Evolution and Objectives of Logistics

Evolution of Logistics:-
• The term” logistics” comes from the Greek word “logos”
and the Greek word “logistiki”
• However some other authorities claim that the word
‘Logitics’ is derived from the French word ‘Loger’
• It is agreed that Logistics originated from the military’s
need to supply themselves with arms, ammunition and
rations as they moved from their base to a forward position.
• In ancient Greek, Roman and Byzantine empires, there
were military offi cers with the title Logitikas.
• In Military science, logistics includes all the activities of
armed-forces units in support of combat units, including
transport, supply, communications, and medical aid.
Objectives of Logistics:-
1) Cost Reduction and Profit Maximization.
2) Efficient Flow of Manufacturing Operations.
3) Competitive Edge.
4) Effective Communication System.
5) Sound Inventory Management.
Components and Functions of
Logistics Management
Components of Logistics Management
Ordercomponents
Three major processing or Input
of logistics maanagement
are as follows:-
1) Order Processing system.
2) Inventory management.
Inventory Management
3) Freight transportation.

Freight transportation
 Functions of Logistics Management
Manufacturing plants, warehouses.
Network Design
●

●
material handling equipment’s

1) Network design.
2)Order processing .
Order processing includes activities for receiving, handling, filing, recording of orders.
Order Processing
●

●
management has to ensure that order processing is accurate, reliable and fast.

3) Procurement. ●
Raw-materials and parts

Inventory
4) Management
Material handling.
●

●
Semi-finished goods
Finished goods

5) Inventory management.
It is related to obtaining materials from outside suppliers. It includes supply sourcing, negotiation, order
Procurement
●

6)Packaging and labeling.

placement, inbound transportation, receiving and inspection, storage and handling etc

7) Warehousing. ●
It involves the activities of handling raw-materials, parts, semi-finished and finished goods into and out of plant, warehouses and transportation terminals.

Material Handling
8)Transportation.
Management has to ensure that the raw-materials, parts, semi-finished and finished goods are handled properly to minimize losses due to breakage, spoilage
etc.

Packaging andLabeling ●
Packaging and labeling are an important aspect of logistics management

The number and type of warehouses needed and

Warehousing
●

●
The location of warehouses.

Movement of raw-materials from suppliers to the manufacturing unit.

●

Transportation
Movement of work-in-progress within the plant.
●

Movement of finished goods from plant to the final consumers.

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Distribution Related Issues and
Challenges in Logistics Management
Fuel Costs
Business Process Improvement
Improved Customer Service
Economy
Driver Shortage & Retention
Government Regulations
Environmental Issues
Technology Strategy & Implementation
Gaining Competitive Advantage
through Logistics Management
A firm can gain competitive advantage only when it performs
its strategically important activities (designing, producing,
marketing delivering and supporting its product) more
cheaply or better than its competitors.
Value chain activity disaggregates a firm into its strategically
relevant activities in order to understand behaviour of costs
and existing and potential sources of differentiation. They are
further categorized into two types
(i) Primary: inbound logistics, operation outbound logistics,
marketing and sales, and service
(ii) Support: infrastructure, human resource management,
technology development and procurement
Transportation – Function, Cost &
Mode of Transportation
Transport or Transportation is the movement of
humans, animals and goods from one location to
another. In other words, the action of transport is
defined as a particular movement of an organism or
thing from a point A to a Point B. Modes of transport
include air, land (rail and road), water, cable, pipeline
and space. The field can be divided into infrastructure,
vehicles and operations. Transport enables trade
between people, which is essential for the
development of civilizations.
Function of Transportation
1) Product Movement:-
To move various types of product whether it is raw
mate
Productrials component, semi- finished goods, finished
Movement
goods, packaging material, scrap and so on.
Tran spor tatio n has become a very essential.
●
To move various types of product whether it is raw materials component, semi-
uct finished
Prodgoods,
2)finished ge:-packaging material, scrap and so on. 
storagoods,
Though it is not very common, but one of the
func tions of tran spor tatio n is also temporary storage
Product storage
of goods. Of course, storing goods in vehicles is quite
an expensive affair.
●
Though it is not very common, but one of the functions of
transportation is also temporary storage of goods. 
TRANSPORT COSTS
Transport systems face requirements to increase their capacity
and to reduce the costs of movements. All users (e.g.
individuals, corporations, institutions, governments, etc.) have
to negotiate or bid for the transfer of goods, people,
information and capital because supplies, distribution
systems, tariffs, salaries, locations, marketing techniques as
well as fuel costs are changing constantly. There are also costs
involved in gathering information, negotiating, and enforcing
contracts and transactions, which are often referred as the cost
of doing business. Trade also involves transactions costs that
all agents attempt to reduce since transaction costs account for
a growing share of the resources consumed by the economy.
MODE OF TRANSPORTATION
Road transportation

