This action might not be possible to undo. Are you sure you want to continue?
Logistics (Oxford Advanced Learner‟s Dictionary)
“The practical organisation that is needed to make a complicated plan successful when a lot of people & equipment is needed” e.g. 1. Logistic support in the army 2. Organising famine relief presents huge problems
i.e. Moving Right People & Right Equipment to the Right Place at the Right Time through the Right Methods.
Why Logistics Management?
To have competitive edge over others
Marketing mix (By McCarthy): Product, Price, Promotion, Place (4 Ps) Past „Place‟ was a “dark continent” in marketing (Peter Drucker, 1992)
Distribution was not important. 6 years waiting for Bajaj Scooters Shift from „Sellers‟ Market to „Buyers‟ Market Consumers are now Bosses .g. Because of manufacturers‟ monopoly E. 10 years waiting for Padmini Cars.Why Logistics Management? In the past.
that too on installment No monopoly now Business has become more Complex & Dynamic now Vibrant market (Market is time & price sensitive) . any product is available.Why Logistics Management? Now.
Why Logistics Management? Everyday. everybody is thinking about new market plans Survival of the fittest theory Saying “People have your money in their pocket & You have their goods on your shelves” .
Why Logistics Management? „Push‟ is important than „Pull‟ now Question is how you push? To give the best products & services than others To win customers‟ loyalty & goodwill A satisfied customer will remain loyal .
Fuel efficiency claim by Hero Honda (Now Bajaj claims 102 kmpl) ◦ Fuel efficiency & Economy: by Maruti Cars (Tata‟s have come up with Nano) .g.Why Logistics Management? Your weakness is your competitor‟s advantage More business competition & rivalry now ◦ E.
Why Logistics Management? Due to rapid technology transfer Rivals not only copy. (Because consumers have enough money) . they add more features & give more value for your money Now. lower price strategy doesn‟t work.
Promotion also doesn‟t work (Because too much „advertisements‟ will make the consumers confused and fed up) Hence Place (out of the 4 Ps) is important now .Why Logistics Management? Now.
So why Logistics Management? Complicated business scenario Rapid economic boom Globalisation Liberalisation Intelligent consumers .
So why Logistics Management? Heavy Industrialisation Scientific innovations Hence for more customer satisfaction now To be customer focused .
So why Logistics Management? Quick delivery & after sales service (24 hrs) Hence the need of Logistics Management .
Nature & Concept of Logistics Management Logistics from Greek word „Logisticos‟ meaning “science of computing and calculating” First used in military sense (Logistical Support) (World War II & other wars) .
maintenance & transportation of military materials.Nature & Concept of Logistics Management Webster (1963) defines Logistics as: “The procurement. facilities & personnel” US Airforce (1981) defines: “The science of planning out movement & maintenance of forces” the .
implementing & controlling of efficient. effective flow & storage of goods.Nature & Concept of Logistics Management CLM(Council of Logistics Management (1991) defines: “Logistics is the process of planning. services and related information from the point of origin to the point of consumption for the purpose of conforming to the customer expectations” .
Strategic Logistic Management includes 4 steps Corporate vision & objectives – To turn it into winning edges over others Strategic logistics analysis (i. finding alternatives.) Logistics planning & evaluation Managing change .e. evaluation. selection etc.
g. ◦ Plastic moulded water tanks ◦ Fully assembled automobiles ◦ Transportation of huge machinery (H & R Johnson) ◦ Containers capacity and storage .Various Decisions in Logistics Management Product Design E.
Various Decisions in Logistics Management Plant Location Choice of sources/ markets Production structure & planning Distribution/ Dealer network design Warehouse location/ operations Plant layout .
g. Cement Transportation (wagon shortage) change in packaging (Jute. plastic) Packaging .Various Decisions in Logistics Management Allocation decisions Inventory management/ stock levels Transportation models/ Routing/ Capacity E.
