound logistics) covering the flow and storage of materials from point of origin to point of consumption (see supply chain management). transport. logistics may have either internal focus(inbound logistics). Led by Lieutenant General William Pagonis. supply chains and resultant efficiencies. The main functions of a logistics manager include Inventory Management. fuel and ammunition is defenseless. Logistics managers combine a general knowledge of each of these functions so that there is a coordination of . implements and controls the efficient. and the defeat of Rommel in World War II. Business logistics Logistics as a business concept evolved only in the 1950s. materials and equipment over great distances. It had become very necessary for the US and its allies to move huge amounts of men. purchasing. Logistics was successfully used for this movement. calling for experts in the field who are called Supply Chain Logisticians. warehousing. The defeat of the British in the American War of Independence. 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. In business. The historical leaders Hannibal Barca and Alexander the Great are considered to have been logistical geniuses. The Iraq war was a dramatic example of the importance of logistics. and the organizing and planning of these activities.crucial—element of military strategy. The goal of logistic work is to manage the fruition of project life cycles. services and related information between the point of origin and the point of consumption in order to meet customers' requirements.

It would have a satellite navigation system. One optimizes a steady flow of material through a network of transport links and storage nodes. The company tracks individual loads by using barcoded containers and pallets to track loads combined into a larger container. Machines are exchanged and new ones added. In ancient Greek. There are two fundamentally different forms of logistics. there were military officers with the title ‘Logistikas’ who were responsible for financial and supply distribution matters. The issue is not the transportation itself. To minimize handling-expense. . the central office knows where its trucks are. The digital radio service forwards the data to the central office of the trucking company. A computer system in the central office manages the fleet in real time under control of a team of dispatchers. Production logistics can be applied in existing as well as new plants. A typical system would be purchased by the managers of a trucking company. which gives the opportunity to improve the production logistics system accordingly.resources in an organization. Production logistics The term is used for describing logistic processes within an industry. In this way. The other coordinates a sequence of resources to carry out some project. Roman and Byzantine empires. a small computer and a digital radio in each truck. Every fifteen minutes the computer transmits where the truck has been.Commercial vehicle operation Commercial Vehicle Operations is an application of Intelligent Transportation Systems for trucks. Manufacturing in an existing plant is a constantly changing process. Logistics as a concept is considered to evolve from the military's need to supply themselves as they moved from their base to a forward position. but to streamline and control the flow through the value adding processes and eliminate non-value adding ones. Production logistics provides the means to achieve customer response and capital efficiency 1. The purpose of production logistics is to ensure that each machine and workstation is being fed with the right product in the right quantity and quality at the right point in time.

When these systems were first introduced. and then poor ones are eliminated using linear programming. accidents or road-work. on planned schedules. This allows a trucking company to deliver a true premium service at only slightly higher cost. viewing them as a way for management to spy on the driver. A good system lets the computer. A well-managed intelligent transportation system provides drivers with huge amounts of help.999% on-time delivery. or urgent loads that are likely to be late can be diverted to air freight. One special value is that the computer can automatically eliminate routes over roads that cannot take the weight of the truck. the drivers log into the system. Components of CVO include: • • Fleet Administration Freight Administration . optimal-sized pallets are often constructed at distribution points to go to particular destinations. It gives them a view of their own load and the network of roadways. Increasingly. The system helps remind a driver to rest. Rested drivers operate the truck more skillfully and safely. Usually. The exact means of combining these are usually secret recipes deeply hidden in the software. some drivers resisted them. such as the one operated by FedEx. dispatcher and driver collaborate on finding a good route. The basic scheme is that hypothetical routes are constructed by combining road segments. The best proprietary systems. The controlled routes allow a truck to avoid heavy traffic caused by rushhour. A good load-tracking system will help deliver more than 95% of its loads via truck. or a method to move the load. If a truck gets off its route. or that have overhead obstructions. or is delayed. linear programming and minimum spanning tree logic to predict and improve arrival times. achieve better than 99.damage and waste of vehicle capacity. governments are providing digital notification when roadways are known to have reduced capacity. the truck can be diverted to a better route. Load-tracking systems use queuing theory.

6 m). 48-ft (14. This is equivalent to 2 TEU.2 m) variety and are known as 40foot containers.59 m (height).7 m). or sometimes teu). the biggest manufacturer.7 m) containers are also designated 2 TEU. Two TEU are equivalent to one forty-foot equivalent . These sell at about US$2. and trucks. and 53-ft (16. Most containers today are of the 40-ft (12. Containerization is also the term given to the process of determining the best carton.CONTAINERIZATION Containerization is a system of intermodal freight transport cargo transport using standard ISO containers (known as Shipping Containers or Isotainers) that can be loaded and sealed intact onto container ships. 20-ft (6. United States domestic standard containers are generally 48-ft and 53-ft (rail and truck).44 m (width) × 2. A twenty-foot equivalent unit is a measure of containerized cargo capacity equal to one standard 20 ft (length) × 8 ft (width) × 8 ft 6 in (height) container.1 m).5 m³. or approximately 38. box or pallet to be used to ship a single item or number of items.• • • • • • • • • • Electronic Clearance Commercial Vehicle Administrative Processes International Border Crossing Clearance Weigh-In-Motion (WIM) Roadside CVO Safety On-Board Safety Monitoring CVO Fleet Maintenance Hazardous Material Planning and Incident Response Freight In-Transit Monitoring Freight Terminal Management 2. In metric units this is 6. 45-ft (13. Container capacity is measured in twenty-foot equivalent units (TEU.10 m (length) × 2.500 in China. planes.2 m). 40-ft (12. 45-foot (13. ISO Container dimensions and payloads There are five common standard lengths.2 m). railroad cars.

unit (FEU). High cube containers have a height of 9 ft 6 in (2.9 m), while half-height containers, used for heavy loads, have a height of 4 ft 3 in (1.3 m). When converting containers to TEUs, the height of the containers typically is not considered. The use of US measurements to describe container size (TEU, FEU) despite the fact the rest of the world uses the metric system reflects the fact that US shipping companies played a major part in the development of containers. The overwhelming need to have a standard size for containers, in order that they fit all ships, cranes, and trucks, and the length of time that the current container sizes have been in use, makes changing to an even metric size impractical. The maximum gross mass for a 20-ft dry cargo container is 24,000 kg, and for a 40-ft, (inc. the 2.87 m (9 ft 5 in) high cube container), it is 30,480 kg. Allowing for the tare mass of the container, the maximum payload mass is there reduced to approx. 21,600 kg for 20-ft, and 26,500 kg for 40-ft containers.

Shipping Container History

A container ship being loaded by a portainer crane in Copenhagen Harbour.

Twistlocks which capture and constrain containers. Forklifts designed to handle containers have similar devices.

A container freight train in the UK.
Containers produced a huge reduction in port handling costs, contributing significantly to lower freight charges and, in turn, boosting trade flows. Almost every manufactured product humans consume spends some time in a container. Containerization is an important element of the innovations in logistics that revolutionized freight handling in the 20th century. Efforts to ship cargo in containers date to the 19th century. By the 1920s, railroads on several continents were carrying containers that could be transferred to trucks or ships, but these containers were invariably small by today's standards. From 1926 to 1947, the Chicago North Shore and Milwaukee Railway carried motor carrier vehicles and shippers' vehicles loaded on flatcars between Milwaukee, Wisconsin and Chicago, Illinois. Beginning in 1929, Seatrain Lines carried railroad boxcars on its sea vessels to transport goods between New York and Cuba. In the mid-1930s, the Chicago Great Western Railway and then the New Haven Railroad began "piggy-back" service (transporting highway freight trailers on flatcars) limited to their own railroads. By 1953, the CB&Q, the Chicago and Eastern Illinois and the Southern Pacific railroads had joined the innovation. Most cars were surplus flatcars equipped with new decks. By 1955, an additional 25 railroads had begun some form of piggy-back trailer service. The first vessels purpose-built to carry containers began operation in Denmark in 1951. Ships began carrying containers between Seattle and Alaska in 1951. The worlds first truly intermodal container system used purpose-built container ship the Clifford J. Rodgers built in Montreal in 1955 and owned by the White Pass and Yukon Route. Its first trip carried

600 containers between North Vancouver, British Columbia and Skagway, Alaska on November 26, 1955; in Skagway, the containers were unloaded to purpose-built railroad cars for transport north to the Yukon, in the first intermodal service using trucks, ships and railroad cars. Southbound containers were loaded by shippers in the Yukon, moved by truck, rail, ship and truck to their consignees, without opening. This first intermodal system operated from November 1955 for many years. The U.S. container shipping industry dates to 1956, when trucking entrepreneur Malcom McLean put 58 containers aboard a refitted tanker ship, the "Ideal-X," and sailed them from Newark to Houston. What was new about McLean's innovation was the idea of using large containers that were never opened in transit between shipper and consignee and that were transferable on an intermodal basis, among trucks, ships and railroad cars. McLean had initially favored the construction of "trailerships" - taking trailers from large trucks and stowing them in a ship’s cargo hold. This method of stowage, referred to as roll-on/roll-off, was not adopted because of the large waste in potential cargo space onboard the vessel, known as broken stowage. Instead, he modified his original concept into loading just the containers, not the chassis, onto the ships, hence the designation container ship or "box" ship.See also pantechnicon van and trolley and lift van. During the first twenty years of growth containerization meant using completely different, and incompatible, container sizes and corner fittings from one country to another. There were dozens of incompatible container systems in the U.S. alone. Among the biggest operators, the Matson Navigation Company had a fleet of 24-foot containers while Sea-Land Service, Inc used 35-foot containers. The standard sizes and fitting and reinforcement norms that exist now evolved out of a series of compromises between international shipping companies, European railroads, U.S. railroads, and U.S. trucking companies. The bulk of the discussions occurred in the late 1960s and the first draft of the resulting ISO standards were prepared for publication in 1970. A social cost arises as a result of the high cost of trasporting the empty containers back to the original shipping point by agents. This cost, often greater than that of containers themselves, results in large areas in ports and warehouses to be occupied by empty containers left when at the destination. In 2004 in the US this has ironically generated a contest addressed to those

but did not anticipate that containerization might make it cheaper to import such goods from abroad. but did not predict that the process of containerization itself would have some influence on producers and the extent of trading. As of 2005. 396 m long. . In the 1950s.500 TEU ("Emma Mærsk". 26% of all containers originate from China. It has even been predicted that. Most economic studies of containerization merely assumed that shipping companies would begin to replace older forms of transportation with containerization. There are ships that can carry over 14. few initially foresaw the extent of the influence containerization would bring to the shipping industry. containerization grew despite the unfavorable regulatory structure of the 1960s. Containerization has revolutionized cargo shipping. at first. at some point. But the United States' present fully integrated systems became possible only after the Interstate Commerce Commission's regulatory oversight was cut back (and later abolished in 1995). container ships will be constrained in size only by the Straits of Malacca—one of the world's busiest shipping lanes—linking the Indian Ocean to the Pacific Ocean. some 18 million total containers make over 200 million trips per year. Harvard University economist Benjamin Chinitz predicted that containerization would benefit New York by allowing it to ship industrial goods produced there more cheaply to the Southern United States than other areas. However. This so-called Malaccamax size constrains a ship to dimensions of 470 m in length and 60 m wide (1542 feet * 197 feet). Today.that present the best project for alternative use of these abandoned containers. trucking and rail were deregulated in the 1970s and maritime rates were deregulated in 1984. In the United States. launched August 2006). approximately 90% of non-bulk cargo worldwide moves by containers stacked on transport ships.

