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• Meaning • Importance • Methods
Why demand forecasting?
• • • • • Planning and scheduling production Acquiring inputs Making provision for finances Formulating pricing strategy Planning advertisement
Steps • • • • • Specifying the objective Determining the time perspective Making choice of method Collection of data Estimation and interpretation of results .
. QUANTITATIVE TECHNIQUES 1)Time Series Analysis. a) leading indicators b)Coincident indicators c) lagging indicators. 2)Barometric Analysis. 2)SURVEY 3)MARKET EXPERIMENT Test marketing Controlled experiments.CLASSIFICATION OF DEMAND FORECASTING QUALTITATIVE TECHNIQUES 1)EXPERT OPINION Delphi method.
When done by • An expert.The Delphi method is primarily used to forecast the demand for “NEW PRODUCTS”. also known as “EXPERT CONSENSUS METHOD”.Expert Opinion • The expert opinion method. consultants. • This method utilizes the findings of market research and the opinions of management executives. qualitative techniques provide reasonably good forecasts for a short term because of the expert’s familiarity with the issues and the problems involved. and trade association officials. is being widely used for demand forecasting. • DELPH I METHOD:. trade journal editors and sector analysts. .
For example. if the survey indicates that there is a demand for that particular product in the market. The remaining 20% preferred to have milk products while only 2% preferred to drink carbonated drinks like coffee. The survey revealed that about 80% of the youth preferred to drink tea or coffee rather than carbonated drinks at regular intervals. Coke in India expanded its product range beyond carbonated drinks. It is also planning to introduce a coconut flavored drink in kerala and a black currant in Tamilnadu named portello. The company is now trying to bring tea and coffee brands to India by installing vending machines. .SURVEY A firm can determine the demand for its products through a market survey. It may launch a new products. after the company conducted a nationwide survey.
• Market Experiments are two types:1) Test marketing:2) Controlled experiments:- .Market Experiment • Market Experiment can help to overcome the survey problems as they generate data before introducing a product or implementing a policy.
A test area may include several cities and towns. In this way. Then the demand for the product can be compared at different levels of price and advertising expenditure. . a test area is selected. Advertising or packaging can be done in various market areas.Test marketing In this case. More than one test area can be selected if the firm wants to assess the effects on demand due to various alternative marketing mix. or a particular region of a country or even a sample of consumers. consumer’s response to change in price or advertising can be judged. which should be a representative of the whole market in which the new product is to be launched.
DRAWBACKS OF THE MARKET EXPERIMENT 1) The test experiments are that they are very costly and much time consuming. which accurately represents the potential market. consumer may switch to the competitor’s products. It may be difficult to regain lost customers even if the price is reduced to the previous level. If in a test market prices are raised. 2) 3) . Moreover. it is often difficult to select an area.
.Controlled experiments • Controlled experiments are conducted to the test demand for a new product launched or to test the demands for various brands of a product. • They are selected some consumers.
2)The selected consumers may not respond accurately If they come to know that they are a part of an experiment being conducted and their behavior is being recorded. .DRAWBACKS OF THE CONTROLLED EXPERIMENTS 1) The consumers may be biased in the process of selection of a sample of consumers on which experiments is to be performed.
Time Series Analysis • The time series analysis is one of the most common quantitative method used to predict the future demand for a product. Here the past sales and demand are taken into considerations. 4)RANDOM FLUCTUATIONS. • TIME SERIES ANALYSIS IS DIVIDED INTO FOUR CATEGORIES: 1)TREND 2)SEASONAL VARIATIONS. 3)CYCLICAL VARIATIONS. .
etc.It may happen due to Natural calamities like flood.It is taken into account the Variations in demand during different seasons.This variations in demand due to the fluctuations in the business cycle – Boom. Which cannot be predicted accurately. The sale of Woolen clothes increases in winter.The sale of cotton dresses increases in summer. 3)CYCLICAL VARIATIONS:. . recession and depression.Past data is used to predict the future sales of firm trend is a long term increase or decrease in the variable. 4) RANDOM FLUCTUATIONS:. Eg:. earthquake. 2)SEASONAL VARIATIONS:.METHODS OF TIME SERIES ANALYSIS • 1)TREND:.
