Logistics and Supply Chain Management PDF

LOGISTICS AND SUPPLY CHAIN MANAGEMENT UNIT – 1 CHAPTER – 1 INTRODUCTION TO LOGISTICS MANAGEMENT Importance of logistics 1. Logistics is the bedrock of trade and business 2. Leads to customer satisfaction 3. Cost reduction and profit maximization 4. Competitive edge 5. Effective communicat...

LOGISTICS AND SUPPLY CHAIN MANAGEMENT UNIT – 1 CHAPTER – 1 INTRODUCTION TO LOGISTICS MANAGEMENT Importance of logistics 1. Logistics is the bedrock of trade and business 2. Leads to customer satisfaction 3. Cost reduction and profit maximization 4. Competitive edge 5. Effective communication system 6. Supports critical functions like operations and marketing Logistical interface with marketing 1. Product 2. Price 3. Promotion 4. Place 5. Logistics wins or losses Objectives of logistics 1. Rapid response 2. Minimum variance 3. Minimum inventory 4. Movement consolidation 5. Quality 6. Life cycle support 7. Minimum product damage Logistics functions logistics mix 1. Order processing 2. Inventory management 3. Warehousing 4. Transportation 5. Material handling 6. Packaging 7. Information management 8. Customer service Logistical performance cycle 1. Procurement performance cycle/ Inbound logistics 2. Manufacturing support performance / In process logistics 3. Physical distribution cycle / Outbound logistics 1 Integrated logistics 1. Inventory flow 2. Information flow Seven pillars / Seven parameters to achieve logistical competency 1. Network design 2. Information management 3. Transportation 4. Inventory management 5. Warehousing, material handling & packaging 6. Material handling 7. Packaging Scope of reverse logistics 1. Return of unsold goods 2. Refilling / Reusable packaging 3. Repairs and refurbishing 4. Product recall 5. Recycling 6. Scientific disposal of waste products How to achieve green logistics: 1. Network optimization 2. Alternative mode of transportation 3. Alternative fuel 4. Building bypass roads 5. Paper usage reduction 6. New fleet induction 7. Waste recycling and scientific disposal 2 Chapter - 2 INTRODUCTION TO SUPPLY CHAIN MANAGEMENT Three Flows 1. Product flow 2. Information flow 3. Financial flow Objectives of supply chain management 1. To maximise the overall profitability 2. Enhancing customer service 3. Reduce inventory flow 4. Reduce warehousing cost 5. Reduce transportation cost 6. Reduce lead time 7. Minimizing Variance 8. Ensuring on-time delivery to customers 9. Reducing working capital Functions of supply chain management 1. Defining business boundaries and relationships 2. Managing demand & supply 3. Logistics 4. Purchasing 5. Selling 6. Manufacturing 7. Product design Participants of supply chain management 1. Suppliers 2. Manufacturers 3. Distributors 4. Customers Remedies / Solutions of Bullwhip Effect 1. Know your customer 2. Proper forecast 3. Better flow of information 4. Free return policies 5. Reducing the lead time of the supply 3 CHAPTER – 3 CUSTOMER SERVICE : KEY ELEMENTS OF LOGISTICS Objectives of customer service 1. Ensuring product order 2. To improve customer satisfaction 3. To increase sales 4. To retain existing customers 5. Improve market position 6. To retain customer loyalty Elements of customer service 1. Pre - transaction elements 2. During - transaction elements 3. Post - transaction elements Levels of customer service 1. Customer service as an activity 2. Customer service as a performance 3. Customer service as a philosophy Rights of customer service 1. Right Product 2. Right Quantity 3. Right Condition 4. Right Place 5. Right Time 6. Right Price 7. Right Customer Strategies to improve customer service / Customer service strategy 1. Developing customer service vision 2. Assessment of customer needs 3. Hiring the right employees 4. Customer service goals 5. Training 6. Accountability 7. Rewards and recognition 4 CHAPTER - 4 DEMAND FORCASTING Objectives of demand forecasting 1. Sales Planning 2. Production planning 3. Adequate purchasing of materials 4. Framing proper policies 5. Enables to make sound plans 6. Reducing inventory costs 7. Reducing warehousing costs 8. Tracking overall performance 9. Effective labour management Approaches to forecasting 1. Top – down approach 2. Bottom – up approach Forecasting methods Forecasting techniques 1. Qualitative forecasting