The use of container trains in all these countries makes trans-shipment between different gauge trains easier. Use of the same basic sizes of containers across the globe has lessened the problems caused by incompatible rail gauge sizes in different countries. Loss at sea of ISO Containers Containers occasionally fall from the ships that carry them. Bowen Exports and Theiler & Sons Goods. For instance. The cargo is not visible to the casual viewer and thus is less likely to be stolen and the doors of the containers are generally sealed so that tampering is more evident.A converted container used as an office at a building site. gradually forcing removable truck bodies or swap bodies into the standard sizes and shapes (though without the strength needed to be stacked). and changing completely the worldwide use of freight pallets that fit into ISO containers or into commercial vehicles. something that occurs an estimated 2. Finland and Spain use broader gauges while other many countries in Africa and South America use narrower gauges on their networks. Improved cargo security is also an important benefit of containerization. Some of the largest global companies containerizing containers today are Patrick Global Shipping. The widespread use of ISO standard containers has driven modifications in other freight-moving standards. This has reduced the "falling off the truck" syndrome that long plagued the shipping industry.435 mm (4 ft 8½ in) gauge track known as standard gauge but many countries like Russia. on .000 times each year.000 to 10. with automatic or semi-automatic equipment. LLC. The majority of the rail networks in the world operate on a 1.

This usually precludes operation of double-stacked wagons on lines with overhead electric wiring (exception: Betuweroute). Most flatcars cannot carry more than one standard 40 foot container. making them a shipping hazard that is difficult to detect. Containers lost at sea do not necessarily sink.November 30. 2006. a container washed ashore on the Outer Banks of North Carolina. but seldom float very high out of the water. along with thousands of bags of its cargo of tortilla chips. but if the rail line has been built with sufficient vertical clearance. A railroad car with a 20' tank container and a conventional 20' container. Freight from lost containers has provided oceanographers with unexpected opportunities to track global ocean currents. Double-stack containerization Part of a United States double-stack container train loaded with 53 ft (16. It saved shippers money and now accounts for almost 70 percent of intermodal . Double stacking has been used in North America since American President Lines introduced this "double stack" principle under the name of "Stacktrain" rail service in 1984.2 m) containers. a well car can accept a container and still leave enough clearance for another container on top.

heavy machinery Open side for loading oversize pallet Flushfolding flat-rack containers for heavy and bulky semi-finished goods. drums in standard. out of gauge cargo Platform or bolster for barrels and drums. cartons. first January 2006 Company TEU capacity Market Share 18. ISO Container types Various container types are available for different needs:[5] general purpose dry van for boxes. bales.665. Moller-Maersk Group 1. in part due to the generous vertical clearances used by US railroads. pallets.272 . high or half height High cube palletwide containers for europallet compatibility Temperature controlled from -25°c to +25°c reefer Open top bulktainers for bulk minerals.P. crates. cases.2% Number of ships 549 A. cable drums. sacks. out of gauge cargo.freight transport shipments in the United States. machinery. and processed timber Ventilated containers for organic products requiring ventilation Tank containers for bulk liquids and dangerous goods Rolling floor for difficult to handle cargo Biggest ISO container companies Top 10 container shipping companies in order of TEU capacity.

911 412.3% 299 256 153 140 111 99 145 118 105 China Shipping Container 346.890 507. This optimization software calculates the best spatial position of each item withing such constraints as stackability and crush resistance.954 477.794 322.A.5% 3. This may be planned by software modules in a warehouse management system.2% 4.5% 3.344 8.437 Hanjin-Senator COSCO NYK Line 328.326 302. .6% 5.8% 3.6% 3.6% 3.6% 5.213 Other container systems Haus-zu-Haus (Germany) RACE (container) (Australia) Determining the best carton.Mediterranean Shipping Company S. box or pallet While the creation of the best container for shipping of newly created product is called "Containerization".493 Lines American President Lines 331. CMA CGM Evergreen Marine Corporation Hapag-Lloyd 865. the term also applies to determining the right box and the best placement inside that box in order fulfillment.

with little or no storage in between. Crossdocking is used to decrease inventory storage by streamlining the flow between the supplier and the manufacturer.particularly when a single corporate customer has many multiple branches or using points . Factors influencing the use of cross-docks Customer and supplier geography -. Typical applications "Hub and spoke" arrangements. where a variety of smaller shipments are combined into one larger shipment for economy of transport Deconsolidation arrangements. If the staging takes hours or a day the operation is usually referred to as a "cross-dock" distribution center. with minimal or no warehousing. In purest form this is done directly. This may be done to change type of conveyance. railcar lots) are broken down into smaller lots for ease of delivery. consolidated. or to combine material from different origins. where large shipments (e. where materials are brought in to one central location and then sorted for delivery to a variety of destinations Consolidation arrangements.3. If it takes several days or even weeks the operation is usually considered a warehouse.CROSS DOCKING Cross-docking is a practice in logistics of unloading materials from an incoming semi-trailer truck or rail car and loading these materials in outbound trailers or rail cars. and stored until the outbound shipment is complete and ready to ship.g. In practice many "cross-docking" operations require large staging areas where inbound materials are sorted. or to sort material intended for different destinations.

and promotion. DISTRIBUTION Distribution is one of the four aspects of marketing. The distributor then sells the product to retailers or customers. Traditionally. The other three parts of the marketing mix are product management. After a product is manufactured it is typically shipped (and usually sold) to a distributor. distribution has been seen as dealing with logistics: how to get the product or service to the customer.Freight costs for the commodities being transported Cost of inventory in transit Complexity of loads Handling methods Logistics software integration between supplier(s). and shipper Tracking of inventory in transit 6. A distributor is the middleman between the manufacturer and retailer. pricing. It must answer questions such as: Should the product be sold through a retailer? Should the product be distributed through wholesale? Should multi-level marketing channels be used? How long should the channel be (how many members)? Where should the product or service be available? When should the product or service be available? Should distribution be exclusive. vendor. selective or extensive? Who should control the channel (referred to as the channel captain)? .

Channels A number of alternate 'channels' of distribution may be available: Selling direct. who sells to retailers Retailer (also called dealer). Internet and telephone sales Agent. may sell their services (typically rooms) directly or through . each passing the product down the chain to the next organization. along with those of the all-important end-user. before it finally reaches the consumer or end-user. such as via mail order. who sells to end customers Advertisement typically used for consumption goods Distribution channels may not be restricted to physical products alone.' Each of the elements in these chains will have their own specific needs. They may be just as important for moving a service from producer to consumer in certain sectors.Should channel relationships be informal or contractual? Should channel members share advertising (referred to as co-op ads)? Should electronic methods of distribution be used? Are there physical distribution and logistical issues to deal with? What will it cost to keep an inventory of products on store shelves and in channel warehouses (referred to as filling the pipeline)? The distribution channel Frequently there may be a chain of intermediaries. since both direct and indirect channels may be used. who typically sells direct on behalf of the producer Distributor (also called wholesaler). Hotels. for example. which the producer must take into account. This process is known as the 'distribution chain' or the 'channel.

tourist boards. In addition. There has also been some evidence of service integration. Outlets such as estate agencies and building society offices are crowding out traditional grocers from major shopping areas. centralized reservation systems. neighbourhood retailers. that of direct contact with no intermediaries involved.. as the 'zero-level' agents.This is the usual. with services linking together. etc. For example. which they refer to as the `channel length'. links now exist between airlines. even for the simplest of Channel structure To the various `levels' of distribution. particularly in the travel and tourism sectors. In small markets (such as small countries) it is practical to reach the whole market using just one. widely recognized. Channel members Distribution channels can thus have a number of levels. the 'one-level' channel. airlines. there has been a significant increase in retail outlets for the service sector. The next level. is now mainly used to extend distribution to the large number of small. In Japan the chain of distribution is often complex and further levels are used. Kotler defined the simplest level. channel with a range of `middle-men' passing the goods on to the end-user. hotels and car rental services.and zero-level channels. . for industrial goods a distributor. features just one intermediary. Lancaster and Massingham also added another structural element. there has been an increase in franchising and in rental services the latter offering anything from televisions through tools. in consumer goods a retailer. For example. tour operators. the relationship between its members: 'Conventional or free-flow . There have also been some innovations in the distribution of services. say. a wholesaler for example. In large markets (such as larger countries) a second level.

