Logistics Planning Model

Unit Objectives
 This unit helps you to understand in details
about:
a) Overall Logistics planning Architecture or
Model, and
b) Strategic, Tactical and Operational logistics
planning and the logistics network.
Overall Logistics Planning
Architecture or Model
Five key steps to logistics planning process
1) Business goal and strategies
2) Specific customer service requirements
3) Integrated logistics planning
4) Logistics network design
5) Logistics Key Performance Indicators or KPIs

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1. Business Goals and Strategy
 Business goals and strategy comes from
overall corporate strategy and the detailed
operational strategies
 Logistics receives its direction from these
sources, like all other operational functions
of the organisation

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2. Specific Customer Service Requirements
 Logistics planning needs the CS requirements
converted into precise “Service Deliverables”
so that these can be planned for.
 Service level influences the kind of network
that will be required, which in turn influences
costs and competitiveness

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3. Integrated Logistics Planning (ILP)
 ILP is a term used to describe the
comprehensive planning that logistics has to
undertake based upon the two input sources
above, i.e. Business goals and specific
customer service requirements
 This is a total plan that has to be developed in
order to meet the company’s objectives.

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Components of Integrated Logistics Plan
 Operations Strategy
 Warehousing Strategy
 Facility Locations
 Inventory Management Strategy
 Materials handling Strategy
 Transportation Strategy
 Fleet Management
 Information Systems
 Control Strategy
 Logistics Organisation Strategy
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4. Logistics Network Design
 This is the implementation phase of the key
start-up actions of the logistics plan.
 The logistics system needs to be designed to
provide the ILMS which will execute the
logistics plan
 It is this ILMS which will work in a coordinated
manner to execute the logistics plan developed
in response to the business operations strategy
and CS goals

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4. Logistics KPIs
 Logistics planning model also requires the KPIs
for all aspects of the logistics network to be
defined, tracked & measured from time to time.
 Logistics KPIs would include KPIs for Inventory
mgt, transportation, warehousing, customer
service, network utilisation, etc
 KPIs are a basis for checking whether the
system is performing well and where to focus
improvement efforts & corrective actions

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Strategic, Tactical and
Operational LP
7 Key Areas of LP here include
1. Warehouse locations.
2. Inventory management
3. Transport management
4. Order Processing
5. Customer Service
6. Warehousing
7. Purchasing

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Example 1: Transportation management
 At the strategic level, the key transportation
decision would be the choice of mode of
transportation based upon the logistics needs
of the business.
 At the tactical level, there may be a need for
additional transportation support during peak
demand periods;
 Added capacity thus needs to be planned for
 At the operational level will be decisions like
fine tuning of delivery routes for supplies to the
marketplace or changes to the dispatches
schedule, etc.
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Example 2: Warehousing
 At the strategic level would be decisions like
warehouse layouts and equipment selection.
 At the tactical level, would be decisions like
additional warehouse capabilities and
additional manpower to handle larger volume
shipments;
 At the operational level would be decisions like
creating warehouse buffer stocks for seasonal
needs, re-routing of delivery priorities, etc.

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The Logistics Network
Key Considerations in Network Design
 Demand.
 Customer Service.
 Product Characteristics.
 Logistics Cost.
 Pricing Policies.

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Questions?
*END*
*END*

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