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  • 1. Elements of LogisticsManagementWhat is Logistics? Can you visualize the productionfunction of a business process? What is the most accessible of allproduction functions you canvisualize? Now what activities makeproduction happen?* Procurement Sourcing Moving or Transportation Handling Storage03/16/12 1

2. Elements of LogisticsManagement - continued*Conversion* Distribution Transportation Warehousing 03/16/122 3. Logistical Management Making inputs and outputs availablewhen they are needed, where they areneeded and in the quantities they areneeded* Inputs from market [domestic orimport] are needed for production* Out puts of production process[Industrial products, engineering,chemical & pharmaceutical productsare needed in the market [domestic orexport]* Battle fronts need troops* Troops need supplies*People need agricultural products* Agriculture needs fertilizers*03/16/12 needs food grains PDS3 4. Logistical Management - continued Without logistics no value addingprocess can run Logistics is a facilitator of trade &business Age old practice Modern logistics is scientific Logistics is a planning function Genesis of logistics is in militaryplanning Origin of many OR techniques likeValue analysis, PERT, CPM etc.. isthe crucible of war 03/16/124 5. Logistical History of India India was a maritime power sinceabout 300 BC Goods Made in India, steel, textilesetc. Trade and prosperity Gradual degenerationSome logistical feats in history: Berlin Air Lift A study inlogistics Indians in the Gulf countries - 1991 Operation Overlord, II WorldWar-1945 1962 war with China 1776 American war ofIndependence [4th July1776]03/16/12 5 6. What causes bad logistics? Infrastructure: bad roads, inefficientrailways, poor communication lines,congestion in ports Taxation: e.g. Octroi Information: Inadequateinformation, bad communication Management: Bad managementdecisions [carrier selection, outsourcing etc.] 03/16/12 6 7. V1V2V3V5Receiving stores V4 ProcurementOperation OutboundInboundLogisticsLogistics Finished Goods StoresW1 W2W3R1 R2 R3R4 R5R603/16/12Market7 8. Importance of Logistics Why should we learn logistics?Why is logistics important formanagement students? Logistics is the bed rock of tradeand business Leads to customer satisfaction,D&F expectations of customers Integrates logistical activities Competitive edge in a commoditiesmarket Logistics wins or loses wars Supports critical functions likeoperations and marketing to be JUSTIN TIME by providing Interface withmarketing 03/16/12 8 9. Importance of Logistics- continued Logistical costs are 5% to 35% ofsales depending on type of business,geographical areas of operation etc. Crucial to survival and prosperity in global business logistics experts are moving up in corporate ladder leads to the concept of supply chainmanagement Indian market is changing- shiftfrom sellers market to buyers market changing customer expanding business, global trade competition, internal & external concept of lean management03/16/129 10. Operating Objectives Of Logistics1.Rapid response F- Objective: Ability to respondrapidly to customers order Role of Information Technology Concept of SMED and Kanban2. Minimum variance D-Objective as OTD Any event that disturbs the supplychain is variance Problems in information flow,traffic snarls, acts of god, wrongdispatches, transit damage Traditional approach Vs costs 03/16/1210 11. Operating Objectives Of Logistics -continued3. Minimum inventory Concept of Inventory Turns Increase these turns withoutsacrificing customer satisfaction Single piece flow as practiced byJIT companies4. Movement consolidation Integrating interests of severalplayers in the supply chain. Planning several small shipmentstogether [of different types ofshipments] 03/16/12 11 12. Operating Objectives Of Logistics-continued5. Quality Quality of logistics performance -complete fulfillment of order6. Life cycle support [cradle tocradle logistical support] After sales service Reverse logistics# Rigid quality standards# transit damage# product expiration dating# law against unscientific disposal03/16/12 12 13. Operating Objectives Of Logistics-continued# law making recycling mandatory# erroneous order processing bysupplier 03/16/1213 14. Logistical Functions INFORMATION SYSTEMS Internal & External Information flowWARENETWORK HOUSINGDESIGNStorage,Handling, LOGISTICSPacking &Distribution FUNCTIONSTRANSPORTATION INVENTORYWater, Road, Rail,When to order?Pipeline & AirHow much toorder? Just InTime03/16/12 14 15. Logistical Functions components of logistics or elementsof logistics Information management* Role of technology, fast & accurateinformation* Real time logistics in competitivebusiness* Notification to customer* Role of information in logisticalforecasting & logistical operations,order processing and ordermanagement* Erroneous information will resultinto product recall and reshipment 03/16/12 15 16. Logistical Functions - continued* Inventory control* Neither stock-out nor stockpiling* Inventory policies* Inventory models* Inventory systems Transportation* the most visible of all elements* High contributor to costs logistics- Movement costs, Preservation costs, Cost of idle asset, Administrationcosts* Transportation is accomplished inthree ways- Private carriage, contractcarriage, common carriage 03/16/1216 17. Logistical Functions - continued* Expectations from carrier-minimum cost, speed of transport,consistency in speed Warehousing* Switching facility rather than astorage facility* Ownership can be private, public orthird party contract.