Class Notes Slides

8/4/2019 Class Notes Slides

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LOGISTICS MANAGEMENT

MBA 031-SUPPLY CHAIN MANAGEMENT

MBA 3 rd SEMESTER

FACULTY DILIP KUMAR GUPTA

ASSISTANT PROFESSOR (SRGC-IC)

SHRI RAM COLLEGE OF MANAGEMENT

MUZAFFARNAGAR


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LOGISTICS MANAGEMENT


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ORIGIN OF LOGISTICS The word logistic has originated from Greek word

Logistikos and the Latin word Logisticus whichmeans science of computing & calculating In ancient times it was used more in connection

with moving armies, the supplies of food &

armaments to the war front. During World War II logistics gained importance

in army operations covering the movement ofsupplies , men & equipment across the border

Today It has acquired the wider meaning and is used in

the business for the movement of material fromsuppliers to the manufacturer and finally thefinished goods to the consumers


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Logistics - Science of managing (controlling) the movement and storage of goods (or people) from acquisition to consumption .

Goods : Raw Materials Final products, and everything in between.Logistics for services & people similar to goods logistics.

Ex. Police, fire, ambulance, passenger airlines, taxi cabs, etc.

Movement = Transportation (between locations).

Storage = Inventory, Warehousing (at locations).

Suppliers Manufacturers Warehouses &Distribution Centers

Customers

Material Costs

Transportation

Costs

Transportation

Costs TransportationCostsInventory CostsManufacturing Costs


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LOGISTICSLogistics is the . . . process of planning, implementing,

and controlling the efficient, effective flow and storageof goods, services, and related information from pointof origin to point of consumption for the purpose of Satisfying customer requirements .

Suppliers Manufacturers Warehouses &Distribution Centers Customers

Material Costs

TransportationCosts

TransportationCosts Transportation

CostsInventory CostsManufacturing Costs


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Logistics

Logistics is an effort todeliver: the right product in the right quantity in the right condition to the right place at the right time

for the right customer at the right cost


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OBJECTIVES OF LOGISTICS MANAGEMENT

1. INVENTORY REDUCTION:- Traditionally firms usedexcess inventory , the funds thus invested are blocked andcannot be used for any other productive purpose. Hencethe prime objective of logistics is to maintain theinventory at the minimum level.

2. RELIABLE AND CONSISTENT DELIVERYPERFORMANCE:-The other objective of logisticsshould be consistency in delivery performance, this willhelp in building customer confidence and contribute tolong term relationships.


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5.Quick response :- This aspect is related with thecapability of the firm to provide better service to

the customer in the shortest time frame.For this :-1.Latest technology can be used in information

processing and communication.2.Which will enhance the decision makingcapability in terms of accuracy and time.3. Enabling the enterprise to be flexible enough tofulfill the customer requirements in terms of volume and varieties in the shortest time frame.


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OPERATIONS OF LOGISTICS1) Material Management.2) Physical Distribution Management.


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Material Management

Logistics

Physical distribution management

Manufacturing and supply services Customer service

Suppliers

Ram materialsSub assembliesManufacturedpartsPackagingmaterial

Inbound

Materials flow

CustomerOther equipmentmanufacturersEnd usersGovernment

Outbound

finishedgoods

Inventoryin thefield

WIP productions

FGs

Transit depot intermediary

Operations of Logistics


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ROLE OF LOGISTICS IN SUPPLY CHAIN MANAGEMENT

1) Connects the source of supply with the demand :-

logistics basically connects the source of supply with source of demand.To do this all the components of a logisticssystem like warehousing network ,transportation network ,,inventory controlsystem, come into operation with theobjective of providing the right product atthe right time at least cost


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2) Fills the gap between supply and demand:-Logistics makes it possible to deliver the product

to the customer anywhere , irrespective of itsmanufacturing location.It facilitates either to deliver a full truckload of shipment once a week/month or part of load daily.for e.g .Laptops demanded in market in August 10,000units.

