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LOGISTIC MANAGEMENT

The transportation of goods from manufacturer to retailer is logistics

INTRODUCTION
The term Logistics Management or supply chain management is that part of Supply Chain Management that plans, implements, and controls the efficient, effective, forward, and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers requirements.

Plan
A plan is typically any procedure used to achieve an objective. It is a set of intended actions, through which one expects to achieve a goal. Plans can be formal or informal: Structured and formal plans, used by multiple people, are more likely to occur in projects, diplomacy, careers ,economic development , military campaigns, combat, or in the conduct of other business. In most cases, the absence of a well-laid plan can have adverse effects: for example, a non-robust project plan can cost the organization time and money. Informal or ad-hoc plans are created by individuals in all of their pursuits.

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The most popular ways to describe plans are by their breadth, time frame, and specificity; however, these planning classifications are not independent of one another. For instance, there is a close relationship between the short- and long-term categories and the strategic and operational categories. It is common for less formal plans to be created as abstract ideas, and remain in that form as they are maintained and put to use. More formal plans as used for business and military purposes, while initially created with and as an abstract thought, are likely to be written down, drawn up or otherwise stored in a form that is accessible to multiple people across time and space. This allows more reliable collaboration in the execution of the plan.

Planning
The term planning implies the working out of sub-components in some degree of elaborate detail. Broader-brush enunciations of objectives may qualify as metaphorical roadmaps. Planning literally just means the creation of a plan; it can be as simple as making a list. It has acquired a technical meaning, however, to cover the area of government legislation and regulations related to the use of resources. Planning can refer to the planned use of any and all resources, as in the succession of Five-year plans through which the government of the Soviet union sought to develop the country. However, the term is most frequently used in relation to planning for the use of land and related resources, for example in urban planning, transportation planning, etc. Thus, in a governmental context, "planning" without any qualification is most likely to mean the regulation of land use.

LAND USE

Land use is the human use of land. Land use involves the management and modification of natural environment or wilderness,(wildland)into built environment such as fields, pastures, and settlements. It has also been defined as "the arrangements, activities and inputs people undertake in a certain land cover type to produce, change or maintain it"

Natural environment
The natural environment, encompasses all living and non-living things occurring naturally on Earth or some region thereof. It is an environment that encompasses the interaction of all living species. The concept of the natural environment can be distinguished by components: Complete ecological units that function as natural systems without massive human intervention, including all vegetation, microorganism, soil, rocks, atmosphere and natural phenomenon that occur within their boundaries. Universal natural resources and physical phenomenon that lack clear-cut boundaries, such as air , water, and climate, as well as energy, radiation, electric charge, and magnetism, not originating from human activity. The natural environment is contrasted with the built environment, which comprises the areas and components that are strongly influenced by humans. A geographical area is regarded as a natural, if the human impact on it is kept under a certain limited level

Built environment
The term built environment refers to the humanmade surroundings that provide the setting for human activity, ranging in scale from personal shelter and buildings to neighborhoods and cites that can often include their supporting infrastructure, such as water supply or energy networks.The built environment is a material, spatial and cultural product of human labor that combines physical elements and energy in forms necessary for living, working and playing.

Implementation
Implementation is the realization of an application, or execution of a plan, idea, model, design specification, standards algorithm , or policy.

Types of implementation
Hot standby or Hot spare Parallel running or as known as parallel Pilot introduction or as known as pilot Well-trade

Control (management)
Control is one of the managerial functions like planning, organizing, staffing and directing. It is an important function because it helps to check the errors and to take the corrective action so that deviation from standards are minimized and stated goals of the organization are achieved in desired manner. According to modern concepts, control is a foreseeing action whereas earlier concept of control was used only when errors were detected. Control in management means setting standards, measuring actual performance and taking corrective action.

