LOGISTIC

MANAGEMENT
 DEFINITION
O It is the process of planning,
implementing and controlling the
efficient, effective flow and storage of
goods, services and related
information from the point of origin to
the point of consumption for the
purpose of confirming to customer
requirements.
 MISSION AND CONCEPT
OF LOGISTICS
O Providing a means by which customer
satisfaction is achieved.
O Art of moving, lodging and supplying
troops, supplies and equipment is
logistics.
O Concept of logistics has moved into
business to move, lodge and supply inputs
and outputs.
Logistics is the process of
managing the procurement,
movement and storage of
materials, parts and finished
inventory through the organization
and its marketing channels in such
a way that current and future
profitability are maximized
through the cost- effective
fulfillment of orders.
O Logistics is concerned in getting
products and services where they
are needed whenever they are
desired.

O Logistics is the designing and

managing of a system in order to
control the flow of material
throughout a corporation.
 BASIC BLOCK DIAGRAM TO
UNDERSTAND LOGISTICS
DIRECT OUTLETS
MOVE OF RAW
MATERIALS BY DIFFERENT MODES
OF TRANSPORT CONSUMERS

PRODUCT
WAREHOUSING AND
PROCESSING INDIRECT
STORAGE

MOVE OF RAW BY DIFFERENT MODES

MATERIALS OF TRANSPORT OUTLETS
The (6) Objectives of
Logistics
1. RAPID O Is concerned with a
RESPONSE firm’s ability to satisfy
customer service
requirements in a
timely manner.
O It involves ass’s
commitment and
2. MINIMUM
relative turn velocity.
INVENTORY
O Any unexpected event
3. MINIMUM that disrupts system
VARIANCE performance.
4. MOVEMENT O One of the most
CONSOLIDATION significant logistical
costs is
transportation.
5. QUALITY O It is a prime part of
IMPROVEMENT developing and
maintaining
continuous TQM
improvement.
6. LIFE- CYCLE O Product recall
SUPPORT resulting from
increasingly rigid
quality standards.
LOGISTICS
ACTIVITIES
1. ORDER O Computers will
PROCESSING determine that the
goods are available,
and the seller will
inform the buyer, still
using electronic
methods, that the
order will be filled
and shipped by a
certain date.
 Example of Order Processing
Order
placement by General Office
District Sales
sales (mainframe
Offices
representatives computer)
and brokers.

Credit Check

Billing and Ship to Plant, Dos &

Invoicing customers Warehouses
2. INVENTORY O A key issue in
logistics planning
MANAGEMENT and operations.
O Improving service
level.
O Reducing over- all
logistics cost.
O Coping with
randomness in
customer demand
and lead times.
O Making seasonal
items available
throughout the year.
2. INVENTORY O Speculating on price
patterns
MNGT
(continuation) O Overcoming
insufficiencies in
managing the logistics
system.

3. FREIGHT O Countries in developing

TRANSPORTATION countries take advantage
of lower manufacturing
wages to provide
perishable goods
available in the worldwide
market.
4. DEVELOPMENT OF O The system approach
LOGISTICS simply states that all
functions or activities
need to be understood in
terms of how they effect
and are affected by other
elements and activities
which they interact.

O Logistics is the major

5. THE ROLE OF expenditure for business.
LOGISTICS IN THE O Support the movement
ECONOMY and view of man
economic transactions.
6. LOGISTICS AND O To separate buyers,
COMPETITIVE suppliers and a firm
into the discrete but
PERFORMANCE
interrelated activities.
O The amount a
customer is willing to
pay for the products
and services provided
by the organization.
INBOUND LOGISTICS

Activities associated with receiving, storing

and disseminating input to the product.
 Objectives of Inbound
Logistics
O Ensure that material received and related
information are processed and made
available promptly to production, store and
other department.
O Completely and accurately document goods
received and goods returned.
O Accept only items that were properly ordered.
O Accept only materials that meet purchase
order specification.
O Safeguard goods received.
 Objectives of Inbound
Logistics
O Ensure that vendor, inventory and purchase
order information is accurately updated to
the reflect receipt.
O Return rejected items promptly.
O Completely and accurately document all
transfer to and from storage.
O Properly transfer all materials requisitioned.
O Maintain safe working conditions and
storage hazardous materials.
 Outbound Logistics-An activity associated
with collecting, storing and physical
distribution of the product to buyers.
1.Company infrastructure
Support 2.Organization,People
Activity 3. System & Technology
4. Procurement

Inbound Logistics
Operation
Outbound Logistics
Marketing and Sales
Service

Primary Activity
 Transportation
-The role that transportation plays in logistics
system is more complex than carrying goods
for the proprietors.
O Transportation Utility