To all intents and purposes. to optimize their contribution to their `customers' (the rest of the organization in general. the elements of distribution are integrated. This does not share many characteristics with other channel transactions. In some parts of certain organizations this may in fact be formalized. In . but just as practical. Indeed. as goods are transferred between separate parts of the organization at a `transfer price'. there is a form of trade-off: the cost of using intermediaries to achieve wider distribution is supposedly lower. offer a very useful parallel. is the use of `marketing' by service and administrative departments. the sale of property or a specific civil engineering project. this process can and should be viewed as a normal buyerseller relationship.A temporary `channel' may be set up for one transaction. for example. with the possible exception of the pricing mechanism itself. most consumer goods manufacturers could never justify the cost of selling direct to their consumers. In theory at least. Vertical marketing system (VMS) . the lessons of the non-profit organizations. Less obvious. or each department's. and those parts of it which deal directly with them in particular). In all of this. The internal market Many of the marketing principles and techniques which are applied to the external customers of an organization can be just as effectively applied to each subsidiary's. except by mail order. Channel Decisions Channel strategy Product (or service)<>Cost<>Consumer location Channel management The channel decision is very important.In this form. 'internal' customers.Single transaction . each one being unique. in dealing with their clients.

until the product or service arrives with the end-user. all the processes involved in that chain. the use of intermediaries (particularly at the agent and wholesaler level) can sometimes cost more than going direct. albeit very indirectly. but large companies 'do' have the choice.practice. Motivating the owners and employees of the .This is the normal pattern (in both consumer and industrial markets) where `suitable' resellers stock the product. their job is finished. Selective distribution .Only specially selected resellers (typically only one per geographical area) are allowed to sell the `product'. if he has any aspirations to be market-oriented. Yet that distribution chain is merely assuming a part of the supplier's responsibility. his job should really be extended to managing. This may involve a number of decisions on the part of the supplier: Channel membership Channel motivation Monitoring and managing channels Channel membership Intensive distribution . On the other hand. many suppliers seem to assume that once their product has been sold into the channel. The small company has no alternative but to use intermediaries. and. if the producer is large enough. for example. most of the practical decisions are concerned with control of the consumer. Exclusive distribution . However. and particularly the brand leaders in consumer goods markets) price competition may be evident. often several layers of them.Where the majority of resellers stock the `product' (with convenience products. Channel motivation It is difficult enough to motivate direct employees to provide the necessary sales and service support. Many of the theoretical arguments about channels therefore revolve around cost. into the beginning of the distribution chain.

a supplier owning its own retail outlets. where the agent's personnel. Alternative approaches are `contractual systems'. so that they are tempted to push the product. so will those of the distribution chain. covering the smaller customers and prospects. support as well as sales. they may complement a direct salesforce. or a competition is offered to the distributors' sales personnel. are trained to almost the same standard as the supplier's own staff. in particular. There are many devices for achieving such motivation. wholesalers and retailers working in one unified system. this being 'forward' integration. to tempt the owners in the channel to push the product rather than its competitors. this being 'backward' integration. This may arise because one member of the chain owns the other elements (often called `corporate systems integration'). At the other end of the spectrum is the almost symbiotic relationship that the all too rare supplier in the computer field develops with its agents. It is perhaps more likely that a retailer will own its own suppliers.producer. with agents. (For example. In practice. the furniture retailer.) The integration can also be by franchise (such as that offered by McDonald's hamburgers and Benetton clothes) or simple cooperation (in the way that Marks & Spencer co-operates with its suppliers). MFI. . owns Hygena which makes its kitchen and bedroom units. This has traditionally been the form led by manufacturers. of course. calling on the larger accounts. and `administered marketing systems' where one (dominant) member of the distribution chain uses its position to co-ordinate the other members' activities. Vertical marketing This relatively recent development integrates the channel with the original supplier . often led by a wholesale or retail co-operative. Monitoring and managing channels In much the same way that the organization's own sales and distribution activities need to be monitored and managed.independent organizations in a distribution chain requires even greater effort. many organizations use a mix of different channels. Perhaps the most usual is `bribery': the supplier offers a better margin.

malnutrition or illness can occur. very deliberately provides considerable amounts of technical assistance to its suppliers. There are three main components of food distribution: Transport infrastructure. It is arguable that it also diverts attention from the real business of the organization. airports. . such as roads. and ports. famine. During some periods of Ancient Rome. a method of distributing (or transporting) food from one place to another.The intention of vertical marketing is to give all those involved (and particularly the supplier at one end. this is less likely to revolve around marketing synergy. In general. Where it breaks down. is a very important factor in public nutrition. for example. Horizontal marketing A rather less frequent example of new approaches to channels is where two or more non-competing organizations agree on a joint venture . retailers should focus on their sales outlets rather than on manufacturing facilities ( Marks & Spencer. rail transport. Other research indicates that vertical integration is a strategy which is best pursued at the mature stage of the market (or product). vehicles. Suppliers rarely excel in retail operations and. and the retailer at the other) 'control' over the distribution chain.because it is beyond the capacity of each individual organization alone. and storage. such as refrigeration. but does not own them). in theory. warehousing. LOGISTICS IN FOOD DISTRIBUTION Food distribution. This removes one set of variables from the marketing equations. Food handling technology and regulation. At earlier stages it can actually reduce profits.a joint marketing operation . food distribution occurred with the policy of giving free bread to its citizens under the provision of a common good.

time and quality Information Logistics consists of two words . based on demand and need. Information can mean a lot of things. location. The deployed system must meet these requirements optimally. Our approach is such that information can be created and reused in a structured manner all along the value creation chain. technologies and applications for need-oriented information supply. Information logistics is concerned with the supply of information to individuals and aims to optimize it by targeted delivery in accordance with requirements in such a way that the substantively correct and actually necessary information is available where and when it is needed. also an e-mail or even the ordinary mail you receive. reduce throughput times and achieve a high degree of parallel processing. The field of information logistics aims at developing concepts. In a simplified sense is a newsletter information logistics. as they have to fulfil user needs with respect to content. it is exactly logistics of information.information and logistics. The goal of information logistics is to optimize the content and format of the information. an overall product tree and a graphic design concept.Adequate source and supply logistics. in order to aid custom processing of it. but usually is text (syntax with a semantic meaning) and logistics which is the transportation of sth from point A to point B. Information logistics In general. This requires the use of an information model. . depending on the communication media and users' preferences. This information should be transformed in line with users' needs. Information is created throughout the entire product creation process. Information-ondemand services are a typical application area for information logistics.

by sector or area of application). A related term is Kaizen which is an approach to productivity improvement literally meaning "continuous impr History of JIT . quality. The customer can simply navigate through the information. or Kanban . and efficiency.The result is automated configuration of fully scalable information for a wide variety of target group perspectives (e. the firm could deplete inventory and cause customer service issues. The process is driven by a series of signals. JIT can lead to dramatic improvements in a manufacturing organization's return on investment. JUST IN TIME CONCEPT Just In Time (JIT) is an inventory strategy implemented to improve the return on investment of a business by reducing in-process inventory and its associated costs. The information and documentation creation process is made easier. such as the presence or absence of a part on a shelf.g. 7. Kanban are usually simple visual signals. that tell production processes to make the next part. safer and more efficient. If demand rises above the historical average planning duration demand. This saves warehouse space and costs. When implemented correctly. one drawback of the JIT system is that the re-order level is determined by historical demand. However. In recent years manufacturers have touted a trailing 13 week average as a better predictor than most forecastors could provide. New stock is ordered when stock reaches the re-order level. Forecasted shifts in demand should be planned for around the Kanban until trends can be established to reset the appropriate Kanban level. To meet a 95% service rate a firm must carry about 2 standard deviations of demand in safety stock.

Japanese corporations cannot afford large amounts of land to warehouse finished products and parts. The technique was subsequently adopted and publicised by Toyota Motor Corporation of Japan as part of its Toyota Production System (TPS). Toyota was one of the first to apply flexible robotic systems for these tasks. The number and types of fasteners were reduced in order to standardize assembly steps and tools. At the same time. examined accounting assumptions and realized that another method was possible. Toyota engineers then determined that the remaining critical bottleneck in the retooling process was the time required to change the stamping dies used for body parts. these were usually installed one at a time by a team of experts. die change times fell to about half an hour. Almost immediately. developed by Shigeo Shingo. Toyota engineers redesigned car models for commonality of tooling for such production processes as paint-spraying and welding. In some cases. reducing the overhead costs of retooling and reducing the economic lot size to the available warehouse space. quality of the .) The undesirable result was poor return on investment for a factory. Before the 1950s. identical subassemblies could be used in several models. Some of the changes were as simple as standardizing the hole sizes used to hang parts on hooks. The concept needed an effective freight management system (FMS). measurements were substituted for adjustments. using crowbars and wrenches. so that the line was down for several weeks. The chief engineer at Toyota in the 1950s. Toyota implemented a strategy called Single Minute Exchange of Die (SMED). Over a period of several years. (An economic lot size is the number of identical products that should be produced. It sometimes took as long as several days to install a large (multiton) die set and adjust it for acceptable quality. These were adjusted by hand. this was thought to be a disadvantage because it reduced the economic lot size. Ford's Today and Tomorrow (1926) describes one. The factory could be made more flexible.The technique was first used by the Ford Motor Company This describes the concept of "dock to factory floor" in which incoming materials are not even stored or warehoused before going into production. With very simple fixtures. given the cost of changing the production process over to another product. Further. Taiichi Ohno.

In the JIT inventory philosophy there are views with respect to how inventory is looked upon. contrary to traditional thinking. apparently from nowhere. Dies were changed in a ripple through the factory as a new product began flowing. economic lot sizes fell to as little as one vehicle in some Toyota plants. After SMED. at the right place. A huge amount of cash appeared. the just-in-time inventory system is all about having “the right material. These problems include backups at work centres. businesses are encouraged to eliminate inventory that doesn’t add value to the product. The ideas in this philosophy come from many different disciplines including. industrial engineering. it sees inventory as a sign of sub par management as it is simply there to hide problems within the production system. Inventory is seen as incurring costs instead of adding value. Under the philosophy.stampings became controlled by a written recipe. Secondly. statistics. that was used as a signal to produce or order a replacement. reducing the skill required for the change. and the main principle behind JIT. what it says about the management within the company. and in the exact amount. production management and behavioral science. Procedural changes (such as moving the new die in place with the line in operation) and dedicated tool-racks reduced the die-change times to as little as 40 seconds. lack of flexibility for employees and equipment. at the right time. Analysis showed that the remaining time was used to search for hand tools and move dies. and inadequate capacity among other things. When a part disappeared.” Effects Some of the results at Toyota were unexpected. as in-process inventory was built out . In short. it has a whole philosophy that the company must follow. Philosophy Just-in-time (JIT) inventory systems are not just a simple method that a company has to buy in to. Carrying the process into parts-storage made it possible to store as little as one part in each assembly station.

