LU-4.-Logistics-Management-1 PDF

UNIT IV: LOGISTICS MANAGEMENT Overview This unit helps you recognize that logistics management is an essential discipline that ensures the right products reach the right place at the right time, contributing to a company's competitiveness and customer satisfaction. Learning Objectives...

UNIT IV: LOGISTICS MANAGEMENT Overview This unit helps you recognize that logistics management is an essential discipline that ensures the right products reach the right place at the right time, contributing to a company's competitiveness and customer satisfaction. Learning Objectives At the end of the unit, I am able to: 1. understand the significance of logistics management; 2. differentiate between supply chain management and logistics management; 3. comprehend the distribution system and its components; and 4. apply a systems approach to logistics management. Setting Up Name: _____________________________________________ Date: __________________ Course/Year/Section: ___________________________ Direction: In layman’s terms, answer the question below: Consider a situation where a product you ordered online was delivered late. What do you think might have caused this delay in the supply chain, and how do you believe efficient logistics management could have prevented or minimized this delay? __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ __________________________________________________________________________________________________________________ _______________________________________________________________________________________________________________. 25 Lesson Proper Definition of Logistics Logistics includes planning and executing the storage and movement of goods between different points in the supply chain. Logistics coordinates facilities, people, equipment and other resources to ensure products move when they’re supposed to and there is space for them at the next stop. Supply Chain Management and Logistics Both supply chain management and logistics focus on the flow of goods from the point of origin to the endpoint. Both disciplines require careful coordination of supplies, labor and facilities to make sure items can move through the supply chain as required. Logistics is a key component of supply chain management, but just one piece of the equation. Supply chain management and logistics both work to move, store and deliver goods as efficiently as possible. Supply chain management provides the strategic direction that guides inbound and outbound logistics. Some common aspects of SCM and logistics are: Both focus on goods, services or information. Both have the ultimate aim of supporting the company’s success and distinguishing it from competitors. Both seek to increase customer satisfaction. Both revolve around the same flow of goods and services, from the supplier, to the manufacturer, to the wholesaler and finally to the retailer or consumer. Supply chain management and logistics definitely intersect, but they differ when it comes to their scope and focus. The differences between supply chain management and logistics are presented below: Logistics Supply Chain Logistics is one activity in supply chain Supply chain management covers a wide management. range of activities, including planning, sourcing materials, labor and facilities management, producing and delivering those goods and services. Logistics focuses on the efficient and cost- Supply chain management targets higher effective delivery of goods to the customer. operational performance that will give the business a competitive advantage. Logistics are centered on the movement and Supply chain management oversees the transport of goods within a company development of raw materials into finished goods that move from the producer to the manufacturer. Those goods get distributed to retailers or directly to consumers. Role of Logistics in Supply Chain Management Logistics are a critical piece of supply chains because it manages and tracks the people and resources needed to store and transfer goods and services. Logistics ensure that materials and products reliably move at the right time and on budget. Specific aspects of logistics that support supply chains include: 26  Delivering the right products at the right time. Reducing costs and improving efficiency. Helping retain customers and increasing loyalty. Providing a unique value proposition for some businesses. Providing a means to deliver goods from the most cost-effective location for production to the location of the customer. Logistics Management Logistics management is the strategic and operational process of overseeing and coordinating all aspects of logistics to achieve specific objectives and ensure the smooth and cost-effective flow of goods, services, and information within a supply chain. The following are the major components of logistics management: 1. Planning. It is a fundamental component of logistics management and involves developing strategies, making decisions, and setting objectives to ensure the smooth operation of the supply chain. It includes supply chain design, demand forecasting, and the development of logistics strategies. 2. Inventory Control. It focuses on managing and optimizing inventory levels to balance the costs of holding inventory with the risks of stockouts. It involves setting reorder points, safety stock levels, and efficient storage and handling of goods. 3. Packaging and Handling. These are critical for protecting products during transportation, optimizing storage space, and ensuring efficient movement within the supply chain. It includes selecting appropriate packaging materials and handling equipment to minimize damage and ensure safe transportation. 4. Transportation. It involves the movement of goods from one location to another within the supply chain. It encompasses the selection of transportation modes (e.g., road, rail, air, sea), carriers, routes, and scheduling to optimize the movement of products. 5. Information. Information management is the backbone of logistics operations. It involves collecting, processing, and disseminating data related to orders, inventory levels, transportation schedules, and demand forecasts. Accurate and timely information is crucial for decision-making. 7 R’s of Logistics Management Effective logistics management relies on the implementation of the 7 R's: right product, right customer, right quantity, right condition, right place, right time, and right cost. These principles are essential for ensuring that products reach their intended destination in a cost- effective and efficient manner, maximizing customer satisfaction and minimizing the use of resources. The first step in logistics management is determining the right product to be delivered to the right customer. This involves understanding customer needs, preferences, and demands in order to accurately fulfill their requirements, ensuring the correct goods are sent to the appropriate recipient. The third and fourth R's involve determining the appropriate quantity of the product and ensuring that it is in the right condition when it arrives at its destination. Accuracy in quantity is crucial for meeting customer demands and avoiding excess inventory or stockouts. Maintaining the right condition is essential for preserving the quality, safety, and usability of the product during transit. A critical aspect of logistics management is ensuring that goods are delivered to the right place at the right time. Meeting deadlines and providing timely delivery are essential for optimizing supply chain efficiency and meeting customer expectations for punctual delivery. Effective transportation planning and route optimization play a key role in achieving these goals. Lastly, achieving