1. Road transportation.
2.RailTrain transportation
transportation and pipelines or pipeline.
3. Maritime transportation.
4.Maritime
Airtransportation
transportation.
5. Intermodal transportation.
Air transportation
6. Telecommunications.
Intermodal transportation

Telecommunications
Transportation Network and Decision
Long-Term Decisions:-
At the highest strategic decision level, transportation managers
must fully understand total supply chain freight flows and
have input into network design.
Network and lane design decisions at the strategic level
should examine tradeoffs with other operational cost areas
such as inventory and distribution center costs.
Lane Operation Decisions:-The second level of decision-
making regards lane operation decisions.  Where network
design decisions are concerned with long-term planning,
these decisions focus on daily operational freight
transactions.
Choice of Mode and Carrier:-A third level of transportation
decision-making involves the choice of mode and carrier for a
particular freight transaction. Due to the blurring of service
capabilities among traditional transportation modes, options
that in the past would not be considered feasible may now
emerge as the preferred choice. For example, rail container
service may offer a cost-effective alternative to longhaul motor
transport while yielding equivalent service.
Dock Level Operations:-The final set of transportation
decisions involves dock level operations, such as load
planning, routing, and scheduling.
Successful managers today require a broad view of
transportation management’s role and responsibilities in an
integrated supply chain. Managers will continue to encounter
significant challenges as their firms proceed down the road
toward supply chain integration, particularly as external
environmental characteristics such as fuel costs and the overall
economy wax and wane.
Containerization
Containerization is a system of intermodal freight transport
using intermodal containers (also called shipping containers and
ISO containers). The containers have standardized dimensions.
They can be loaded and unloaded, stacked, transported
efficiently over long distances, and transferred from one mode of
transport to another—container ships, rail transport flatcars, and
semi-trailer trucks—without being opened. 
Containerization originated several centuries ago but was not
well developed or widely applied until after World War II, when
it dramatically reduced the costs of transport, supported the
post-war boom in international trade, and was a major element
in globalization. 
The main advantages of containerization are

 Standardization.
  Flexibility.
  Costs.
  Velocity.
 Warehousing.
 Security and safety.
Drawbacks of containerization:-
 Site Constrains.
 Capital intensiveness.
 Stacking.
 Repositioning.
 Theft and Losses.
 Illicit Trade.
Containerization
Cross Docking
Cross-docking is a practice in logistics of
unloading materials from an incoming semi-
trailer truck or railroad car and loading these
materials directly into outbound trucks, trailers,
or rail cars, with little or no storage in between.
This may be done to change the type of
conveyance, to sort material intended for
different destinations, or to combine material
from different origins into transport vehicles (or
containers) with the same or similar destinations.
Advantages of Cross-docking:
Streamlines the supply chain, from point of origin
to point of sale
Reduces labour costs through less inventory
handling
Reduces inventory holding costs by reducing
storage times and potentially eliminating the need
to retain safety stock
Products reach the distributor, and consequently
the customer, faster
Reduces or eliminates warehousing costs
May increase available retail sales space
Less risk of inventory handling
 Disadvantages of cross-docking:
Potential partners may not have the necessary storage
capacities
An adequate transport fleet is needed to operate
A computerized logistics system is needed
Additional freight handling can lead to product
damage
Labour costs are also incurred in the moving and
shipping of stock
 Factors influencing the use of retail cross-docks
Cross-docking depends on continuous communication
between suppliers, distribution centers, and all points of
sale
Customer and supplier geography, particularly when a
single corporate customer has many multiple branches or
using points
Freight costs for the commodities being transported
Cost of inventory in transit
Complexity of loads
Handling methods
Logistics software integration between supplier(s),
vendor, and shipper
Tracking of inventory in transit
Cross-dock facility design:- Cross-dock facilities
are generally designed in an “I” configuration, which
is an elongated rectangle. The goal in using this
shape is to maximize the number of inbound and
outbound doors that can be added to the facility
while keeping the floor area inside the facility to a
minimum. Bartholdi and Gue (2004) demonstrated
that this shape is ideal for facilities with 150 doors or
less. For facilities with 150–200 doors, a “T” shape is
more cost effective.