Introduction of logistic management- Logistics management is a supply chain

management component that is used to meet customer demands through the

planning, control and implementation of the effective movement and storage of
related information, goods and services from origin to destination. Logistics
management helps companies reduce expenses and enhance customer service.
The logistics management process begins with raw material accumulation to the final
stage of delivering goods to the destination.
By adhering to customer needs and industry standards, logistics management
facilitates process strategy, planning and implementation.
Logistics management involves numerous elements, including:

 Selecting appropriate vendors with the ability to provide transportation

facilities
 Choosing the most effective routes for transportation

Logistic as a part of the scm-Logistics management is that part of supply chain management
that plans, implements, and controls the efficient, effective forward and reverses flow
and storage of goods, services and related information between the point of origin and
the point of consumption in order to meet customers' requirements.
Logistic cost-Companies need to manage their logistics with a balance between cost and
performance, since the lowest-cost transportation path is not necessarily the fastest. Logistics
costs relate to the charges for various transportation methods, including train travel, trucks, air
travel and ocean transport. Additional logistics costs include fuel, warehousing space, packaging,
security, materials handling, tariffs and duties.

Logistic sub system-The tasks carried out within the framework

of supply logistics subsystem rely primarily on providing the required raw materials
(including support and maintenance), intermediates, spare parts, products and other
resources with accompanying information. Goods are delivered to the warehouse of the
recipient or directly to the places of their use.

The decisions in terms of supply can not be taken without taking into account conditions
on the market that are shaped primarily by the following factors:
 Characteristics of the purchased goods - mainly concerning requirements in the
fields of transport (means of transport, its accessories), storage (surface area,
location, conditions of storage), packaging (size, material) and labelling
 Providers activity - including especially the quantity, degree of compliance with the
requirements, opportunity to ensure a long term cooperation, focus on closer
cooperation with the customer and mutual improving actions

Inbound or outbound logistic-Inbound and Outbound Logistics term is comes under the transportation
of goods. Inbound Logistics is the transportation storing and delivering of goods which are coming into the
location of the business whereas Outbound Logistics is the transportation of goods which is going out of
the business location. It is essential for the Logistics managers to ensure the efficiency of networks
distributing the goods and reduce the transportation and storage costs associated with the company.

Most organizations rely on different supply chain and logistics partners for carrying out inbound and
outbound logistics. The logistics between suppliers and the company is the concern for inbound logistics
whereas it will be between companies and customers in the case of outbound logistics. It is also possible
for the companies to work with third parties for logistics management.

In the case of both inbound and logistics, the agreement made between the suppliers and customers will be
pointing out which party will have to bear the cost of damage at various points of the supply chain. Most of
the Inbound logistics include the raw materials and tools which are ordered from the suppliers. In the case
of outbound logistics, it will be the end goods which will be transferred to the customers.

Bullwhip effect in logistic-The

bullwhip effect is a supply chain phenomenon
describing how small fluctuations in demand at the retail level can cause
progressively larger fluctuations in demand at the wholesale, distributor,
manufacturer and raw material supplier levels. The effect is named after
the physics involved in cracking a whip. When the person holding the whip
snaps their wrist, the relatively small movement causes the whip's wave
patterns to increasingly amplify in a chain reaction.

In supply chain management, customers, suppliers, manufacturers and

salespeople all have only partial understanding of demand and direct
control over only part of the supply chain, but each influences the entire
chain with their forecasting inaccuracies (ordering too much or too little).
Warehousing and distribution management-

Warehousing-A warehouse is a large, spacious and secured building intended for

commerce and government use. It functions as a storage place for large quantities of
goods. Warehousing is not simply about storage though. It also covers the
administration and manual labor required in storage such as delivery,
documentation, examination and certification.

There are three types of warehouses: public, owned by third party logistics (3PL) and
company-owned. The government through its arm uses public warehouses to store
shipments and contrabands they confiscated temporarily.
Distribution-In the business language, distribution refers to the delivery of finished
goods to buying centers such as shopping centres, markets and retailer stores.
Some manufacturers deliver their goods directly to their accredited retailers. This is
advantageous if the retailers’ business establishments are just nearby the
manufacturers’ places.

Direct delivery of goods to retailers can save you from warehousing costs. However,
if you are far from distribution centers, you have to deal with trucking costs and
inventory frequently.

Thus, it is safe to say that warehousing and distribution go hand-in-hand in providing

a more cost-effective way of delivering goods. There are even businesses that
literally combined these two business operations.