the right cost involves optimizing logistics activities to minimize expenses and maximize value for both the company 27 and the customer. This involves considering factors such as transportation costs, warehousing and storage expenses, and inventory management. Streamlining these aspects of logistics management provides companies with a competitive advantage in the marketplace while simultaneously improving customer satisfaction. Importance of Logistics Management in Modern Business Operations Logistics management is a critical component of modern business operations due to its multifaceted and far-reaching impacts. Here's a comprehensive discussion of its importance: 1. Cost Efficiency. Logistics management focuses on optimizing the flow of goods, services, and information, which directly impacts cost efficiency. Effective management of logistics can reduce transportation costs, minimize holding costs, and streamline operations, ultimately improving the bottom line. 2. Customer Satisfaction. In an era where customer expectations are continually rising, timely and reliable deliveries are essential. Logistics ensures that products reach customers on time, every time. 3. Market Expansion. Efficient logistics management enables companies to expand their market reach. By having a well-organized supply chain, businesses can reach customers in distant locations or even globally. 4. Risk Mitigation. Managing the logistics chain also involves risk assessment and mitigation. Companies can prepare for unexpected disruptions in the supply chain, such as natural disasters or geopolitical events, by having contingency plans in place. 5. Inventory Control. Effective logistics management minimizes the need for excess inventory. This is critical for companies as holding too much inventory ties up capital and increases storage costs, while holding too little can lead to stockouts. 6. Competitive Advantage. Logistics can provide a significant competitive advantage. Companies that offer faster, more reliable delivery can win over customers and capture market share. 7. Sustainability. Logistics management also plays a role in promoting sustainability. Efficient routing and transportation methods can reduce fuel consumption and environmental impact. Distribution Management Distribution is a management system within logistics that is focused on order fulfillment throughout distribution channels. A distribution channel is the chain of agents and entities that a product or service moves through on its way from its point of origin to a consumer. Distribution includes activities and processes such as consumer or commercial packaging, order fulfillment and order shipping. In short, distribution is most easily understood as commercial or sales distribution. Choosing the right distribution management system for your organization depends a great deal on your organization’s distribution goals and challenges, and the distribution models and channels your company uses. But as a general rule, companies should evaluate: Ease of integration and compatibility with legacy systems. Scalability and elasticity Security Data management and analytics, including real-time data streaming and ecosystem data-sharing Adaptability, whether the system is agile enough to accommodate the rapid changes needed to overcome obstacles or seize new opportunities 28 Four (4) Channels of Distribution These are the distribution channels: 1. Wholesaler. Goods are distributed from manufacturers to wholesalers in this channel. 2. Retailer. Goods are distributed from manufacturer or wholesaler to retailers. 3. Distributor. This channel moves goods from the source or manufacturer to an authorized distributor. 4. E-commerce. This is the newest and most disruptive distribution channel wherein goods and services are represented virtually online and then distributed directly to the buyer. A Systems Approach to Logistics Management The system approach to logistics management is integrated and involves coordinating activities such as procurement, inventory management, warehousing, transportation, and customer service. It includes route planning, mode selection, and vehicle scheduling to ensure that the transportation of goods is carried out efficiently and cost-effectively. This approach allows for better planning, coordination, and control of the supply chain, which leads to improved customer service and increased efficiency. Aspect Definition Key Considerations 1. Procurement The process of obtaining the Timelines, order size, vendor necessary supplies in an efficient selection, procurement strategy. manner. 2. Inventory The process of managing the Stock levels, storage space, Management storage, ordering, and utilization replenishment schedules, of supplies to ensure smooth demand prediction. operations. 3. Warehousing The process of storing goods Storage space, warehouse prior to their transportation or organization, accessibility and use. Involved in receiving, storing, safety. and distributing goods. 4.Transportation An essential component involving Selecting an optimal mode of the movement of goods from the transportation, formulating the point of origin to the point of most effective route, and consumption. executing effective vehicle scheduling. 4.1 Mode The process of choosing the most Assessing factors such as Selection cost-effective and efficient mode distance, time, cost, and safety. of transportation. 4.2 Route The selection of the most cost- Evaluation of factors such as Planning effective and efficient route for distance, time, cost, and safety. the transportation of goods. 4.3 Vehicle The process of scheduling Balancing vehicle availability, Scheduling vehicles to ensure goods delivery time frames, and cost transportation is carried out effectiveness. efficiently and cost-effectively. 29  Aspect Definition Key Considerations 5. Customer Ensuring customer satisfaction Communication, order tracking, Service through prompt and accurate handling returns or complaints. fulfillment of orders. 6. Coordinating Ensuring all the activities, from Ensuring communication across Supply Chain procurement to transportation to activities, reducing redundancy, Activities customer service, work together optimizing process flow. efficiently. 30 Assessing Learning Activity 4-1 Name: _____________________________________________ Date: __________________ Course/Year/Section: ___________________________ Score: _________________ Direction: Do this to evaluate your understanding of the lessons. 1. Provide examples of how logistics contributes to cost efficiency and customer satisfaction within the supply chain. __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ _________________________________________________________________________________________________. 2. Discuss how can adhering to the 7 R's of logistics management provide a competitive advantage to businesses. __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ _________________________________________________________________________________________________. 3. Explain how effective logistics management can lead to better decision-making and operational efficiency. __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ _________________________________________________________________________________________________. 4. Explore the importance of logistics management in modern business operations. Provide real-world examples of companies that have leveraged logistics management for competitive advantage. __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ __________________________________________________________________________________________________ _________________________________________________________________________________________________. 31