1.What is logistics? Explain the different perspectives of Logistics?

The process of planning, implementing and controlling the efficient, cost 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 requirement. Logistics involves the integration of Information, Transportation, Inventory, Warehousing, Material Handling & Packaging Responsible for the geographical positioning of Raw materials, Work in Process & Finished Goods inventory where required at the lowest cost possible. Logistics facilitates the flow of products through marketing channels to consumers Sl.No 1 2 Perspective Inventory Customer (eight R of logistics) Definition Management of materials in motion & at rest Right product, At the right time, In the right quantities, In the right condition, At the right place To the right customer At the right cost Right documentation The branch of military science concerning processing,maintaining & transporting materials, personnel & facilities The art & science of management, engineering & technical activities concerned with requirements, design & supplying and maintaining resources to support objectives, plans & operations. Providing Time & place utility / value of materials & products in support of organizational objectives. That part of the supply chain which plans,implements & controls the efficient & effective flow & storage of goods, services & related information from point of origin to point of consumption in order to meet customer requirements. Supply management for the plant (inbound logistics) and distribution management for the firms customer (outbound logistics) Determination of material requirement,purchasing,transportation,

Dictionary

International Society of Logistics

Utility / value

Council of Logistics Management

Component support

Functional Management

Common Culture

inventory management, warehousing, material handling, industrial purchasing,facility location analysis, distribution,return goods handling, information management, customer service,and all other activities concerned with supporting the internal customer (manufacturing) with materials and the external customer (retailer) with finished products. Handling the details of an activity

2. Who are the key players in logistics management? Customers Shippers Suppliers of logistics services Transport providers Transport infrastructure operators & providers Government regulator of logistics

3. What are the major elements of logistics costs? Describe how they could be leveraged for competitive advantage. Transportation costs Inventory costs Packaging costs Warehousing costs Administrative costs like taxes, duties & insurance

4. What do you understand by Integrated Logistics Management? Integrated Logistics is defined as the process of anticipating customer needs and wants, acquiring the capital, materials, people, technologies and information necessary to meet those needs, optimizing the goods or service

producing a network to fulfill customer requests and utilizing the network to fulfill customer requirements in a timely way.

System-wide management of entire logistics chain as a single entity, instead of separate management of individual logistical functions. Integrated Logistics Support (ILS) is foremost used in the civil and military industry and describes procedures and methods for the integrated technical-logistic support of operation, of maintenance as well as of monitoring of operation risks. The use of integrated logistics ensures the cost-efficient deployment of available resources and minimizes the production and operation costs during the whole life-cycle of a product. The optimization of logistic processes within your company implies substantial cost savings you can increase your margin towards your customers or partners. 5. What are the different network elements? Explain each element briefly. Network Elements 1. Information: Most important element of the logistics network.Todays technology is capable of handling most demanding requirements on a real-time basis.Deficiencies in the quality of information can create operational problems. 2.Transportation: Operational area of logistics that geographically positions inventory.Facility selection establishes a network structure that creates the framework of transportations requirements. Typical metrics of transportation are cost, speed & consistency 3. Inventory: This depends on the network structure and the desired level of customer service. Typical objectives would be to achieve the desired customer service with the minimum inventory commitment. Inventory policy would be based on the following Customer segmentation Product requirements Transport integration Time based requirements Competitive performance

4.Warehousing, material handling & packaging 6. What are the objectives of Integrated Logistics Management? Operating Objectives

There are several objectives that must be simultaneously achieved in a well designed logistical system.They include Rapid response Minimum variance Minimum inventory Movement consolidation Quality Lifecycle support Rapid Response: Is concerned with a firms ability to satisfy customer requirements in a timely manner.The ability to respond rapidly results in reducing the inventory levels.RR shifts the focus from dependence on forecasting and stocking to increased operational efficiencies. Minimum Variance: Variance is due to unplanned events that disrupts system performance. Traditional solutions to overcome variance was to establish safety stock or use high cost premium transportation. Logistical productivity improves as variances are minimized. Minimum Inventory: The objective of logistical operations is to reduce inventory deployment to the lowest level consistent with customer service goals to achieve lowest total logistics costs.