Supply of 10,000 laptops may be once in aweek/month or part of load daily.


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Supply Chain

Raw Materials

RETAILER

FACTORY DC RDC SUPPLIER

Finished Goods

Office


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BULLWHIP EFFECT

It refers to the increase in variance in the demand as one

moves up in the supply chain from retailers to distributors tomanufacturers/suppliers.

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Manufacturer Wholesale Distributors

Consumers Multi-tier Suppliers

Retailers

Time

S a

l e s

S a

l e s

Time

S a

l e s

Time

S a

l e s

Time

Bullwhip Effect


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Case study of HPHP experienced the bullwhip effect in thepattern of sales of its printers.Orders placed by retailer exhibited widerswings than the actual retail sales tocustomers.Orders placed by the printer division to thecompany s integrated circuit division hadeven wider swings.


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Case study of P&GP&G observed bullwhip effect in the patternof sales for pampers disposable diapers.P&G were surprised to see that the orders

placed by distributors had much morevariation than sales at the retail stores.Further , order of materials to suppliers had

even greater variation as compared tovariation at distributors , retailers and at thesales counters.


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INBOUND AND OUT BOUND

LOGISTICS

INBOUNDLOGISTICS

SUPPLIERS TOMANUFACTURERS

OUTBOUNDLOGISTICS

MANUFACTURERSTO CONSUMERS


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Supply Chain

Procurement

Stores Stores

Vendor

Operations

Warehouse

Customer

Inbound

Logistics

Out BoundLogistics


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Supply Chain

Supplier

Purchase

StoresRM

Customer

Warehousing/Distribution channel

StoresFG

Inbound Logistics Out bound logistic

OPERATIONS(Manufacturingprocess)

P r o cu

re

m

e n t

Dis

tri bu

ti o n

Material flow Material flow

Information flow


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Suppliers Manufacturers Warehouses &Distribution Centers

Customers

Material CostsTransportation

CostsTransportation

Costs TransportationCostsInventory CostsManufacturing Costs

INBOUND LOGISTICSSUPPLIER TO MANUFACTURERS

OUTBOUND LOGISTICSMANUFACTURERS TO CUSTOMERS


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REVERSE LOGISTICS

SUPPLIERS Company Resellers Customers

Inbound Logistics,Supplier to Company

Outbound LogisticsCompany to customers

REVERSE LOGISTICS e.g. return of goods


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LOGISTICS COSTS

FIXED COST

VARIABLECOST

SEMI- VARIABLECOST

CASH EXPENSES

NON CASH EXPENSES

DIRECT COST

SUNK COST

MARGINAL COST

INDIRECT COST


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LOGISTICS SUB SYSTEMS

PROCUREMENNT /PURCHASINGSUB SYSTEM

WAREHOUSING SUB-SYSTEM

INVENTORY MANAGEMENTSUB SYSTEM

MATERIAL HANDLING SUB

SYSTEM

ORDER SIZE SUB-SYSTEM

ORDER PROCESSINGSUB SYSTEM

RECYCLING , RETURNS ANDWASTE DISPOSAL SUB-SYSTEM

TRANSPORTATIONSUB - SYSTEM


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FACTORS AFFECTING LOGISTICS1) Globalization:-Now a days business organizations are

supplying products beyond the national boundarieswhenever there is a market opportunity. In such asituation , the role of logistics will be to provide time andplace utility of the products to the customers.

2) Focus on supply chain management :-Businessorganizations all over the world in order to survive in thiscompetitive environment has shifted their focus onsupply chain management i.e., integrating the process of procurement, processing and distribution to deliver valuefor money to customer.


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MODELS IN LOGISTICS MANAGEMENT

1) FORCASTINGMODELS

3) MATHEMATICALPROGRAMMING MODELS

2) INVENTORY MODELS

i) LOCATION MODELS

ii) ALLOCATION MODELS

iii) DISTRIBUTION NETWORK MODELS

4) ALTERNATIVE ANALYSIS

5) ROUTING MODELS

6) SCHEDULING MODELS

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