BAROMETRIC ANALYSIS • • • • • • • • DEFINITION:.“The prediction of turning points In one economic time series through the use of Observations on another time series called the Barometer of the Indicator”. . 3)Lagging indicators. 2)Coincident indicators. It can be divided into three groups 1)Leading indicators.
index of consumer expectations. and real M2 money supply.LEADING INDICATORS • • • • • • • It compares the existing data available. In this Index includes such as things as average weekly hours worked and claims for Unemployment insurance. . manufacturers new orders. orders for plant and equipment. stock prices.
. CLL Is primarily intended to identify changes in the direction of the economy. Personal income minus transfer payments. industrial production.Composite Of Leading Indicators • • • • • • • It is useful in understanding the business cycle. manufacturing and trade sales. Components of the Index of Coincident Indicators are employees on nonagricultural payrolls.
LAGGING INDICATORS • The lagging indicator composite includes changes in labour costs per unit. among other items. these indices are among the most important tools available to most organizations. and figures on installment credit and loans. including the government. . the level of employment and the rate of inflation. In Practical attempts to forecast the future. These indicators provide signals of changes in economic activities like national income or national product. ratio of inventory to sales.
Conclusion • Accurate demand forecasting requires – Product knowledge – Knowledge about the customer – Knowledge about the environment .
Procurement Management .
Current Process Group Execution Planning Initiation Integration Key: Past lecture Current lecture Future lecture Integration Scope Time Cost Quality HR Communications Risk Procurement Integration Quality HR Communications Procurement Procurement Closing Control Integration Scope Time Cost Quality HR Communications Risk Procurement Procurement Integration Procurement .
and negotiate a contract • Administer the Contract Manage the vendor relationship. document ongoing contract activities and request changes • Closing the Contract Accept the final products of the contract • • • • .Procurement Management Acquisition of goods and services. including: Plan Acquisitions Define what to procure Plan Contracting Prepare a solicitation Request Proposals Solicit responses Select a Vendor Evaluate and choose a vendor.
Integration • Planning Process Group – Continue project integration management by including a procurement management plan in the project management plan • Closing Process Group – Acceptance of contract deliverables and project phases and formally completing the project .
Plan Acquisitions Acquisition options: • Upgrade Modify the existing system • Build Develop system “from the ground up” internally or through a third party • Buy Purchase a Commercial-Off-The-Shelf (COTS) solution hosted internally or by a third party • Transfer Obtain public domain or no/low-cost license software from a third party • Re-Platform Convert the status quo to a new technology platform using internal or third party resources .
e.g.. measure a successful EMR implementation by how it achieves increased patient safety • Define user requirements tied to strategic objectives • Avoid re-inventing the wheel by using existing examples of requirements instead of starting from scratch .Prepare Requirements • Focus on strategic objectives • View IT as a tool enabling successful clinical improvements tied to an organization’s objectives.
Plan Contracting • Reduce the time to procure a system by limiting initial vendor proposals to scripted demonstration of user requirements • Request vendor costs and support for technical requirements from only those vendors that support user requirements • Maintain consensus by working with key users as they prepare requirements. conduct vendor demonstrations and select the best option .
Request Proposals • Identify vendors that support user needs. e.. EMR niche. provide similar products to competitors and/or have existing relationships with your organization • Prepare a vendor short-list and solicit proposals • Prepare solicitation document • Issue RFP • Administer vendor solicitation process .g.
Select Vendor • Evaluate vendors during demonstrations • Request finalists’ costs and support for technical requirements • Check references and conduct site visits • Select vendor supporting most user requirements at lowest cost .
