Professional Documents
Culture Documents
Logistics ManagementShahid Chavakkad
Logistics ManagementShahid Chavakkad
The practical organisation that is needed to make a complicated plan successful when a lot of people & equipment is needed e.g. 1. Logistic support in the army 2. Organising famine relief presents huge problems
i.e. Moving Right People & Right Equipment to the Right Place at the Right Time through the Right Methods.
To
Marketing
Past
In
E.g. 10 years waiting for Padmini Cars. 6 years waiting for Bajaj Scooters
Shift
Consumers
Now,
No
Business
has become more Complex & Dynamic now market (Market is time & price sensitive)
Vibrant
Everyday,
Survival Saying
People have your money in their pocket & You have their goods on your shelves
Push
Question To
give the best products & services than others win customers loyalty & goodwill
To
Your
More
Due
Rivals
not only copy, they add more features & give more value for your money lower price strategy doesnt work. (Because consumers have enough money)
Now,
Now,
Promotion also doesnt work (Because too much advertisements will make the consumers confused and fed up) Place (out of the 4 Ps) is important
now
Hence
Complicated
Rapid
business scenario
economic boom
consumers
Heavy
Industrialisation
innovations
Scientific Hence To
be customer focused
Quick
Hence
Logistics
from Greek word Logisticos meaning science of computing and calculating used in military sense (Logistical Support) (World War II & other wars)
First
Webster
(1963) defines Logistics as: The procurement, maintenance & transportation of military materials, facilities & personnel Airforce (1981) defines: The science of planning out the movement & maintenance of forces
US
Corporate vision & objectives To turn it into winning edges over others
Strategic logistics analysis (i.e. finding alternatives, evaluation, selection etc.) Logistics planning & evaluation
Managing change
Firm
4
to dominate
Highest
Product Design
E.g.
Plastic moulded water tanks Fully assembled automobiles Transportation of huge machinery
(H & R Johnson)
Plant Location
Allocation decisions
Packaging
Material Handling
Shippers
Suppliers
Carriers (Rail, Road, Air etc) Warehouse providers/ Freight forwarders Terminal operators (port, stevedores)
Role CST, local sales tax, excise, octroi, modvat, road tax on vehicles
- Bulk, perishable, non-perishable, refrigerated, non-durable, industrial v/s consumer products, packaged products (Fruits/ Vegetable exports)
Because Managers ego & territories In conventional companies, even inbound & outbound transportation is differentiated Too much paperwork & Red Tapism
Papers move even slower than the movement of cargo A conventional company, shows multifaces to customers.
Organisation to be horizontal
By eliminating non-value added items e.g. delays in paperwork, idle times in transportation, storage, checking etc. Better management of order fulfillment groups like sales office people, accounting, Cr. control, transport department etc.
Reaching with at
the
the
at
at
the
the
Right Place
Right Time
to
the
the
Right People
Right Mode (of transportation)
with
To To
To
Now
Now
Redistribution HLL
They
HLL
HLL
The
There
are 600,000 villages in India in the most remotest places creates win-win partnership with consumers e.g. Surf Ad
HLL
HLLs
New
self help women group sell HLL products directly to the rural people also spread the message of health & hygiene
e.g. Lifebuoy for health
They
Now
Rs. 2300/-
Also
provides customised offerings covering 11 categories in Home & personal care & foods has network of over 1500 towns in India covering 80% of urban population, with 250,000 consultants
HLL
Direct
selling enables personalised communication & customized solutions, through demonstrations & product trials & brand experience
Eating Now
HLL
adopts 3 ways
Product availability
Brand Communication
Brand experience
Interface
means Connections
Customer
awareness of Rights
Customers No
are too much demanding Customers know what is in the market brand image will work out. Neither the price, nor the quality
E.g. Computer market
Now
Service Service
in non-manufacturing is equally important now (Service Industry) is an added value now loss due to out-of-stock scenario
Financial
Marketing
The
Will
To
This To
First,
to design customer needs and then the services design a suitable logistics system
Then, Less
inventory but faster mode of transport for reaching the goods Servicing through better & faster logistics
Customer
Procurement
& manufacturing management have to be market oriented, need oriented. is Logistics Pipeline Management
This
Not
Inventory
To
Production
Production
Procurement
of raw materials requires planning, lead time, mode of transportation, time, cost between production and other departments
i.e. Logistics the whole concept
Co-ordination
Forecasting Models
2.
