Module 1 – Chapter 1

Introduction to Logistics
Management
LOGISTICS MANAGEMENT

 Logistics management is the part of supply chain management that

plans, implements, and controls the efficient, effective flow and storage
of goods, services, and related information between the point of origin
and the point of consumption.

 An art and science of obtaining, producing, and distributing materials

and products in right place and in right quantity.

 Management stands for managing movement of materials as desired by

customer.

LOGISTICS

Process of planning, implementing and controlling the flow of goods and

services from place of production to the place of consumption for
confirming to customer satisfaction
 Through customer satisfaction.

Product- depending on the size and

shape decide the transportation,
warehousing etc. COMPETITIVE
Price- reduce logistical cost to provide EDGE
the product at lower price to customer. For individual businesses logistic
Place- Wholesalers (large quantity, less expenditure is 5% to 35% of sales.
frequent) Retailers (small quantity, Improvement in logistical functions
OPERATIONS LOGISTICAL
more frequent). & MARKETING COSTS reduces the logistical cost and also leads
Promotion- sufficient inventory to to customer satisfaction.
match the boost in sales due to
promotion. IMPORTANCE OF
LOGISTICS
Brings together all
INTEGRATED functions/departments under one
TRADE &
Physical movement of goods and LOGISTICAL umbrella thus overcoming inter-
BUSINESS
services. ACTIVITY departmental barriers and achieving
organizational objectives and reducing
costs. For example; production and
CUSTOMER purchase department.
SATISFACTION

Right quality goods, at right time, at right place, in

right quantity and right condition.
 Focus on continuous improvement (aka Kaizen).
Eg; TOYOTA – The Toyota Way

QUALITY After Sales Service – guarantee,

warrantee etc.
Eg; Croma
Concerned with transportation cost
Reverse Logistics – goods move from
Grouping up of small shipments into MOVEMENT LIFE CYCLE point of consumption to the point of
a single large shipment. CONSOLIDATION SUPPORT
origin
Expired product, for exchange/repairs,
rigid quality standard, transit damage etc.
OBJECTIVES OF
LOGISTICS

Inventory cost includes – MINIMUM RAPID Satisfy customer requirements/orders

transportation, material handling, INVENTORY RESPONSE in timely manner.
warehousing etc. Eg; Ola/Uber
Keep inventory minimum
Eg; Nike
MINIMUM
VARIANCE
Difference between Actual Logistical Performance and
Perceived Logistical Performance.
Eg; Pizza Hut, Dominos, McDonalds
 SCOPE OF REVERSE LOGISTICS
REFILLING / SCIENTIFIC
RETURN OF UNSOLD REPAIRS AND
REUSABLE PRODUCT RECALL RECYCLING DISPOSAL OF
GOODS REFURBISHING
PACKAGING WASTE PRODUCTS
• Newspapers • Soft drink bottles • Defects in the • Refurbishing for • Soft drink bottles • Electronic goods
• Magazines • Gas cylinders product (Eg; products • Cans like laptops
faulty airbags) returned within
• Expired products warranty period
(Eg; dairy due to poor
products) performance,
damage or
defects.
 LOGISTICAL
MISSION

SUPERIOR CUSTOMER
Very important to MINIMIZE TOTAL LOGISTICAL
SERVICE maintain a balance COST
between the two

Availability – necessary If company tries to provide superior

level of inventory to meet Transportation cost
customer service, the logistical cost
requirements
will increase and if the company
attempts to reduce overall logistical
cost then the customer service is not
satisfactory.
Operational Performance
– time gap between order Warehousing cost
receipt and order delivery

Service Reliability – sense

of satisfaction when
Packaging cost
requirements are fulfilled on
time
 Customer places order with the supplier.
Order processing time can be reduced with the help of
computers. Maintaining required level of stocks to meet
ORDER customer requirements simultaneously ensuring
PROCESSING
minimum inventory carrying cost.
Right product reaches the right CUSTOMER INVENTORY
customer at the right place and time SERVICE MANAGEMENT
in right quantity and condition at
right price (7 R’s). Physical movement of goods
3 ways: Private carriage, Contract
carriage, Common carriage.
Determinants:
Cost – cost involved in the
Demand forecasting and FUNCTIONS OF movement.
INFORMATION
order processing are MANAGEMENT LOGISTICS / TRANSPORTATION
Speed – speed with which it
dependent on information. LOGISTICS MIX reaches the destination.
Needed for better tactical Consistency – achieving same
and strategic decision. speed over period of time.