Characteristics of Control
Control is a continuous process Control is a management process Control is embedded in each level of organizational hierarchy Control is forward looking Control is closely linked with planning Control is a tool for achieving organizational activities

The elements of control

The four basic elements in a control system (1) The characteristic or condition to be controlled. (2) The sensor, (3) The comparator (4) The activator

Comparator
The comparator, determines the need for correction by comparing what is occurring with what has been planned. Some deviation from plan is usual and expected, but when variations are beyond those considered acceptable, corrective action is required. It is often possible to identify trends in performance and to take action before an unacceptable variation from the norm occurs. This sort of preventative action indicates that good control is being achieved.

Activator
The activator, is the corrective action taken to return the system to expected output. The actual person, device, or method used to direct corrective inputs into the operating system may take a variety of forms. It may be a hydraulic controller positioned by a solenoid or electric motor in response to an electronic error signal, an employee directed to rework the parts that failed to pass quality inspection, or a school principal who decides to buy additional books to provide for an increased number of students. As long as a plan is performed within allowable limits, corrective action is not necessary.

Efficient
In economics, the term economic efficiency refers to the use of resources so as to maximize the production of goods and services. An economic system is said to be more efficient than another (in relative terms) if it can provide more goods and services for siciety without using more resources. In absolute terms, a situation can be called economically efficient if: No one can be made better off without making someone else worse off. No additional output can be obtained without increasing the amount of inputs. Production proceeds at the lowest possible per-unit cost.

effective
Having power to produce an effect or efftcts Producing a decided or decisive effect Efficient, Serviceable or Operative Actually in effect

Nature and Concepts of Logistic Management


The evolution of logistics and Supply Chain Management (SCM) in the 1990s can be traced back to physical distribution management in the 1970s when there was no coordination among the various functions of an organization, and each was committed to attain its own goal. This myopic approach then transformed into integrated logistic management in the 1980s that called for the integration of various functions to achieve a system-wide objective. Supply Chain Management (SCM) further widens this scope by including the suppliers and customers into the organizational fold, and coordinating the flow of materials and information from the procurement of raw materials to the consumption of finished goods.

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The objectives of Supply Chain Management (SCM) are to eliminate redundancies, and reduce cycle time and inventory so as to provide better customer service at lower cost. The focus has shifted from the share of the market paradigm to the share of the customer paradigm, wherein the goal is to create customer value leading to increased corporate profitability, shareholder value, and sustained competitive advantage in the long run. Logistics involves getting, in the right way, the right product, in the right quantity and right quality, in the right place at the right time, for the right customer at the right cost. The logistic network consists of the suppliers, the retailer and the users. The purpose of an integrated logistic network in a supply chain is to fulfill customer orders through providing place utility to deliver products and services to end users. The place utility is achieved by managing a number of key functions of a supply chain.

Scope of Logistics
Logistics is not confined to manufacturing operation alone. It is relevant to all enterprises, including Govt. institutions such as Hospitals and schools and service organization such as retailers, banks and financial service organizations. The study of logistics is especially important for bulk raw materials, where substantial outflow of freight is involved. Management of Logistics is an art which is extremely difficult to perfect in India, JIT ends up being SHIT (some how in time.) The study of logistics is important to establish a lean supply chain which would give an advantage of quick product change over, capability, excellent short and long term forecast visibility and JIT capability.

For More Information


Members M/s.ganesh Logistics [BANGALORE] India (www.Ganeshlogistics.Com ) Trustman & Co [New Delhi] India (www.trustman.org, www.delhilaw.firm.in) Kandla Logistics Pvt. Ltd. [Rajkot] India 1 Logistic [Navi Mumbai] India Globe Ecco Logistics Limited [lucknow] India Above are few Logistic companies check the details of these companies for further study.

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Logistics play a significant role in ensuring efficiency and cost margins in retail businesses. The competitive retail scenario, rapidly changing consumer preferences, diversified retail formats, as well as retail stores spread far and wide, are some of the factors contributing to the increased efficiency in retail logistics. Logistics involves managing the flow of merchandise as well as information related to the movement of goods. A retailer can have either own logistics arrangements (in-house logistics) or hire some other company for logistics services (outsourcing of logistics activities). In order to increase efficiency in their supply chain, companies are increasingly going for logistics outsourcing. Transportation is an essential part of logistics for maintaining flow of goods between manufacturers, suppliers and retailers.