i.e. planning optimal & ideal location of plant & warehouses, both for inbound and outbound To minimize Transportation cost
b) Allocation Models
i.e. optimal allocation of commodities from sources to destinations with a vast & multidimensional network e.g. a company with 15 plants & 30 warehouses
Involves location of warehouses & break bulk points, choice of transportation modes Distribution costs include transportation, ware housing, handling, inventory
3. Inventory Models
Costs on buffer stock keeping for uncertainties Shipment & inventories of Finished products, its warehousing & retailing Pipeline inventory i.e. routing of transportation network to destinations The simplest model is called the shortest path problem e.g. Critical path method in Operations Research Can be done by using geographical maps
4. Routing Models
Produces against advance firm order (Pull) Push is in anticipation of the demand In pull, product flow is based on demand
EOQ =
(2AS) i
EOQ =
A = Annual usage (e.g. 1000 units) S = Set up ordering cost (Rs 100/- per unit) i = Inventory carrying cost (e.g. 25% of unit cost = Rs. 40/-)
Another
way to keep inventory management is a periodic review of stock/ replenishment levels & pull may lead to higher/ lower stocks
Push EOQ
may create more carrying costs in the initial stages, then it gets decreased till the next EOQ ordered
JIT JIT
encourages small lot batches/ Quantities but often (To avoid stock out at manufacturers side)
is against conventional system of mass production & storage requires strictest planning discipline
This
JIT
JIT JIT
Consolidation
can be done by 3rd parties. They collect, segregate for onward despatches
JIT
JITs
(QR)
P
& G uses QR. Their retailer Walmart gives them quick and fast sales data
QR
leads to
less inventory less safety stock less pipeline inventory less lead time less forecasting errors
Developed
Developed
Built
Each
of these models were connected through information flows & goods flows flows like order processing time, factory lead time, shipping delivery time etc.
Information
Sometimes,
a surge/ a jolt is created during promotional activities i.e. retailers wholesaler manufacturers
It
This
Dell
Mass
customization can be done with CAD/ CAM i.e. Computer Order Design
E.g. Customer Foot shoe Co. No inventory. They take measurements make-to-order 3 weeks delivery time
Toyotas
Strategy make 80% of the total demand based on forecasting 20% on firm orders
a) Industrial Products
Company Customer
Company Dealer Customer Company C&F Stockists Retailers Customers
b) Automobile
d) FMCG
Company Distributors Wholesalers Retailers Customers Company Depot Stockists Retailers Customers Company Own Retail Outlet Franchised showroom Customers
e) FMCG
f) Consumer durables
i.e. Company Consumers (No Intermediary) e.g. Industrial products & services sectors, where the unit value of the product is very high, product technicality & product complexity
To have its
Direct Mailing
Telemarketing
Websites
Personal
Selling
To have trained sales force Sales force locates customers E.g. Insurance sector, Eureka Forbes
Telemarketing
Direct
Mailing
Sending detailed brochures to prospective customers Is a silent sales Negative is, poor response Firms to have the right & vast data bank
One-tier
Distribution system
i.e. Company Distributors Customers (only 1 intermediary) positive is, minimum distribution costs, maximum control e.g. Maruti Sitaram Customer
Two-tier
Distribution system
Multi-tier
Distribution system
i.e.