methods 2. Jury of executive methods 3. Consumer survey method 4. Assessment by sales personnel 5. Naïve approach 6. Delphi method Quantitative methods of forecasting  Time series method 1) Moving Average 2) Extended smoothing  Casual technique 5 UNIT - 2 CHAPTER - 5 TRANSPORTATION Transportation functionality 1. Product movement A) Temporal (Time) resources B) Financial resources C) Environmental resources 2. Product storage Principles of transportation 1. Economies of scale 2. Economies of distance Participants in transportation 1. Shipper / Originating party/ consigner 2. Receiver / destination party / consignee 3. Carrier 4. Government 5. Public Railways Advantages of rail transport 1. High speed 2. Large carrying capacity 3. Suitable for long distance 4. Protection to goods 5. Suitable for heavy & bulky products 6. Economical 7. Less pollution Disadvantages of rail transport 1. Huge capital expenditure 2. Huge overheads cost 3. No competition 4. No door to door service 5. Lack of flexibility Roadways Advantages of roadways 1. Limited capital expenditure 2. Door to door service 1. Flexibility 6  2. Suitable for short distance 3. Feeder to other modes of transport Disadvantages of road transport 1. Irregular and unreliable 2. Not suitable for long distance 3. Bad and unsafe road conditions 4. Lack of uniformity in rates 5. Low speed Airways Advantages of air transport 1. Brings world closer 2. High speed 3. Quick services 4. Easy access 5. No physical barrier 6. Natural highways Disadvantages of air transport 1. Costliest mode 2. Huge investments 3. Not suitable for heavy and bulky products 4. Limited carrying cost 5. Affected by weather 6. Restricted products 7. Narrow coverage Waterways 1. Sea transport 2. Inland water transport Advantages of water transport 1. Largest carrying capacity 2. Long distance 3. Protection to goods 4. Cheapest mode of transport 5. Flexible mode 6. Natural highways Disadvantage of water transport 1. Huge capital expenditure 2. Huge overload cost 3. Slow speed 4. Alliance needed 5. Specialized packaging 7 Ropeways Pipelines Advantages of pipelines 1. Continuous 2. Unaffected by weather 3. Cheap 4. Eco friendly 5. No empty wagons 6. Suitability Disadvantages of pipelines 1. Cannot carry solids 2. Inflexibility Factors influencing transportation decisions 1. Nature of goods 2. Availability / Accessibility 3. Distance 4. Cost 5. Delivery time 6. Frequency 7. Capabilities of mode 8. Speed 9. Reliability 10. Safety and security Transportation infrastructure 1. Terminal facilities 2. Vehicles 3. Right of way 4. Prime movers 5. Carrier organization Intermodal transportation 1. Piggy back 2. Fishy back 3. Birdy back 4. Land bridge 5. Mini land bridge 6. Micro bridge Factors influencing transportation cost 1. Product related factors 2. Market related factors 8 Product related factors 1. Density 2. Stowability 3. Handling 4. Liability Market related factors 1. Location of markets 2. Nature and extent of government regulation 3. Seasonality of product movement 4. Domestic / international transportation 5. Degree of competition 9 CHAPTER - 6 WAREHOUSING Warehousing functionality 1. Receiving goods 2. Identifying goods 3. Sorting goods 4. Dispatching goods to storage 5. Holding goods 6. Selecting, retrieved, packing 7. Marshalling goods 8. Dispatching goods 9. Preparing record and advice Benefits of warehousing A) Economic benefits 1. Consolidation 2. Break bulk 3. Cross dock 4. Processing postponement 5. Stockpiling B) Service benefits 1. Spot stock 2. Assortment 3. Mixing 4. Production Support 5. Market presence Warehouse operating principles Design criteria 1. Number of storey’s 2. Height 3. Product flow Handling Technology 1. Movement technology 2. Movement scale economies 3. Storage plan Types of warehouses 1. Private warehouses 2. Public warehouses 3. Contract warehouses 10 Warehousing strategies 1. Presence synergies 2. Industry synergies 3. Operating flexibility 4. Location flexibility 5. Economies of scale Number of warehouses 1. Transportation costs 2. Inventory costs 3. Warehousing costs 4. Customer dissatisfaction costs Factors affecting warehousing costs 1. Size of warehouses 2. Type of product 3. Transportation 4. Inventory 5. Customer service level 6. Degree of automation & type of equipments used in warehousing 