Negotiate Contract • Use an agreement provided by your organization not the vendor • • • • • • Include a contract scope of services based on the project SOW. prioritize and share negotiation issues with vendor Obtain and evaluate vendor response Prepare fallback response and share with vendor Narrow issues to short-list and conduct face-to-face negotiations . including project manager and an attorney with system procurement experience Identify. which defines the criteria for approval of and payment for deliverables Assemble your negotiating team.
Administer Agreement • Use contract scope of services . project schedule and budget as standards • Monitor vendor compliance • Identify deviations and define agreed upon corrective actions • Prepare change orders/contract amendments where required by corrective actions • Monitor and document corrective actions successful completion of .
Close Agreement • Compare deliverable results to deliverable acceptance criteria included in contract scope of services • Identify corrective actions if the vendor does not adhere to the acceptance criteria • Review updated deliverable to confirm compliance • Accept and pay vendor for deliverable when it complies with acceptance criteria .
Inventory Management .
. work-in-process. component parts. or finished products that are held at a location in the supply chain.What is inventory? Inventory is the raw materials.
25 Trillion (U. This figure accounts for almost 25% of GNP.S. Department of Commerce). Investment in inventory is currently over $1.Why do we care? At the macro level: Inventory is one of the biggest corporate assets ($). Enormous potential for efficiency increase by controlling inventories .
inventory management.Why do we care? At the firm level: – Sales growth: right inventory at the right place at the right time – Cost reduction: less money tied up in inventory. obsolescence Higher profit .
Now.7 billion in inventory. Its loss totaled $392 million. Ericsson. it was too late for Solectron to halt orders from all of its 4.piles of unsold devices. (WSJ. March 19. a big chunk of which was attributable to writing down excess inventory .000 suppliers. June 16. which include Cisco. 2001) “When Palm formally reported its quarterly numbers in June.” (The Industry Standard. and Lucent was expecting explosive growth for wireless phones and networking gear…. the damage was gruesome. 2001) “Liz Claiborne said its unexpected earnings decline is the consequence of higher than anticipated excess inventories”. August 1993) .when the bottom finally fell out.Why do we care? Each of Solectron’s big customers. Solectron has $4. (BW.
How do you manage your inventory? How much do you buy? When? • • • • • • Soda Milk Toilet paper Gas Cereal Cash .
• Cost of holding and storing. money). • How much you consume. lost interest.What Do you Consider? • Cost of not having it. . • Price discounts. cost of drawing money. • Cost of going to the grocery or gas station (time. • Some safety against uncertainty.
spoilage. rework. security. cooling) – All costs that may be entailed before you sell it (obsolescence. • Operational costs: – Delay in detection of quality problems. – Increase throughput times.. . warehouse rental.Costs of Inventory • Physical holding costs: – out of pocket expenses for storing inventory (insurance..) • Opportunity cost of inventory: foregone return on the funds invested. – Delay the introduction of new products.
.Benefits of Inventory • Hedge against uncertain demand • Hedge against uncertain supply • Economize on ordering costs • Smoothing To summarize. we build and keep inventory in order to match supply and demand in the most cost effective way.
Modeling Inventory in a Supply Chain… Supplier Retail Warehouse .
000 different kinds of building materials.000 more products through our special order services.Home Depot • “Our inventory consists of up to 35. home improvement supplies.” .” • “We currently offer thousands of products in our online store.” • “We offer approximately 250. and lawn and garden products.
single order .Different types of inventory models 1. Multi-period model • • Repeat business. multiple orders 2. Single period models Single selling season.
Multiperiod model orders On-hand inventory Supply • Key questions: – – – – • Ordering costs • Holding costs How often to review? When to place an order? How much to order? How much stock to keep? .