Various Decisions in Logistics Management Material Handling Storage problems in monsoons Plant/ warehouse near port/ Airport Nearness of dealers to factory/ warehouses .
stevedores) Government (Regulations & logistics) ◦ Role CST. Air etc) ◦ Warehouse providers/ Freight forwarders ◦ Terminal operators (port. Road. excise. octroi. road tax on vehicles . modvat. local sales tax.Various Agencies involved Shippers Suppliers ◦ Carriers (Rail.
industrial v/s consumer products.Other factors Inbound Logistics (Raw Materials) Outbound Logistics (Finished Products) Single v/s Multiple plants Nature of the products e. non-perishable. perishable.g. refrigerated. various dimensions . packaged products (Fruits/ Vegetable exports) . non-durable.Bulk.
Logistics & Infrastructure (in India) Includes goods transportation & storage Material handling & Information structure We do mostly by road & rail Pipeline is growing Waterways unexplored Air for emergency only .
How to develop an ideal Logistics Organisation? Organisation to be horizontal Organisation to be market facing/ market driven (Output focused) Organisation to work together Organisation to have cross functional teams This is Flat Organisation system To have customer order fulfillment system .
Better management of order fulfillment groups like sales office people. control.g. transport department etc.How to improve customer order management system (i. checking etc. idle times in transportation. .e. Cr. delays in paperwork. order fulfillmen system)? By eliminating non-value added items e. accounting. storage.
Logistics in Short Reaching Right Quantity with the at the Right Quality Right Price at the at the Right Place Right Time to the with the Right People Right Mode (of transportation) .
Price. Place) Right product. Promotion.The Marketing Logistics & Interface Interface means Connections Marketing is the management of 4Ps (Product. The competitive edge to be customer service . ….Right Place etc.
The Marketing Logistics and Interface Customer awareness of Rights Customers are too much demanding. Customers know what is in the market No „brand image‟ will work out.g. Computer market Now it is product availability & service (Product Sector) . Neither the price. nor the quality ◦ E.
The Marketing Logistics and Interface Service in non-manufacturing is equally important now (Service Industry) Service is an “added value” now Financial loss due to „out-of-stock‟ scenario .
e.The Marketing Logistics and Interface Marketing is inter-related with „Logistics‟ & „Customer Service‟ The concept of „Customer Retention‟ i. “A satisfactory customer will remain loyal” Will also get references .
The Marketing Logistics and Interface To sell & to service a loyal customer is less costly A loyal customer may not think of substitutes This is “Relationship Marketing” To create & sustain & strengthen customer loyalty & relationship .
need oriented. This is “Logistics Pipeline Management” .The Marketing Logistics and Interface Procurement & manufacturing management have to be market oriented.
Logistics interface with Production Not to produce at any cost Inventory tied up is money tied up To produce the right product Production schedule through better planning management Production to be market oriented .
e. cost Co-ordination between production and other departments i. mode of transportation.Logistics interface with Production Procurement of raw materials requires planning. time. „Logistics‟ the whole concept . lead time.
Forecasting Models ◦ Demand and Supply based on past data 2.e. Mathematical Programme Model a) Location Model i. both for inbound and outbound To minimize Transportation cost .Models in Logistics Managemen These are „Quantitative‟ models from operations research 1. planning optimal & ideal location of plant & warehouses.
optimal allocation of commodities from „sources‟ to destinations with a vast & multidimensional network e. a company with 15 plants & 30 warehouses c) Distribution Network Design Model Involves location of warehouses & break bulk points.g. ware housing. choice of transportation modes Distribution costs include transportation.Models in Logistics Managemen b) Allocation Models i.e. handling. inventory .
Critical path method in Operations Research Can be done by using geographical maps 4. its warehousing & retailing Pipeline inventory i.g.e. Routing Models ◦ .Models in Logistics Managemen 3. routing of transportation network to destinations The simplest model is called the shortest path problem e. Inventory Models ◦ ◦ ◦ ◦ ◦ Costs on buffer stock keeping for uncertainties Shipment & inventories of Finished products.
nothing is produced/ moved until the need arises Produces against advance firm order (Pull) „Push‟ is in anticipation of the demand In pull.Inventory Management Decisions JIT (Just In Time) is a Japanese philosophy i. product flow is based on demand .e.
