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Elements of Logistical Management

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What is logistical Management?

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A Function Of Business Management

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Business & Business Management

What are business functions?

• What is function?

• What is activity?

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Logistical Management

• Ensuring availability of resources at minimum cost for production

• Ensuring availability of finished products at minimum cost to the

customer

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Definition of Logistics as a function of management

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

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What is the most accessible production process known to you?

Production and Logistics

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How Logistics is visualized?

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C AS

H

I N V E N T O R Y

I N F O R M A T I O N

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Receiving stores

V1 V2

Operation

Finished Goods Stores

W1 W2 W3

R1 R2 R3 R4 R5

V3

V5

V4

R6

Market

Procurement cycle

Manufacturing Support cycle

Distribution cycle

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What are logistical functions?

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Inventory Management Neither stock-out nor stockpiling

Inventory policies, models, systems

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Information management* Fast & accurate information in real time

in competitive business supported by Information technology

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Transportation * The most visible of all elements

* High contributor to costs of logistics- Movement costs, Preservation costs, Cost of

idle asset, Administration costs

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Net work analysis # Number of facilities, their location,

communication systems, operational decisions

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Warehousing* Switching facility rather than a storage facility that provides economic & service

benefits

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forklift_1.jpg

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Material handling * Receiving, moving, storing, dispatching

activities* Impact on cost [capital as well as running]

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Packaging* Types of packaging- consumer packaging and

industrial packaging

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Genesis of modern logistics • Military planning

• OR techniques like VA, PERT, CPM etc. • “Battles are won or lost even before they are

fought……….”Field Marshall RommelSome logistical feats in history:

• Indians in the Gulf countries – 1991• 1776 American war of Independence [4th

July1776]

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BERLIN AIRLIFT- 1945

In total, 1,534 tons of provisions were needed daily to keep the over 2 million people alive. 

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OPERATION OVERLORD – NORMANDY BEACH

II World War-1945

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What Causes Bad Logistics?

• Infrastructure: bad roads, inefficient railways, poor communication lines, congestion in ports

• Taxation: e.g. Octroi• Information: Inadequate information, bad

communication • Management: Bad management decisions [carrier

selection, out sourcing etc.] What Does Bad Logistics Cause?

• Costly products, shortages• Deteriorating economy

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Importance of Logistics

Why should we learn logistics? Why is logistics important for management

students?1. Logistics is the bed rock of trade and business

2. Leads to customer satisfaction, D & F expectations of customers

3. Integrates logistical activities4. Competitive edge in a commodities market

5. Logistics wins or loses wars6. Supports critical functions like operations and

marketing to be JUST IN TIME to the customer

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Importance of Logistics

7. Logistical costs are 5% to 35% of sales depending on type of business, geographical

areas of operation etc.8. Crucial to survival and prosperity in global

business9. Logistics experts are moving up in Corporate

Ladder10. Leads to the concept of supply chain

management11. Indian market is changing- shift from seller’s

market to buyer’s market

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12. Changing customer13. Competition, internal & external

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1. Rapid response Ability to respond rapidly to customer’s order

• Short lead-times• High flexibility

• Real time information• Concepts of SMED and Kanban

Operating Objectives Of Logistics

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2. Minimum variance• Any event that disturbs flow of supplies to

customer is variance• Interrupts product delivery

• Undermines OTD Objective• Problems in information flow, traffic snarls, acts

of god, wrong dispatches, transit damage• How to maintain smooth, undisturbed flow of

supplies to customer?Traditional approach – Inventory

Modern approach – Minimum Variance

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3. Minimum inventory• Low inventory volume by high inventory turns

• Kanban as an inventory control tool • Single piece flow as practiced by JIT

companies

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4. Movement consolidation Movement planning to reduce costs

• Bulk volume, same product or collection• Long runs, eliminating broken short runs • Integrating interests of several players in

business

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5. Quality Quality of logistics performance - complete fulfillment of order, product, place, time and

quantity

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6. Life cycle support [cradle to cradle logistical support to product]• After sales service• Reverse logistics

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• Reverse logistics Rigid quality standards

Transit damage Product expiration dating

Product recall Law against unscientific disposal Law making recycling mandatory

Erroneous order processing by supplier Reuse of packaging material

• What are the drivers of reverse logistics?