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The infrastructure available for moving goods from one place to another in India includes roads, railways, airways and ports. The nature of providing logistic services has changed dramatically in recent years. It is gradually becoming a specialist field, with increasing requests for the integration of complex flows of goods. Vertical integration, by aligning processes within one supply chain, as well as horizontal integration, by allowing collaboration between different supply chains. The logistics provider is increasingly expected to act as a thinking partner. This in turn calls for considerable investments in technology and information management, as these two factors will be essential in the field of logistics in the future.

Customer value Chain

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The customer focused value chain is conceptually underpinned by the principle that ..the purpose of a business is to create and keep a customer.. (Theodore Levitt). The concept looks at the organization in terms of a series of value creating activities and considers the best in class approaches to enhancing value and reducing the cost of delivery. The concept is based on bringing together the following elements into a holistic approach to creating and sustaining customer value in order to maintain competitive edge: Strategy and structure aligned to creating and serving the customer (Johnson & Scholes) Business processes engineered to add customer value through Service Breakthroughs (Heskett) Business controls performance management principles i.e. the Balanced Scorecard (Kaplan & Norton), to ensure the business continually monitors and manages the chain of events which drive customer value. Namely, people perform business processes which create customer value which creates business profitability. Culture the creation of a learning environment (Garratt)

Objectives of Logistic Management


The General objectives of the logistics can be summarized as: Cost reduction Capital reduction Service improvement The specific objective of an ideal logistics system is to ensure the flow of supply to the buyer, the: Right product Right quantities and assortments Right places Right time Right cost / price and, Right condition

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This implies that a firm will aim at having a logistics system which maximizes the customer service and minimizes the distribution cost. However, one can approximate the reality by defining the objective of logistics system as achieving a desired level of customer service i.e., the degree of delivery support given by the seller to the buyer. Thus, logistics management starts with as curtaining customer need till its fulfillment through product supplies and, during this process of supplies, it considers all aspects of performance which include arranging the inputs, manufacturing the goods and the physical distribution of the products. However, there are some definite objectives to be achieved through a proper logistics system. These can be described as follows:

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1. Improving customer service: As we know, the marketing concept assumes that the sure way to maximize profits in the long run is through maximizing the customer satisfaction. As such, an important objective of all marketing efforts, including the physical distribution activities, is to improve the customer service. An efficient management of physical distribution can help in improving the level of customer service by developing an effective system of warehousing, quick and economic transportation, all maintaining optimum level of inventory. But, as discussed earlier, the level of service directly affects the cost of physical distribution. Therefore, while deciding the level of service, a careful analysis of the customers wants and the policies of the competitors is necessary. The customers may be interested in several things like timely delivery, careful handling of merchandise, reliability of inventory, economy in operations, and so on. However, the relative importance of these factors in the minds of customers may vary. Hence, an effort should be made to ascertain whether they value timely delivery or economy in transportation, and so on. One the relative weights are known, an analysis of what the competitors are offering in this regard should also be made. This, together with an estimate about the cost of providing a particular level of customer service, would help in deciding the level of customer service.

2. Rapid Response: Rapid response is concerned with a firm s ability to satisfy customer service requirements in a timely manner. Information technology has increased the capability to postpone logistical operations to the latest possible time and then accomplish rapid delivery of required inventory. The result is elimination of excessive inventories traditionally stocked in anticipation of customer requirements. Rapid response capability shifts operational emphasis from an anticipatory posture based on forecasting and inventory stocking to responding to customer requirements on a shipment-to-shipment basis. Because inventory is typically not moved in a time-based system until customer requirements are known and performance is committed, little tolerance exists for operational deficiencies

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3. Reduce total distribution costs: Another most commonly stated objective is to minimize the cost of physical distribution of the products. As explained earlier, the cost of physical distribution consists of various elements such as transportation, warehousing and inventory maintenance, and any reduction in the cost of one element may result in an increase in the cost of the other elements. Thus, the objective of the firm should be to reduce the total cost of distribution and not just the cost incurred on any one element. For this purpose, the total cost of alternative distribution systems should be analyzed and the one which has the minimum total distribution cost should be selected.