Right Place etc .Distribution Structures & Systems What is distribution? Right goods.
Systems in common a) Industrial Products ◦ Company Customer b) Automobile ◦ Company Dealer Customer c) FMCG & Pharma ◦ Company C&F Stockists Retailers Customers .
Systems in common d) FMCG ◦ Company Distributors Wholesalers Retailers Customers e) FMCG ◦ Company Depot Stockists Retailers Customers f) Consumer durables ◦ Company Own Retail Outlet Franchised showroom Customers .
To have warehouse or not? . garments ◦ Company CA Wholesalers Retailers Customers Note:.Systems in common g) Food grain.
Industrial products & services sectors.g.Direct Distribution System (DDS) i. where the unit value of the product is very high. Company Consumers (No Intermediary) e.e. product technicality & product complexity .
Direct Distribution System (DDS) To have its ◦ Own sales force ◦ Own retail outlets ◦ Direct Mailing ◦ Telemarketing ◦ Websites .
reduced selling costs .Direct Distribution System (DDS) Personal Selling ◦ To have trained sales force ◦ Sales force locates customers ◦ E. Eureka Forbes Telemarketing ◦ Through Telephone calls ◦ Positive is.g. Insurance sector.
Direct Distribution System (DDS) Direct Mailing ◦ Sending detailed brochures to prospective customers ◦ Is a silent sales ◦ Negative is. poor response ◦ Firms to have the right & vast data bank .
Indirect Distribution System (IDS)
One-tier Distribution system
◦ i.e. Company Distributors Customers (only 1 intermediary) ◦ positive is, minimum distribution costs, maximum control ◦ e.g. Maruti Sitaram Customer
Indirect Distribution System (IDS)
Two-tier Distribution system
◦ E.g. Company Wholesaler Retailer Customer
Multi-tier Distribution system
◦ E.g. FMCG Firms
Multi Channel System (MCS)
i.e. by adopting more than one channel system to reach to customers
e.g. Auto component Manufacturers & HLL
◦ Company Customers
◦ Company Wholesalers Customers ◦ Company Retailers Customers
Multi Channel System (MCS) Manufacturing firms prefer MCS for greater marketing coverage & penetration Drawback: Rivalry & competition among agents in MCS resulting into unethical selling & loosing Corporate image .
but effective & profitable if managed well Channel conflict may lead to loosing business opportunities .Managing MCS MCS is complex & expensive.
(HLL Scenario) (Quote from M S Banga. Chairman.Hindustan Lever Ltd. HLL (FMCG) AGM 2004 Speech) .
g. Family and children taking leisure time . To touch customers in multiple ways To create brand messages & to experience our brands To offer tailored solutions to customers now Now shopping is a new experience E.
Now consumers are well informed through advertisements (Average 350 to 400 Ads/ week) Redistribution partners are important to HLL HLL has 25000 outlets in key cities in India They do superior display of HLL products .
HLL in Hyderabad Reliance Super Stores Advantage is consumers can “Touch & Feel” HLL Sunsilk shampoo wash in stores The key factor is product availability .g. HLL introduced self service stores in India e.
000 villages in India in the most remotest places HLL creates „win-win‟ partnership with consumers e.000 villages = 100 million people (rural) .g. Surf Ad HLL‟s plan is to reach to 100. There are 600.
g. New self help women group sell HLL products directly to the rural people They also spread the message of health & hygiene ◦ e. Lifebuoy for health .
with 250. 2300/. generating Rs.HLL Network Now doing direct selling.Crores & growing at 20% pa Also provides „customised‟ offerings covering 11 categories in „Home & personal care & foods‟ HLL has network of over 1500 towns in India covering 80% of urban population.000 consultants .
through demonstrations & product trials & brand experience .HLL Network Direct selling enables personalised communication & customized solutions.
Out of Home Eating outside in European style Now in India. due to busy family life and nucleus family .
HLL adopts 3 ways ◦ Product availability ◦ Brand Communication ◦ Brand experience .
employs 60.000 people . HLL re-inventing their distribution network HLL distribution creates new employments HLL has 7000 stockists. 6000 substockists.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.