Multiperiod model – The Economic Order Quantity Supplier Retailer Demand • Demand is known and deterministic: D units/year • We have a known ordering cost. and immediate replenishment • Annual holding cost of average inventory is H per unit • Purchasing cost C per unit . S.
What is the optimal quantity to order? Total Cost = Purchasing Cost + Ordering Cost + Inventory Cost Purchasing Cost = (total units) x (cost per unit) Ordering Cost = (number of orders) x (cost per order) Inventory Cost = (average inventory) x (holding cost) .
Finding the optimal quantity to order… Let’s say we decide to order in batches of Q… Inventory position Number of periods will be D Q Q The average inventory for each period is… Q 2 Total Time Period over which demand for Q has occurred Time .
Finding the optimal quantity to order… Purchasing cost = D x C Ordering cost = D Q Q 2 x S Inventory cost = x H .
So what is the total cost? TC = D C + D Q S + Q H 2 In order now to find the optimal quantity we need to optimize the total cost with respect to the decision variable (the variable we control) Which one is the decision variable? .
What is the main insight from EOQ? There is a tradeoff between holding costs and ordering costs Total cost Cost Holding costs Ordering costs Order Quantity (Q*) .
Economic Order Quantity .EOQ Q* = 2SD H Example: Assume a car dealer that faces demand for 5. and that it costs $15.000 to have the cars shipped to the dealership.000 )(5.000 cars per year.000 ) 548 500 . How many times should the dealer order. and what should be the order size? Q * 2(15. Holding cost is estimated at $500 per car per year.
but there is a lead time L: When to order? How much to order? Order Quantity Q Inventory Lead Time Place order Receive order Time .If delivery is not instantaneous.
Order Quantity Q Inventory Q: When shall we order? A: When inventory = ROP Q: How much shall we order? A: Q = EOQ Reorder Point (ROP) ROP = LxD Lead Time D: demand per period L: Lead time in periods Place order Receive order Time .If demand is known exactly. place an order when inventory equals demand during lead time.
. order 548 more cars. when the number of cars on the lot reaches 137. first convert: 10 days = 10/365yrs R = 10 D = 365 10 5000 = 137 365 So.Example (continued)… What if the lead time to receive cars is 10 days? (when should you place your order?) Since D is given in years.
But demand is rarely predictable! Inventory Level Order Quantity ROP = ??? Demand??? Place order Receive order Time Lead Time .
Actual Demand < Expected Demand Inventory Level Order Quantity Lead Time Demand X ROP Inventory at time of receipt Lead Time Place order Receive order Time .
If Actual Demand > Expected. we Stock Out Order Quantity Stockout Point Inventory Time Lead Time Place order Receive order Unfilled demand .
Inventory left 50% of the time.If ROP = expected demand. stock outs 50% of the time. service level is 50%. Inventory Level Order Quantity ROP = Expected Demand Uncertain Demand Average Time .
To reduce stockouts we add safety stock Inventory Level ROP = Safety Stock + Expected Expected LT Demand LT Demand Safety Stock Lead Time Place order Receive order Order Quantity Q = EOQ Time .
Decide what Service Level you want to provide (Service level = probability of NOT stocking out) Service level Probability of stock-out Safety Stock .
Safety stock = (safety factor z)(std deviation in LT demand) Service level Probability of stock-out Safety Stock Read z from Normal table for a given service level .
.Caution: Std deviation in LT demand Variance over multiple periods = the sum of the variances of each period (assuming independence) Standard deviation over multiple periods is the square root of the sum of the variances.
Average Inventory = (Order Qty)/2 + Safety Stock Inventory Level Order Quantity EOQ/2 Average Inventory Safety Stock (SS) Lead Time Place order Receive order Time .
