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 It provides information to efficiently manage the flow of
materials, effectively utilize people and equipment ,
coordinate internal activities and communicate with
customers.

 It has to do with keeping accurate records of finished

goods that are ready for shipment.

 Process of efficiently overseeing the constant flow of

units into and out of existing inventory.

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 Inventories are held in following general categories:
- Raw materials and components
- Work In Progress
- Finished Goods
- Maintenance repairs & operating supplies
- Pipelines or in-transit inventory

Works Finished
Raw Finished
in Goods
Materials Goods
Process in Field

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 Irrespective of its location in supply chain, the product
inventory essentially serve the following functions:

- Balancing supply and demand

- Periodic variation

- Scale economics

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 Meeting production requirements

 Supporting operations requirements

 Customer service consideration

 Hedging against future expectations

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 Inventory Cost

 Carrying cost

 Ordering cost

 Warehousing cost

 Damaged, Pilferage and obsolescence cost

 Exchange rate differentials

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 ABC Analysis

 VED Analysis

 SAP Analysis

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 Plays important role in SC process since products are
rarely produced and consumed in same location.

 Main purpose of transportation is to make right quantity

of right quality goods at right time and place in least
cost.

 Logistical costs and customer service capabilities can

be reduced by:
- reduction in transit time
- less damages
- curtailment of productive packaging cost
Example: Blue Darts
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 Ensures speedier and timely physical movement of
goods from point of inspection to point of consumption
 It creates core competencies by preventing stocks – out
of customers annoyance
 It provides protective storage during transit
 Ensures cost efficient, better customer service
 Fulfills specific service requirements of the corporate
enterprise for improvement of logistical capabilities and
harmonious supply chain relationship

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 Tariff of transportation mode

 Transit time cost

 Obsolescence and detoriation costs

 Protective packaging costs

 Transit insurance cost

 Miscellaneous cost

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 Airways
 Seaways
 Roadways
 Railways
 Pipelines

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 Strength and weakness of the company in terms of
marketing
 Financial and production resources
 Prevailing market characteristics including the
competitive scenario
 Geographical and territorial structure
 Quantity to be transported each time, distance to be
covered
 Product feature and suitability to various modes of
transportation such as weight, size, shape etc

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 For a comprehensive discussion on transportation
decision following 4 factors needs to be highlighted

- Economic factor

- Shipper’s factor

- Carrier factors

- Alternative pricing strategies

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 Current transport infrastructure of India is major
bottleneck in the achievement of logistical objectives,
mainly due to following factors-
 Poor Government policies
 Networks
 Road/Rail track conditions
 Vehicle quality
 Coordination between various agencies and transport
organizations

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 Logistics Management – Vinod Sople
 Logistics & SCM – D K Agrawal
 Materials Management – K. Shridhara Bhat

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 Thank You

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