Logistics and supply chain management:

How raw material reaches the inventory

International logistics:
Ex. Adidas, Hong kong
- Flow of shoes from Hong Kong factory to India
- Info of all the trucks, airport no, name
- 5 container of shoes and one is not okay, then sending it back is reverse logistics

JIT - just in time started by Toyota for internal operations - successful and used in many companies now
What is JIT?
Example: LG
Fridge unit of LG (Greater noida factory): components required
- Freezing units (say, Hyderabad)
- Compressor (Chennai)
- Door
- Wiring (from Bombay)
- Trays
- Paints
Maintaining JIT - companies tell the vendors when everything will arrive
Suppose 5k fridge in 30 days
Accordingly all the factories start delivering the raw materials (according to daily consumption of the factory
to make fridge)
Additional Backup truck is also parked in case faulty raw materials are found
Suppose per day 300 fridges were made, the fridges will be packed, and dispatched the same day - not even a
single fridge is left

During festivals, a month or two before, LG sends a mail to all the vendors, the raw materials should be sent
for the same the same day for increased production

Benefits of JIT:
* Inventory stock pile is not there
* Manufacturing process is streamlined (defined Target, not a single extra piece, inventory and
manufacturing =0)

Supply chain:
Starts with vendor factory (factory that would be delivering raw materials)—> reaches factory—>
manufacturing —> dispatch —> retailer stores

Transportation infrastructure:
Foreign country making their product in India has to see all the transportation. The logistics should be same,
how to transport the product, where to store, how to deliver it.
Product sent via ship:
- Oil tankers - For oil - big oil tankers
- Cold chain ships - refrigerated containers, 2-3months the product stays inside till the time it reaches
location, products having long shelf life. Ex. Washington apple reaches the consumer after 2-3 months, apple
is coated with wax to protect it from bacteria, moisture
Sea food
- Normal containers

Air freight:
Item of high value like gold, diamonds is delivered via air freight
Perishable items like milk, sea food

Cost:What mode of transport used - truck, plane, ship

Predictability - transit time, no of days
Export documentation - bill of lading
International inventory issues - adequate

Three factors

Order cycle time - target, time required, How many fridge to be sold
Use of inventories as tool - adequate inventories, robust logistics chain
Desired customer service levels - satisfy customers

IMPPPPPP
International packaging issues
Perishable goods have different packing (frozen)
Shoes clothing tires - have different packing
Since delivery Through sea has many issues like rodents, humidity, fungus - that might damage the clothes,
or any other product

Storage facilities:
How to deliver Adidas shoes
Regional distribution centres
More distribution centres under a state to deliver to tier 2,3 cities

STZ:
Started in china - custom duty and tax benefits
Products made to export

Ex. Gold jewellery - raw material gold, jewellery made in India, sold in outside markets (foreign countries)
Benefit - infrastructure -> factory -> employment generation -> FDI
Therefore the government doesn’t take tax

UAE has many SEZs

Export processing zones:

Areas given to many companies upto kms
China is a manufacturing hub because of the export processing zones

Centralised system,
Ex Adidas
Sending shoes to india
Logistics centres operates and reports at india and Hong Kong as well
issues:
Need to follow a decentralised process to adapt to local needs
Logistic managers cannot understand in Hong Kong about weather condition, toll tax, covid conditions in
india

Outsourcing logistics services:

Ex. Mc Donalds core competency - burgers
Logistics is not their competency - they use third party logistics companies who handle the entire process for
delivering products across the world
Radha krishan hospitality given a contract by mc Donalds, to deliver all the raw material like mayo , buns,
patty, veggies
They pick up ketchup from some place, then keep in warehouse, maintain cold chain, deliver raw materials
to all the franchisees, deliver raw material according to needs

Samsungs job is to manufacture products , not to deliver

They tie up with third party logistics to deliver it to different cities, and also to deliver it back in case any
faulty product Is found (reverse logistics)
Supply chain and internet
IT is importance - Any ship where its stuck, the location, how much product has been destroyed , delivery of
the product

Logistics and environment

Environment friendly products - packaging is important - cardboard material to be reused, wooden cartons,
avoid plastics

Multi modal containers - used in ships and planes, and trucks

Channel functions:

- Information
- Promotion
- Contact
- Matching
- Negotiation
- Physical distribution
- Financing
- Risk taking

Channel levels
Manufacturer - like nestle, MRF
Wholesaler - dealer distributor , or intermediaries selling the product

Channel behaviour and conflict:

Ex. Samsung - Delhi divided into NWSE, and divided through their sales persons on the basis geographical
territories

- Horizontal Conflict - suppose the Rohini distributor sells it in south Delhi, conflict occurs within south and
north Delhi distributor

- Vertical conflict - Samsung distributor —> Samsung Retailer, stockist —> conflict among different levels

Innovations in marketing systems

Bigg bazar having a small branch of Kotak Mahindra bank with an ATM
Advantage to Kotak - branding, advertising
Advantage to Bigg bazaar - Samsung tv sold but money missing so cash can be withdrawn from Kotak. more
money can be spent by people through this system that would profit Bigg bazaar.

Hybrid marketing system:

Banka assurance - bank selling insurances. ICICI ties up with an insurance company. Insurance selling can
be made easy by using icici customers.
Icici - commission
Insurance company - customers

Channel design decisions:

Intensive distribution - for fmcs products. Selling pulse candy —> at the airpot, at grocery stores
DS group all products’ distributors will start selling pulse candy as well.
Selective - cars, motors, limited dealers in cities
Exclusive - Armani, Versace, rolls royce, in 5stars

Channel management decisions:

Selecting distributors
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Motivating channel members - vouchers, gifts
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Evaluation - evaluating where the product is selling, which dealer is selling better

Logistics:
Transportation
IT department
Dealer distribution
Raw material supplier to factory process - from vendor’s factory to dealer

Logistics functions:
Inland waterway - river ports
Maruti car supplied via rivers in india

Logistics:
Taking from point A to point B
With the right price, right place, right time and the right products

Functions:
- Movement of materials within factory - Ex. Maruti Factory spread over 500sq ft
- Shipment of incoming materials from suppliers
- Shipment of outgoing products to customers - Taking from dealer distributor to customers

Movement of materials within factories (flowchart in pdf)

Components of logistics management:

Inputs - natural, human, financial, and information resources
Outputs - competitive advantage, time and place utility, efficient movement to customer, proprietary asset

In the middle of input and output are management actions

The role of logistics is - Logistic activities:

M imp -> demand forecasting (how many cars to be made in festivals, wedding season to be made by
company - accordingly raw material, vehicles arrangement
Logistics departments duty in handling cars in covid times, keeping them in warehouses, taking care of the
cars
- Customer service
- Inventory management
- Logistics communications - to raw material suppliers, with dealer distributor, within factory
- Material handling - raw material being stored in factory
- Order processing - dealer distributor places order which goes to logistics department
- Part and service support - after sales services, inventory maintenance of parts
- Plant and warehouse site - maintaining sites, selecting location of warehouse, deep delivery to states
- Selection
- Procurement - raw material procurement
- Packaging - LG refrigerator, packaging during loading and unloading, Roohafza glass bottles would break
while delivery, replaced it with plastic bottles.
- Reverse logistics - e-commerce like Myntra, amazon etc. issues with size, fabric, quality. Taking back
faulty items and replacing them with the right product.
- Traffic and transportation - Maruti cars delivery through R. Ganga, Air cargo, diamond from S. Africa
mines are sent to Europe for auctioning and sent for polish in India and Israel, sent back to destinations
where they’re sold. Pilferage of thee consignment can cost millions.
- Warehousing and storage - different gowns are made for different products like each raw material of Mc
Donalds product is kept in a different warehouse. The warehouses and delivery vehicles are refrigerated to
maintain cold chain.
Vaccines - maintaining it at set temperature and delivering it to areas of high humidity, high temperatures or
low temperature. Maintenance of cold chain is essential.
keeping precious items secure, Gold and diamonds, iPhones, controlling fire damages, FMCG products like
chocolates, dals, grains etc attract insects and rodents that can damage the products.
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Supply chain:
Supply chain starts from vendor factory and ends with customers

Materials management:
- Administration of raw materials - management of raw materials
- Subassemblies - deliveries to different subassemblies
- Manufactured parts
- Packing materials
- In-process inventory - location