UNIT – IV

RECENT TRENDS IN
LOGISTICS & SCM
-ASST. PROF. ANITA CHAUDHARY
CHAPTER – LOGISTICAL INFORMATION SYSTEM
INTRODUCTION

• LIS is the backbone of the logistical operations.

• There are various types of information flows in the logistical system
• Demand forecasts given by sales force, distributors etc.
• Customer orders placed at retailers, dealers, etc
• Purchase orders for materials and components to be sent to vendors.
• Production schedule for different SKUs to be communicated to production lines.
• Inventory levels of different SKUs at different storage locations to be communicated to
manufacturing plant or distribution warehouse.
IMPORTANCE OF INFORMATION SYSTEM

• The organisation needs to place an information system in place to manage flow of

information and to enable sharing of information between various functions of the
organisation and also between various supply chain participants.
LIS - CLASSIFICATION

• Internal information system

• Deals with sharing of information between diff. functions and depts of the organistaion.

• External information system

• Deals with sharing of information with supply chain participants such as vendors (suppliers)
and distribution channel members.
PRINCIPLES FOR DESIGNING LIS

• Availability of information
• Accuracy of information
• Timeliness of information
• Exception based LIS
• Flexibility
• Appropriate presentation format
LOGISTICAL INFORMATION ARCHITECTURE
LIS REQUIRES

• An information base to maintain the data warehouse,

• Execution components which help in planning, coordination and implementation of

logistical activities
INFORMATION BASE

• Provides a historical background for data analysis.

• Contains information such as:
• Purchase orders for materials and components for different products.
• Customer orders for FGs at different warehouses or market locations
• Production schedule for different SKUs
• Inventory position of different SKUs at different facility locations.

• Provides platform for future decisions.

EXECUTION COMPONENTS

• Execution components use the database maintained in data warehouse for the purpose
for planning and execution of future logistical activities, mainly related to customer
orders and procurement of materials.
• There are 2 types of activities in the execution components:
• Planning and coordinating activities
• Operating activities
PLANNING AND COORDINATING ACTIVITIES

• Strategic plan
• Capacity constraints
• Manufacturing plan
• Procurement plan
• Logistics plan
OPERATING ACTIVITIES

• Order management
• Order processing
• Distribution operations
• Transportation and shipping
• Procurement
APPLICATION OF INFORMATION TECHNOLOGY IN
LOGISTICS
• Electronic Data Interchange (EDI)
• Bar coding and scanning (Automatic Data Collection – ADC)
• Quick Response (QR) code
• Radio Frequency Identification (RFID)
• Global Positioning System (GPS)
 CHAPTER

MODERN LOGISTICS INFRASTRUCTURE

CONTAINERIZATION

• Is the method of storing, transporting and distributing products in unitized or

standardized form in a container.

• Container is box shaped equipment used to store and carry goods.

CHARACTERISTICS OF CONTAINER

• It has a permanent character i.e. its shape and size is not flexible in nature.
• It can be used repeatedly
• It can be used for inter modal transport
• It has facilities or fittings, which makes it possible to lift and transport it by mechanized
material handling system such as cranes.
• Its minimum storage volume is one cubic meter.
CLASSIFICATION OF CONTAINER

• Based on Raw Material

• Based on Size
• Based on Use
BASED ON RAW MATERIAL

• Steel containers
• Aluminium containers
• Glass Fibre Reinforced Plywood (GRP) containers
BASED ON SIZE

• 10 feet
• 20 feet (1 TEU – Twenty feet Equivalent Unit)
• 40 feet (2 TEU)
BASED ON USE

• General Cargo Containers – used for storing and transporting bulk materials or
general cargo, which has no special requirements.

• Thermal Containers – have temperature control.

• Refrigerated Containers – used for transporting products which need refrigeration.
• Insulated Containers - used for transporting products which need temperature control
for avoiding moisture or excessive rise or fall in temperature.
BASED ON USE

• Liquid Cargo Containers – used for transporting any type of liquid, need special
arrangement for filling and emptying the liquid cargo.

• Gas Containers – used for storing and transporting gaseous products.

