Logistics & Supply Chain

Management
(Term-III,IILM)

-Vikram S. Tyagi
 Logistics Management
(in 21st Century)

Logistics management refers to creating

(designing, developing, producing) and operating an
integrated system which responds to
customer expectations by making
available required quantity of required
quality products and services as and
when required (Time, place & speed) at the
least possible costs.
Evolution of logistics Management

Period Logistics Evolution Era

Till1950s Independent Business Function
1960s Limited Internal integration
1980s Fully Internally Integrated Function
1990s Externally integrated Function
2000+ IT integrated process function
 Independent Business Function
Era (Till 1950s)
• Long history of application in wars but no formal
concepts or theory for business existed.
• Post war-large demands and acute shortages of
products
• Mindset-Increased capacities and high volume
production
• Main object- maximize profit by volume sales
• Role of logistics limited to warehousing &
transportation of raw materials and finished
products.
“Production Focus”
 Independent Functional
Structure

Chief Executive

Manufacturing Sales & Marketing Finance &Control

-Prod. scheduling -Order processing

-Plant location -Sales forecasting
-Depot locations and -Use of computers
-RM purchases -Credit controls
-Factory transport operations
-Depot stock levels -Investments in
-Inventory mgmt. inventories
-Packaging -Delivery transports
-Distribution channels -Operational research
-Work in process
 Limited Internal integration Era
(1960-70s)
• Recession of 1958
• Plentiful of products, very sluggish
demand, severe price competition
• Business focus- price based competition
and cost controls
• Limited Internal Integration of- Materials
Management and Distribution Management.
“Focus: Cost Control”
 Limited Internally Integrated
Functional Structure
Chief Executive

Manufacturing Sales & Marketing Finance &Control

-Sales forecasting -Credit controls

-Prod. scheduling
-Sales operations -Facility planning
-Industrial Eng.
-Market Intelligence -Budgeting
-in-plant storage

Materials Management Distribution Management

-Material req. planning -Out-bound transport

-Procurement, purchase -Fin. goods stocks
-Warehousing -order processing
-RM inventory -Distrib. warehousing
-In-bound transport
 Fully Internally Integrated
Functional Era(1980s)
• OPEC embargo-steep increase in oil price
• Sharp increase in transport costs-reduced
profitability
• Very high inflation- significant increase in
interest rates
• Gradual change in economic structure-
multinational operations
• Pressure for increased internal efficiencies
 Fully Internally Integrated
Functional Era(1980s)..contd
• Business need- maximize profitable sales
volume and cost reduction
• Major development- Integrated logistics
management i.e. Materials Management,
Production Management and Distribution Management
• Main Focus- increased productivity,
profitability
“ Focus: Internal Efficiencies”
Fully Internally Integrated Functional structure(1980s)
 Externally integrated Functional
Era (1990s)
• Rapid privatization, Liberalization and globalization
• Business scenario becomes still more competitive
• New pattern for survival- provide most value at least
cost
• Rapid technology development, many new concepts
developed- TQM,MRP,DRP, JIT, 3PL & 4PL
• Major thrust of era- Core Competence and high
degree of specialization
• Do what you can do the best and outsource the rest

“ Focus” Core Competencies”

 IT integrated Functional Era(2000+)
(Virtual Organization Era)
• Major developments in Information
technology
• Real time and high speed communications
becoming common
• Web based transaction becoming common
• Supplier, manufacture, seller and customer
can make transactions simultaneously on a
real time basis
• E-commerce, VMI, Zero Inventory and many
other developments
IT Integrated Functional Structure
IT Integrated process Structure
Chief Executive

Logistics Executive

Multi-discipline Logistics Management Team

Transaction Management foundation
Software
Supplier Internal Custom
Relationship Logistics Relationship
Management Management Management
(SRM) (ILM) (CRM)
-Strategic -Call centre
-Source Planning
-Negotiate -Marketing
-Demand
-Buy -Selling
and supply
-supply -Order
Planning
collabortn. Management
-Fulfillment
-Design -Customer
-Field
collaboratn. service
service
 Logistics Management
Overview

Retail Chain Outlets

Products
Mfg & distribution
based SCM-Supply Chain Mgmt
industries
Electronic & M business

Ten Media, Entertainment &Music

Elements
Service
Of SDM-Services delivery Mgmt Travel, Tourism, leisure & Event Mgmt
Based
Logistics
Industries
BPO, KPO & Fin. Services

Repairs, Maint.& Post sales services

Export &
Import ISCM /Global SCM International Trade Operations
business

Logistics
Managing Logistics change Motivation, Training, coordin.
Admin
 Ten Basic Elements of Logistics
• Information Systems
• Forecasting
• Inventory
• Warehousing &Distribution Centres
• Material Handling Systems
• Transportation
• Protective Packaging
• Order Processing
• Purchasing & Sourcing
• Supply Chain Design
 Logistics Management
(in 21st Century)

Logistics management refers to creating

(designing, developing, producing) and operating an
integrated system which responds to
customer expectations by making
available required quantity of required
quality products and services as and
when required (Time, place & speed) at the
least possible costs.
(Value Chain; Value Engineering; Business process Engineering; products, funds and information
flows; paradigm shift in the way business is done)
 What is a Supply Chain?
Customer wants
P&G or other Jewel or third Jewel
detergent and goes
manufacturer party DC Supermarket
to Jewel

Chemical
Plastic Tenneco
manufacturer
Producer Packaging
(e.g. Oil Company)

Chemical
Paper Timber
manufacturer
Manufacturer Industry
(e.g. Oil Company)
Flows in a Supply Chain

Information

Product
Customer
Funds
 Supply Chain Assignment
• Please draw a complete Supply Chain of
one pruduct- 5 marks
 Reading references
• Text Book og Logistics by DK Agrawal
Chapter-1