. Average Inventory is: SS + EOQ/2 . Order quantity Q = 2.) 2 SD H Find the safety factor from a z-table or from the graph. Find std deviation in LT demand: square root law.How to find ROP & Q EOQ 1. std dev in LT demand ( std dev in daily demand ) LT D LT days in LT Safety stock is given by: SS = (safety factor)(std dev in LT demand) Reorder point is: ROP = Expected LT demand + SS 3. To find ROP. the probability of NOT stocking out.e. determine the service level (i.
the expected demand over the lead time is 5000(10/365) = 137. .65. When should you re-order if you want to be 95% sure you don’t run out of cars? Since the expected yearly demand is 5000.65 10(36) 168 Order 548 cars when the inventory level drops to 168.Example (continued)… Back to the car lot… recall that the lead time is 10 days and the expected yearly demand is 5000. So ROP 137 1. You estimate the standard deviation of daily demand demand to be d = 6.95 is 1. The zvalue corresponding to a service level of 0.
WAREHOUSING MANAGEMENT Gaurav Narkhede | Josue Servalis | Praneetha Boda Mike Macas | .
and finished products. .• Part of firms logistics system that stores products at and between point of origin and point of consumption. allowing firms to use customer service as a dynamic value-adding competitive tool. industrial goods. • Term “Warehousing” is referred as transportation at zero miles per hour • Warehousing provides time and place utility for raw materials.
• Functions of warehousing include – Transportation consolidation – Product mixing – Docking – Service – Protection against contingencies .THE ROLE OF THE WAREHOUSE IN THE LOGISTICS SYSTEM • The warehouse is where the supply chain holds or stores goods.
TYPE OF WAREHOUSING • Public Warehousing • Private Warehousing • Contract Warehousing • Multi-client Warehousing .
DESIGN CONSIDERATION Ideal Facility for Pure Supplier Consolidation (Full Pallet Movement) Warehouse Space Requirements .
PRINCIPLES OF WAREHOUSE LAYOUT DESIGN Use one-story facilities Move goods in a straight line Use efficient materialshandling equipment Use an effective storage plan Minimize aisle space .
RECEIVING INP UT •Schedule Carrier •Unload Vehicle •Inspect for damage WAREHOUSE PROCESS Put-away •Identify Product •Identify Product Location •Move Products •Update Records Storage •Equipment •Stock Location – Popularity – Unit Size – Cube Shipping Preparation •Packing •Labeling •Stacking Order Picking •Information •Walk & Pick •Batch Picking Shipping •Schedule Carrier •Load Vehicle •Bill of Loading •Record Update OUT PUT .
• Provide timely customer service. OBJECTIVES OF EFFICIENT WAREHOUSE OPERATIONS • Keep track of items so they can be found readily & correctly. • Minimize the total physical effort & thus the cost of moving goods into & out of storage. • Provide communication links with customers .
• Most activity in a warehouse is material handling. .• Benefits of Warehouse Management – Provide a place to store & protect inventory – Reduce transportation costs – Improve customer service levels • Complexity of warehouse operation depends on the number of SKUs handled & the number of orders received & filled.
COSTS OF OPERATING A WAREHOUSE • Capital costs — Costs of space & materials handling equipment • Operating costs — Cost of labor — Measure of labor productivity is the number of units that an operator can move in a day .
WAREHOUSE ACTIVITIES • Receive goods • Identify the goods • Dispatch goods to storage • Hold goods • Pick goods • Marshal shipment • Dispatch shipment .
Receive goods • Accepts goods from ‒ Outside transportation or attached factory & accepts responsibility • Check the goods against an order & the bill of loading • Check the quantities • Check for damage & fill out damage reports if necessary • Inspect goods if required .
Identify the goods
‒ items are identified with the appropriate stockkeeping unit (SKU) number (part number) & the quantity received recorded
Dispatch goods to storage
‒ goods are sorted & put away
‒ goods are kept in storage & under proper protection until needed
‒ items required from stock must be selected from storage & brought to a marshalling area
Marshal the shipment
‒ goods making up a single order are brought together & checked for omissions or errors; order
records are updated
Dispatch the shipment
‒ orders are packaged, shipping documents are prepared, & goods loaded on the vehicle
Operate an information system
‒ a record must be maintained for each item in stock showing the quantity on hand, quantity
received, quantity issued, & location in the
Maximize productivity & minimize cost. warehouse management must work with the following • Maximize use of space – space is the largest capital cost • Effective use of labor & equipment – labor is the largest operating cost – material handling equipment is the second largest capital cost .
