Elements of Logistics
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Transcript of Elements of Logistics
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 11
Logistics and Supply Chain Management--- Course Content Logistics and Supply Chain Management--- Course Content and Reference text- MMS IIIand Reference text- MMS III Logistics & Supply Chain Management 100 MarksLogistics & Supply Chain Management 100 Marks
Course ContentCourse Content
1. Basics of Logistics1. Basics of Logistics2. Forecasting2. Forecasting3. Transportation3. Transportation4. Warehousing4. Warehousing5. DRP / MRP5. DRP / MRP6. Application of IT in LSCM6. Application of IT in LSCM7. Inventory Planning / Inventory Control7. Inventory Planning / Inventory Control8. Logistics Organization8. Logistics Organization9. Logistics Measurement9. Logistics Measurement10. Logistic Costing (Activity Based Costing)10. Logistic Costing (Activity Based Costing)11. Basics of Supply Chain Management11. Basics of Supply Chain Management12. Integrated Supply Chain Management12. Integrated Supply Chain Management13. Barriers to integration13. Barriers to integration14. Outsourcing14. Outsourcing
Reference TextReference Text
1. SCM by Rahul Altekar1. SCM by Rahul Altekar2. Logistics Management by S.C. Ailawadi & Rakesh Singh2. Logistics Management by S.C. Ailawadi & Rakesh Singh3. Logistics Management by K. Sridhara Bhatt3. Logistics Management by K. Sridhara Bhatt4. Supply Chain Management - Sahay4. Supply Chain Management - Sahay5. Logistical Management by Donald J Bowersox & David J Closs5. Logistical Management by Donald J Bowersox & David J Closs
6 SCM by Chopra Meindel6 SCM by Chopra Meindel
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 22
Definition of Logistics:
Logics Management is the process of strategically managing the procurement, movement and storage of materials, parts and finished inventory, and the related information flows through the organization and its marketing channels in such a way that the current and future profitability are maximized through the cost effective fulfillment of orders.
Logistics is defined as the practice of scheduling , implementing and controlling the well organized , cost effective flow and storage of raw material , in process inventory and finished products and related information from the point of origin to the point of consumption as per customer demand.
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 33
The competitive Advantage and the The competitive Advantage and the three Csthree Cs
Customers: Seek benefits at acceptable costs
Competitors: Asset Utilization Competitors: Asset Utilization
Value
Cost Differential
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 44
Factors affecting commercial Factors affecting commercial successsuccess
Commercial Success
Cost Advantage Value Advantage
•Cost /Productivity advantage•Value Advantage•Combination of both
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 55
The experience CurveThe experience Curve
Cumulative volume
Real
cost
Per
unit
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 66
Productivity and value advantage Productivity and value advantage matrixmatrixProductivity V/S ValueProductivity V/S Value
Service Leader(3)
Commodity Market(1)
Cost and Service Leader
(4)
Cost Leader(2)
Productivity Advantage
Value Advantage
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 77
Value Chain ActivitiesValue Chain Activities
Value Chain Activities
Primary Activities Secondary Activities
•Inbound Logistics•Operations•Outbound Logistics•Marketing & Sales•Service
•Infrastructure•HR Management•Technology Management•Marketing & Sales•Service
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 88
Michael Porter’s concept of value chainMichael Porter’s concept of value chain
Margin
Support
Activities
Primary Activities
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 99
Factors affecting value & productivity Factors affecting value & productivity advantageadvantage
The goal: Superior customer
value(4)
(3)
(1) (2)
Value Advantage•Customized Services•Reliability•Responsiveness
Productivity Advantage•Capacity utilization•Asset Utilization•Inventory deduction•Integration with suppliers
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 1010
Philosophy behind logistics Philosophy behind logistics conceptconcept
Procurement Operations Distribution CustomersSuppliers
Materials Flow
Information flow
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 1111
An example of supply chain An example of supply chain networknetwork
Retailers Shirt manufacturers
WeaversOf
Fabrics
Manufacturers Of
YarnCustomers
Supply chain can be defined as the network of organizations that are having Linkages, both upstream & downstream, in different processes and activitiesthat produce and deliver the value in the form of the products and servicesIn the hands of ultimate customers.•SCM is not the same as vertical integration. Companies focus on core business
Down Stream Up Stream
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 1212
Necessity for integrating & coordinating logistic Necessity for integrating & coordinating logistic functionsfunctions
• Achieving cost reduction not at the expense of Achieving cost reduction not at the expense of supply chain partnerssupply chain partners
• Discourage transferring of cost upstream/ down Discourage transferring of cost upstream/ down stream as all costs reflect in final market pricestream as all costs reflect in final market price
Implications of SCM on Logistics ManagementImplications of SCM on Logistics Management
Difference between logistics & SCM:Difference between logistics & SCM:
Logistic concerns with optimizing flows within org. Logistic concerns with optimizing flows within org. while SCM deals with integration of all partners in while SCM deals with integration of all partners in value chain.value chain.