• Liquid cargo and Gas cargo containers need special protection if they are
carrying inflammable / hazardous materials
MARKINGS OF CONTAINERS

• Name of the owner of container and any code or license or serial number.
• Container serial number
• Country of origin and country code
• Container type (whether special or general cargo)
• Container volume and capacity
• Maximum gross weight (weight capacity)
• Warnings , if any
BENEFITS OF CONTAINERIZATION

• Standardized size helps in maximum utilization of vessel (ship) space and container
terminal space.
• Use of mechanical handling for lifting and placing containers reduces labour cost and
saves times.
• Products are not handled directly as they are stored inside the container. Hence, the
possibility of damage or theft is reduced.
BENEFITS OF CONTAINERIZATION

• Individual handling of product units is not required. Products are packaged in unitized or
palletized format. Hence, reduction in material handling cost.
• Economy in transportation because of bulk storage in containers.
• Less paper work as all information of container products can be submitted to
government terminal officials collectively in a single document.
LIMITATIONS OF CONTAINERIZATION

• Need for mechanized material handling system.

• Capital intensive business due to high fixed cost i.e. initial capital investment
• Restrictions on movements may be in place in some countries (especially for 40 feet
containers) because their movement (especially by road) can disturb normal traffics &
can be risky.
• A container must be used to its full capacity to achieve economy of scale.
CFS AND ICD NETWORKS
CFS

• CFS stands for Container Freight Station.

• Is also called as container terminal
• It is a port facility for loading and unloading container cargo to and from ships.
• A container terminal is a facility where cargo containers are trans – shipped between
different transport vehicles for onwards or further transportation.
CFS

• If trans - shipment is between container ships and land vehicles such as trains or trucks,
the terminal is described as a maritime container terminal.
• If trans - shipment is between container land vehicle and land vehicle such as train to
truck etc, the terminal is described as an inland container terminal.
• Both maritime and inland terminals provide storage facility for loaded as well as empty
containers.
ICD

• ICD stands for inland container depots.

• It is an inland container terminal.
• ICDs are generally located near the entry points of major cities.
• Formalities related with octroi, entry taxes etc. are performed near these entry points.
• It can be a road terminal on a national highway or a rail terminal at a major rail junction.
COLD CHAIN LOGISTICS

• Is a system that provides a series of facilities for maintaining ideal storage conditions for
perishable products and products which require cold storage temperature from point of
origin to point of delivery or consumption.
• It is ideal for agricultural produce, milk products, ice creams, certain type of medicines,
ready to eat packages, poultry, meat etc.
COLD CHAIN LOGISTICS

• The cold chain starts at the farm level and continues up to the retail level.
• A well organized cold chain helps in reducing spoilage and maintaining product quality.
• The cold chain logistics infrastructure generally consists of:
• Pre – cooling facilities (at the farm centres)
• Cold storage (at the warehouses)
• Refrigerated carriers (containers)
• Packaging systems
• Information processing system.
COLD CHAIN LOGISTICS

• Some of the industries which use cold chain logistics system are:
• Imported fresh fruits and vegetables
• Exports (seafood, meat , poultry, fruits and vegetables)
• Chocolates
• Dairy
• Ice cream and frozen deserts
• Processed food.
DOUBLE STACK CONTAINER

• A double stack container means two levels of containers are stacked on a flat car of rail
or trailers.
• It is more economical.
• Using double stack technology, a freight train roughly carries twice the number of
containers which reduces transportation cost per container.
LOGISTICS PARKS

• A logistics park is a strategic location which offers logistical services such as warehousing,
loading and unloading material handling systems, easy connectivity to different
transportation mode terminals such as sea ports, air ports, rail terminals etc.
• In modern business envt, there is tremendous pressure on business to reduce costs,
maintain optimal level of customer service and protect the bottom line i.e profitability.
LOGISTICS PARKS

• Logistics parks provide solutions for such business by providing facilities such as:
• Good road, rail, water and air connectivity.
• Large warehousing space.
• Parking space for trucks, trailers, personal vehicles.
• Utilities like weighbridge.
• Communication facilities.
• Power supply with back up
• Security supported by CCTV
• Fire protection systems etc.
DEDICATED FREIGHT CORRIDORS

• The Dedicated Freight Corridor Corporation of India Limited (DFCCIL) is a corporation

run by the Government of India to undertake planning & development, mobilization of
financial resources, construction, maintenance and operations of the Dedicated Freight
Corridors.
• DFCCIL is designated as a Special Purpose Vehicle (SPV) by the Government.
• To take advantage of the commercial opportunity, Indian railways has been constructing
dedicated freight corridors.
DEDICATED FREIGHT CORRIDORS