Movement Consolidation: Transportation cost, which is one of the major logistical costs

can be optimized through movement consolidation. The larger the overall shipment and longer the distance, the lower is the transportation cost per unit.Innovative ways to consolidate movement by grouping small shipments through overall supply chain integration can lower transportation costs significantly. Quality: Total Quality Management or TQM has become a major commitment and one of the major forces contributing to the emergence of Logistics as an important function of the firm.The value provided by logistics is keeping service promises and ensuring products do not become defective.Aim is to achieve Zero-defect Performance. Lifecycle Support: Majority of the products sold today comes with some

guarantee on Performance over a specified period (life of the product) Some times value added inventory flow towards customers may have to be reversed. Also return logistics requirements results from the laws prohibiting disposal and encouraging recycling. Examples would be beverage containers and packaging materials. For firms marketing consumer durables or industrial equipment, commitment to lifecycle support constitutes a versatile and demanding operational requirement.

8. What do you understand by performance cycles? Performance cycle is the primary unit of analysis for integrated logistics. Performance cycles provide a basic perspective of the dynamics, interfaces, & decisions that must link to create an operating system. At a basic level, suppliers, the firm and its customers are linked together by communications and transportation. The facility locations that performance cycles linked together are referred to as nodes. In addition to nodes and links, a logistical performance cycle requires inventory. Within nodes, inventory is stocked or flows through the node, necessitating a variety of different types of material handling and at least limited storage. Performance cycles become dynamic as they accommodate input /output

Performance Cycles The primary unit of analysis for logistics is the performance cycle and generally spans the overall supply chain and link the participating firms Reflects the input/output requirements. The input to a performance cycle is

an order that specifies requirements for a product or material. System output is the level of performance expected from the logistical operation To better understand the similarities and differences in the nature of physical distribution, manufacturing support and procurement performance cycle are discussed below. 1) Procurement cycle (Inbound):Procurement is concerned with purchasing and arranging inbound movement of materials, parts and/or finished inventory from supplier to manufacturing and assembly plants, warehouses or retail stores. The acquisition process is called purchasing in manufacturing organization, in government organisation it is called procurement and in retailing and whole selling it is called buying. All these three term namely purchasing procurement and buying are referred to as inbound logistics. These activities are related to product and materials from outside suppliers. It includes(i) Resource planning, (ii) Supply sourcing, negation, (iii)Order placement, (iv) Quality assurance, (v) Inbound transportation, (vi) Receiving and inspection (vii) Storage and handling. 2) Manufacturing support performance cycle:The manufacturing support performance cycles provides production logistics. Manufacturing can be viewed as being positioned between the physical distribution and procurement operations of firm. Manufacturing logistical support has the primary objective of establishing and maintaining an orderly and economic flow of materials and work in process inventory to support production schedules. The isolation of manufacturing support as a distinct operating area is a relatively new concept in logistic management. The justification for focusing on performance cycles to support manufacturing is found in the unique requirements and operational constraints of modern production strategies. It is important to once again stress that the mission of logistics manufacturing support is to facilitate the what, where, and when of production, not the how. Manufacturing support is significantly different when compared with either physical distribution or procurement. Manufacturing support logistics is typically captive to firm, whereas the other two performance areas must deal with behavioural uncertainty of external customers and suppliers. Even in situation when contract manufacturing is used to augment internal capacity, overall control is greater than in the other two operating areas.

Within a typical manufacturing organization, procurement provides materials and externally manufactured components when and where needed. Once a firm's manufacturing operation is initiated, subsequent requirements for interplant movements of materials or semi finished products are classified as manufacturing support. When a firm has multiple plants that specialize in specific production activities, the manufacturing support system may require a vast network of performance cycles manufacturing support operations, as contrasted to either physical distribution or procurement, are limited to movement under internal management control 3) Physical Distribution Performance Cycle (Outbound Logistics):Physical distribution operations involve processing and delivering customer order. Physical distribution is integral to marketing and sales performance because it provides timely and economical product availability. The overall process of gaining and maintaining customers can be broadly divided into transaction creating like advertising and selling and physical fulfilment activities. From the logistical prospective physical distribution links a firm with its customers. It resolves marketing and manufacturing initiatives into an integrated effort. The interface between marketing and manufacturing can be conflictive. On the other hand marketing is dedicated to delighting customers. The expectation is that zero defect service will be achieved and customer focused marketing efforts will be supported. 9. What functions does a warehouse perform in a logistical system? A warehouse is typically viewed as a place to store inventory. In modern logistical system design, the role of the warehouse is more properly viewed as a switching facility as contrasted to a storage facility. Warehouses are the nodes of the supply chain network that extend the operational reach of the firm and provide a strategic thrust to its objectives

