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LOGISTICS Introduction

LOGISTICS
DEFINITION : A system of handling the physical movements of goods and services from the place of origin to the destination as fast as possible at a low cost and with safety and security.

Journey Made By Goods


VENDORS MANUFACTURING PLANT WAREHOUSE

CUSTOMERS

RETAILERS

WHOLE SELLERS

Meaning of logistics
 Logistics involves 3 broad interrelated areas of function. Logistics = S + M + D S - Supply M - Materials Management D - Distribution

IMPORTANCE OF LOGISTICS
Cost of logistics main factor in fixing the final price of a product. (specially in bulk cargoes like grains, iron ores, crude) Its the management of cost n time positioning of resources at the R(right) time, in the R place, at the R cost, in the R quality. ( whether a turnkey or supply of medicines) It contributes to a certain % of GDP. (10 15 % in north American, European & Asia pacific economies)

Critical elements of logistics system


 Nature of the Product  Location of the manufacturing plant  Availability of Infrastructure such as roads, ports, airports, material handling system etc.  Availability of different Modes of Transport  Location of the Warehouses  Dealer/Distributor Network  Government Policies

Nature of product
Nature of product determines
The mode of transportation Type of packing Material handling system
For example:
For Diamonds air transport Grains, fertilizers sea transport Perishables careful packing & refrigerated containers Liquids, volatiles, highly inflammables special containers are devised

Logistics system is highly product dependent

Location of manufacturing plant


Timely delivery of cargo at ports/ airports is important for two basic things:
 For complying with L/C conditions  To maintain customer credibility

Hence location of plant in relation to port is an important element of logistics system. It can be close to source of raw material, backward regions, close to ports/air ports, free trade zones or special export zones.

Availability of infrastructure
Infrastructure is the backbone of industry in any country. It includes ;
 Good roads  Air transport system  Inland Waterways system  Efficient telecommunication system  Modern ports( with capabilities to handle all types of containerized and break-bulk commodities  Suitable material handling system

For smoother & speedier movement of cargo India vs. China

Availability of different modes of transport


Efficiency of logistics system depends upon availability of various modes of transport. Now a days export cargo moves on various modes of transport Containerization has revolutionized the concept of multimodal transport.

Location of the warehouse


Today every customer prefers off the shelf delivery which is an outcome of just in time concept of inventory. Reason - capital gets locked in inventories & Warehouse is important coz it keeps stock of goods which can be lifted at the time of consumption. & thats why location of warehouse is important.

Services offered by warehouse


Storage facility Modern warehouses offer many more services

Dealer/ Distribution Network


Important component of product mix of any company A dealer or a distributors is the vital link bet manufacturer n customer An impressive network of distributors all over the world (eg-cocacola), strategic located dealers, dealers at selected places Dealers with adequate stocks makes logistics system more effective

Government Policies
Govt. s export import policies of both exporting and importing countries. Like sales tax, excise duty,MODVAT, octroi, etc. example due to regulations of octroi and motor vehicle act , companies prefer to have warehouses outside city limits. Eg GSP ie exporter can avail of 0% duty on imports, if his products have already reached the host country, and kept in customs bonded warehouses he can take the benefit, it will be cleared without delay. Speed is imp here coz such preferences r given on first come first basis

Factors affecting logistics effectiveness

Benefits of an efficient logistics system