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 1313
Supply Chain Integration: 4 Stages to Supply Chain Integration: 4 Stages to achieveachieve
Purchasing Mtl Control Production Sales Distribution
Material Flow Customer Service
Stage1: Baseline
Stage2: Functional Integration
MaterialManagement
ManufacturingManagement Distribution
Material Flow Customer Service
MtlMgt
MfgMgt Distribution
Stage 3: Integral Integration
Material Flow Customer Service
Stage 4: External Integration
SuppliersInternal
Supply Chain Customer
Material Flow Customer Service
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 1414
Impact of logistics & customer service on marketingImpact of logistics & customer service on marketing
CustomerFranchise
CustomerFranchise
Supply Chainefficiency
MarketingeffectivenessX X =
•Brand Values•Corporate image•Availability
•Customer Services•Partnership•Quick response
•Flexibility•Reduced inv.•Low cost Supplier
•Market Share•Customer retention•Superior ROI
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 1515
The work of LogisticsThe work of Logistics
Coordination of following functional Coordination of following functional areasareas
• Network designNetwork design
• InformationInformation
• TransportationTransportation
• InventoryInventory
• Warehousing, material handling & Warehousing, material handling & packagingpackaging
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 1616
Network DesignNetwork DesignFactors influencing network designFactors influencing network design
• Change in demand & supplyChange in demand & supply
• Product assortmentsProduct assortments
• Changes in suppliers’ SuppliesChanges in suppliers’ Supplies
• Manufacturing requirementsManufacturing requirements
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 1717
Impact of information:Impact of information:
Deficiencies in quality of information
Incorrect Info.w.r.t. trends
Incorrect Info.w.r.t.specific customers
requirement
•May cause inventory shortage•Over commitment
•Processing of incorrect order creates additional cost•Does not result in sales
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 1818
Factors affecting transportation Factors affecting transportation performanceperformance
Transportation Performance
Cost•Payment for movement•Admin cost•Maintaining in-transit inventory
Speed•Reduces in transit inventory
Consistency•Variations in time•Inconsistency increases Safety stock requirement
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 1919
Factors to be considered in Factors to be considered in formulating Inventory formulating Inventory management policy:management policy:
Inventory management
Policy(Selective-deployment)
CustomerSegmentation
Product Requirements
TransportationIntegration
Time-baseRequirement
CompetitivePerformance
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 2020
Integrated Logistic ConceptIntegrated Logistic Concept
PhysicalDistribution
ManufacturingSupport
Procurement SuppliersCustomers
Inventory Flow
Information flow
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 2121
Constituents of information flow:Constituents of information flow:
Information Flow
Planning & coordination Flows•Strategic objectives•Capacity Constraints•Logical Req.•Inventory deployment•Mfg requirements•Procurement requirements•Forecasting
Operational Flows•Order management•Order processing•Distribution operations•Transportation & shipping•Procurement
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 2222
Barriers to integral Barriers to integral integration:integration:
• Org. structureOrg. structure
• Measurement systemsMeasurement systems
• Inventory ownershipInventory ownership
• Information technologyInformation technology
• Knowledge transfer technologyKnowledge transfer technology
Elements of LogisticsElements of LogisticsLogistics and Supply Chain Logistics and Supply Chain
Management by P D KulkarniManagement by P D Kulkarni 2323
Next Topic:Next Topic:
Forecasting:Forecasting:
• Nature of demandNature of demand
• Forecast componentsForecast components
• Forecast approachesForecast approaches
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