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4. Generating additional sales: Another important objective of the physical distribution/logistics system in a firm is to generate additional sales. A firm can attract additional customers by offering better services at lowest prices. For example, by decentralizing its warehousing operations or by using economic and efficient modes of transportation, a firm can achieve larger market share. Also by avoiding the out-ofstock situation, the loss of loyal customers can be arrested.

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5. Creating time and place utilities: The logistical system also aims at creating time and place utilities to the products. Unless the products are physically moved from the place of their origin to the place where they are required for consumption, they do not serve any purpose to the users. Similarly, the products have to be made available at the time they are needed for consumption. Both these purposes can be achieved by increasing the number of warehouses located at places from where the goods can be delivered quickly and where sufficient stocks are maintained so as to meet the emergency demands of the customers. Moreover, a quicker mode of transport should be selected to move the products from one place to another in the shortest possible time. Thus, time and place utilities can be created in the products through an efficient system of physical distribution.

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6. Price stabilization: Logistics also aim at achieving stabilization in the prices of the products. It can be achieved by regulating the flow of the products to the market through a judicious use of available transport facilities and compatible warehouse operations. For example, in the case of industries such as cotton textile, there are heavy fluctuations in the supply of raw materials. In such cases if the market forces are allowed to operate freely, the raw material would be very cheap during harvesting season and very dear during off season. By stocking the raw material during the period of excess supply (harvest season) and made available during the periods of short supply, the prices can be stabilized.

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7. Quality improvement: The long-term objective of the logistical system is to seek continuous quality improvement. Total quality management (TQM) has become a major commitment throughout all facets of industry. Overall commitment to TQM is one of the major forces contributing to the logistical renaissance. If a product becomes defective or if service promises are not kept, little, if any, value is added by the logistics. Logistical costs, once expended, cannot be reversed. In fact, when quality fails, the logistical performance typically needs to be reversed and then repeated. Logistics itself must perform to demanding quality standards. The management challenge of achieving zero defect logistical performance is magnified by the fact that logistical operations typically must be performed across a vast geographical area at all times of the day and night. The quality challenge is magnified by the fact that most logistical work is performed out of a supervisor s vision. Reworking a customer s order as a result of incorrect shipment or in-transit damage is far more costly than performing it right the first time. Logistics is a prime part of developing and maintaining continuous TQM improvement.

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8. Life-Cycle support: A good logistical system helps to support the life cycle. Few items are sold without some guarantee that the product will perform as advertised over a specified period. In some situations. the normal value-added inventory flow toward customers must be reversed. Product recall is a critical competency resulting from increasingly rigid quality standards, product expiration dating and responsibility for hazardous consequences. Return logistics requirements also result from the increasing number of laws prohibiting disposal and encouraging recycling of beverage containers and packaging materials. The most significant aspect of reverse logistical operations is the need for maximum control when a potential health liability exists (i.e.. a contaminated product). In this sense, a recall program is similar to a strategy of maximum customer service that must be executed regardless of cost. Firestone classical response to the tyre crisis is an example of turning adversity into advantage. The operational requirements of reverse logistics range from lowest total cost, such as returning bottles for recycling, to maximum performance solutions for critical recalls. The important point is that sound logistical strategy cannot be formulated without careful review of reverse logistical requirements.

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9. Movement consolidation: As the logistical system aims at cost reduction through integration, consolidation One of the most significant logistical costs is transportation. Transportation cost is directly related to. the type of product, size of shipment, and distance. Many Logistical systems that feature premium service depend on highspeed, small shipment transportation. Premium transportation is typically high-cost. To reduce transportation cost, it is desirable to achieve movement consolidation. As a general rule, the larger the overall shipment and the longer the distance it is transported, the lower the transportation cost per unit. This requires innovative programs to group small shipments for consolidated movement. Such programs must be facilitated by working arrangements that transcend the overall supply chain.