Toyota had to test and train suppliers of parts in order to assure quality and delivery. the rate had fallen to a few line stops per day. every part had to fit perfectly. the entire production line had to be slowed or even stopped. This dramatically improved the company's return on equity by eliminating a major source of risk. it meant eliminating one or all of the warehouses in the link between a factory and a retail establishment.and sold. But by the end of the first month. This improved customer satisfaction by providing vehicles usually within a day or two of the minimum economic shipping delay. In the first week. After six months. while simultaneously implementing careful statistical controls. (See Total Quality Management). In the commercial sector. Toyota redesigned every part of its vehicles to eliminate or widen tolerances. Many people in Toyota confidently predicted that the initiative would be abandoned for this reason. No inventory meant that a line could not operate from in-process inventory while a production problem was fixed. Another surprising effect was that the response time of the factory fell to about a day. This by itself generated tremendous enthusiasm in upper management. The Just in Time philosophy was also applied to other segments of the supply chain in several types of industries. that permitted any worker on the production line to order a line stop for a process or quality problem. . The result was a severe quality assurance crisis. Even with this. the company eliminated multiple suppliers. many vehicles began to be built to order. When a process problem or bad parts surfaced on the production line. In some cases. Since assemblers no longer had a choice of which part to use. and a dramatic improvement in product quality. and has since been widely emulated. line stops fell to a few per week. Eventually. Also. line stops occurred almost hourly. line stops had so little economic effect that Toyota installed an overhead pull-line. completely eliminating the risk they would not be sold. similar to a bus bell-pull. The result was a factory that became the envy of the industrialized world.

Better consistency of scheduling and consistency of employee work hours. Having management focused on meeting . Set up times are significantly reduced in the warehouse. Cutting down the set up time to be more productive will allow the company to improve their bottom line to look more efficient and focus time spent on other areas that may need improvement. This can save the company money by not having to pay workers for a job not completed or could have them focus on other jobs around the warehouse that would not necessarily be done on a normal day. Supplies continue around the clock keeping workers productive and businesses focused on turnover.Benefits As most companies use an inventory system best suited for their company. No company wants a break in their inventory system that would create a shortage of supplies while not having inventory sit on shelves. Increased emphasis on supplier relationships. Having employees trained to work on different parts of the inventory cycle system will allow companies to use workers in situations where they are needed when there is a shortage of workers and a high demand for a particular product. workers don’t have to be working. Having a trusting supplier relationship means that you can rely on goods being there when you need them in order to satisfy the company and keep the company name in good standing with the public. Employees who possess multiple skills are utilized more efficiently. the Just-In-Time Inventory System (JIT) can have many benefits resulting from it. The main benefits of JIT are listed below. Having employees focused on specific areas of the system will allow them to process goods faster instead of having them vulnerable to fatigue from doing too many jobs at once and simplifies the tasks at hand. The flows of goods from warehouse to shelves are improved. If there is no demand for a product at the time.

a strong. Thus. long-term relationship with a few suppliers is preferred to short-term. The same is true of most raw materials. none of them followed this logically all the way back through the processes to the raw materials. it would ultimately be desirable to introduce flow and JIT all the way back through the supply stream. an ear of corn cannot be grown and delivered to order . With shipments coming in sometimes several times per day. With present technology. Just In Time is a means to improving performance of the system. which must be discovered and/or grown through natural processes that require time and must account for natural variability in weather and discovery. Toyota is especially susceptible to an interruption in the flow. this was seen as a feature rather than a bug by Ohno. In part. However. not an end. who used the analogy of lowering the level of water in a river in order to expose the rocks to explain how removing inventory showed where flow of production was interrupted. since Toyota also makes a point of maintaining high quality relations with its entire supplier network. For that reason. Problems Within a JIT System The major problem with Just In Time operation is that it leaves the supplier and downstream consumers open to supply shocks. However. . As noted in Liker (2003). Within a raw material stream As noted by Liker (2003) and Womack and Jones (2003). since one of the main barriers was rework. promotion or even higher pay.deadlines will make employees work hard to meet the company goals to see benefits in terms of job satisfaction. lowering inventory forced each shop to improve its own quality or cause a holdup in the next downstream area. there was an exception to this rule that put the entire company at risk by the 1997 Aisin fire. Toyota is careful to use two suppliers for most assemblies. price-based relationships with competing suppliers. Once the barriers were exposed. several suppliers immediately took up production of the Aisin-built parts by using existing capability and documentation. they could be removed. for example.

903 bbls to 208.000 bbls. and a large number of oil production and transfer facilities.000 thousand bbls. JIT calls for a reduction in inventory capacity. JIT students and even oil & gas industry analysts question whether JIT as it has been developed by Ohno.017 thousand bbls in 1997. resulting in the loss of 20% of the US domestic refinery output. The GDP figures for the third and fourth quarters showed a slowdown from 3.331 to 222. and others is used by the petroleum industry. Stocks fluctuate seasonally by as much as 20. stocks never fell below 194. Beside the obvious point that prices went up because of the reduction in supply and not for anything to do with the practice of JIT. JIT has never subscribed to such considerations directly. Katrina caused the shutdown of 9 refineries in Louisiana and 6 more in Mississippi. this ROI-based thinking conforms more to Brown-style accounting and Sloan management. During the 2005 hurricane season. and here (1996)). here (1996).2% growth.986 (Energy Information Administration data). the annual average stocks of gasoline have fallen by only 8. including opportunity costs. while the low for the period 1990 to 2006 was 187. The argument is presented as follows: The number of refineries in the United States has fallen from 279 in 1975 to 205 in 1990 and further to 149 in 2004. Rita subsequently shut down refineries in Texas.5% from 228. . the industry is susceptible to supply shocks. The effects of hurricanes Katrina and Rita are given as an example: in 2005.Oil It has been frequently charged that the oil industry has been influenced by JIT (see here (2004). Further. and more significantly. the plant may be economically inefficient. As a result. which cause spikes in prices and subsequently reduction in domestic manufacturing output. Companies routinely shut down facilities for reasons other than the application of JIT. it hasn't been drastically reduced as JIT practitioners would prefer. One of those reasons may be economic rationalization: when the benefits of operating no longer outweigh the costs. Similar arguments were made in earlier crises.5% to 1. not production capacity. Goldratt. This shows that while industry storage capacity has decreased in the last 30 years. following Waddel and Bodek (2005). From 1975 to 1990 to 2005. further reducing output.

the Oil & Gas Journal claimed that "casually adopting popular business terminology that doesn't apply" had provided a "rhetorical bogey" to industry critics. they confirmed that "It also happens not to be accurate. the annual number of orders placed is D / Q. times the cost per order. the average inventory times the carrying cost per unit. In Waguespack and Cantor (1996)." Theory Consider a (highly) simplified mathematical model of the ordering process. Specifically. They find that a large part of the shift came about because of the availability of short-haul crudes from Latin America. Confessing that they had been as guilty as other media sources.Finally. In the follow-up editorial. The second cost is the cost of placing orders. but the changes in inventories in the oil industry exhibit none of those tendencies. given by D * K / Q. which arrives instantly. K. Also. the relationships remain cost-driven among many competing suppliers rather than qualitybased among a select few long-term relationships. D / Q. as shown in a pair of articles in the Oil & Gas Journal.e. which is given by Q * kc / 2. JIT does not seem to have been a goal of the industry. We assume that demand is constant and that the company runs down the stock to zero and then places an order. i. The first is the cost of carrying inventory. Hence the average stock held (the average of zero and Q. Let: K = the incremental cost of placing an order kc = the annual cost of carrying one unit of inventory D = annual demand in units Q = optimal order size in units TC = total cost over the year We want to know Q. the annual number of orders. TC consists of two components. assuming constant usage) is Q / 2. the authors point out that JIT would require a significant change in the supplier/refiner relationship. Thus total annual cost is .

Typically this refers to operations within a warehouse or distribution center. 8. We differentiate TC with respect to Q and set it equal to 0 to find the Q for minimum total cost. The theory above can be fairly easily adapted to take into account realistic features such as delays in delivery times and fluctuations in demand. but it is not appropriate if K is not small. . Both of these are usually modelled by normal distributions. giving which is known as the Economic Order Quantity or EOQ formula. The key Japanese breakthrough was to reduce K to a very low level and to resupply frequently instead of holding excess stocks.LOGISTICS AUTOMATION Logistics automation is the application of computer software and / or automated machinery to improve the efficiency of logistics operations. In practice JIT works well for many businesses. The delay in delivery. in particular. means that additional 'safety stocks' need to be held if a stockout is to be rendered very unlikely.. with broader tasks undertaken by supply chain management systems and enterprise resource planning systems.

Typically all of these will automatically identify and track containers based upon barcodes. Many also have in-built barcode scanners to allow identification of containers.g. packaging. and either through hard coded rules or data input allow destination selection. e. palletizing robots. Typically used to distribute high volumes of small cartons to a large set of locations. The focus on an individual node within a wider logistics network allows systems to be highly tailored to the requirements of that node. depalletizing. or increasingly. Typically cranes serve a rack of locations.Logistics automation systems can powerfully complement the facilities provided by these higher level computer systems. allowing many levels of stock to be stacked vertically. RFID tags Mobile technology Radio data terminals: these are hand held or truck mounted terminals which connect wirelessly to logistics automation software and provide instructions to operators moving throughout the warehouse. Components Logistics automation systems comprise a variety of hardware and software components: Fixed machinery Automated cranes (also called automated storage and retrieval systems): provide the ability to input and store a container of goods for later retrieval. and allowing far high storage densities and better space utilisation than alternatives. Conveyors: automated conveyors allow the input of containers in one area of the warehouse. comissioning and order picking. . are used for palletizing. Industrial Robots: four to six axis industrial robots. The container will later appear at the selected destination. Sortation systems: similar to conveyors but typically have higher capacity and can divert containers more quickly.