Elements .FACTORS INFLUENCING EFFECTIVE USE OF WAREHOUSES • Cube utilization and accessibility • Stock location • Order picking and assembly • Physical Control & Security .
Cube utilization and accessibility ‒ Goods stored not just on the floor. but in the cubic space of the warehouse. warehouse capacity depends on how high goods can be stored ‒ Accessibility means being able to get at the goods wanted with a minimum amount of work .
Cube utilization and accessibility continued… .
and retrieve items • Basic Stock Locating Systems – Group functionally related items together . put away.Stock Location • Objectives – To provide the required customer service – To keep track of where items are stored – To minimize effort to receive.
& there are few SKUs continued… • Floating (Random) Location – Goods stored wherever there is appropriate space – Advantage is improved cube utilization . throughput is small.Stock Location • Fixed Location – SKU assigned a permanent location. & no other items are stored there – Fixed-location systems usually have poor cube utilization – Usually used in small warehouses.
Stock Location continued… • Two other systems sometimes used are – Point-of-use storage • Inventory stored close to where it will be needed • Used in repetitive manufacturing & JIT systems – Central storage • Contains all inventory in one central location .
Stock Location continued… • Advantages of Point-of-use Storage – Materials are readily accessible to users – Material handling is reduced or eliminated – Central storage costs are reduced – Material is accessible all the time .
Stock Location continued… • Advantages of Central Storage – Ease of control – Inventory record accuracy is easier to maintain – Specialized storage can be used – Reduced safety stock. since users do not need to carry their own safety stock .
items must be obtained from the warehouse.Order Picking and Assembly • When an order is received. & prepared for shipment. systems used – Area system – Zone system – Multi-order system . grouped.
Order Picking and Assembly continued… • Area system – Order picker circulates throughout warehouse selecting items on an order -- order is ready to ship when order picker is finished • Zone system – Warehouse is divided into zones. & each picker works only in an assigned zone -- .
except that each picker collects items for a number of orders at the same time .Order Picking and Assembly continued… • Multi-order system – Same as the zone system.
well-documented transaction system – – – – Identify the item Verify the quantity Record the transaction Physically execute the transaction • Limited access – Inventory must be kept in a safe. secure (locked) place with limited general access • Well-trained workforce .• Good part numbering system PHYSICAL CONTROL & SECURITY ELEMENTS • Simple.
Logistic Management .
LOGISTICS Defined Planning implementing and controlling the physical flow of material and finished goods from point of origin to point of use to meet customer`s need at a profit By “Philip Kotler” It is essentially a planning process and an information activity So A integrative process that optimizes the flow of material and supplies through the organization and its operations to the customer .
The word logistic has originated from Greek word ‘Logistikos’ and the Latin word ‘Logisticus’ which means science of computing & calculating In ancient times it was used more in connection with moving armies. During World War II logistics gained importance in army operations covering the movement of supplies . men & equipment across the border Today It has acquired the wider meaning and is used in the business for the movement of material from suppliers to the manufacturer and finally the finished goods to the consumers . the supplies of food & armaments to the war front.
mining & agriculture Sectors. . connectivity & information processing are contributing to a larg3e extent in the physical movement of goods produced in manufacturing .Scope of Logistic It is of critical importance to the organization how it delivers products & services to the customer . storage facilities. Effective & efficient Physical movement of the tangible product will speak of intangible services associated with the product and the organization which is delivering it. transportation equip. whether the product is tangible or intangible.. On the macro level infrastructure such as Various modes of transport . In Case of intangible product . the delivery of tangibles at the right place & right time will speak about its quality.