O Transportation in Production and Marketing

MODAL CHARACTERISTICS
O Modes of transportation used in
national and international logistics
and supply chain management can be
grouped under five models. They are
rail, highway, water, pipeline and air.
Warehousing Management
O Warehousing has become an important
part of companies’ logistics systems, which
stores goods at and between the origin and
destination points and provides the
management with the information about
status, disposition, and condition of
inventories. These inventories may belong o
different phases of the logistics process
and can be categorized into three groups:
 Warehousing Management
O These three groups are:
• Physical supply (e.g. raw materials,
components, parts)
• Physical distribution (e.g. finished goods)
• Goods in Process (e.g. constitute small
portion of total inventories)
 Warehousing Function
O Warehousing plays a critical role in logistics
systems, providing the desired customer
service levels in combination with other
logistics activities. A wide variety of
operations and tasks are performed in
warehousing; these can be categorized
under three basic functions:
 Warehousing Functions
• These three basic functions are:
1. movement (material handling)

2. storage (inventory holding)

3. information transfer
 Movement
O The movement or material-handling function is represented by
four primary activities:
• Receiving and Put Away
This activity includes unloading goods from
the transportation equipment as well as
verifying their count and specifications against
order record, inspecting them for damage, and
updating warehouse inventory records.
Receiving also includes sorting and
classification of products and prepacking bulk
shipments into smaller ones before moving
them to their warehouse storage location.
 Movement
• Order filling or Order Picking
This is a fundamental movement activity
in warehousing and involves identifying and
retrieving products from storage areas
according to customer orders. Order filling
also includes accumulating, regrouping, and
packaging the products into customers’
desired assortment.
 Movement
• Cross Docking
In this process, receiving products from
one source are occasionally consolidated
with products from other sources with the
same destination and immediately sent to
customers, without moving to long-term
storage.
 Movement
• Shipping
This activity involves physically moving
and loading assembled orders onto
transportation carriers, checking the content
and sequence of orders, and updating
inventory records. It may also include sorting
and packaging the products for specific
customers or bracing and packing the items
to prevent them from damage.
 Types of Warehouse
O Private Warehouse
These are the warehouse owned by the
company for their exclusive use of storing the
goods manufacture or traded by them from
onward selling in the market.
 Types of Warehouse
O Advantages:
• Better control over storage and movement
of goods
• Less chance of errors in handling the goods
• Customized design and flexibility in
operations
• Cost effective and economic
 Types of Warehouse
O Disadvantages:
• Lack of geographical flexibility
• Require stable demand and high product
throughput
• Require initial larger financial investment
• Has permanent liability
 Types of Warehouse
O Public Warehouse
These are the warehouse hire from other
storing the goods for a specific period of
time by paying the agreed rent.
O Advantages:
• Generally located near ports and market
place and thus has fixed periodic operating
cost
• Great flexibility in location changeover
 Types of Warehouse
• No permanent liability
• Adjustments as per season are possible
O Disadvantages:
• Lack of flexibility in operations
• Not suitable for specialized services.
 Types of Warehouse
O Contract Warehouse
It is a specialized form of public
warehouses managed by Third Party
Logistics companies for providing total
warehousing services by paying agreed
charges.
 Types of Warehouse
O Advantages:
• Great flexibility in location changeover
• No permanent liability
• Adjustment of expert manpower and
dedicated resources
O Disadvantages
• Less control on operations
• Performance of organization depends on
the performance on third party
 MID-TERMS
Chapter 3
Distribution Management
 Distribution Management
System
O Is a collection of application which
shall monitor and control distribution
network efficiently and reliably. It acts
as a decision support system to assist
the control room and field operating
personnel with monitoring and control
of the electric distribution system.
OUTBOUND LOGISTICS
O This is the distribution of those products
manufactured by our company to the retailer
or our respective outlets. It’s division offers
comprehensive services to buyers sourcing
their products from multiple suppliers in
multiple countries. It is designed to facilitate
a seamless flow of goods with complete
transparency of information from point to
point, to ensure that the products arrive in
the marketplace on-time and in perfect
condition.
OUTBOUND LOGISTICS
O Products and Services
-It provides enhancement to the value of the
product.
O Origin Services
-The movements of product originates after
manufacturing, hence it is vital for efficient
shipment of products.
 OUTBOUND LOGISTICS
O Destination Services
-FSL (Freight System Logistics) offers well
equipped destination services all over the world.
O Information Services
-FSL is well connected globally to serve the
customer by giving real-time information on the
product and this site gives customer a clear
visibility on the products, during its supply chain.
 FACILITY LOCATION
O Also known as location analysis, it is a
branch of operations research and
computational geometry concerning
itself with mathematical modeling and
solution of problems concerning optimal
placement of facilities in order to
minimize transportation costs, avoid
placing hazardous materials near
housing, outperform competitors
facilities.
 CLASSICAL LOCATION
O It is a theory during the time of Weber
pit it forward and how relevant the
theory is in today’s world. He tried to
explain the location if industries
which it is also known as the lowest
cost location (LCL) model.(putting up
companies globally)
 STRATEGIC PLANNING MODELS
FOR LOCATION ANALYSIS