Benefits of logistics automation A typical warehouse or distribution center will receive stock of a variety of products from suppliers and store these until the receipt of orders from customers. assignment of stock to outgoing trailers. mail order). such as identification of incoming deliveries / stock and scheduling order fulfilment. Business Control software: provides higher level functionality. and where to retrieve them when requested. the goods can be scanned and thereby identified. sortation systems. and taken via conveyors. such as where to store incoming containers. Automated despatch processing: Combining knowledge of all orders placed at the warehouse the automation system can assign picked goods into despatch units and then into outbound loads. chain stores). Operational control software: provides low-level decision making. A logistics automation system may provide the following: Automated goods in processes: Incoming goods can be marked with barcodes and the automation system notified of the expected stock. retail branches (e.Software Integration software: this provides overall control of the automation machinery and for instance allows cranes to be connected up to conveyors for seamless stock movements. or other companies (e. and automated cranes into an automatically assigned storage location. whether individual buyers (e. On arrival. the automation system is able to immediately locate goods and retrieve them to a pickface location.g.g. Automated Goods Retrieval for Orders: On receipt of orders. . Sortation systems and conveyors can then move these onto the outgoing trailers.g. wholesalers).

and is utilized extensively in the "Supply Chain for Liquids" discipline. which simply use cranes to store and retrieve identified cases or pallets. LIQUID LOGISTICS Liquid Logistics is a special category of logistics that relates to liquid products.A complete warehouse automation system can drastically reduce the workforce required to run a facility. assistance can be provided with equipment such as pick-to-light units. 9. Standard logistics techniques are generally used for discrete or unit products. such as picking units of product from a bulk packed case. with human input required only for a few tasks. typically into a highbay storage system which would be unfeasible to access using fork-lift trucks or any other means. Smaller systems may only be required to handle part of the process. Even here. Examples include automated storage and retrieval systems. Some of the major characteristics of liquid products that impact their logistics handling are: Liquids flowing from a higher level to a lower level provide the ability to move the liquids without mechanical propulsion or manual intervention Liquids’ adaptation to the shape of the container they are in provides a great deal of flexibility in the design of storage systems and the use of “dead” space for storage The level of a liquid as it has settled in a tank may be used to automatically and continuously know the quantity of liquid in the tank Liquids provide indications through changes in their characteristics that may be sensed and translated into measures of the quality of the liquid . Liquid products have logistics characteristics that distinguish them from discrete products.LOGISTICS FOR DIFFERENT FIELDS.

or use liquid products. such as returns from consumers. Because its final customers are responsible for the lives and health of their patients. medical logistics is unique in that it seeks to optimize effectiveness rather than efficiency. REVERSE LOGISTICS Reverse logistics is the logistics process of removing new or used products from their initial point in a supply chain. medical supplies are the single most expensive component of health care.Many security and safety risks are significantly reduced or eliminated utilizing liquid logistics techniques Liquids may in some cases be “processed” well downstream from the original production facility and thus offer the opportunity for improved efficiencies throughout the supply stream together with more flexibility as to the nature of the product at the point of final usage. and other health and dental care providers. medical and surgical supplies. medical logistics providers are adopting supply chain management theories. move. process. When properly planned for and handled these points of differentiation may lead to business advantages for companies that produce. medical devices and equipment. over stocked inventory. nurses. Medical logistics functions comprise an important part of the health care system: after staff costs. or outdated merchandise and redistributing them using disposition management rules that will result in maximized value at . To drive costs out of the health-care sector. MEDICAL LOGISTICS Medical logistics is the logistics of pharmaceuticals. Each of these points represents a differentiation of liquid logistics from logistics techniques used for discrete items. and other products needed to support doctors.

field service and many others. A reverse logistics operation is considerably different from forward logistics. recycling. selling goods on a secondary market. after market call center support. Simply. It often requires the development of a transportation mode that is compatible with existing forward logistic system. thus saving money. It must establish convenient collection points to receive the used goods from the final customer or remove assets from the supply chain so that more efficient use of inventory / material overall can be achieved. which are often sold at second sales where those with minor flaws like improper logo print of the manufacturer or unnoticeable stitching flaws are exhibited to be sold at discounted prices. It requires packaging and storage systems that will ensure that most of the value still remaining in the used good is not lost due to careless handling. "reverse logistics" is all activity associated with a product/service after the point of sale.the end of the items original useful life. the ultimate goal to optimize or make more efficient aftermarket activity. or a combination that will yield maximum value for the assets in question. An example of Reverse Logistics: T-Shirts. recycling assets. repair. reverse fulfillment. Disposition can include returning assets into inventory pools or warehouses for storage. warehousing. refurbishment. returning goods to the original manufacturer for reimbursement. The collection of the flawed clothes from the various stores and reselling them at the Second Sales shop is an example of reverse logistics. e-waste. . Types of activity common with reverse logistics includes: logistics.

while others consider the terms to be interchangeable. conversion. In essence. The term supply chain management was coined by consultant Keith Oliver. Supply chain management is also a category of software products. which can be suppliers. . third-party service providers. and logistics management activities. The definition one America professional association put forward is that Supply Chain Management encompasses the planning and management of all activities involved in sourcing. Some experts distinguish supply chain management and logistics. intermediaries. and finished goods from point-of-origin to point-ofconsumption. and customers. Supply chain management spans all movement and storage of raw materials. workin-process inventory.CONCEPT OF SUPPLY CHAIN MANAGEMENT Supply chain management (SCM) is the process of planning. procurement. Importantly.10. implementing. and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible. it also includes coordination and collaboration with channel partners. of strategy consulting firm Booz Allen Hamilton in 1982. Supply chain event management (abbreviated as SCEM) is a consideration of all possible occurring events and factors that can cause a disruption in a supply chain. With SCEM possible scenarios can be created and solutions can be planned. Supply Chain Management integrates supply and demand management within and across companies.

Activities/Functions Supply chain management is a cross-functional approach to managing the movement of raw materials into an organization and the movement of finished goods out of the organization toward the end-consumer. As corporations strive to focus on core competencies and become more flexible. . warehouses and customers. Cross docking. thus improving inventory visibility and improving inventory velocity. direct shipment. work-in-process and finished goods. including demand signals. Supply chain execution is managing and coordinating the movement of materials information and funds across the supply chain. The flow is bidirectional. forecasts. Information: Integrate systems and processes through the supply chain to share valuable information. The purpose of supply chain management is to improve trust and collaboration among supply chain partners. they have reduced their ownership of raw materials sources and distribution channels. Less control and more supply chain partners led to the creation of supply chain management concepts. pull or push strategies. Distribution Strategy: Centralized versus decentralized. The effect has been to increase the number of companies involved in satisfying consumer demand. distribution centers. while reducing management control of daily logistics operations. These functions are increasingly being outsourced to other corporations that can perform the activities better or more cost effectively. inventory and transportation etc.Supply chain management problems Supply chain management must address the following problems: Distribution Network Configuration: Number and location of suppliers. production facilities. third party logistics. Inventory Management: Quantity and location of inventory including raw materials.

Strategic partnership with suppliers. Transportation strategy. distribution centers and facilities. including frequency. and customers. SCOR is a supply chain management model promoted by the Supply-Chain Management Council. .Several models have been proposed for understanding the activities required to manage material movements across organizational and functional boundaries. Product design coordination. locations. There to make and what to make or buy decisions Align overall organizational strategy with supply strategy Tactical Sourcing contracts and other purchasing decisions. Inventory decisions. and size of warehouses. direct shipping. and operational levels of activities. so that new and existing products can be optimally integrated into the supply chain. Another model is the SCM Model proposed by the Global Supply Chain Forum (GSCF). location. creating communication channels for critical information and operational improvements such as cross docking. load management Information Technology infrastructure. including contracting. Strategic Strategic network optimization. tactical. scheduling. and third-party logistics. and planning process definition. distributors. routes. including the number. including quantity. and quality of inventory. to support supply chain operations. Supply chain activities can be grouped into strategic. location. Production decisions. and contracting.

Production scheduling for each manufacturing facility in the supply chain (minute by minute). distribution centers. Demand planning and forecasting.In Peter Drucker's (1998) management's new paradigms. manufacturing facilities. including all fulfillment activities and transportation to customers. accounting for all constraints in the supply chain. Production operations. including the consumption of materials and flow of finished goods. including all nodes in the supply chain. including transportation from suppliers and receiving inventory. Performance tracking of all activities. Order promising. Milestone payments Operational Daily production and distribution planning. including current inventory and forecast demand. Supply Chain Management Organizations increasingly find that they must rely on effective supply chains. coordinating the demand forecast of all customers and sharing the forecast with all suppliers. Inbound operations. Sourcing planning. including all suppliers.Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise. to successfully compete in the global market and networked economy. Outbound operations. and other customers. this concept of business relationships extends beyond traditional . or networks. in collaboration with all suppliers.

following the earlier "Just-In-Time". and little is known about the coordination conditions and trade-offs that may exist among the players. joint ventures. "Virtual Corporation". Global Production Network". such a structure can be defined as "a group of semi-independent organizations. 1998). This inter-organizational supply network can be acknowledged as a new form of organization. Traditionally. the network structure fits neither "market" nor "hierarchy" categories (Powell. 1993). 1979). there have been few changes in business environment that have contributed to the development of supply chain networks. Second. It is not clear what kind of performance impacts different supply network structures could have on firms. In general. particularly the dramatic fall in information communication costs. a complex network structure can be decomposed into individual component firms (Zhang and Dilts. Therefore. the choice of internal management control structure is known to impact local firm performance (Mintzberg. Many researchers have recognized these kinds of supply network structure as a new organization form. and "Next Generation Manufacturing System". "Lean Management" and "Agile Manufacturing" practices. which collaborate in ever-changing constellations to serve one or more markets in order to achieve some business goal specific to that collaboration" (Akkermans. "Extended Enterprise". with little concern for the internal management working of other individual players. globalization. companies in a supply network concentrate on the inputs and outputs of the processes. with the complicated interactions among the players. as an outcome of globalization and proliferation of multi-national companies. In the 21st century. outsourcing and information technology have enabled many organizations such as Dell and Hewlett Packard. using terms such as "Keiretsu". However. During the past decades. From a system's point of view. .enterprise boundaries and seeks to organize entire business processes throughout a value chain of multiple companies. strategic alliances and business partnerships were found to be significant success factors. a paramount component of transaction costs. 2004). 2001). to successfully operate solid collaborative supply networks in which each specialized business partner focuses on only a few key strategic activities (Scott. has led to changes in coordination among the members of the supply chain network (Coase. each with their capabilities. technological changes. 1990). First.

According to Lambert and Cooper (2000) operating an integrated supply chain requires continuous information flows. common systems and shared information. The key supply chain processes stated by Lambert (2004) are: Customer relationship management Customer service management Demand management Order fulfillment Manufacturing flow management Supplier relationship management Product development and commercialization Returns management One could suggest other key critical supply business processes combining these processes stated by Lambert such as: . An example scenario: the purchasing department places orders as requirements become appropriate. communicates with several distributors and retailers. Shared information between supply chain partners can only be fully leveraged through process integration. which in turn assist to achieve the best product flows.Supply Chain Business Process Integration Successful SCM requires a change from managing individual functions to integrating activities into key supply chain processes. management has reached the conclusion that optimizing the product flows cannot be accomplished without implementing a process approach to the business. joint product development. Marketing. in many companies. Supply chain business process integration involves collaborative work between buyers and suppliers. and attempts to satisfy this demand. However. responding to customer demand.

and reduction times in the design cycle and product development is achieved. Also. hedging. such as electronic data interchange (EDI) and Internet linkages to transfer possible requirements more rapidly. and research to new sources or programmes. storage and handling and quality assurance. order placement. includes the responsibility to coordinate with suppliers in scheduling. It also provides the customer with real-time information on promising dates and product availability through interfaces with the company's production and distribution operations. the purchasing function develops rapid communication systems. Also. inbound transportation. supply continuity. b) Procurement process Strategic plans are developed with suppliers to support the manufacturing flow management process and development of new products. negotiation. This requires performing resource planning. sourcing should be managed on a global basis. Activities related to obtaining products and materials from outside suppliers. supply sourcing. In firms where operations extend globally. where both parties benefit.Customer service Management Procurement Product development and Commercialization Manufacturing flow management/support Physical Distribution Outsourcing/ Partnerships Performance Measurement a) Customer service management process Customer service provides the source of customer information. The desired outcome is a win-win relationship. .