A warehouse is a static unit in the material & product pipeline, necessary to match products in a timing sense with consumers, for storage of products. Typically a warehouse is a godown or storage space where a firm holds raw materials, semi-finished or finished goods for different periods of time.A warehouse receives merchandise by railroad or truck. The items are moved to

a storage area within the warehouse and piled in stacks. When customer orders are received, the products are handpicked for placement on wagons and transported to the shipping area where the merchandise is loaded on to delivery trucks. 10. Describe the economic benefits of the warehousing network in a logistical system? Economic Benefits A warehousing function is meant to improve the time and place capability of the overall logistical system both in terms of economic benefits and service. The cost of adding a warehouse should get offset by the benefits of increase in market share, revenue and gross margins .No warehouse should be included unless backed up by a cost benefit analysis.Economic benefits of warehousing can be quantified by the return on investment in the direct cost to cost tradeoff. If adding a warehouse to a logistical system reduces the overall transportation costs by an amount exceeding the fixed and variable cost of the warehouse, then the warehouse is economically justified. This means that the total costs have been reduced. Typically cost reductions are attainable through the following four basic steps. (1) Consolidation (2) Break bulk and cross-dock (3) Processing / postponement (4) Stockpiling

11. What is the difference between a consolidation and break bulk? Consolidation: Shipment consolidation is when a warehouse receives and consolidates materials from a number of mfg plants destined to a specific customer on a single transportation shipment.Prime benefits are the realization of the lowest transportation rates. Break bulk:A break bulk operation receives combined customer orders from manufacturers, sorts or splits individual orders and delivers them to individual customers. Long distance transportation is consolidated to lower costs. 12.What do you understand by cross docking in a warehousing system Cross Dock: is similar to break bulk except that it involves multiple manufacturers. Here truckloads of product arrive from multiple manufacturers. The products are Received, sorted customer wise,moved across the dock to be loaded into the trucks destined for the appropriate customers. Retail chains make extensive use of crossdock operations to replenish fast moving store inventories. Cross docking provides cost savings as full trucks move from manufacturers end to the warehouse and from the warehouse to retailers 13. What are the different types of warehouses? Describe briefly Types of Warehouse 1. General Merchandise warehouse Store goods that are readily handled & packaged Does not require controlled environment

2. Refrigerated warehouse

Specialized warehouse to handle & maintain products that are perishable food, medical drugs & other chemicals Needs to follow environmental regulations

3. Special commodity warehouse Used for handling bulk materials like rice,wheat,jute,fertilizers etc

4. Bonded warehouse. These are licensed by government to store goods prior to payment of taxes / duties

Generally imported goods are stored to defer the payment of duties/taxes 14. What do you understand by the term Public Warehouse? What are the different types of public warehouse? -primary function to store agri-products,seeds,manures, fertilizers etc -total capacity of public warehouse's is56.50 million tonnes types of public warehouses 1.food corporation of india (FCI) -capacity24.4 million tonnes 2.central warehousing corporations ( CWC's) -setup in 1957 -largest public warehousing org. -4564 warehouses two types 1.owned capacity - capacity 8 million tonnes 2.Hired capacity -2.4 million tonnes 3.State warehousing corporations (SWC's) -17 states have swc's

-capacity 19.40 million tonnes Warehousing Act: The CWC was set up in 1957 under the Agriculture Produce Development & Warehousing Corporations Act, 1956 1. Acquire & build godowns & warehouses at suitable places in India 2. Run warehouses for storage of agriculture produce, seeds, manures, fertilizers etc 3. Arrange facilities for transport of agriculture produce etc to and from warehouses 4. Subscribe to share capital of State Warehousing Corporations 5. Act as agent of government for the purpose of purchase,sale,storage and distribution of agriculture produce etc Carry out such functions as may be prescribed. 15. Describe briefly the various warehouse strategies? Warehousing Strategies Strategies are based on the following. 1. Level of availability of products & services to the customer 2. Level of availability & support for manufacturing 3. Degree of customer service to be offered / desired 4. Minimization of total distribution costs. Broadly based on the above, warehousing strategies could be Market positioned -typically positioned near key customer location to provide inventory replenishment to customer -to provide assembled product a soon as order is placed -ex. HP keep chipset in various location to serve the customers soon Manufacturing positioned -typically positioned closer to production plant -serves as assembly or consolidation point for items being produced

-ex. DHL consolidates all the consignments to be exported or delivered at a centralized place to reduce the ground rent. Intermediately positioned -located between customer and manufacturing plants are intermediately -all types of stocks are stored in one place to reduce the transportation cost for the various types of stock ordered by the customer. Strategies could also be based on Owner operated -facilities may cover the basic year-round requirement Private -used to handle peak seasons.