Scope of logistics This speed & reliability in distribution of products & services contribute to a great extent in the growth of a country`s domestic & international trade . Logistic cost as a percentage of GDP across the world is shown in the following table Country Logistic cost as a percentage of GDP Korea China Japan India France UK USA 16 15 14 13 12 11 10 .
. So the “ Public distribution system in the country needs logistical support for delivering goods at right place on time and the lowest cost. At Micro Level logistic plays a critical role in the value delivery system of business organization to provide superior customer service i. In a nutshell any productivity improvement that could be achieved in any part of logistic system.Scope of logistics India spent nearly $ 50 billion to move material from one use to another. to achieve a desired level of delivered services and quality at the lowest possible cost.e.at the micro or macro level would help in cost reduction and proper deployment of scare national resources to the productive purposes.
as a whole their performance may be dismal. then to the customer through the distribution channel the department may excel in their respective function but org. the business process starts with the flow of material from the suppliers.Fact In a manufacturing org. Reason • Lack of Co ordination in their activities •They have different goal to cherish •There is no single agency that coordinates their functions and homogenizes them. progress to the plant. How to overcome ? Use of Logistic as a system .
Logistic –A system approach Logistic recognizes that all the activities of material movement across the business process are interdependent and needs close coordination and these are to be maintained as a system and not the functional Silos. System is shown as logistic Mix including following functional Areas •Order Processing •Information Flow •Warehousing •Inventory control •Packaging •Transportation .
delivery period. indicating deviation if any It is routine operation but require great deal of planning training of people involved and investment to bring about efficiency & accuracy In a large organization a system capable of handling thousands of voluminous orders with minimum human involvement or without human involvement is a must involving shortened order fulfillment cycle to have edge over rivals .Order Processing Involve following activities •Order checking for any deviation in agreed on negotiated term •Technical details.payment terms.price.taxes etc •Checking the availability of material in stock (material requisition) •Production & material scheduling for shortage •Acknowledging the order.
Information Flow It is basically information based activity of inventory movement across the supply chain. Hence role of information system plays a vital role in delivering superior customer service This function is required to facilitate the following information needs Order Registration Order checking & editing Order processing Coordination means to integrate the total supply chain of the company with informational needs as to time . rate of consumption .g Lead time. delivery schedule & price of the material . value e. Transportation time & cost etc.quantity. .
Major decision of ware house are as follows: Location .Size & Number of warehousing facilities Warehouse layout Design of building Ownership of the warehouse . Nowadays Warehouse are treated as switching facilities rather than storage place.Effectiveness of an organization`s marketing strategy depends on making the right decision regarding warehouse.It is a major cost center. many customer problem are the direct result of improper warehousing management.Warehousing A storage place wherein finished goods are stored till they are sold.
Inventory management Point order problem That is How much to order When to order For this we require Dependable IMS Independent IMS Purchase Control Stores control ABC Analysis VED Analysis EOQ & EBQ Analysis Issue management Level Management MRP System Perpetual inventory system JIT System .
Packaging It is also a critical element in physical distribution of the product , which influences the efficiency of the logistic system this is done with the view of following : Foe handling and damage prevention For communications For inter modal transportation Storage space economy Thus to reduce packaging cost
Foe the movement of goods from supplier to buyer , transportation is the most fundamental and important component of logistic. E.g. for low unit value products the transportation cost component is 20% of the product cost. In logistic cost its share varies up to 65-70% in case of mass consumed very low unit price products. •Mode of transportation ( Cost & time factor) •Own fleet or Outsourcing •Route Planning •Vehicle scheduling Are the few decision which are involved in transportation
Which have change the perspective of logistics
Focus on Supply chain Management Outsourcing of Non Core Competency Functional Area
In such conditions the role of LOGISTICS Will be to provide time and place time and place utility of the product to the customer .Globalization The entire world has become a global village for marketers because of the liberalization of economics of most countries and the emergence of WTO which is forcing business organizations to supply products beyond the national boundaries wherever there is a market opportunity.
