Logistics

and
Supply Chain Management
Dr. Sushant Waghmare
Assistant Professor of Management
Maharashtra National Law University, Nagpur
 Module 1
Overview of Logistics and Supply Chain
Management
 Definition of Logistics
• Logistics 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
current and future profitability are maximized
through the cost-effective fulfilment of orders.
 Scope of Logistics Management
• The scope of logistics spans the organization, from
the management of raw materials through to the
delivery of the final product.
 Definition of Supply Chain Management
• A network of connected and interdependent
organisations mutually and cooperatively working
together to control, manage and improve the flow
of materials and information from suppliers to end
users.
 Competitive Advantage

Co Val
st ue
Competitive Advantage
Gaining Competitive Advantage
 From Supply Chain to Value Chain
• Competitive advantage cannot be understood by looking at a firm as a whole. It stems
from the many discrete activities a firm performs in designing, producing, marketing,
delivering, and supporting its product.

• Each of these activities can contribute to a firm’s relative cost position and create a
basis for differentiation.

• The value chain disaggregates a firm into its strategically relevant activities in order to
understand the behaviour of costs and the existing and potential sources of
differentiation.

• A firm gains competitive advantage by performing these strategically important

activities more cheaply or better than its competitors.
 Value Chain Activities

Primary Secondary
• Inbound logistics • Infrastructure,
• Operations, • Human resource
• Outbound logistics, management,
• Marketing and sales, • Technology development
• Service and procurement
Value Chain Design
The Story of Michael Dell
Integrated Supply Chain
Integrated Supply Chain
Integrated Supply Chain
Integrated Supply Chain
 Formula for Success

Product Process Competitive

Excellence Excellence Advantage
 Attaining Market Success

Responsiveness Reliability

Success

Resilience Relationships
 Changing Competitive Environment 1/4
• New Rules of Business:-
– Supply Chain Competition
– End of Stand-Alone Companies
– Quicker Response and Agility
– Service- then product- and now process-base
– Capabilities, Competencies and Core Processes
 Changing Competitive Environment 2/4
• Globalization of Business:-
– Materials and components sourcing
– Optimization of global supply
– Third-party companies for distribution and
finishing
– Labour Cost
– Time-based competition
 Changing Competitive Environment 3/4
• Downward Pressure on Price:-
– Components, raw materials and industrial
products are becoming cheaper
– Removal of trade barriers and deregulation
– Identify new areas for reducing costs
 Changing Competitive Environment 4/4
• From Customer Care to Customer Control:-
– Quality Product AND Quality Service
– Enhance ‘Value-in-Use’
– Enhance product quality and service quality
– Reduce customer shift
 Customer Service Matrix

Product Price

Place Promotion
 Customer Value Definition
• Customer value can be defined quite simply as the
difference between the perceived benefits that
flow from a purchase or a relationship and the total
costs incurred.
 Customer Value (Breakdown)

• Quality:
– The functionality, performance and technical specification of the offer.
• Service:
– The availability, support and commitment provided to the customer.
• Cost:
– The customer’s transaction costs including price and life cycle costs.
• Time:
– The time taken to respond to customer requirements, e.g. delivery lead
times.
 Customer Service

Pre-Transaction Elements

Transaction Elements

Post-Transaction Elements
 Pre-Transaction Elements
• Written customer service policy
– (Is it communicated internally and externally? Is it understood? Is it specific
and quantified where possible?)
• Accessibility
– (Are we easy to contact/do business with? Is there a single point of contact?)
• Organization structure
– (Is there a customer service management structure in place? What level of
control do they have over their service process?)
• System flexibility
– (Can we adapt our service delivery systems to meet particular customer
needs?)
 Transaction Elements
• Order cycle time
– (What is the elapsed time from order to delivery? What is the
reliability/variation?)
• Inventory availability
– (What percentage of demand for each item can be met from stock?)
• Order fill rate
– (What proportion of orders are completely filled within the stated lead
time?)
• Order status information
– (How long does it take us to respond to a query with the required
information? Do we inform the customer of problems or do they contact
us?)
 Post-Transaction Elements
• Availability of spares
– (What are the in-stock levels of service parts?)
• Call-out time
– (How long does it take for the engineer to arrive and what is the ‘first call
fix rate’?)
• Product tracing/warranty
– (Can we identify the location of individual products once purchased? Can
we maintain/extend the warranty to customers’ expected levels?)
• Customer complaints, claims, etc.
– (How promptly do we deal with complaints and returns? Do we measure
customer satisfaction with our response?)
 Module 2
Logistics Mix
Critical Components of Supply Chain Management