Orders are processes operating on a just-in-time (JIT) basis in minimum lot sizes. and must accommodate mass customization. Also. customers and suppliers must be united into the product development process. scheduling and supporting manufacturing operations. and develop production technology in manufacturing flow to manufacture and integrate into the best supply chain flow for the product/market combination. inventory at manufacturing sites and maximum flexibility in the coordination of geographic and final assemblies postponement of physical distribution operations. In physical distribution. and time phasing of components. thus to reduce time to market. Manufacturing processes must be flexible to respond to market changes. Activities related to planning. As product life cycles shorten. the appropriate products must be developed and successfully launched in ever shorter time-schedules to remain competitive. transportation. such as work-in-process storage.c) Product development and commercialization Here. handling. e) Physical Distribution This concerns movement of a finished product/service to customers. It is also through the physical distribution process that the time and space of customer service become an . select materials and suppliers in conjunction with procurement. managers of the product development and commercialization process must: coordinate with customer relationship management to identify customerarticulated needs. the customer is the final destination of a marketing channel. According to Lambert and Cooper (2000). meaning improved responsiveness and efficiency of demand to customers. changes in the manufacturing flow process lead to shorter cycle times. and the availability of the product/service is a vital part of each channel participant's marketing effort. d) Manufacturing flow management process The manufacturing process is produced and supplies products to the distribution channels based on past forecasts.

Hence. The logic of this trend is that the company will increasingly focus on those activities in the value chain where it has a distinctive advantage and everything else it will outsource. strategic decisions need to be taken centrally with the monitoring and control of supplier performance and day-to-day liaison with logistics partners being best managed at a local level.integral part of marketing. This movement has been particularly evident in logistics where the provision of transport. and . retailers). to manage and control this network of partners and suppliers requires a blend of both central and local involvement.g. As logistics competency becomes a more critical factor in creating and maintaining competitive advantage. warehousing and inventory control is increasingly subcontracted to specialists or logistics partners. links manufacturers. thus it links a marketing channel with its customers (e. but also outsourcing of services that traditionally have been provided inhouse. Kearney Consultants (1985) noted that firms engaging in comprehensive performance measurement realized improvements in overall productivity. According to experts internal measures are generally collected and analyzed by the firm including Cost Customer Service Productivity measures Asset measurement. Also. By taking advantage of supplier capabilities and emphasizing a long-term supply chain perspective in customer relationships can be both correlated with firm performance. A. g) Performance Measurement Experts found a strong relationship from the largest arcs of supplier and customer integration to market share and profitability.T. f) Outsourcing/Partnerships This is not just outsourcing the procurement of materials and components. wholesalers. logistics measurement becomes increasingly important because the difference between profitable and unprofitable operations becomes more narrow.

Houlihan. Components of Supply Chain Management are 1. Consequently. External performance measurement is examined through customer perception measures and "best practice" benchmarking. adding more management components or increasing the level of each component can increase the level of integration of the business process link. and SCM suggests various possible components that must receive managerial attention when managing supply relationships. ranging from low to high. and includes 1) Customer perception measurement.Quality. 1990. Postponement 3. Standardisation 2. of components added to the link (Ellram and Cooper. The level of integration and management of a business process link is a function of the number and level. 1985). Lambert and Cooper (2000) identified the following components which are: Planning and control Work structure Organization structure Product flow facility structure Information flow facility structure Management methods Power and leadership structure . Customisation Supply Chain Management Components Integration The management components of SCM The SCM management components are the third element of the four-square circulation framework. buyer-supplier relationships. and 2) Best practice benchmarking. The literature on business process reengineering.

For Product Development and Commercialization: Includes the primary level component of Product Data Management (PDM). 1996). is a business that participates in channel relationships by performing essential services for primary participants. Lambert and Cooper's framework of supply chain components. 93). and secondary level components such as market share. 1996). a more careful examination of the existing literature will lead us to a more comprehensive structure of what should be the key critical supply chain components. that is what supply chain components should be viewed as primary or secondary. and how should these components be structured in order to have a more comprehensive supply chain structure and to examine the supply chain as an integrative one . and returns to stakeholders. p. Also. that is what kind of relationship the components may have that are related with suppliers and customers accordingly. customer satisfaction.g. Manufacturing support and Procurement: Includes the primary level component of Enterprise Resource Planning . A primary level channel participant is a business that is willing to participate in the inventory ownership responsibility or assume other aspects financial risk. 1996. For Customer Service Management: Includes the primary level component of customer relationship management. and secondary level components such as benchmarking and order fulfillment. A secondary level participant (specialized).Risk and reward structure Culture and attitude However. does not lead us to the conclusion about what are the primary or secondary (specialized) level supply chain components ( see Bowersox and Closs. which are supporting the primary ones. thus including secondary level components. profit margins. that will support the primary level channel participants. For Physical Distribution. and which are the fundamental branches of the secondary level components. third level channel participants and components may be included. the "branches" of the previous identified supply chain business processes. Consequently. thus including primary level components (Bowersox and Closs. Bowersox and Closs states that the emphasis on cooperation represents the synergism leading to the highest level of joint achievement (Bowersox and Closs.

which are a) planning and Coordination flows. and b)operational requirements. customer profitability analysis (CPA). pick and pack. Types of 3PL providers Hertz. manufacturing planning. In general. They would perform activities such as.CONCEPT OF 3PL For Outsourcing: This includes the primary level component of management methods and the company's cutting-edge strategy and its vital strategic objectives that the company will identify and adopt for particular strategic initiatives in key the areas of technology information. Secondary level components may include four types of measurement such as: variation.(ERP). warehousing. in accordance with these secondary level components total cost analysis (TCA). and logistics (secondary level components). with secondary level components such as warehouse management. and Asset management could be concerned as well. 11. direction. More specifically. information flow facility structure is regarded by two important requirements. which is correlated with the information flow facility structure within the organization. manufacturing capabilities. decision and policy measurements. and postponement (order management). and Alfredsson (2003) describe four categories of 3PL providers: Standard 3PL provider: this is the most basic form of a 3PL provider. material management. For Performance Measurement: This includes the primary level component of logistics performance measurement. personnel management. A third-party logistics provider (abbreviated 3PL) is a firm that provides outsourced or "third party" logistics services to companies for part or sometimes all of their supply chain management function. Third party logistics providers typically specialize in integrated warehousing and transportation services that can be scaled and customized to customer’s needs based on market conditions and the demands and delivery service requirements for their products and materials. and . operations.

The 3PL provider improves the logistics dramatically. vehicles. this type of provider must show its customers a benefit in financial and operational terms by leveraging exceptional expertise and ability in the areas of operations. Service developer: this type of 3PL provider will offer their customers advanced value-added services such as: tracking and tracing. the 3PL function is not their main activity. These are often leased on terms equalling those of the 3PL contract minimising liability to capital expenditure. The customer developer: this is the highest level that a 3PL provider can attain with respect to its processes and activities. and auditing. and customer service in a way that complements its customers' preexisting physical assets. but will perform extensive and detailed tasks for them. For a majority of these firms. The customer adapter: this type of 3PL provider comes in at the request of the customer and essentially takes over complete control of the company’s logistics activities. specific packaging. A solid IT foundation and a focus on economies of scale and scope will enable this type of 3PL provider to perform these types of tasks. The customer base for this type of 3PL provider is typically quite small. Non Asset-based Logistics Providers This 3PL performs duties such as quoting. but do not develop a new service. booking.distribution (business) – the most basic functions of logistics. negotiations. CASE STUDY India Logistics Industry: $125 Billion Goldmine (DATAMONITOR REPORT) . These providers will have few customers. routing. but doesn't need to own warehousing facilities. or providing a unique security system. or aircraft. This occurs when the 3PL provider integrates itself with the customer and takes over their entire logistics function. cross-docking. To be useful.

Delhi." added Praveen Ojha. Bangalore. and development of organized retail and agri-processing industries".India's third-party logistics (3PL) market is all set to experience a period of explosive organic growth. which provides multiple tactical logistics services for use by customers as opposed to the respective company having a business unit in-house to oversee its supply chain and transportation of goods. With increased geographical distribution of incomes in India. With India's gross domestic profit (GDP) growing at over 9% per year and the manufacturing sector enjoying double digit growth rates. and telecom will lead to increased market opportunities for providers of 3PL in India. Chennai and Hyderabad. the consumer markets are extending beyond the five metros of Mumbai. Logistics analyst. India will have to work on such systemic inefficiencies. judging by independent market analyst Data monitor’s latest research. the logistics cost of the Indian economy is over 13% of GDP. "In addition. retail. compared to less than 10% of GDP in almost the entire Western Europe and North America. the increased competition across industry verticals is forcing firms to focus on . say Praveen Ojha. "As leading manufacturers realign their global portfolios of manufacturing locations. strong foreign direct investment inflows (FDI) in automotive. electronics. and is expected to reach a market size of over $125 billion in year 2010. However." predicts high double-digit growth rates for both outsourced and contract logistics in India. Data monitor and author of the study. As such. The Data monitor report. the companies are only following with new distribution outlets. the Indian logistics industry is at an inflection point. as a result of the under-developed trade and logistics infrastructure. Consumer markets to lead growth in outsourced logistics 3PL/outsourced logistics is the outsourcing of a company's logistics operations to a specialized firm. capital goods. "India Logistics Outlook 2007." However. phased introduction of value-added-tax (VAT). "Strong growth enablers exist in India today in the form of over $300 billion worth of infrastructure investments. rather than being pre-emptive. in order to attract and retain long-term real investments.

