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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.
15
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