16. What are the guiding principles of transport management? Guiding Principles of Transport Management Mode of transport Economy of scale Economy of distance

here in the above diagram we see the relationship between fright rate and distance and mode of transport to be used

total thing to minimize financial and environmental resource and also reach the customer on time and proved real-time info of their consignment and reduce loss and damage to their goods 17. What are the different modes of transportation available in India? Describe briefly each mode Mode of transport Road Railways Water Pipeline Air Animal drawn vehicles 18. Who are the key players in a transportation model? Describe each players functions/objectives. Transactions are influenced by 5 parties 1. Shipper originating party 2. Consignee destination party or the receiver 3. Carrier responsible for movement of goods 4. Government 5. Public Shipper & consignee share a common objective of moving goods within a prescribed time and at the lowest cost Carriers want to charge the maximum rate that the shipper or consignee are willing to pay and minimize the cost of fuel, labor & vehicle costs Government is the largest investor in infrastructure and has the highest impact on the economy by providing roadways, ports,airports and traffic control systems. Also responsible for regulations & promotions The final participant - Public is concerned with the transportation accessibility, expense & effectiveness as well as environmental and safety standards.Public determines the need for transportation by demanding goods & Services. Development of air freight industry

shows that consumers may find cost less important than speed.

19. What are the factors that influence Transport economics? Describe each factor briefly. Transport Economics: There are 7 factors that influences economics 1. Distance 2. Volume 3. Density 4. Stowability 5. Handling 6. Liability 7. Market factors

Density : Product weight is a function of density & volume.Vehicles are limited by both space & weight considerations. Higher density products are assessed for lower transport cost per unit of weight. Stowability : This refers to space utilization and is a function of product dimensions. Odd sizes & shapes as well as excessive weight or length do not stow well and hence result in wastage of space. Products with good stowability attract lower transportation costs. Handling : Special handling equipment may be required for loading / unloading trucks,railway wagons or ships.Proper packaging - grouping together of products by taping, boxing and palletizing products for transport & storage handling costs can be reduced. Liability : This includes Susceptibility to damage Property damage to freight Perishability Susceptibility to theft Spontaneous combustion / explosion

Value per Kg

-Carriers insure their cargoes to protect against claims. -Shippers reduce the risk by improved protective Packaging. Market Factors : Since transportation vehicles & drivers must return to their origin,they must either find a load to bring back (back-haul) or return empty ( deadhead). When deadhead movements occur, labor, fuel & maintenance costs must be charged to he shipper. Balanced moves where volumes are equal for both directions is rarely possible due to factors such as demand imbalances in manufacturing & consumption. 20 What are the components of Total Transportation Costs? Describe each briefly Total Transportation Costs 1.Transit time costs reflects the temporal cost of transportation cost of inventory in transit. The longer the transit time means that the inventory is inaccessible to the user. This adds to safety stocks and therefore requirement of working capital. If inventory is available after a longer period of time, it will result in higher total cost. 2.Obsolescence & Deterioration Costs Certain category of goods are perishable and delicate in nature. Their physical attributes deteriorate over Time gradually resulting in devaluation of the product. Examples : Any delay in transport of vegetables such as tomatoes may force marketers to sell them at a less than desired price. Such costs are classified as obsolescence and deterioration costs. 3.Protective Packaging Costs : Products may require special packaging. This cost is also a part of the total transport cost. Products shipped in a container generally requires less protective packaging for safe shipment as compared to transportation by truck. 4.Insurance Costs :Insurance covers goods against loss or damage while in transit or under storage during a journey.If goods are transported by sea, then a marine insurance has to be taken out. This also includes the transit of cargo over land at each end of the voyage. A goods in transit policy protects operators from theft, loss & damages.

Insurance does not protect you if the goods are inferior,below standard or damaged through inappropriate packaging.There are generally two types of insurance covers 1.New for old items are replaced at their current market value 2.Indemnity cover takes into account general depreciation 5.Incoterms :These are standard trade codes used for international contracts. They delineate the risk & cost obligation for both the importer and the Exporter and therefore which party needs to take out the insurance cover. 6.Joint Costs : are expenses unavoidably created by the decision to provide a particular service. For example, when a carrier transports a truckload from point A to point B, there is an implicit decision to incur a joint cost for the back-haul from point B to point A. Either the cost must be covered by the original shipper or a back-haul shipper must be found. 7.Other costs : Common costs such as terminal or management expenses are often allocated to a shipper according to a level of activity like the number of shipments handled.local taxes, octroi & toll taxes can also be a part of other costs. 8.Class Rates : In transportation terminology, the price per Kg to move a specific product between two locations is referred to as the rate or tariff.The classification does not define the price charged for movement of a product.It refersto a product transportation characteristics in comparison to other commodities. Classification of individual products is based on a relative percentage index of 100. Class 100 is considered for an average product, while other classes run as high as 500 and as low as 35. Each product is assigned an item number for listing purposes and then given a classification rating.The higher the class rating ,the higher the transportation cost. Products are also assigned different ratings on the basis of packaging. Glass has a different rating when shipped loose,in crates or in boxes than when shipped in wrapped protective packaging. 21.What are the cost characteristics for the different modes of transport? Illustrate through a table.

