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ELEMENTS OF LOGISTICS MANAGEMENT

WHAT IS LOGISTICS?

Logistics is concerned with getting the products and services where they are needed and when they are desired. It

is difcult to accomplish any marketing or manuacturing without logistical support. It involves the integration o

inormation, transportation, inventory, warehousing, material handling, and packaging.

The operating responsibility o logistics is the geographical repositioning o raw materials, work in process, and

nished inventories where required at the lowest cost possible.

The ormal denition o the word logistics! as per the perception of Council of Logistics Manageentis the

process of planning! ipleenting an" controlling the e#cient! e$ecti%e &o' an" storage of goo"s!

ser%ices an" relate" inforation fro the point of origin to the point of consuption for the purpose

of conforing to custoer re(uireents)

"ission o logistics is providing a means by which customer satisaction is achieved. #rt o moving, lodging and

supplying troops, supplies and equipment is logistics. $oncept o logistics has moved into business to move, lodge

and supply inputs and outputs.

Logistics is practiced or ages since organi%ed activity began. &ithout logistics support no activity can beperormed to meet dened goal. The current challenge is to perorm logistics scientically in order to optimi%e

benets to the organi%ation.

Logisticsis aplanning functiono management. Logistics unction is concerned withtaking pro"ucts an"

ser%ices 'here they areneededand'hen they areneeded.

Logistics ensures that the requiredinputs *'hat+ to a%alue a""ing process are madeavailable,'here they

are needed,'henthey are needed and in the (uantities *ho' uch+ they are needed. It also ensures that the

outputs o the value adding process are made available 'herethey are needed'hen they are needed and in

the (uantities *ho' uch?+ they are needed.

There are many ways o dening logistics but the underlying concept might be dened as ollows' Logistics is

the process of strategicall, anaging the procureent! o%eent an" storage of aterials! parts

an" -nishe" in%entor, through the organi.ation an" its ar/eting channels in such a 'a, that

current an" future pro-ta0ilit, are a1ii.e" through the cost2e$ecti%e ful-llent of or"ers)3

What causes 0a" logistics?

a. 4 (ad roads, inefcient railways, poor communication lines, and congestion in the ports.

b. Ta1ation4e.g. )ctroi

c. Inforation4Inadequate inormation

d. Manageent4 *oor management decisions

IM5O6TANCE OF LOGISTICS

Logistics is the 0e"roc/ of tra"e an" 0usiness)

&ithout selling and or buying there can be no trade and business. (uying and or selling takes place onlywhen goods are physically moved into and or away rom the market.

Take away logistical support trade and business will collapse

7) Leads to customer satisaction through superior customer service.

LOGISTICS MANAGEMENT TYBMS

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)rgani%ational ob+ectives o **roductivity-, uality-,$ $ost-,/ /elivery-,0 0mployee "orale-,1 1le2ibility-,3

3aety-,4 4ealth-,0 0nvironment- are set to meet customer e2pectations o ,$,/.

, $, 3, 4, 0 are parts o must be quality that a customer e2pects. Logistics addresses /, 1 ob+ectives which lead to

customer satisaction through superior customer service

8) Integrates logistical activities

In conventional management environment, various activities o logistics work in isolation under di5erent

management unctions. 0ach pocket trying to sub optimi%e its ob+ectives at the cost o overall organi%ational

ob+ectives. *urchasing trying to purchase at minimum price at the cost o what is needed by operations.

)perations produce large quantities at minimum production cost ignoring demand leading to doom inventory.

Logistics unction o management brings all such unctions under one umbrella pulling down inter departmental

barriers.

9) $ompetitive edge' In the ercely competitive environment logistics provides the edge. /ue to technological

revolution most o the products are moving into coo"it, ar/ets. In a commodity market where price is

controlled by competition, where there is no product di5erentiation in terms o quality parameters like

perforance6 relia0ilit,, where brands are almost irrelevant, competitive edge is that o a%aila0ilit,o

product and service in terms o tie! place and (uantit,)

:) Logistics wins or loses wars

(ritish lost #merican war o independence due to poor logistics

7ommel was beaten in the desert by superior logistics o #llies

;) 3upports critical unctions like operations and marketing

3trong logistics support enables a company to move towards893T I: TI"0production system or survival in a

highly competitive market

a; Interace with marketing

These days marketing a product is increasingly on the strength o availability and

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III. $hanging Indian customer, aware, demanding and less brand loyal

IB. $ompetition ensures that product di5erentiation in terms o quality is difcult

B. *roduct lie cycles are shrinking

BI. )ur markets are shiting rom sellers! to buyers!

BII. "any consumer products are moving into commodities market

BIII. India is a large country. Large distances separate production and consumption centers. 0ssential

commodities have to travel rom 1ood $orporation warehouses to consumers through */3.IC. Logistics perormance has not been impressive

C. 1ruits and vegetables are grown at various places but do not en+oy access to market

WHAT A6E THE O5E6ATIONAL O>ECTI@ES OF LOGISTICS?

