LOGISTICS Examples

Dominos / Mc Donalds
Britania / Parle-G
Courier companies (professional
courier)
Indian Railways
Airline companies
News paper / Milk
Vegetable market (roadways/railways)
Suppliers / Wholesalers / distributors /
retailers of any product

DEFINING LOGISTICS
Logistics is a process of -- strategically
managing the procurement,
movement and storage of
materials, parts and finished goods
through the organization and its
marketing channels in such a way
that the current and future
profitability are maximized through
cost effective fulfillment of orders

OPERATING OBJECTIVES OF
LOGISTICS
Rapid response
Minimum variance
Delay in customer order receipt
Goods arriving damaged at customers location
Delivery to incorrect location
Unexpected disruption in manufacturing process.

Minimum Inventory
Movement consolidation
Quality
Life cycle support

Functions of Logistics (remember

names of all chapters)

Inventory management
Warehousing
Packaging
Transportation
Assignment
Facility location
Information
Logistics costing and performance
measurement

Michael Porters Value chain

analysis

Inbound & Outbound

logistics
Inbound logistics (upstream logistics)
Concerned with procurement cycle.
Task involves sourcing, order placement,
transportation & receiving
Outbound logistics (Downstream logistics)
Concerned with physical distribution
Distribution of finished goods, warehousing,
customer delivery, scheduling

Three Cs
CUSTOMERS

Needs seeking
benefits at
acceptable prices
VALUE

VALUE

COMPANY

COMPETITO
R &
ASSET

ASSET &
UTILISATION

UTILISATION
COST
DIFFERENTIALS

The 3 Rs of Logistics
Responsiveness
Reliability
Relationship

3 dimensions of customer
service
Availability
Operational performance
Speed
Consistence
Flexibility
Malfunction recovery

Reliablity

Sound Inventory Policy

Customer segmentation
Product requirement
Transport integration
Time based requirement
Competitive performance

Logistics performance cycle

Procurement cycle (materials
management)
Manufacturing cycle
Physical distribution cycle

Procurement cycle
SOURCING

RECEIVING

ORDER
PLACEMEMEN
T

SUPPLIER

TRANSPORTAT
ION

Manufacturing cycle

Inventory
from store

WIP

Finished
goods

Factory
warehouse

Physical distribution cycle

CUSTOMER
ORDER

ORDER
TRANSMISSIO
N

ORDER
PROCESSING
(Check
credit/inv)

RECEIVING

ORDER
TRANSPORTAT
ION

ORDER
SELECTION
(Check back
order)

Physical distribution Concept

Revolves around:
Transportation
Inventory control
Warehousing
Packaging
Material handling
Location analysis

Integrated Logistics
The suppliers, the firm, its suppliers
connected to each other office /
factory (nodes)
Nodes connected in the form of
communication links, transportation
links, human links (Links)

Defining Integrated
Logistics
The process of anticipating customer
needs and wants, -- acquiring the
inputs to meet those needs and
wants, -- optimising goods and
services, -- developing a network to
fulfill the customer requirement -and utilising this network to fulfill the
customer requirement in a timely
manner

Concept of Integrated
Logistics
INVENTORY FLOW
S
U
P
P
L
I
E
R

PROCUREME
NT

MFG
SUPPORT

INFORMATION
FLOW

PHYSICAL
DISTRIBUTI
ON

C
U
S
T
O
M
E
R

CONCEPT OF REVERSE
LOGISTICS
Customer returns new products
o Manufacturing defects
o Product not meeting specifications as per sample
o Product recalled by the company

Customer returns used products

o
o
o
o
o

Short term rentals

Warranty returns
Exchange offers
Unit sent to manufacture for product upgrade
Take backs (unnecessary packaging / pallets)

Concept of Reverse
Logistics
Customer returns Re-usable
products:
o Reusable products soft drink bottles
o Returns sent to manufacturer

Information flow
Primary objective is to plan & execute
integrated logistical operations
Within individual logistics areas, there are
different requirements w.r.t. order size, inv
availability, urgency of movement etc.
Thus, logistics information involves 2
major types of flows:

Logistics Information
1) Planning & coordination flows:
- Strategic objectives
- Capacity constraints
- Logistical requirements
- Inventory deployments
- Manufacturing requirement
- Procurement requirements
- Forecasting

Logistics Information
2) Operational flows:
- Order management
- Order processing
- Distribution operations
- Transportation & shipping
- Procurement

Concept of Supply Chain

Management
UPSTREAM
(SUPPLIERS)

WEAVERS OF FABRICS /
CLOTH

COMPANY

DOWNSTR
EAM
(CUSTOME
RS)

SHIRT MANUFACTURING
COMPANY

DISTRIBUTORS / RETAILERS /
CUSTOMERS

Produces value chain in the form of products & services in the hands of
ultimate consumers

Supply Chain Management

Management of upstream & downstream
relationships with suppliers & customers
to deliver superior value at least possible
cost to the supply chain as a whole
Network of organisations that are involved
in different processes and activities that
produce value in the form of products &
services to ultimate customers

LOGISTICS Vs SCM
Concerned with getting
goods & services where
they are needed at the
desired time.
No manufacturing or
marketing can be
accomplished without
logistical support.
Adds value only when inv
is correctly positioned to
facilitate sale.
Mainly concerned with
optimizing flows within
the org.

Concerned with all

activities associated with
movement of goods from
RM to end user.
Includes sourcing,
procurement, scheduling,
order processing, inv
mgmt, WH, customer
service.
Adds value at each stage
Concerned with flow of
material from a multitude
of suppliers

Barriers to internal integration of

Logistics
Organisational structure
Measurement systems
Inventory ownership (each dept
differs)
Information technology (limited data
base not accessible on cross
functional basis)
Knowledge transfer capacity