11 CHAPTER – 7 MATERIAL HANDLING Objectives of material handling 1. Increase the storage capacity of warehouse 2. Reduction of the number of tines product is handled 3. Development of effective working conditions 4. Reduction of movement involving manual labour 5. Improves logistics service 6. Reduction of cost Principles of material handling 1. Planning principle 2. Standardisation principle 3. Work principle 4. Ergonomic principle 5. Unit load principle 6. Space utilization principle 7. Systems principle 8. Automation 9. Environment principle 10. Life cycle cost Systems of material handling 1. Manual material handling system 2. Mechanised material handling system 3. Semi – Automated material handling system 4. Automated material handling system Equipments used for material handling 1. Fixed path 2. Variable path 3. Conveyors 4. Cranes 5. Elevators 6. Hoists 7. Industrial Trucks 8. Pipelines 9. Automated guided vehicle 10. Industrial robots 11. Forklift trucks Factors affecting selection of material handling equipments 1. Frequency of material movement 2. Distance of material movement 3. Quantity of materials 4. Time constraint 5. Cost 6. Engineering factors 7. Compliance with safety standards 12  8. Low maintenance costs Elements of customer service 1. Reduced lead time 2. Safe delivery 3. Correct orders 4. Consistency 13 CHAPTER – 8 PACKAGING Objectives of packaging 1. Physical protection 2. Barrier protection 3. Containment or agglomeration 4. Information transmission 5. Marketing 6. Security 7. Convenience 8. Portion control Functions / Benefits of packaging 1. Physical protection 2. Environment protection 3. Helps to improve material handling efficiency 4. Cube minimization 5. Weight minimization 6. Facilities handling and using 7. Facilities storage and reuse 8. Grouping goods into convenient unit for distribution 9. Reduce pilferage opportunities 10. Communication Design consideration in packaging 1. Material handling 2. Transportation 3. Warehousing 4. Communication Types of packaging material 1. Corrugated fiberboard (Cardboard) 2. Plastics 3. Steel 4. Wood 5. Glass Types of packaging 1. Primary packaging 2. Secondary packaging 3. Transit packaging 14 UNIT – 3 CHAPTER – 9 INVENTORY MANAGEMENT Objective of inventory management 1. Avoid stock-outs 2. Avoid excess inventory 3. Move goods efficiently 4. Maximise profit margins 5. Other objectives 6. Functions of inventory / inventory functionality 7. Geographical specialization 8. Decoupling 9. Balancing demand & supply 10. Buffer uncertainties 11. Importance of inventory management 12. Avoid stock outs 13. Avoid excess inventory 14. Move goods efficiently 15. Maximise profit margins 16. To enter continuity in production process 17. To keep investment in inventory at optimum level Selective inventory control techniques 1. ABC Analysis 2. X-Y-Z Analysis 3. HML Analysis 4. VED Analysis 5. FSN Analysis 6. G-NG-L-F Analysis / GOLF Analysis 7. SDE Analysis 8. S- OS Analysis 15 CHAPTER – 10 LOGISTICS COSTING 1. Total cost approach / traditional costing methods 2. Balance sheet 3. Profit & loss statement CHAPTER – 11 PERFORMANCE MEASUREMENT IN SUPPLY CHAIN MANAGEMENT Objectives of performance measurement 1. Monitoring 2. Controlling 3. Directing Types of performance measurement / dimensions of performance measurement Internal performance measurement 1. Cost 2. Customer service 3. Productivity measurement 4. Asset measurement 5. Quality measurement External performance measurement 1. Customer perception measurement 2. Best practice benchmarking Characteristics of ideal measurement system 1. Cost / service reconciliation 2. Dynamic knowledge based reporting 3. Exception based reporting 16 CHAPTER – 12 LOGISTICAL NETWORK ANALYSIS Objectives / importance of logistical network analysis Quick response to market changes 1. Changing customer service requirements 2. Changing customers 3. New market segment Changes in corporate policy 1. Changes in product line 2. Downsizing 3. Re-engineering Revitalize customer service 1. Lead time 2. Response time Cost control 1. RORO (Roll on – Roll off) 2. Lash (lighter aboard ship) Transportation network options 1. Direct shipment 2. Direct shipment with milk run 3. All shipment via central distribution centre 4. Shipping via distribution centre using milk run 17