Transportation

Manufacturing Purchasing
 Key Components of Product Creation
Materials to be used for products
Production amounts
Inventory levels
Distribution network configuration
Transportation for both receiving and shipping
 Importance of Transportation
• Of all the processes in your supply chain, few have an impact on
your business quite like your choice of transportation.
• Transportation methods ensure deliveries to and from your
facility flow smoothly and arrive at their designated destinations
on time.
• Because of the importance of transportation to your business’s
success, it’s vital to include this factor in your supply chain
management strategy.
• It is so important that transportation is considered one of the
three primary components of supply chain management.
 How Does Transportation Work?
• Moving raw materials to transporting products to end customer, supply chains,
irrespective of industries, depend on efficient transportation for smooth business
processes.
• An organization must build a flexible, affordable transportation network as the basis
for cost-effective logistics management.
• Keeping in mind the competitive market, making strategic changes to cut costs and
improve customer service levels with a responsive, cost-effective transportation
network in place, significantly impacts the overall flow of the supply chain.
• The foundation of a responsive transportation network is end-to-end network
visibility.
• Transportation offers an organization the chance to continuously improve
operational efficiency and the bottom line, unlocking untapped value for
shareholders when the right tools to manage complexity and visibility are in place.
 Multi-Modal Transportation
• Multimodal transportation- combines different modes of transportation to provide the
quickest shipping time.
• Distinct advantages and relevance to each industry and business sector.
• Choose land, rail, sea, and air
– Transportation of heavy goods choose rail transportation over road and air options
because they can handle heavier goods at scale and lower costs.
– In contrast, air freight is preferred when the value per unit weight is high, and there is
a degree of urgency.
• This approach is not only cost-effective but also time-effective.
• More shippers are choosing to do so in order to benefit from cost savings, environmental
advantages, and improvements in highway safety.
• Multimodal transportation is gaining popularity because of the lower costs, predictable
pricing, standardized transit schedules, and flexibility.
 Role of Multi-Modal Transport
Enabler of
Shipment Supply Chain Profitability
Goods
Segmentation Sustainability and Efficiency
Movement

Bypass Inventory Local

Cost
Geographical Planning and Fulfilment and
Reduction
Limitations Management Distribution