*Economic benefits - Consolidation,Break bulk, Cross Dock, processingpostponement, stock piling[seasonalstorage]* Service benefits - spot stocking,Assortment, mixing, productionsupport, market presence 03/16/12 17 18. Logistical Functions - continued Material handling* Receiving, moving, storing,dispatching activities* Impact on cost [capital as well asrunning], Quality and safety* One of the principles of materialhandling is minimum movement* Commonly used material handlingequipment- forklifts, EOT Cranes,hoists, pulley blocks, trolleys,railroad cars, conveyers, ropes, slings,carousels, sortations, robotics Packaging* Types of packaging- consumerpackaging and industrial packaging03/16/12 18 19. Logistical Functions - continued*Consumer packagingAttracts attention single most important factor inpurchasing decisions made at pointof sale* Industrial packaging - makeslogistical activities of handlingstorage moving easy* Sales functions of packaging Display - attraction, easyidentification, communication ofrecipe, hazard, special care Ease of opening Convenience - flexi tubes, sprays Dispensing - spouts, taps, spays,tubes03/16/1219 20. Logistical Functions - continued* Functions of packaging# Protection - physical damage,bubble pack, corrugated sheet cartons,mangos in crates# Cube minimization - flattened cans,square shaped whisky bottles, softdrink concentrates, furniture inknocked down condition# Weight minimization - plasticbottles, plastic crates, milkbags# Facilitating handling & using -fruity packs, flexible tubes, aerosolpacs# Facilitating storage & reuse -corrugated boxes 03/16/12 20 21. Logistical Functions - continued# Grouping goods into convenientunit for distribution - mango boxes,cola bottles, cotton bales, wire ropecoils# Pilfer proofing - bisleri caps, colacaps# Handling - pallets, straps Net work design [Locationanalysis] - to minimize overallsystem cost of delivering value to thecustomer# Number of facilities - productionfacilities, warehouses# What is to be performed in thesefacilities?03/16/12 21 22. Logistical Functions - continued# Their location - to minimize overallsystem cost# Who operates these facilities? -outsourcing decisions# Communication between thesefacilities- are some of the salient features ofnet work design. 03/16/1222 23. Some important concepts# Logistics and supply chainmanagement Logistics and Supply ChainManagement by G.Raghuram, N.Rangaraj. Page#15, The Management of Business Logistics byCoyle, Bardi, Langlely Page # 31 ] Focus on costs and benefits inphysically moving the goods tocustomers - post war1950s. Idea of total system cost Trade off situations between costsof several activities03/16/1223 24. Some important concepts -continued Selection of modes of transport 1960s - Emergence of Physicaldistribution management- integration of activities of outboundlogistics- Electronic era, information as anelement of Physical distributionmanagement 1970 - some aspects of financialsubsystem integrated & focus onactivities of inbound logistics untilconsidered to be vendors concern 03/16/12 24 25. Some important concepts - continued 1980s - Concept of Logistics as amanagement function, internallyintegrating all activities of inboundand out bound logistics - Focus on logistical operations,application of TQM, TPM & JIT 1990 - Gradually concept isencompassing entire value chain asSupply Chain Management Henry Fords [early 1990s] idea ofcontrol on supply chain No firm can be self sufficient 03/16/12 25 26. Some important concepts - continued Scope - Source of raw materials toend user - all upstream &downstream organizations & linkages How is this created in business? -external integration Concept of supply chain as a pipeline Main objective - Supply chainprofitability by value creation Focus - end user 03/16/12 26 27. Some important concepts - continued Origin - extension of scope oflogistics management Definition - Management ofupstream and down streamrelationships with suppliers andcustomers to deliver superiorcustomer value at less cost to thesupply chain as a whole breaking the organizational barriersto deliver value 03/16/1227 28. Some important concepts - continued* Sharing of sales information inreal time - reduces inventories byreducing uncertainties- compr