WHAT ARE CENTRALIZED & DECENTRALIZED

PURCHASES?
Centralized Purchase refers to purchasing of all the requirements
under the central point of the organization. Like wise, Decentralized
Purchase refers to purchasing of requirements of each production
centre in an organization.

Important points to be considered

There is no hard and fast rule to follow either centralized purchase
system or decentralized purchase system. But, the management
should consider the following points before deciding either
centralized purchase or decentralized purchase for their purchase
department.
1. The distance between the production centre and the storage.

2. The nature of materials used i.e. bulky, heavy, fragile etc.

3. The cost of transport.

4. Policy of the company with regard to the materials purchase.

Function of purchasing department and purchase policy-Most major companies and even
some government organizations have a purchasing or procurement department as part of
everyday operations. These departments provide a service that is the backbone of many
manufacturing, retail, military and other industrial organizations. Many individuals, even some
who work for these companies, are unaware of what the purchasing department does, why it
exists or what purposes it serves. To understand better what the role of the purchasing
department is, consider some functions it performs.

Procuring Raw Materials and Other Resources

One role of the purchasing department is to procure all necessary materials needed for
production or daily operation of the company or government organization. For a manufacturing
company, this might include raw materials such as iron, steel, aluminum or plastics, but it also
might include tools, machinery, delivery trucks or even the office supplies needed for the
secretaries and sales team.

Achieving the Best Possible Price

A purchasing department also is charged with continuously evaluating whether it is receiving

these materials at the best possible price in order to maximize profitability. This can be
challenging for a small business that may purchase in lesser quantities than a larger vendor and
which thus may not receive the same type of bulk discounts

Purchase policy-The purchasing policy involves the procurement of goods

and services that meet community needs at the lowest possible cost
consistent with the quality needed for the proper operation of the various
departments. In general, purchases should be handled in a manner that
creates the greatest ultimate value per dollar expended.

Budget officers are responsible to insure that all purchases incurred by

their department are made in accordance with the University’s purchasing
policies and practices. Therefore, all budget officers and other
departmental staff involved in purchasing should be familiar with the
guidelines as set forth in this policy.

Use of mathematical model for vendor rating / evaluation-

Vendor evaluation In this section a VE model, based on the Linear Weighting Method (LWM), is
presented. Starting from a hierarchical structuring of all the evaluation criteria, the model provides
for a procedure which aims to contextualize the general structure to the specific cases. This is
obtained through a calculation method based on the AHP logic which assigns opportune weights to
the criteria, basing on experts judgment.

Vendor rating-Vendor rating is a tool used by the organizations to assess the performance of their vendors
to ensure efficient and effective upstream supply chain. The paper presents the views expressed by the
experts in literature and studies vendor-rating methodologies used by industries requiring supplies of
mechanical engineering components. Weightages recognized during study would help organizations to
understand the explicit and implied requirements of their customers. Apparently, basis of vendor rating is
quality and delivery reliability.

Single vendor concept-A Single vendor marketplace is basically a website where there is a
single seller/vendor sells its products to multiple customers. Thus it's a kind of one to
many relationships between the vendor and customer. The main disadvantage of a
single vendor marketplace is that it does not provide a large range of products to its
customers. Due to this, there is less number of traffic on such websites in comparison
with the Multivendor Marketplace.

Management of stores- It is defined as that aspect of material control concerned with

the physical storage of goods. It is concerned with ensuring that all the activities
involved in storekeeping are carried out efficiently & economically.
Principle facets of store management:-
Managing the stores.
Store layout, design & visual merchandising.
Customer service.
Retail selling.
Factors affecting location of stores.

Proximity with user departments. Security considerations. Types of materials. Ease of transport.
Good material control. Scope for future expansion. Avoidance of boredom

Store Layout

Defined : Physical arrangement of storage facilities for efficient receipt, storage and issue of
materials is called layout of stores. Factors affecting store layout: Type of stock: Deciding on
nature and size of materials to be stored. Volume of stock: Sufficient passages for uninterrupted
handling. Availability of space: Inadequate space leads to congestion. Too much space increases
cost. Physical factors: Lighting, ventilation, controlled noise.

Accounting for material-Materials management is a cluster of processes used to plan for

and control the flow of inventory into, through, and out of a business. These processes
are concerned with identifying the need for inventory, procuring and storing it,
scheduling the inventory into production, and warehousing and distributing the
finished product. An essential materials management function is determining the
amount of finished goods to be deployed at each distribution point for sale to
customers. Ideally, materials management strives to have inventory available when it is
needed, while minimizing the cost of holding inventory.