• It is linking the 4 metros of Delhi, Mumbai, Chennai and Kolkata (Golden Quadrilateral)
and 2 diagonal of Delhi – Chennai and Mumbai – Howrah. This adds up to a total length
of approximately 10,000 km.
• A dedicated freight corridor provides uninterrupted economical movement of
commercial freight along large distances.
• Presently, a freight train takes 50 hours to cover the 1400 km distance Mumbai and Delhi.
When the freight corridor is constructed, it would take 17 hours to travel the same
distance.
GOLDEN QUADRILATERAL (GQ) PROJECT

• The golden quadrilateral is a highway network connecting India’s 4 metros Delhi, Mumbai,
Chennai and Kolkata. Hence, its shape resembles a sort of quadrilateral.
• This quadrilateral network also connects important cities like Bangalore, Pune,
Ahmadabad and Surat on its way.
• It is the largest highway project in India.
• It is a part of National Highways Development Project (NHDP).
GOLDEN QUADRILATERAL (GQ) PROJECT

• Its total length is 5846 km of four or six lane highways.

• Safety features such as guardrails, high visibility signs etc used on the highway for safety of
vehicles..
• The Golden quadrilateral (GQ) project is managed by the National Highway Authority of
India (NHAI) under the Ministry of Transport and Highways.
GOLDEN QUADRILATERAL (GQ) PROJECT - ADVANTAGES

• The GQ project establishes better and faster transport networks between many major cities
and ports. It will enable faster, smoother, more economical and safer movement of people and
products in India.
• It will create industrial development, job opportunities and business growth not only in big
and medium sized cities, but also in smaller towns which are connected by the GQ project.
• It will provide easy access to major markets for the farmers who are producing agricultural
produce in India.
• It will also reduce wastages, damages and spoilage of perishable goods as speed and quality of
transport is faster and better.
DEEP WATER PORTS

• A deep water port is defined as “any fixed or floating manmade structure other than a
vessel, or any group of such structures, located beyond the territorial sea and off the
coast, used for loading and unloading of solid, liquid or gaseous cargo”.
• The term deep water port includes all associated equipments, including pipelines,
pumping stations, service platforms etc.
INLAND PORTS

• An inland port is defined as a “a physical site located away from traditional land, air and
costal borders with the vision to facilitate and process international trade through
strategic investment in multi modal transportation assets and by promoting value added
services as goods move through the supply chain”.
• Inland ports are also referred to as dry ports or intermodal hubs.
• Key features of inland ports are the transfer of containers between different modes of
transportation and the processing of international trade. Hence, it is different from a
container terminal.
CHAPTER - LOGISTICS OUTSOURCING
OUTSOURCING - INTRODUCTION

• Outsourcing occurs when a company retains another business to perform some of its
work activities.
OUTSOURCING - DEFINITION

• According to Stank and Maltz (1996), outsourcing logistics is the decision to buy logistics
services from external sources rather than operate in house.

• According to Murphy and Wood (2004) is, the process when an organisation allows a
specialist company to provide its non-core activities is termed as logistics outsourcing.
OBJECTIVES OF OUTSOURCING

• Reduce costs
• Focus on core functions
• Acquire new skills
• Acquire better management
• Assist a fast growth situation
OBJECTIVES OF OUTSOURCING

• Avoid labour problems

• Focus on strategy
• Avoid major investments
• Improve flexibility
• Begin strategic initiative
THIRD PARTY LOGISTICS (3PL)

• A 3PL service provider is one that works with shippers in order to manage another
company’s logistics operations department.
• 3PL providers usually specialize in Integrating operations, warehousing, transportation
services, cross docking, inventory management, packaging and freight forwarding etc.
• They perform the work as per the needs of the customers.
• 3PL specialize in their own functional area.
• These service providers have their own Logistical infrastructure.
ADVANTAGES OF 3PL

• Low capital investment

• Partnering with 3PL means that the company will not have to maintain your own w/h space.
This will saves money on costs like electricity, IT systems, and staff.

• Business growth
• The company has a team of in-house experts to manage the logistics and SCM which will also
help once the business starts to expand.
ADVANTAGES OF 3PL

• Save time and money

• 3PL providers can save from costly mistakes and allow the business to build a global logistical
network with lower risk and higher return.

• Expertise
• 3PL providers are knowledgeable of industry best practices and stay up to date with the latest
developments in technology.
TYPES OF 3PL PROVIDERS

• Standard
• These service providers provides with the basic activities like pick and pack, warehousing and
distribution etc.