Company Customers
Manufacturing
firms prefer MCS for greater marketing coverage & penetration Rivalry & competition among agents in MCS resulting into unethical selling & loosing Corporate image
Drawback:
MCS
is complex & expensive, but effective & profitable if managed well conflict may lead to loosing business opportunities
Channel
1) Distribution Objectives
Manufacturers
Objectives include:
4) Intensive distribution
5) Exclusive distribution
- i.e. whether to give exclusive dealership or not, for a designated area e.g. readymades
6) Selective distribution
i.e. to select high potential channel intermediaries (i.e. agents/ sellers) To bring maximum turnover & profits
Storage
Warehouse
For keeping for a long time E.g. Raw materials, components etc for production Closer to factories
Warehouse
Module III
Distribution
Centre
i.e. full service warehouse It emphasizes on movement, then storage Situated near to market
Warehouse
is a value added process now, than a necessary evil (if managed well)
Warehouse
facility
To
store goods scientifically & systematically to retain its value & originality a good information system
Requires
1)
2)
3) 4)
Ownership Based Private warehouses (company owned) + points Public warehouses (e.g. By government or by organisation) Bonded Warehouses
Either private or government owned Under customs/ Excise control (Goods removal after paying duty)
5) 6)
a single warehouse receives goods from many plants e.g. A,B,C, etc. But despatches to one customer
Break Bulk
Entire lot is stored Then despatched to different customers
Stock - Piling
i.e. seasonal storage of goods e.g. Garments
a) b) c)
d)
e)
Quantity based, product characteristics, shapes, sizes, weight Warehouse design to be flexible & futuristic Good material handling system
1. 2. 3.
Layout for material handling Roof plan, floor plan for smooth material flow Windows, aisles, platforms, pillars, lighting, elevators, cranes, forklifts, trucks (loading platform) etc, palletized keeping, water, communication, road. Vast courtyard for parking
Space for office, security, compound wall For keeping damaged goods, refrigerated area Bonded space Computer usage
Improved customer service Accurate inventory records Better use of storage capacity & equipment utilizations To know stock costs Material availability Visibility of inventory
Is necessary for consumer products Branding e.g. Glucose biscuit, Toothpaste (Colgate) Design package Usually squares (To save space) Pencil like package (Lipstick) for utility purpose, easy to carry in handbags
For self services (it is self explanatory) Consumer affluence Company & Brand image
For
Product protection
Containment
Attractiveness
Identification
Convenience
Effective sales tool
Easy to identify
Good memory & identification/ recognition
Earthenware China Jars Wooden/ hard boxes Straw baskets Gunny/ Plastic bags Glass bottles Tin containers Clothes, etc.
1. 2. 3.
Consumer Package e.g. Toothpaste Family Package Reuse Package e.g. glass jar
4.
To protect contents
To be attractive
To identify For convenience To identify For convenience
Proud to possess
Status (e.g. Damas packs) Minimises sellers job
Simple in design
Easy to handle
Module III
Movement of one product from one location to another location i.e. Distribution of products to various locations because products are not consumed in one place An important factor in Supply Chain especially, transportation cost
Walmart uses cross docking system i.e. exchanging products based on where shortages & surpluses occur To establish the cost effectiveness of the transport mode
1)
2)
Fixed Operating Costs: E.g. Vehicle parking, trucking facility, terminal facility for aircrafts, hangers, drivers salary, etc.
3)
4) 5)
Quantity-related Costs: For loading unloading Overhead costs: i.e. Costs involved in information technology used in transportation network
Carrying Passenger & Carg, incur high fixed costs in infrastructure and equipment Labour and Fuel costs Hence, Airline to maximize the daily flying time Hence, airline to maximize seating capacity with different priced classes
More economical
Bilk Carriers
For long distances Could be delayed due to shunting of bogies
Few Famous lines: Maersk, American President Lines (APL), Scindia Steam Navigation Company, Shipping Corporation of India (SCI) For large bulk to carry Slow & delay Carries cars, grains, iron and steel etc. Cheapest mode
Customer Characteristics (Delivery Specifications) Environmental Issues (Govt. policies, at times subsidized transportation etc)
i.e. Inter-Company computer-to-computer communication No Human Intervention is required This is an automation facility It is inter-organisational Consists of standardized Electronic Message Formats
Can Communicate from one company to another through computer Becomes paperless communication Can prepare and send invoices, purchase orders etc. (computer-to-computer) Best for inventory management
Intranet
is a means of distributing information. complete network flow of information from department to department, to warehouse, to shop-floor etc. intranet, the access is restricted to outsiders access is given to outsiders (e.g. suppliers and customers), it becomes extranet
Establishes
In
When
Data
mining is exploring data stored already, for transforming it to useful and meaningful information (e.g. for forecasting purposes) warehouse is a store house, built to contain enterprise-wide information, collected from multiple operational sources
Data
i.e. Electronic commerce or paperless office Everybody will transact business electronically (e.g. Zurich in Dubai)
It is a wide business
Reduces time, money, and speed up supply & service