O It is notable for the lack of

standardized and terminology in the
field. It is useful to establish
operational definitions for terms used
in planning process and to be clear
about what elements are included in
the strategic plan.
 STRATEGIC PLANNING MODELS
FOR LOCATION ANALYSIS
• Model 1: Non-Profit Organization
(NPOs)
-In order to be applied to community
associations, this model must be modified to
accommodate multiple missions in more
complex organizations, which offer many
services to very heterogeneous
constituencies.
 STRATEGIC PLANNING MODELS
FOR LOCATION ANALYSIS
• Model 2: Applied Strategic Planning
-Business and military executives tend to
favor this model. It assumes a top-down
hierarchy with a plans and operation
department that is responsible for running
the models and recruiting and involving
appropriate and key personnel.
Strategic Planning Model
 LOCATION MODELS
• It became recently as essential topic
in the field of ubiquitous computing
(UC) systems. A wide selection of
different sensing technologies is
available for the system developer
who wants to use spatial information,
whether to offer better service or just
to provide the users their current
position.
 LOCATION MODELS
O Basic Models
Physical Location
- Is related to a global geographic
coordinate system and provides
absolute, accurate, grid based position
in from of pair.
 LOCATION MODELS
O Basic Models
Geographic Location
-Is used to deal with natural geographic
objects, such as countries, cities and
also zip codes, postal address and so
on.
 MULTI OBJECTIVE ANALYSIS
OF LOCATION MODELS
O Dispersion facilities location problem
is one of the facility location
problems. Possible applications
include the location of shops and
service-stations, the location of
transceivers and location of
undesirable facilities.
 ROLE OF TRANSPORTATION IN A
SUPPLY CHAIN-DIRECT
SHIPMENT
O Transportation refers to the movement
from one location to another as it makes
its way from beginning of a supply chain
to the customer handle. Many
manufacturers and retailers have found
that they can use of the art supply chain
management to reduce inventory and
warehousing costs while speeding up
delivery to the end customer.
 WAREHOUSING
-Warehouse is a storage
constructed for the protection of
the quality and quantity of the
stored produce. The need for
warehouse arises due to the time
gap between production and
consumption of products.
 WAREHOUSING
Types of Warehouses
O Private Warehouses
-These warehouses are owned and operated by
big manufacturer and merchant to fulfill their
own storage needs.
O Public Warehouses
-These warehouses are a specialized business
establishment that provides storage facilities to
the general public for a certain charge.
 WAREHOUSING
 Types of Warehouses
O Bonded Warehouses
-These warehouses are licensed by the
government to accept imported goods for
storage until the payment of customs duty.
 CROSS DOCKING
-Isa distribution system where
items received at the warehouse
are not received into stock, but are
prepared for shipment to another
location or for retail stores.
 CROSS DOCKING
 Types of Cross Docking
O Manufacturing Cross Docking
-This procedure involves the receiving of
purchased and inbound products that are
required by manufacturing.
O Distributor Cross Docking
-This process consolidates inbound products
from different vendors into mixed product
pallet, which is delivered to the customer
when final item is received.
 CROSS DOCKING
 Types of Cross Docking
O Transportation Cross Docking
-This operation combines shipments from a
number of different carriers in the less-than-
truckload (LTL) and small package industries to
gain economies of scale.
O Retail Cross Docking
-This process involves the receipt of products
from multiple vendors and sorting onto
outbound trucks for a number of retail stores.
 CROSS DOCKING
Types of Cross Docking
O Opportunities Cross Docking
-This can be used in any warehouse, transferring
a product directly from the goods receiving dock
to the outbound shipping dock to meet a known
demand.
 PUSH VERSUS PULL
SYSTEM
PUSH SYSTEM
-In push system, releases are scheduled. So,
throughout is determined by a exogenously
set release rate. Since, releases are linked to
orders, it controlled by a upstream
information and is inherently make-order.
 PUSH VERSUS PULL
SYSTEM
PULL SYSTEM
-In pull system, releases are authorized.
There is an endogenous signal based on
system that determines whether a release is
allowed or not.
 TRANSPORTATION
DESICIONS
-Strategic transportation decisions are
closely related to inventory decisions as
well as meeting customer demands.
Using air transport gets the product out
quicker and to the customer
expediently, but the cost is high as
opposed to shipping by boat or rail.
 MARKET CHANNEL
STRUCTURE
-It is traditionally viewed as a bridge
between producers and users.
However, this perspective fails to
capture the complex network of
relationship that facilitates marketing
flows: the movement of goods, service,
information, and so forth between
channel members.
 MARKET CHANNEL
STRUCTURE
• Communication
-Communication channel present
information to pools of potential consumer
known as the products target markets.
• Distribution
-Products reach customer through
distribution channel. It include displays and
product delivery methods.
 MARKET CHANNEL
STRUCTURE
• Service
-Transactions are facilitated through service
channels. Types of service channels include
banks, warehouse, insurers and transportation
companies.
• Supply Chain
-Also known as the value delivery network, the
supply chain refers to the process of turning raw
materials into products in customer hands.