BY GROUP 3

Logistics Management And Its Link With Inventory Control

OVERVIEW

• Logistics• Inventory• Inventory control• Methods of inventory control

JIT & H.P. Case JIT II Kanban

Kaizen• Challenges

TrackingInventory costDemand & supplyStrategic locationDistribution• Conclusion

• Part of supply chain management • Plans, implements and controls the efficient, effective,

forward and reverse flow • Storage of goods, services and related information• Between the point of origin and the point of

consumption• To meet customer’s requirements.

LOGISTICS MANAGEMENT

INVENTORY

• A physical resource • Firm holds in stock with the intent of selling it or

transforming it into a more valuable state

INVENTORY INCLUDES

• Raw Materials• Works-in-Process • Finished Goods• Maintenance, Repair and Operating (MRO)• Pipeline or in-transit inventory

Inbound logistics

Procurement Of Raw Materials

Transporting Work In Progress

Transporting Finished Goods

Distribution Channels

WarehouseCentral HubRetailersCustomers

Outbound logistics

LINK OF LOGISTICS AND INVENTORY CONTROL

• Supervision of the supply and storage and accessibility of items in order to insure an adequate supply without excessive oversupply

INVENTORY CONTROL

Inventory Cost

Market Opportunity

TOOLS OF INVENTORY CONTROL• Just in time- I & II• Kaizen• Kanban• EOQ

INVENTORY CONTROL

• Produce output within the minimum lead time• Minimise total cost• Continuously identify wastage and variance• Eliminating corporate waste and variance.

JUST IN TIME (JIT)

H.P. CASE

• In JIT II system, vendor’s representatives are stationed at the customer’s place of business

• Designed to create harmony and efficiencies for both sides

• It relies heavily on trust

JUST IN TIME II

KANBAN

• Pull type• Production depends on customer demand • Production takes place only when order is placed• Bin cards, boxes, shelves etc. are used to place order

KANBAN BOARD

KAIZEN TRAINING

• Continuous improvement

• Concentrates on improving methods rather than achieving certain results.

• Philosophy-“Do it better, make it better” rather than “if it aint broke, don’t fix it”

• Tracking• Carrying cost• Demand and supply• Strategic location management• Distribution

CHALLENGES

Methods of inventory tracking • Sufficient space for your inventory• Organize your inventory • Develop inventory database• Develop procedures for “check-in” and “check-out”• Strive for accuracy and manually double-check at least

annually

INVENTORY TRACKING

LOGISTICS TRACKING

INVENTORY TRACKING

• Amount to about 10-25% of sales• Affects profitability of the company• Factor of competitive edge

INVENTORY COST

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HIGH COSTHIGH INVENTORY LOWER PROFITS

H.P. Reduced inventory from 7 to 5 weeks Made a profit of $ 30 mn annually

DEMAND AND SUPPLY

DemandSupply

• Based on previous data• Rational and well planned• According to the market data

• According to demand• Strategically managed

INCORRECT ESTIMATION

• Subhiksha expanded stores with insufficient

funds

• No control on mobile inventory

• Stock outs in stores

• Archies did overstocking for 3-

4 years

• Incurred loss of Rs. 6.5 crores

STRATEGIC LOCATION

v

v

A geographical or social position which plays a part in a predetermined plan

DISTRIBUTION

Best way to reach the strategic location and cater to markets