22. Why is timely & accurate information critical to integrating logistical activities? Logistics Information is a critical component of the integration process. Timely and accurate information is also critical for 3 reasons 1. Information on order status,product availability,delivery schedule & invoices is perceived by customers as a necessary element of total customer service 2. Information can reduce inventory by minimizing demand uncertainty 3. Information increases flexibility with regard to how,when & where resources may be utilized for strategic advantage. 23. What do you understand by exception-based LIS capability? Exception based LIS : LIS need is to be exception based to highlight problems & opportunities. This helps management to focus on situations that require the most attention. Managements need to continuously be aware of whether action has to be taken for product / replenishment orders What type of action that should be taken eg. immediate , before or after lead time

Exception reports also highlights

Very large order inflows Products with little / no inventory Delayed shipments Declining productivity

24. Briefly describe as to what is meant by LIS architecture.? Information Architecture The nature of information provided by an LIS is determined by Information System architecture.It includes information base to Maintain the data warehouse & the execution components of information. There are two type of activities of an LIS 1. Planning & coordination activities 2. Operating activities Inventory deployment & inventory management are the interfaces between planning / coordination and operations.

Planning Coordination This is the information system backbone for manufacturers & merchandisers. Reflects the activities necessary to produce & deploy inventory

These components define the core activities that guide enterprise resource allocation & performance from procurement to product delivery Includes planning activities both within the enterprise & between distribution channel members. Key components are Strategic planning Demand planning Supply planning

Operations activities All activities necessary to Receive Process Ship Invoice customer orders

The information activities required to achieve these objectives are listed under the following operational components. Order management & processing Distribution operations Transportation & shipping Procurement inventory deployment & management

25. How does EDI work? What is the difference between a communicationstandard & an information standard for EDI transactions? Electronic data Interchange 1. The process involving the capability & practice of communicating information between two organizations via computer systems instead of traditional forms communication for managing distribution & procurement systems.

2. EDI has a highly structured message communication system, with tight,pre-decided formats of documents, which allows effective,speed & reliable communication between different locations. 3. It uses a service provider who transfers data & provides translators between different formats. 4. The service provider also handles EDI traffic between various sources & destinations.

What do you understand by customer service? Explain the concept of value advantage. How can value advantage be achieved through customer service?
26.

27. Explain availability and how it is measured. Availability is the capacity to have inventory when it is desired by a customer. Availability is based on the following three measures. Stock-out frequency: is the probability that a stock-out will occur. Stock-outs occur when demand exceeds supply Fill rate: measures impact of stock-outs over time Orders shipped complete: is a measure of the times that a firm has the entire inventory ordered by a customer. 28. What is the similarities & differences between domestic & international logistics ?

29. What do you understand by globalization? What are the factors that can limit the growth of global markets?
Globalization & Global Economy World economy impacts the economic conditions in every country through international trade,global production & international finance Extent of business done on a global level in India is growing rapidly. Exports grew by 30% for the period 2005-2007 This trend reflects the current ability of business organizations to outsource from any part of the world that offers a cost advantage Global logistics supply chains have the ability to move goods to any part of the world, economically & quickly due to technological developments in the fields of information & transportation Logistics companies have been successful in using new technologies and combining them with new ways of doing business resulting in dramatic price reductions in moving goods & services from one part of the world to another KEY DEVELOPMENTS which have impacted global logistics Trade Policies Global organizations Global Transnational Multi-domestic Inter-modal transport Port-to-port Port-to-point

 Point-to-point New breed of logistics organizations Logistics Issues Compliance to regulatory environment surrounding logistics process Currency fluctuations Visibility & tracking

30. Explain Porters Dynamic Diamond Theory Porters Dynamic Diamond Theory Traditional theories of international trade propose that comparative advantage of country lies in the natural endowments like Skilled labor Natural resources Knowledge resources Capital resources Infrastructure Based on the study of 10 countries, Michael Porter came up with a Dynamic Diamond Theory that a countrys global competitive advantage is not just related to factor conditions but also other conditions as well According to Porter,competitive is related to the following 4 elements Factor conditions Demand conditions Related & support industries Company strategy,structure & rivalry