Logistics Management

Studied by,Gunjan BudhirajaIndu PalJitendra ChauhanJiwant KumarKamal Kant SoniKamaljit SinghaKanak Vashishth

The Definition ,

“Logistics is the process of planning, implementing and controlling the efficient, effective flow and storage of goods, services and related information from point of origin to point of consumption for the purpose of conforming the customer requirement”. ------Council of Logistics Management

The Origin

’Logistics’ is derived from French word ‘loger’, which means art of war pertaining to movement and supply of armies. Fighting a war requires the setting of an object, and to achieve this objective meticulous planning is needed so that the troops are properly deployed and the supply line consisting, interalia, weaponary, food, medical assistance, etc. is maintained.

The plan should be each that there is a minimum loss of men and material while, at the same time, it is capable of being altered if the need arises. As in the case of fighting a war in the battle-field, the MANAGERS also need a suitable logistics plan that is capable of satisfying the company objective of meeting profitably the demand of the targeted customers.

• DEVELOPMENT OF LOGISTICS

SETTING THE STAGE

FOCUS ON THE PHYSICAL DISTRIBUTION (1960-1970) — Conceptualization and credibility

1. PRODUCT LINE EXPANSION

2. RATE INCREASES

3. HIGHER-VALUED PRODUCTS

Focus on:

Integrating Logistic Management (1970-1980) — Changing Priorities and Patterns

1. TRANSPORTATION DEREGULATION

2. GLOBAL COMPETITION

3. LONGER SUPPLY CHAINS

4. ECONOMIC PROBLEMS

Focus on:

SUPPLY CHAIN MANAGEMENT (1980-PRESENT) —Economic and Technical Change

1. GLOBALIZATION

2. CHANGING MARKET (consumers and competition)

3. DEREGULATION

4. ORGANIZATIONAL AND CHANNEL CHANGES

5. TECHNOLOGY

GOALS of logistic system:

Provide a Targeted Level of Customer Service at the Least Cost.

Maximize Profits, Not Sales.

Higher Level

Higher Distribution Costs/Higher Customer Service

Lower Distribution Costs/Lower Customer Service

Lower Level

Increasing importance of logistics

– Effective logistics is becoming a key to winning and keeping customers.

– Logistics is a major cost element for most companies.

– The explosion in product variety has created a need for improved logistics management.

– Information technology has created opportunities for major gains in distribution efficiency.

CHARACTERISTICS OF LOGISTICS ACTIVITIES

A. SPAN ENTIRE FLOW

B. SPAN NORMAL BOUNDARIES

1. WITHIN FIRM

2. OUTSIDE FIRM

C. INTERACT WITH EACH OTHER

D. TOTAL COST APPROACH

The LOGISTICS SYSTEM ELEMENTS  The following are the system elements of logistics: 1. Order processing 2. Warehousing 3. Inventory control 4. Transportation 5. Information monitoring 6. Facilities

Note : These are considered primary to the effective management of logistics because they either contribute most to the total cost of logistics or they are essential to effective completion of the logistics task.

The Significance

The buyer is not only interested in the promises of the seller that he can supply goods at competitive price but also on ON-TIME delivery.

Delivery according to the contract is essential to fulfilling the commercial and legal requirements. In the event of failure to comply with the stipulated supply of period, the seller may not only get his sale amount back, but may also be legally penalized, if the sales contract so specifies.It also helps in getting repeat orders through creation of goodwill.

And above all the main reason all industries are looking for it is the control over the cost, reducing it thus increasing the profit.Such is the gain of importance that like finance, marketing and HR, nowadays supply chain & logistics have become a course in management specialisations.

Thus the General objectives of the logistics can be summarized as: 1. Cost reduction 2. Capital reduction 3. Service improvement  The specific objective of an ideal logistics system is to ensure the flow of supply to the buyer, the:

right product right quantities and assortments · right places right customer right time right cost / price and right condition

Material Management / Procurement

Introduction

Definition:

The management of the inbound movement and storage of raw materials, supplies, and components from source to point of production.

Tasks to Perform

Trouble Avoidance

Opportunities

Organizations Involved:

Purchasing

Warehousing

Transportation

Salvage and Scrap Disposal

Quality Control

Material Management / ProcurementPurchasing

ObjectivesPrerogativesCentralization vs. Decentralization

Steps in Purchasing

Recognition of NeedPrice ForecastDemand ForecastSupply Forecast

Description of NeedSpecificationsQuantityTimingEstimate Costs

Analysis of possible sources of supply

Determination of price and terms

Total Cost of Ownership (Make of Buy)

Preparation and placement of purchase orderFollow-up / expeditingReceipt and inspection of goodsPayment of supplierMaintenance of records

particulars Logistics managementSupply chain management

Scope Inbound logistics, in process inventory, outbound logistics

All players in the supply chain from raw material source to finished product consumer, vendors, their vendors, supplier organization [shipper],Warehouses, service providers, customers, their customers

How this is created in business? By internal integration of logistics functions handled by various management functions within organization

By external integration of roles of various players in the supply chain.

Main objective Logistics cost reduction by integrating resources across the pipeline

Supply chain profitability by value creation.

focus L/M tries to take the product to the consumer at minimum logistical cost. Hence it is supply driven.

SCM focuses on value creation in the supply chain. Hence this is customer focused or demand driven.

definition Logistics is the process of strategically managing procurement and storage of material , part and finished inventory [and related information flow] through organization and its marketing channels in such a way that current and future profits are maximized through cost effective fulfillment of order

Management of upstream and down stream relationships with suppliers and customers to deliver superior customer value at less cost to the supply chain as a whole.

Origin A very old concept in military planning. As a logical extension of logistics management