7) 6api" response

FD

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in the supply chain. Aenerally, large shipment si%e and long distances reduce transportation cost per unit.

"ovement consolidation shall result into reduction in transportation costs.

;) ualit,

I the quality o product ails logistics will have to ship the product out o customers premises and repeat the

logistics operation again. This adds to costs and customer dissatisaction. 4ence logistics should contribute to T"

initiative o management. In act, commitment to T" has made the managements world over wake up to the

signicance o logistics unction. Logistics can play a signicant role in total quality improvement by improving the

quality o logistics perormance continuously and continually.

. Life c,cle supportcradle to cradle logistical supportD produce, pack Jcradle; and repackJcradle;-

Logistics unction is e2pected to provide lie cycle support to the product ater sale. This includes

a. After sales ser%ice' the service support needed by the product once it is sold during its lie cycle

b. 6e%erse logistics concept )ct!H?- or *roduct recall as a result o

- rigid quality standards critical in case o contaminated products which can cause environmental ha%ard-

- transit damage leaking containers containing ha%ardous material-

-product e2piration dating

- rigid laws prohibiting unscientic disposal o items associated with product packaging-

- 7igid laws making recycling mandatory

- 0rroneous order processing by supplier

- 7everse logistics is an important component o logistics planning

Functions of logistics anagers4

G; 7eceiving o materials, counting and storing.

K; Implant progress , checking and up to date inormation

?; $ontact person or customer

; #rranging inbound and outbound transportation o materials.

=; uality assurance

; *acking and dispatching

lOGISTICAL FBNCTIONS *coponents of logistics or eleents of logistics+

7) Inforation anageent

"anagement is appreciating importance o inormation as an element o logistics o late, now. The role o

inormation is vital in or"er processing. uality o inormation is critical as error in composition o inormation

requirement creates potential disturbance in the supply chain. Incorrect order processing due to erroneous

inormation will result into product recall and reshipment i the sales opportunity still e2ists.

1aster and quality inormation

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1orecasting is an e5ort to estimate uture requirements to position inventory or assets devoted to inventory. #s

orecasting becomes unreliable in a ast changing environment, control strategies like 8IT, uick 7esponse and

$ontinuous 7eplenishment came into being. :ow it is the task o the logistics unction to use inormation

technologyto strengthen operation controlan" orecastingto the 0est a"%antage of the organi.ation)

Leading rms typically have inormation systems capable o monitoring logistical perormance on a real time basis

giving them the capability to identiy potential operational breakdowns and take corrective actions prior to

customer service ailure. In situations where timely corrective action is not possible, customers can be notied inadvance and thereby taking the surprise out o orthcoming service ailures

8) In%entor, control

Feeping the stock levels in such a position, so that neither stock out nor stock piling takes place is Inventory

control. &hile ormulating inventory policies nd out KH> o the products marketed that account or MH> o the

prot.

9) Transportation

Transportation is the most %isi0le o all elements o logistics and high contributor to logistics e2penditure. $osts o

transportation are mainly as ollows

a. Mo%eent costs' money paid or moving material across geographical terrain

b. 5reser%ation costs4money spent on preserving the material during transit

c) Cost of i"le asset4 inventory is unavailable or conversion during transit. This results into costs or

organi%ation

d. A"inistration costs4money spent on administration

Transportation is accoplishe" in three 'a,s

a. )ne!s own

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Econoic 0ene-tsare "ovement $onsolidation,(reakDbulk, $rossDdock, *rocessing@*ostponement 6 stock

piling.

Ser%ice 0ene-tsare spot stocking, assortment, mi2ing 6 production support

;) Material han"ling

"aterial handling covers receiving, moving, storing, dispatching activities. It has an

impact on cost capital as well as running-, quality and saety. )ne o the principles o

material handling is minimum movement. $ommonly used material handling

equipment are orklits, 0)T $ranes, hoists, pulley blocks, trolleys, railroad cars, conveyers, ropes and slings

etc.

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LOGISTICS MANAGEMENT TYBMS

particulars Logistics anageent Suppl, chain anageent3cope Inbound logistics, in process

inventory movement rom one

plant to another-, outbound logistics

#ll players in the supply chain rom

raw material source to nished

product consumer, vendors, their

vendors, supplier

organi%ationshipper-,

&arehouses, service providers,

customers, their customers4ow this is

created in

businessE

(y internal integration o logistics

unctions handled by various

management unctions within

organi%ation

(y e2ternal integration o roles o

various players in the supply chain.

"ain

ob+ective

Logistics cost reduction by

integrating resources across the

pipeline

3upply chain protability by value

creation.

denition Logistics is the process o

strategically managing procurement

and storage o material , part and

nished inventory and related

inormation