Realizing the potential in the contract logistics market. The freight forwarding segment is also represented by thousands of small customs brokers and clearing & forwarding agents. who cater to local cargo requirements. a strong indicator of both 3PLs desiring to become integrated service providers and the industry enjoying investmentdriven growth. Furthermore. 3PL service providers are expanding their basket of services as companies are now looking for more than just transportation of their products and raw materials. According to Data monitor. is slated to grow at a compound annual growth rate (CAGR) of over 16% from 2007-10. Inland Container Depots (ICD) and container trains. and logistics outsourcing is gaining further momentum with this. freight forwarders are moving towards owning assets in the form of Container Freight Stations (CFS). the logistics industry in India is currently hampered due to poor infrastructure such as roads (over 70 % of freight transportation in India is via roads). ports and complex regulatory structures. Trucking and courier companies are now leveraging their network to provide express distribution and warehousing. at just above one-quarter of the entire $90 billion Indian logistics market. As per the investment plans of the leading 3PLs in India. In order to reduce logistics costs and focus on core competencies. The fragmented industry structure: Opportunity for 3PL integrators The Indian logistics industry is characterized by dominance of a disorganized market. 3PLs are also increasing investments to become end-to-end integrated players. the logistics industry's capital expenditure is progressively increasing to almost match its revenue growth. communication. outsourced logistics. Transporters with fleets smaller than five trucks account for over two-thirds of the total trucks owned and operated in India and make up 80% of revenues. Similarly. Indian companies across verticals are now increasingly seeking and using the services of third-party logistics service providers (3PLs).product distribution. Infrastructure congestion: the key challenge According to Data monitor. .

the twelve major ports of India handle volumes higher than their full capacity. VAT. Praveen Ojha concluded: "With the collective economic interaction of growing per capita disposable incomes. Phased introduction of VAT . putting enormous pressure on the highway infrastructure. both India's logistics industry and the 3PL sector of this market are set to witness explosive growth in the next five years. but handle over 40% of the national road freight traffic. In addition. fast growing manufacturing and organized retailing sectors. Given the current thrust on infrastructure investments in India. The agency provides supplies to the .The National Highways (NH) form only 2% of the entire road network in India. is likely to enhance the efficiency of the logistics industry in India. increasing external merchandise trade. resulting in pre-berthing delays and longer ship turn-around time compared to even the East Asian counterparts like China and South Korea. which is expected to replace a plethora of state and central government taxes. infrastructure investments by the government and 3PL capex plans.000 civilian and military personnel throughout the world. Also. the implementation of VAT is likely to boost the efficiency for these stakeholders by lowering transit times and the associated paper work." CASE STUDY DEFENCE LOGISTICS AGENCY The Defense Logistics Agency (DLA) is the largest agency in the United States Department of Defense. with about 22. on an average a commercial vehicle in India runs at a speed of 20 miles per hour (mph) compared to over 60 mph in the mature logistics markets of Western Europe and the USA.A supply chain boon The amount of time spent in complying with inter state tax requirements and at transport check points affects the cost and competitiveness of both 3PL providers as well as their customers.

which began to reorganize these major supply categories into joint procurement agencies. a presidential commission headed by former President Herbert Hoover. Since its founding in 1961. transportation. It has been a full partner with the military services in helping to fuel the Cold War. and in the Defense Cataloging and Standardization Act of 1952. in 1949. there were seven supply systems in the Army. Congress became disenchanted with the board. Passage of the National Security Act of 1947 prompted new efforts to eliminate duplication and overlap among the services in the supply area and laid the foundation for the eventual creation of a single integrated supply agency.military services and supports their acquisition of weapons and other materiel. clothing. including the quartermaster of the Marine Corps. plus an Air Technical Service Command. the call grew louder for more complete coordination throughout the whole field of supply . It has also provided crucial relief to victims of natural disasters and humanitarian aid to those in need. transferred the board’s functions to a new . The main offices of the Army and Navy for each commodity were collocated. and other commodities.including storage. History Origins of DLA The origins of the Defense Logistics Agency (DLA) date back to World War II when America’s huge military buildup required the rapid procurement of vast amounts of munitions and supplies. and other aspects of supply. recommended that the National Security Act be specifically amended so as to strengthen the authority of the Secretary of Defense so that he could integrate the organization and procedures of the various phases of supply in the military services. the Commission on the Organization of the Executive Branch of the Government (Hoover Commission). During the war. the military services began to coordinate more extensively when it came to procurement. medical supplies. and 18 systems in the Navy. The act created the Munitions Board. In 1947. particularly procurement of petroleum products. DLA has been an integral part of the nation's military defense. After the war. distribution. Meanwhile. The Munitions Board was not as successful as hoped in eliminating duplication among the services in the supply area.

" meaning supplies that are not repairable or are consumed in normal use. Early History. The military services feared that such an agency would be less responsive to military requirements and jeopardize the success of military operations. however. Under a Defense directive approved by the Assistant Secretary of Defense for Supply and Logistics. the second Hoover Commission recommended centralizing management of common military logistics support and introducing uniform financial management practices. stored. the Navy managed medical supplies. For the first time. petroleum. In July 1955. and industrial parts. the Korean War led to several investigations by Congress of military supply management. It also recommended that a separate and completely civilian-managed agency be created with the Defense Department to administer all military common supply and service activities. Meanwhile.Defense Supply Management Agency. The Eisenhower Reorganization Plan Number 6 (1953) abolished both this agency and the Munitions Board. which threatened to impose a common supply service on the military services from the outside. remained concerned about the Hoover Commission’s indictment of waste and inefficiencies in the military services. all the military services bought. In each category. The Army managed food and clothing. the Secretary of Defense would formally appoint one of the three service secretaries as single manager for selected group of commodities or common service activities. Consumable items. The Defense Department and the services defined the materiel that would be managed on an integrated basis as "consumables. Congress. and the Air Force managed electronic items. DoD reversed its position. the . 1941-1961 The pressure for consolidation continued. The solution proposed and approved by the Secretary of Defense was to appoint "single managers" for a selected group of common supply and service activities. Integrated management of supplies and services began in 1952 with the establishment of a joint Army-Navy-Air Force Support Center to control identification of supply items. an Assistant Secretary of Defense for Supply and Logistics. also called commodities were assigned to one military service to manage for all the services. replacing them with a single executive. To avoid having Congress take the matter away from the military entirely. and issued items using a common nomenclature.

McNamara assumed office in the spring of 1961.5 million items. The initial catalog. 1961. 1961. full of duplications and errors. Secretary McNamara announced the establishment of a separate common supply and service agency known as the Defense Supply Agency (DSA). on August 31." On March 23. or 20 percent. assigning and recording a unique identifying number. Each single manager operated under the procedures of its parent service. 1961-1977 When Secretary of Defense Robert S. under . The Defense Cataloging and Standardization Act led to the creation of the first Federal Catalog. the single manager agencies reduced their item assignments by about 9. After much debate among the service chiefs and secretaries. Over a six-year period. he convened a panel of high ranking Defense officials. Yet. was a rough draft. The single manager concept was the most significant advance toward integrated supply management within DoD or the military services since World War II. completed in 1956. Proposals were soon made to extend this concept to other commodities. and their inventories by about $800 million. the first-generation of single managers were handling roughly 39. and providing information on the item to the system’s users. Defense Supply Agency. The federal catalog system provided an organized and systematic approach for describing an item of supply. and directed them to study alternative plans for improving DOD-wide organization for integrated supply management." The committee’s report highlighted the principle weaknesses of the multiple single manager supply system. Secretary McNamara was convinced that the problem required some kind of an organizational arrangement to "manage the managers.000 items by procedures with which the Services had become familiar. but it effectively highlighted the areas where standardization was feasible and necessary. it was clear that the single manager concept. and to simplify the supply process by persuading the services to adopt the same standard items.single manager was able to reduce his investment by centralizing wholesale stocks. The new agency was formally established on October 1. and customers had to use as many sets of procedures as there were commodity managers. 1961. or 30 percent. though successful. a task designated as "Project 100. did not provide the uniform procedures that the Hoover Commission had recommended.000. containing about 3.

he moved his staff into more suitable facilities at Cameron Station in Alexandria. as did the Defense Electronic Supply Center. McNamara. (fomerly the Philadelphia Quartermster Depot).C.. A short time later. made up primarily of civilians but with military from all the services. and Defense Medical Supply Center were merged to form the Defense Personnel Support Center. Richmond. and Defense Logistics Services Center. the Defense Standardization Program. forces in .came under DSA control.500 people. Ohio. Illinois. and managed 45 facilities. On July 1. would administer the Federal Catalog Program. By July 1. Defense Traffic Management Service. By late June 1963 the agency was managing over one million different items in nine supply centers with an estimated inventory of $2.300 people and save more than $30 million each year. Virginia.C.the Defense Industrial Supply Center in Philadelphia and the Defense Automotive Supply Center in Detroit. Defense General Supply Center. Washington.. Virginia.S. McNamara. D. Ohio. the agency included 11 field organizations. it controlled six commodity-type and two service-type single managers: Defense Clothing & Textile Supply Center. and redistribution of idle equipment. Defense Construction Supply Center. Supporting U. Officials estimated that the consolidation of these functions under DSA and subsequent unified operations would allow them to reduce the workforce by 3. the Defense Utilization Program. The results far exceeded these expectations. and the Surplus Personal Property Disposal Program. The Defense Supply Agency was tested almost immediately with the Cuban missile crisis and the military buildup in Vietnam. repair. Philadelphia. Brooklyn. Chicago. The Defense Industrial Plant Equipment Center. an energetic and experienced Army logistician who had served as Quartermaster General. Defense Petroleum Supply Center. Washington. Washington. The agency. 1962. 1965. 1962. Dayton. rapidly pulled together a small staff and set up operations in the worn Munitions Building in Washington. the Defense Subsistence Supply Center. Defense Medical Supply Center. Defense Clothing Supply Center. D. Michigan . D. was established under the agency in March 1963 to handle storage. two additional single managers . Columbus. New York. D. a new activity. When the agency formally began operations on January 1.C. During the first six months. Defense Subsistence Supply Center.C. employed 16.the command of Lieutenant General Andrew T.5 billion.