PACKAGING WAREHOUSING Goods are stored until they are sold

Packaging influences efficiency and
effectiveness.
Consumer packaging: convenience,
market appeal and protection.
Industrial packaging: focus on
handling, protection and communication.
Private/Public/Contract Warehouse
Should be near to the market.
MATERIAL
HANDLING
Involves – movement, protection, storage and control of materials
Around 15%-20% of cost of product is spent on material handling.
 INTEGRATED LOGISTICS

Information from customer flows in form of sales activity, forecasts and orders.

Information is translated into manufacturing and purchasing plans

Raw Material converted into finished products

Inventory Flow

Supplier Procurement Manufacturing support Physical distribution Customer

Information Flow

Planning and co-ordination flows Operations flow

Planned activities Day-to-day activities
GL describes all attempts to measure and minimize the ecological impact of logical activities
Strike a balance between economic and environmental efficiency
Procedures and steps instituted by a logistics company to minimize its waste and other negative effects on the environment

HOW TO ACHIEVE GREEN LOGISTICS WASTE RECYCLING

& SCIENTIFIC
NEW FLEET DISPOSAL
INDUCTION For eg; Kodak
PAPER USAGE Replace older recyclable
REDUCTION vehicles with cameras
BUILDING BYPASS E-retailers do new vehicles
ROADS not provide low on emission
ALTERNATIVE FUEL Creating bypass receipt to and fuel
CNG, battery roads to speed enhance green efficient
ALTERNATIVE MODE operated up traffic. image
OF vehicles, Reduce
NETWORK TRANSPORTATION electronically emission due to
OPTIMIZATION Adopt powered optimal speed
Optimum intermodal vehicles
transport transport – rail
network by emissions are 5
aggregating times lesser than
entire loads road. Use road
only for last
Full capacity mile delivery.
utilization of Eg; FedEx
vehicles hybrid delivery
trucks
 7 PARAMETERS OF ACHIEVING LOGISTICAL COMPETENCY/COMPETITIVE ADVANTAGE

NETWORK DESIGN INFORMATION TRANSPORTATION INVENTORY WAREHOUSING MATERIALS PACKAGING

Analysis of various SYSTEM **Refer slide #7 MANAGEMENT Storage place where HANDLING **Refer slide #7
facilities Demand forecasting Maintaining the goods are stocked Right quantity of
Which facilities are and order required level of till they are sold right material, in
needed processing inventory right condition, at
Decision needs to right place, at right
How many of each time
type of facility be taken regarding:
Geographic location Safety stock
Work to be Lead time
performed Replenishment of
stock
 INBOUND LOGISTICS V/S OUTBOUND LOGISTICS

INBOUND LOGISTICS OUTBOUND LOGISTICS

1. Upstream Logistics Downstream Logistics

2. Procurement Production Cycle Distribution Performance Cycle

3. Pre production logistics activities Post production logistics activities

4. Raw materials from supplier to company Finished goods from warehouse to customer

5. Activities involved – order placement, sourcing, Activities involved – customer order, order transmission,
transportation, receiving, storage and issue order processing, order transportation and customer
delivery
QUESTION BANK FOR MODULE 1 – CHAPTER 1 – INTRODUCTION TO LOGISTICS MANAGEMENT

1. What is the meaning of logistics? Also elaborate what is integrated logistics

2. What is the mission of logistics? Also elaborate the significance of 7 R’s

3. How to gain competitive advantage via logistics

4. What are objectives of logistics

5. What are the importance of logistics in a country like India

6. What is logistics performance cycle

7. What are the functions of logistics

8. Explain Green Logistics