LOGISTICS PLANNING

• Logistic planning is gathering information and putting structures in

place to make sure your logistics function can achieve the rights in
the future, in an ongoing fashion. More importantly, it seeks to make
certain you have plans in place to deal with disruptions to your
supply and transport resources.
How Logistics Companies Can Benefit From Effective Planning

• Improves efficiency
• Reduces the need for labour
• Provides environmental benefits
• Minimizes of wastes within the supply chain
• Reduces time spent on each chain
• Enhances continuity
• It enhances visibility within the supply chain
Demand forecasting
• Demand forecasting is the process of predicting, the demand for
products to ensure they can be delivered and satisfy customers. The
goal is to strike a balance between having sufficient inventory levels
to meet customer needs without having a surplus.

• Demand forecasting is a field of predictive analytics which tries to

understand and predict customer demand to optimize supply
decisions by corporate supply chain and business management.
• Demand forecasting, also known as sales forecasting, refers to the
process of making estimates about future customer demand over a
certain time period. Failing to use demand forecasting puts
businesses at risk for making poor decisions about their target
markets and products
• Demand forecasting allows manufacturing companies to gain insight
into what their consumer needs through a variety of forecasting
methods. These methods include: predictive analysis, conjoint
analysis, client intent surveys, and the Delphi Method of forecasting.
Survey Method:

• Survey method is one of the most common and direct methods of

forecasting demand in the short term. This method encompasses the
future purchase plans of consumers and their intentions. In this
method, an organization conducts surveys with consumers to
determine the demand for their existing products and services and
anticipate the future demand accordingly.
• i. Experts’ Opinion Poll
• ii. Delphi Method
• iii. Market Experiment Method
2. Statistical Methods:

• Statistical methods are complex set of methods of demand

forecasting. These methods are used to forecast demand in the long
term. In this method, demand is forecasted on the basis of historical
data and cross-sectional data.
• Historical data refers to the past data obtained from various sources,
such as previous years’ balance sheets and market survey reports. On
the other hand, cross-sectional data is collected by conducting
interviews with individuals and performing market surveys. Unlike
survey methods, statistical methods are cost effective and reliable as
the element of subjectivity is minimum in these methods.
• Trend Projection Method
• Graphical Method
• Fitting Trend Method
• Box-Jenkins Method
• . Seasonal trend
• Cyclical Trend
• Irregular trend
 Dependent demand
• Is the demand for component parts, raw materials, or sub-
assemblies. This demand does not occur until there is demand for a
parent item, which is typically a product.

• Generally, Dependent Demand Item refers to the item whose demand

is required by the one-by-one calculation base on the independent
demand items such as products and service parts, and includes
assemblies, subassemblies, processed parts, purchased parts, and raw
materials.
• For example, this would be the speakers in the computer, the wheels
on the bicycle, or the cheese on the pizza
 Independent demand

• Independent demand is demand for a finished product, such as a

computer, a bicycle, or a pizza.

• The Independent Demand occurs by the request of customers for

products, kit products, service parts. This demand also individually and
independently happens for each item, and has no relationship with
other items. Thus it is used as it is to setup the production plan.
Strategic, tactical and operational plans in logistics
• Decides what, when, and to how plan for logistics at three
levels:
Strategic – long range 1 year

Tactical - 1 year horizon

Operational – frequently on hourly or daily basis

• Strategic plans are developed by top management to give

the organization direction.

• At such a level, the plans address issues to do with financial

sources, resource allocation and organizational structure.
Wilson and Herbert
• Tactical plans on the other hand are executed by
middle level managers. They are meant to create a
way for implementing strategic plans.

• Tactical plans are more specific and concrete than

strategic plans.

• Operational plans specify what must be achieved

over a short time in order to achieve tactical level
plans. Wilson and Herbert
Strategic decisions in logistics

• Make to order vs make to stock

• Inventory centralization vs decentralization. 