thousands of portable walk-in. refrigerated storage boxes filled with perishable beef. Utah. 1964. the Defense Department consolidated most of the contract administration activities of the military services to avoid duplication of effort and provide uniform procedures in administering contracts. the agency acquired Army general depots at Columbus. and Tracy. Until the mid-1960s. on January 1. Pennsylvania. Ohio. The agency’s new contract administration mission gave it responsibility for the performance of most defense contractors. In addition to the depot mission. Officials established the Defense Contract Administration Services (DCAS) within DSA to manage the consolidated functions. Tennessee. The agency launched an accelerated procurement program to meet the extra demand created by the military buildup in Southeast Asia. The agency that had begun operations three years earlier with more than 90 percent of its resources devoted to supply operations had evolved to one almost evenly divided between supply support and logistics services. Yet. In 1965.both those awarded by DSA and by the military services. a logistics miracle. on 1 January 1963. sandbags. eggs. both canned and dehydrated. construction materials. As part of a streamlining effort. extensive test of the supply system in the young agency’s history. the agency became responsible for administering most Defense contracts . As a result of support to the operations in Vietnam. But in 1966. and Ogden. Between 1965 and 1969 over 22 million short tons of dry cargo and over 14 million short tons of bulk petroleum were transported to Vietnam. As the buildup continued in Southeast Asia. completed the DSA depot network.2 billion in fiscal year 1967. and the Navy depot at Mechanicsburg. in 1975. California. The agency’s supply centers responded in record time to orders for everything from boots and lightweight tropical uniforms to food. the services retained contract administration of state-of-the-art weapon systems. The following year. The expanded contract administration mission significantly altered the shape of DSA. the demand for food was largely for non-perishables. and petroleum products. the eleven DCAS regions were reduced to nine. Acquisition of Army depots at Memphis. DSA’s total procurement soared to $4 billion in fiscal year 1966 and $6. fresh fruits and vegetables began arriving in Vietnam. including some new weapon systems and their components.Vietnam was the most severe. officials reorganized the DCAS field .

Major revisions included a change in reporting channels directed by the Secretary of Defense which placed the agency under the management. The Defense Industrial Plant Equipment Center was . officials eliminated depot operations at the Defense Electronics Supply Center in 1979 and began stocking electronic material at depots closer to the using military activities. 1977-1990 In recognition of 16 years of growth and greatly expanded responsibilities. and distribution of coal and bulk petroleum products (1972). officials changed the name of the Defense Supply Agency to the Defense Logistics Agency (DLA). As the move to consolidate Defense contracting progressed. Michigan. the agency’s responsibilities extended overseas when it assumed responsibility for defense overseas property disposal operations and worldwide procurement. Defense Logistics Agency. on an urgent basis. Responsibilities for subsistence management were expanded in 1976 and 1977 with improvements required in the current wholesale management system and the assumption of major responsibilities in the DOD Food Service Program. In response. DSA established the Defense Property Disposal Service (later renamed the Defense Reutilization and Marketing Service) in Battle Creek. Officials published a revised agency charter in June 1978. direction. By 1977. Reserve Affairs. 1977. on September 12. management. 1972. The next decade was a period of continued change and expanded missions. and Logistics. One dramatic example of the agency’s overseas support role was during the Middle East crisis in October 1973 when it was called upon to deliver. During 1972 and 1973.structure to eliminate the intermediate command supervisory levels known as DCAS districts. as a primary-level field activity. As part of various organizational changes during this period. a congressional report in 1972 recommended centralizing the disposal of DOD property for better accountability. a wide range of vitally needed military equipment. the agency had expanded from an agency that administered a handful of single manager supply agencies to one that had a dominant role in logistics functions throughout the Defense Department. and control of the Assistant Secretary of Defense for Manpower. on January 1. and worldwide management of food items for troop feeding and in support of commissaries (1973).

g. Further implementation of reorganization recommendations. resulted from Secretary of Defense Richard Cheney’s Defense Management Review report to the President in July 1989. In response. Although DLA had received responsibility for administering most defense contracts in 1965. especially from the Goldwater-Nichols Act. 1990. It helped the agency’s mission evolve from functional concerns (e. inventory management." After the implementation of the Defense Management Review decisions. DLA established the Defense National Stockpile Center as a primary-level field activity. eliminating redundant functions and initiating common business practices. The report emphasized improving management efficiencies in the Defense Department by "cutting excess infrastructure. A Defense Management Review-directed study recommended the consolidation of DoD contract management. On February 6. In 1989.g. the military services had retained responsibility for administering most major weapons systems and overseas contracts. DOD directed that virtually all contract administration functions be consolidated within DLA.phased out in the late 1980s when responsibility for managing the Defense Department’s reserve of industrial plant equipment was transferred to the Defense General Supply Center in Richmond. the agency established the Defense Contract Management . the Goldwater-Nichols Reorganization Act identified DLA as a combat support agency and required that the selection the DLA Director be approved by the Chairman of the Joint Chiefs of Staff. DLA assumed some of the military services’ responsibilities. enhancement of materiel readiness and sustainability of the military services and the unified and specified commands). by presidential order. The 1980s brought other changes as well. contract administration) to operational concerns (e. Soon after. The act also directed the Office of the Secretary of Defense to study the functions and organizational structure of DLA to determine the most effective and economical means of providing required services to its customers. the agency assumed management of the nation’s stockpile of strategic materials from the General Services Administration. On October 1. Virginia. Another major mission came in July 1988 when. such as inventory management and distribution functions. 1986. the military services were directed to transfer one million consumable items to DLA for management.

As part of Operation Provide Comfort. and several allied nations. the agency supported relief efforts after Hurricane Andrew in Florida (1991) and Hurricane Marilyn in the U. from nerve gas antidote to jet fuel . medical supplies. textiles. textiles. During this operation and the subsequent Operation Desert Storm. the agency provided the military services with over $3 billion of food.Command (DCMC). In those first critical months.came from DLA stock. and medical supplies to support a major land and air relief operation designed to aid refugees-mostly Kurds in Iraq. The quality of supply support that DLA provided American combat forces during these operations earned it the Joint Meritorious Service Award in 1991. however. Operation Desert Shield began in August 1990 in response to an Iraqi invasion of Kuwait. military. The mission execution included providing supply support. military units deployed in Bosnia and other NATO forces.from bread to boots. The military services retained responsibility for contracts covering shipbuilding and ammunition plants. the agency was at the center of the effort to support the deployment to the Middle East and later the war. the services’ responsibility (5.000 contracts valued at $400 million) for managing the majority of weapons systems contracts was transferred to the Defense Contract Management Command. . DLA support continued in the Middle East long after most U. most of the supplies transported to Saudi Arabia . Soon after President George Bush announced the involvement of the U. absorbing its Defense Contract Administration Services into the new command. Reorganizing for the 1990s During the 1990s. DLA supported other contingency operations as well. forces had redeployed. Closer to home. unified commands. the first element of a DLA Contingency Support Team deployed to Hungary to coordinate the delivery of needed agency supplies and services to U. Virgin Islands (1995).400 personnel and 100. and technical and logistics services to all military services. In October 1994 DLA deployed an initial element to support operations in Haiti and established its first Contingency Support Team.S. clothing.S. the agency’s role in supporting military contingencies and humanitarian assistance operations grew dramatically. and weapons system repair parts in response to over 2 million requisitions. contract management. In December 1995. In June. in April 1991 the agency provided over $68 million of food. clothing.S.S.

Until September 1997. realigned. The Defense General Supply Center became the Defense Supply Center. and St. Chicago. Pennsylvania. In response to BRAC 1993. The consolidation began in October 1990 and was completed March 16. which stored over 8. As a result of BRAC 1993. Boston. New York.7 million spare parts. Throughout the 1990s the agency continued its effort to eliminate managerial and stockage duplication. The Base Realignment and Closure (BRAC) process. Defense Contract Management Regions Atlanta. managed a vast network of distribution depots within their respective geographic boundaries. In August 1990. Defense Distribution Depot Oakland.An even more dominant theme for the 1990s was the agency’s efforts to reorganize so that it could support the war fighter more effectively and efficiently. two regional offices . Richmond. and other consumable items worth $127 billion in 788 million square feet (73 km²) of storage. They later merged into the Defense Distribution Center. . The Defense Distribution Depot Charleston. West. and Defense Distribution Region West in Stockton. reducing overhead costs. subsistence. Louis were disestablished. and the Tooele Facility. unified materiel distribution system to reduce overhead and costs and designated DLA to manage it. Northeast. Los Angeles. Defense Distribution Depot Ogden. instituted in 1993. and Mid Atlantic respectively.Defense Distribution Region East in New Cumberland. significantly affected the way the agency organized for its contract administration and supply distribution missions. The system consisted of 30 depots at 32 sites with 62 storage locations. In April 1990 Secretary Cheney directed that all the distribution depots of the military services and DLA be consolidated into a single. New Cumberland. Specifically. Utah were disestablished. officials merged. they closed two of the five contract management districts and the Defense Electronics Supply Center. or closed several DLA primary-level field activities. Dallas. North Central. and Philadelphia were re-designated as Defense Contract Management Districts South. 1992. Defense Contract Management Districts Mid Atlantic and North Central were disestablished in May 1994. California. Defense Contract Management Regions Cleveland. in 1996 officials merged the former Defense Construction Supply Center Columbus and the former Defense Electronic Supply Center Dayton to form the Defense Supply Center Columbus.

and Contract Management. rather than 42.Meanwhile. Virginia. In October 1996. The agency assumed a major logistics role previously performed by the military services. Defense Printing Services. In late December 1997 and early January 1998. managed. the agency has successfully standardized. Distribution. DLA launched a $1 billion project to replace the Defense Department’s cache of aging procurement programs with a DODwide standard automated procurement system that supported electronic commerce. Since its establishment in 1961. transferred to DLA. . and distributed DOD consumable items throughout the military services. renamed the Defense Automated Printing Service. only 6 organizations. In November 1995. In March 1993. the agency re-engineered its headquarters to form integrated business units for Supply Management. and other changes in the 1990s better positioned the agency to support the war fighter in the next century. the headquarters was again realigned. As a result. procured. thus eliminating much wasteful duplication. and the agency’s Defense Material Management Directorate became the Defense Logistics Support Command under Rear Admiral David P. move to electronic commerce. DLA headquarters underwent a major reorganization. In 1996 the agency received a Joint Meritorious Service Award for saving DOD and the taxpayer $6. The reorganization. Keller. In 1995 the DLA headquarters and the Defense Fuel Supply Center (renamed Defense Energy Support Center in January 1998) moved from Cameron Station to Fort Belvoir.3 billion. would report directly to the Director.

Sign up to vote on this title
UsefulNot useful