According to the Council of Logistics Management (CLM) Logistics is the process of planning, implementing and controlling the efficient

and effective flow of goods, services and related information from point of origin to point of consumption in order to meet customer requirements. Logistical Management? y y y y Performing physical movement of materials efficiently and effectively Ensuring availability of resources at minimum cost for production Ensuring availability of finished products at minimum cost to the customer A Function Of Business Management

What? Where? When? Who? How much? How?

WHAT IS SUPPLY CHAIN?

What Causes Bad Logistics? 1. 2. 3. 4. Infrastructure:- Bad roads, inefficient railways, poor communication lines, congested ports Government policies:- Octroi Information:- Inadequate information, bad communication Management decisions:- Bad management decisions like carrier selection, outsourcing etc.

What Does Bad Logistics Cause? Costly products - Poor logistics adds costs. HOW? y y y Higher cost of capital (delayed deliveries) Damaged products (bad roads, bad vehicles, bad packaging) Excessive movement costs (wrong deliveries)

Shortages as product/service delivery fails y y y PDS and FCI stocks Deteriorating economy Law and order problems

OPERATING OBJECTIVES OF LOGISTICS 1. Rapid Response Firms ability to satisfy customers requirement in a timely manner. 2. Minimum Variance any unexpected event that disrupts system operations are disrupted by events like delays in order receipt, disruption in manufacturing, goods damaged at customers location and delivery to an incorrect location Traditional solution-safety stock or use high cost transportation. 3. Minimum Inventory asset commitment and inventory turnover reduce the inventory without sacrificing customer satisfaction. 4. Movement Consolidation grouping small shipments together in order to reduce transportation cost. 5. Quality Improvement Logistics is a prime part of developing and maintaining continuous TQM improvement. 6. Life-Cycle Support also called cradle-to-cradle logistical support going beyond reverse logistics and recycling to include the possibility of after sale services, product recalls and product disposal. Eg: Cold drink industries use their glass bottle again and again whereas the cans are reused in making of paper dishes.

WHAT ARE LOGISTICAL FUNCTIONS?

1. Inventory Management  Neither stock-out nor stockpiling of inputs or outputs  Minimum cost by minimum stock & high turns  Just In Time to customer (internal and external)  Inventory policies, models, systems 2. Information management  Importance in competitive business- Response to customer, Customer service  The role Information Management function- Accurate information, Real time information, Choice of Information technology phone, fax, internet, satellites, RFID, EDI. 3. Transportation Physical movement of materials  The most visible function of Logistics  High contributor to costs of logistics- Movement costs, Preservation costs, Cost of idle asset, Administration costs 4. Net work analysis :- Analysis of Logistical Network to retain or gain competitive edge  Number of facilities and their locations  Communication systems  Operational decisions-What? , Who? , How much? , Where? 5. Warehousing  Strategic storage storage as an activity in W/H  Value Adding Activities in warehouses  Switching facility rather than a storage facility  Economic benefits (cost reduction) & service benefits (customer service) 6. Material handling  Receiving, moving, storing, dispatching activities  Cost adding activity  High capital cost as well as high running cost 7. Material handling  Receiving, moving, storing, dispatching activities  Cost adding activity  High capital cost as well as high running cost. 8. Packaging  Product Protection  Facilitation of transportation & material handling  Types of packaging  Consumer packaging  Logistical packaging

LOGISTICAL PERFORMANCE CYCLES

Cycles are sets of logistical activities in logistical value chain Types of Logistical Performance Cycles 1. Procurement 2. Manufacturing support 3. Physical distribution

Important features 1. Logistical performance cycles link all participating firms (facilities) and organizations in the value chain up and down by information and product movement 2. Input sensitive (customer order) & dynamic 3. Sensitiveness determines efficiency of operating system

TYPES OF LOGISTICS

 Inbound Logistics (procurement cycle) (Nov. 06) All the activities related to the material movement till the dispatch of the products out of the factory gate are called as inbound logistics activities. Creation of value in the products depends upon availability of inputs on time. Making available these inputs on time at minimum cost is the essence of Inbound Logistics. Activities of a procurement performance cycle come under the scope of Inbound Logistics. They are transportation during procurement operation, storage, handling and overall management of inventory of inputs. Diagram:-

 INBOUND LOGISTICS (PROCUREMENT CYCLE) Logistical operations in procurement cycle  Potential avenues for reducing systems costs Value of inventory is low (capital blocked is low) Trade off between inventory cost reduction (inventory in house & in transit) and transportation cost reduction  Important in Input Intensive industries Complexity Large number of inputs & vendors

 Outbound Logistics (Nov. 06) 1. All the activities in which the value added goods are to be made available in the market for customers are called as outbound logistics activities. 2. Success of the firm depends upon the supply of products to the customer on time. Supplying the products of firm at marketplace at minimum cost is the essence of Outbound Logistics. 3. Activities of distribution performance cycle come under the scope of Outbound Logistics. They are order management, transportation, warehousing, packaging, handling etc. DIAGRAM:-

OUTBOUND LOGISTICS (DISTRIBUTION PERFORMANCE CYCLE) Value added goods are to be made available in the market distributed through the network of warehouses and retailers shops Value of the inventory is very high as during conversion value is added Trade off between transportation cost reduction and customer service Trade off between inventory cost reduction and transportation cost reduction Important in Output Intensive industries

 Reverse Logistics Reverse logistics is also known as Product Recall.It may be defined as a process of moving goods from their place of use, back to their place of manufacture for re-processing, refilling, repair, and recycling or waste disposal. Reasons for Reverse Logistics 1. Rigid quality standards- it is critical in case of contaminated products, which can cause environmental hazard. 2. Rigid laws prohibiting unscientific disposal of items 3. Rigid laws making recycling mandatory 4. Transit damage e.g. leaking containers containing hazardous material. 5. Product expiration. 6. Erroneous order processing by supplier 7. Exchange of new product for the old ones. 8. Return for repair or refill.  Drivers in Reverse Logistics (Nov. 03, May 04) The success of reverse logistics depends upon the efficiency of following subsystems: Product Location: For product recall it is necessary to identify the product location in the physical distribution system of the firm. It is difficult in case of consumer goods but easier in case of industrial goods. Product Collection System: After the product location is identified, product collection is to be done through companys field force or third party. Recycling / Disposal Centers: This may be companys plant, warehouse or any other location. Called back products must be inspected before recycling or disposal etc. Documentation System: Proper documents should be maintained at each level, this would help in tracing the product location.