Wilson and Herbert

Tactical plans
• Logistics involves the decision of material flows and inventories
throughout a network of manufacturing sites and warehouses to
satisfy the demand of each customer. To ensure that best decisions
are made for the mid-term, optimization models are employed.
• Eg. How much to keep at each warehouse
• Which supplier to buy from
• How many employees are needed to man in each department?
• What means of transport to use?

Wilson and Herbert

Operational plans
• Routing
• Scheduling
• Replenishment
• Loading/offloading
• Order fulfillment
• Repair and mentainance

Wilson and Herbert

 ILLUSTRATION
Logistics Decisions Strategic Tactical Operational

Transportation To own or hire Manage determining Routing/Scheduling

vehicle number needed

Inventory What type of inventory to Inventory systems Replenishment and

deal in material handling

Location Facility , size Utilization of the location Regular mentainance and

Location cleaning

Wilson and Herbert

Production planning
• Is the planning of production and manufacturing modules in a
company or industry. It utilizes the resource allocation of activities of
employees, materials and production capacity and time in order to
serve different customers.
• Here's a simple production planning : A factory produces handbags.
The management plans the production of a number of bags based on
demand forecasts for each design seasonally. Using the right material
and resources, such as leather for each item, the bags are made in the
factory.
Importance of production planning
• Production planning has the purpose of ensuring all necessary
preparation is completed before a production cycle begins, so it can
run smoothly. This involves allocating resources effectively so that
everything is in place for each stage of production to start. The factory
floor should be organized appropriately.
• Production planning is important because it creates an efficient process
for production according to customer and organizational needs.
• A good production plan minimizes lead time, which is the amount of
time that passes between the placing of an order and the completion
and delivery of that order.
Production scheduling
• Scheduling is the process of arranging, controlling and optimizing
work and workloads in a production process or manufacturing
process.
• Production scheduling ideally deals with allocating time for the
production of products according to the customer’s demand.
Scheduling is used to allocate plant and machinery resources, plan
human resources, plan production processes and purchase materials.
• The production schedule is a versatile and important document for
planning, forecasting, predicting, and meeting demand. It helps keep
your operations working on time and under budget, which helps you
keep your commitment to your customers.
• Scheduling is essentially the short-term execution plan of a
production planning model. Production scheduling consists of the
activities performed in a manufacturing company in order to
manage and control the execution of a production process. ...
Scheduling affects, and is affected by, the shop floor organization.
How do you create production schedules
• 5 key factors of a production plan
• Forecast market expectations. To plan effectively, you will need to
estimate potential sales with some reliability
• Inventory control.
• Availability of equipment and human resources
FLEET MANAGEMENT

• Fleet management refers to the overall actions that take place to keep a fleet
running efficiently, on time, and within budget. It can be defined as the processes
used by fleet managers monitor fleet activities and make decisions from asset
management, dispatch and routing, and vehicle acquisition and disposal.
Mechanically fit
Insured
With fuel
With drivers
Readily available
Routing in transport
• Routing is the process of mapping specific routes that drivers will
take to make these deliveries.
• Transportation is a major cost factor within any logistics operation.
Often transport accounts for up to 70% of logistics spend and rarely is
it less than 30%. Consequently, maximising the utilisation of transport
assets is a main area of focus for transport routing.
• The ultimate goal of transport routing is to minimize route time or
distance, maximizing vehicle fill and reducing the total cost of a
vehicle. Of course, this also needs to be balanced against service level
agreements and operational constraints.
Transport routing continues
• Transport routing is a mathematical optimisation problem with a large number of constraints including
vehicle capacity, access restrictions, load configuration and delivery windows.

Look at the
• Time available
• Traffic
• Nature of the road
• Restrictions
• The cost of transportation
• The state of the vehicle
• The nature of goods
• The nature of the driver
• Transport Options at hand
Vehicle scheduling
•  The process of assigning vehicles to the trips of a timetable. Given a
desired timetable, the quality of vehicle schedules is often measured
by the minimum number of vehicles required to cover all trips
• One of the main roles of a transport planner is to create a highly
efficient schedule. This involves combining orders with routes and
shifts in such a way that total costs are minimized, and all business
rules and service constraints satisfied.