• Service developer
• These service providers provides value – added services such as tracking and tracing, cross
docking and specific packaging.
TYPES OF 3PL PROVIDERS

• Customer adapter
• These service providers comes in at the request of a customer. It is when the 3PL takes over
complete logistics of the firm.

• Customer developer
• These service providers are at the highest level of 3PL. This is when the 3PL integrates itself
with the company, and ends up taking over the entire logistics operation.
FOURTH PARTY LOGISTICS (4PL)

• A 4PL service provider is a consultancy firm that act a link between the third party and
the customer.
• It is a non-asset based company.
• They do not actually perform the logistical activities but they arrange for such
performance.
• It covers all logistical functions and so the approach is broad.
FOURTH PARTY LOGISTICS (4PL)

• It mainly focus on planning and designing of activities

• 4PL’s are also commonly referred to as Lead Logistics Providers (LLPs).
• 4PL service provider deals with the planning, management, designing, and optimization of
a supply chain from start to end and does so by outsourcing the services it needs to
trusted companies.
ADVANTAGES OF 4PL

• Focusing on core activities

• The company can concentrate on important activities by outsourcing the activities to 4PL service
provider. This would eliminate distractions and the company is forced to concentrate on core
activities.
• Reduction in cost
• Outsourcing eliminates the need to hire individuals from outside so the cost of recruitment and
operation can be minimized to great extent.
• Customer delight
• 4PL service provider provides all the services to the customers as per their need and requirement.
This increases customer satisfaction and results into customer delight.
DIFFERENCE BETWEEN 3PL AND 4PL
Sr. no Points
1 Meaning
2 Ownership of
infrastructure
3 Performers of work
4 Focus on
5 Specialisation
6 Nature of approach
3PL
A 3PL is the firm that provides with
various specialized services to its
customers like warehousing,
transportation etc.
They own the infrastructure of their
functional work
They perform the work entrusted by
the customers
It focus on one or more functions of
logistics
They specialize in their own functional
area
It involves a narrow approach
4PL
A 4PL is the consultancy firm that act as
link between the 3PL and the customer.
They are not the owners of the
infrastructure of their functional area.
They do not perform the work themselves
entrusted by the customers
It focus on all functions of logistics
Their specialization is not restricted to
one area
It involves a broader approach
DRAWBACKS OF OUTSOURCING

• Loss of Management control

• Reducing work places for own employees may lead to losses of high qualified personnel
• Poor control or wrong selection of partner
• Supplier problems (poor performance or bad relations, not giving access to best employees or
technology)
• Over dependence on a provider
• Loss of corporate knowledge and future opportunities
• Dissatisfied customers. As a result of bad service provider’s performance
• Damaged data security
STEPS FOR SELECTION OF LOGISTICS SERVICE
PROVIDER
1. Defining the problem
2. Identify the areas of problem
3. Establishing objectives of outsourcing
4. Searching potential service provider
5. Evaluation and selection
OUTSOURCING – VALUE PROPOSITION
CHAPTER : LOGISTICS IN
GLOBAL ENVIRONMENT
MANAGING THE GLOBAL SUPPLY CHAIN

• Today entire world has become a Global market.

• As globalisation is the free movement of goods, services and people across the world in a
seamless and integrated manner.
• With the increasing Globalisation the concept of Global Supply Chain Management has
gained importance.
• Global supply chain management is management of flow of goods in several
countries.
• It covers movement and storage of Raw materials, WIP and FGs.
MANAGING THE GLOBAL SUPPLY CHAIN

• The main aim of Global Supply chain management is to reduce the risk in relation to
purchase activities and to reduce the cost of purchase.
• Movement of goods within the geographical boundaries of the country is much easy as
compared to movement of goods across the globe.
• The main highlighted areas are Selection of mode of transport, packaging, insurance and
documentation on the basis of the country of destination.
• Thus managing logistics at a Global level is very demanding task.
GLOBAL ISSUES AND CHALLENGES IN LOGISTICS &
SCM
• Conflicting business objectives and requirements

• Trying to predict the unpredictable

• Political actions

• Shortage of Raw materials

• Variations in customer demand

GLOBAL ISSUES AND CHALLENGES IN LOGISTICS &
SCM
• Currency fluctuations

• Maintaining intellectual property protection

• Identifying and assuring the reliability of international business partners

• Accessing finance and insurance

• Compliance with international regulations and standards

Thankyou