Enhance
Customer
Experience
 Role of Multi-Modal Transport Explained 1/11
• Transportation as an Enabler of Goods Movement
– Transportation results in flexible and cross-border transportation
methods. With careful planning, companies can grow their
markets while also boosting the economies of their respective
nations.
 Role of Multi-Modal Transport Explained 2/11
• Transportation for Supply Chain Sustainability
– A sustainable supply chain fully integrates ethical and environmentally
friendly practices into a competitive and successful model. Transparency
throughout the entire supply chain is essential, and sustainability efforts
must cover everything from sourcing raw materials to last-mile logistics to
product returns and recycling procedures. To account for supply chain
emissions, one must be aware of the issue, actively engage with suppliers
and transportation service providers, and be willing to commit to long-term
climate change and sustainable practices goals
 Role of Multi-Modal Transport Explained 3/4
• Transportation for Supply Chain Profitability and Efficiency
– The supply chain is held together by the link of transportation. Since raw
materials are moved from dealers or the location where they are purchased
to the location where they are manufactured and then to the final
consumer, every step of the process needs to be connected by optimized
transportation. Without a reliable and cost-effective shipping strategy in
place, companies risk losing a lot of time and money, which could negatively
impact their competitive advantage. This includes having solutions ready for
potential disruptions, like equipment failure, natural disasters, work
stoppages, government interventions, etc.
 Role of Multi-Modal Transport Explained 4/11
• Efficient Goods Movement
– Every type of product has a particular mode of transportation that is
required. As a result, the ability to transport goods using a variety of
different methods is crucial to a company’s supply chain. Moreover, as
global and regional travel have vastly different requirements, engaging
appropriate transportation keeps the supply chain moving in the right
direction.
– Gaseous and liquid materials, for instance, are moved from one location
to another using pipelines; moving large pieces of equipment across the
ocean by shipping companies helps optimize the costs involved. Similarly,
products with high value and urgent requirements are transported via air
or road to ensure the efficiency of time.
 Role of Multi-Modal Transport Explained 5/11
• Shipment Segmentation
– Choosing the right carrier can significantly bring down your overall
spending both in terms of resources and time. Depending on the
customers, products, season, and other factors, each shipment will
receive varying priority levels. It is necessary to segment the
modes and routes of transportation in order to accommodate such
needs.
– An efficient transportation system also needs a variety of modes of
transportation. A product frequently travels through several
modes, like sea-road or air-road, before reaching a distributor or
end-user.
 Role of Multi-Modal Transport Explained 5/11
• Cost Reduction
– Costs in a business operation can be managed by effectively optimizing the
role of transportation in a supply chain. The majority of the logistics budget is
spent on freight and fuel. It is expensive to move products from one location
to another using one or a combination of the different modes of
transportation.
– Businesses can become more aware of the supply chain network in general,
and how it interacts with the larger transportation ecosystem by utilizing
technology and data. The right data provides shippers with insights into freight
flows and other factors that could affect how much it will cost to transport
goods to various locations. They gain a deeper understanding of the
transportation ecosystem and how it influences the entire supply chain as a
result.
 Role of Multi-Modal Transport Explained 6/11
• Synchronization Across Supply Chain Activities
– Supply chain technology is synchronized with transportation by
Transportation Management Software. It is best suited to handle
the daily monitoring of transportation operations. Route planning,
fleet management, fuel costing, supplier relations, cargo handling,
and customer communications are among the tasks monitored by a
TMS.
– A TMS is very good at managing and reducing transportation costs.
Adoption of TMS is growing as affordable transportation is the way
ahead for an effective supply chain. This is reflected as the TMS
market is projected to reach $28 billion by 2027.
 Role of Multi-Modal Transport Explained 7/11
• Inventory Planning and Management
– A lean inventory is maintained through effective
transportation management, which improves the
efficiency and smoothness of stock movement through
warehouses. Improving the flow of goods into and out of
the warehouse can help save money on transportation
and storage while also cutting down on lead times.
 Role of Multi-Modal Transport Explained 8/11
• Local Fulfillment and Distribution
– A distribution network in a supply chain is a connected system of
warehouses and transportation hubs that receive inventories of goods
before shipping them to customers. It serves as a connecting point
between the manufacturer and the final consumer, either directly or via
a retail network.

– With evolving consumer demand, a quick and reliable distribution

network is crucial. Two of the most crucial components of a distribution
network are its proximity to the customer and its infrastructure. Smart
transportation helps connect these components in a proper manner.
 Role of Multi-Modal Transport Explained 9/11
• Bypass Geographical Limitations
– Extending a company’s global reach is a key strategy for growth.
Because last-mile delivery is so important to keeping customers
happy, it is an essential component of logistics and supply chain
management. However, getting it right is incredibly challenging due
to geographical and infrastructural limitations.

– No matter where consumers are, goods are accessible to them

through well-planned transportation. Using transportation
strategically can lead to a successful supply chain with both regional
and global reach.
 Role of Multi-Modal Transport Explained 10/11
• Enhanced Customer Experience
– A crucial component of transportation management is making
certain that finished goods are delivered to customers on schedule
and in the same condition as when they were shipped. One of the
few steps in a supply chain where businesses interact directly with
customers is delivery, which is heavily dependent on transportation.

– As a result, ensuring prompt delivery while taking precautions to

prevent delays can boost customer satisfaction and build the
brand’s reputation for dependability and trustworthiness.
 Role of Multi-Modal Transport Explained 11/11
• Supply Chain Sustainability
– Inefficient and poorly optimized delivery routes increase the
distance traveled and fuel consumption. They also lead to
empty miles, which greatly impact last mile sustainability
and business profitability. AI-based transport management
solution smartly clubs planned and on-demand orders (that
need to be delivered on the same route) to minimize trip
volumes and improve delivery productivity. This also
reduces the distance traveled, fuel consumption, and
delivery time.