LOGISTICS CONCEPTS

Lt Gen D V Kalra, PVSM, AVSM

(Retired)

ORIGINS OF SUPPLY CHAIN

MANAGEMENT
Military origins and connotations of
logistics
Systems of maintenance of armies
Logistics-a bridge between Strategy and
Tactics
Logistics and Supply Chain Management as
integral parts of strategic planning

LOGISTICS
(MILITARY DEFINITION)
THE SCIENCE OF PLANNING AND CARRYING OUT
THE MOVEMENT AND MAINTENANCE OF FORCES....
THOSE ASPECTS OF MILITARY OPERATIONS THAT
DEAL WITH THE DESIGN AND DEVELOPMENT,
ACQUISITION, STORAGE, MOVEMENT,
DISTRIBUTION, MAINTENANCE, EVACUATION AND
DISPOSITION OF MATERIAL; MOVEMENT,
EVACUATION, AND HOSPITALIZATION OF
PERSONNEL; ACQUISITION OF CONSTRUCTION,
MAINTENANCE, OPERATION AND DISPOSITION OF
FACILITIES; AND ACQUISITION OF FURNISHING OF
SERVICES. -- (JCS PUB 1-02 EXCERPT)

LOGISTICS
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 TO CUSTOMER
REQUIREMENTS."
NOTE THAT THIS DEFINITION INCLUDES
INBOUND, OUTBOUND, INTERNAL, AND
EXTERNAL MOVEMENTS, AND RETURN OF
MATERIALS FOR ENVIRONMENTAL
PURPOSES. -- (REFERENCE: COUNCIL OF LOGISTICS
MANAGEMENT).

LOGISTICS
(BUSINESS DEFINITION)
LOGISTICS IS DEFINED AS A BUSINESS
PLANNING FRAMEWORK FOR THE
MANAGEMENT OF MATERIAL, SERVICE,
INFORMATION AND CAPITAL FLOWS. IT
INCLUDES THE INCREASINGLY COMPLEX
INFORMATION, COMMUNICATION AND
CONTROL SYSTEMS REQUIRED IN TODAY'S
BUSINESS ENVIRONMENT. -- (LOGISTIX
PARTNERS OY, HELSINKI, FI, 1996)

BUSINESS LOGISTICS
THE SCIENCE OF PLANNING, DESIGN,
AND SUPPORT OF BUSINESS
OPERATIONS OF PROCUREMENT,
PURCHASING, INVENTORY,
WAREHOUSING, DISTRIBUTION,
TRANSPORTATION, CUSTOMER
SUPPORT, FINANCIAL AND HUMAN
RESOURCES. -- (MDC, LOGLINK /
LOGISTICSWORLD, 1997)

EVOLUTION OF SUPPLY
CHAIN MANAGEMENT

MATERIALS MANAGEMENT (TILL 70s)

PURCHASING AND STOCK KEEPING
ALLOCATION AND SCHEDULING

EXTENDED MATERIALS MANAGEMENT (80s)

PRODUCTION PLANNING AND CONTROL

INTEGRATED MATERIALS MANAGEMENT (Early 90s)

Order Processing Control and Distribution

SUPPLY CHAIN
MANAGEMENT
SUPPLY CHAIN MANAGEMENT (Mid
90s onwards)
To include Supplier / Customer Relations
Management-an end to end approach

IMPORTANCE OF LOGISTICS
BUSINESSES CANNOT HOPE TO WIN IN WORLD
MARKETS UNLESS THEY GET THEIR LOGISTICS
RIGHT
Michael Heseltine, President Board of Trade UK
THE CORRECT APPLICATION OF THE
PRINCIPLES OF MODERN LOGISTICS
REPRESENTS NOT ONLY AMONG A NUMBER OF
POSSIBLE ROUTES TO SUCCESS, BUT THE
CENTRAL, DECISIVE ONE
Hansjoerg Bendel, President European Logistics
Association

LOGISTICS
SCOPE AND OPPORTUNITY
PHYSICAL DISTRIBUTION IS TODAYS
FRONTIER IN BUSINESS. IT IS ONE AREA
WHERE MANAGERIAL RESULTS OF
GREAT MAGNITUDE CAN BE ACHIEVED
AND IS STILL LARGELY UNEXPLORED
Peter Drucker

ALLIED TERMS

PHYSICAL DISTRIBUTION
BUSINESS LOGISTICS
PROCUREMENT AND SUPPLY
MANUGISTICS
MARKETING LOGISTICS
SUPPLY CHAIN MANAGEMENT

WHAT IS LOGISTICS?
LOGISTICS

MEANS HAVING
THE RIGHT THING, AT THE
RIGHT PLACE, AT THE
RIGHT TIME."

LOGISTICS
SUPPLY
PLUS
MATERIALS MANAGEMENT
PLUS
DISTRIBUTION

LOGISTICS COST FOR KEY

REGIONS (%AGE OF GDP)

NORTH AMERICA
EUROPE
ASIA PACIFIC
REMAINING
INDIA

10.77 (9.9 in 2007)*

11.79
11.64
11.74
13.00**
* 8.6 in 2006
** UNVERIFIED

COMPONENTS OF LOGISTICS
COSTS
REGION TPT

S&WH

ICC

ADM

US

46%

22%

22%

10%

EU

41%

23%

21%

15%

ELEMENTS OF LOGISTICS
AND DISTRIBUTION

STORAGE AND WAREHOUSING

MATERIALS HANDLING
TRANSPORT
INVENTORY
INFORMATION AND CONTROL
PACKAGING AND UNITISATION

DISTRIBUTION &
LOGISTICS

DEEP SEA CARRIERS

SHORT SEA CARRIERS
AIR TRANSPORT
RAIL TRANSPORT
ROAD TRANSPORT
INLAND WATER TRANSPORT
PARCEL TRANSPORT

DISTRIBUTION &
LOGISTICS

FREIGHT FORWARDERS
BROKERS
INTER-MODAL HUBS
PORTS
RAIL HUBS

INTERNATIONAL
LOGISTICS
For the international firm, customer
locations and sourcing opportunities
are widely dispersed. The firm can
attain a strategically advantageous
position only if it is able to
successfully
manage
complex
networks, consisting of its vendors,
suppliers, other third parties, and
its customers.

INTERNATIONAL
LOGISTICS
Logistics costs comprise between 10% and
30% of the total landed costs of an
international order. Thus, international
logistics is a competitive tool.
Effective international logistics and supplychain management can produce higher
earnings and greater corporate efficiency.

INTERNATIONAL LOGISTICS
International Logistics is design and
management of a system that controls
the flow of materials into, through, and
out of the international corporation.