Integrating the process of Procurement . In their struggle for survival their focus has shifted to the supply chain I.Focus on Supply Chain Management Business the world over are striving for competitiveness. processing & distributing to deliver value for money to the customer Two key roles logistics planning & support are Value delivery process success of supply chain management .e.
It is better to outsource functional area to experts who can do job at the lowest cost and that to efficiently & Effectively. LOGISTICS Is one such area where most of business org.Outsourcing of Non Core Competency functional Area Outsourcing is a acceptable trend in business. Corporation have realized that doing everything by themselves does not result in effective & efficient use of scare resources available to them. do not have enough expertise thus needs to be outsourced Thus Logistics have shaped into different service industry offering complete & customized logistics solutions .
Accounts & finace.Value Chain It is understood now that an organization`s competitive Success could only come through either cost leadership or offering differentiated product and services LOGISTIC MANAGEMENT Can provide both the benefits simultaneously Through its value chain activities Which can be categorized into different types Inbound logistics operations Out bound logistics Support activates e. IT & MIS .g HR.
Infrastructure O A&F p e r operations a S&M t i Out bond In bound o Logistics logistics n s Technology Services Customer Value M&M HR .
Supply Chain Stores Operations Stores Procurement Warehouse Vendor Customer Inbound Logistics Out Bound Logistics .
P r o c u r e m e n t
D Stores is FG tr i b u Warehousing ti o n Customer Out bound logistics
Logistics for Business Excellence
For Business Excellence logistics operation need to be integrated on the following two fronts integration of logistic into business Integration of components of logistics To achieve the objective of making available right product at the right place and at a right time at low cost , every business is required to integrate logistics into the business process. For logistic operation to run smoothly, proper integration amongst the component of logistic process is a must.
A/Cs FinanceUtilities Marketing PPC
In process Log.
In Bound Log.
Out Bound Logistic
Logistic System Component
Transportation Material Handling & Storage Logistical Packaging
Objectives of Logistic management Inventory Reduction Reliable and consistent delivery performance Freight economy Minimum product damage quick Response .
NOTE: Amongst most of the Indian companies logistics outsourcing Has now become an accepted trend for the following reasons: Cost Saving Focus on core Business Paucity of funds Reduction in liabilities Wider Geographical coverage Cross pollination of better available practice .
Warehousing Nowadays warehousing is used as a switching facility rather than as a long term storage house. Attention is paid to 1 Higher lower shorter inventory turnover operating cost cycle time And in light of these warehouse`s performance is judged by its productivity and cost performance while trying to achieve 2 polemic goals. 1 2 2 3 Customer`s satisfaction lower cost of operation .
We have to decide on 2 factors Whether to have Centralized decentralized warehouse warehouse It ensures tight control On inventories and can Operate on EOS multiple distribution centers location of sites .
Objective Main better customer service low operating cost Ancillary objective Maximum utilization of storage space Higher labour productivity Maximum Asset utilization Reduction in material handling Increase in inventory turnover Reduce order filing time .
Warehousing Function 3 Functions Material Storage Function Material Handling Function Information Handling Function .
Material Storage function Due to non synchronization of Manufacturing cycle with that of the consumption cycle of the material . storage of the material remains a big hurdle So material storage is required to accommodate the following functions: Holding Consolidation Postponement Break Bulk packing Cross Docking Mixing .
Loading & unloading 2.Material Handling function This involves three function 1. Material Movement 3. Order filing .
Information handling function For this following information is required Goods inward Inspection & auditing Goods outward Excess Stock Invoicing Warehouse expenses Transit damage & Breakage Consignment tracking This all information facilitate quick decision .
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