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An Insight - Transport & Logistic Domain

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Key Insight on Transportation and Logistic Domain

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An Insight - Transport & Logistic Domain

  1. 1. TRANSPORTATION & LOGISTIC
  2. 2. • What is Logistics ? • Alignment of Firms & Logistics Strategies • Goals & Decisions • Networks • Strategy Formulation • Channel Strategy • Strategy Implementation • Measuring Logistics Performance • What is importance ofTransportation in Logistics?
  3. 3. WHAT ISTRANSPORT AND LOGISTICS INDUSTRY “ The process of planning, implementing, and controlling the efficient, cost effective flow and storage of raw materials, in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of meeting customer requirements. ”
  4. 4. ALIGNMENT OF FIRMS & LOGISTICS STRATEGIES
  5. 5. BUSINESS / STRATEGY MODEL Business Strategy Market Entry / Exit / Compete 1. Political 2. Economical 3. Socio Cultural 4.Technological 1.Vision 2. Competencies 3. Financial Order Winner / Qualifiers (Competing Priorities – Cost, Quality,Delivery , Flexibility,Service) Planning & Scheduling Routing Structural Decision Facility / Location Process / Layout Technology Quality People Planning Systems Infra- Structural Decision Capacity Supply Chain design Logistic Design Sourcing Inventory Organization Structure External Factor Internal Factor Alignment Alignment
  6. 6. BUSINESS & FUNCTIONAL STRATEGIES Human Resources Finance / IT Leadership / Mgmt.Team Product Development Business Strategy Cost Price – Purchase / Lifecycle Delivery – Speed, Reliability , NPD Quality – Performance , Conformance Flexibility –Volume , Product Service – Customer Services Purchasing • Supplier Selection • Supplier Development • Designer Involvement • Supplier Capabilities • Capacity , Quality • Competencies • Process, Quality • Management • Planning & Control • Technology • Improvement Operations • Technology • Facility • Supply Chain Design • Process Flow Layout • People • Sourcing • Quality • Planning & Scheduling • Inventory • Organization Structure Logistics • Inbound Transport • Outbound Transport • Transport Mode • Data / Information • Warehouse • Material Management • Distribution Planning • Quality Management • Carrier Management • Customs Marketing • Brand Management • Category Management • Segmentation • Product / Services • Marketing Mix • Range / Assortment • Volumes • Customization • Relationships • Channels • Geography / Region
  7. 7. LOGISTICS GOALS & DECISION
  8. 8. DEALING WITH SITUATION Manage Warehouses Send to Right Location Buy Right Product Collect & Calculate Right Requirement Manage Repairs
  9. 9. LOGISTICS DEFINITION Logistics is a process of coordination of Material & Information flow across supply chain process Purchasing Control Inventory Control Order/Sales Control Receiving Storage Sale Receiving Control Storage Control Delivery Control Accounting Receiving ReceivingInspection Warehousing Storage Picking Repacking Sorting Inspection Loading Delivery Vendor Vendor Receiving Operation Receiving DataInput Location Control Storage Location Location Pickup Picking Planning Pre- packing Sorting System Dispatch System Delivery System Receiving Instruction Purchase Data Purchase Order Delivery Data Delivery Data Delivery Instruction
  10. 10. CO-ORDINATOR (ATTENDEES OF SYSTEM) CO-ORDINATOR Carrie r Assembly plant Custom Broker Customer Supplier Receiving Location Cross Doc Distribution Center Freight Forwarder Manufacturing Plant
  11. 11. LOGISTICS GOALS Facility / Location Material Handling Operation & Firms Strategy Information System & Investment Management Planning & Control Performance Measurement Logistics Simulation Optimization Traceability Regulatory Compliance Fulfill, Flexible Accurate Reduce Time to Market Improve Asset Performance Improve Uptime Improve Capacity, Quality Optimize Operation Improve Visibility, Inventory Supply Chain Visibility
  12. 12. LOGISTICS OBJECTIVES Cost Reduction Minimize the variable costs associated with movement and storage Capital Reduction Minimize the level of investment in logistics system. Maximizing the return on logistics asset. Service Improvement Pre-transaction elements. Transaction elements. Post-transaction elements
  13. 13. LOGISTICS CHALLENGES 1. Inventory Level 2. Control Method 3. Forecasting 4. Inventory Planning 5. Planning & Procurement 1. Model of Transport 2. Routing / Scheduling 3. Shipment size / consolidation 4. Distribution Requirement Planning 1. Written Statement of company policy 2. Technical Services 3. SystemAccuracy 4. Installation, Warranty,repair 5. Customer claims/ complains 1. Number, size & location of facilities 2. Assignment of stocking points to sourcing points 3. Assignment of demand of stocking or source points 4. Location &Yard Management Inventory / Material Transport Strategy Customer Service Facility / Location
  14. 14. DECISION FOCUS DecisionArea Strategic Tactical Operational Facility Location Size & location ofWarehouse, Plants andTerminals Inventories Stocking Locations & Control Policies Safety Stock Level Replenish Quantities & Timing Transportation Mode Selection Seasonal Equipment Leasing Routing & Dispatching Order Processing Order Entry,Transmission & Processing System Design Processing Orders, Filling Backorders Customer Service Setting Standards Priority Rules for Customer Orders Expediting Deliveries Warehousing Equipment Selection, Layout Design Seasonal Space Choices & Space utilization Order Packing & Restocking Purchasing Development of Supplier- Buyers Relationships Contracting,Vendor Selection, Forward Buying Order Releasing & Expediting Suppliers
  15. 15. LOGISTICS NETWORK
  16. 16. PRODUCT FLOW Links Nodes The Movement of Materials between various inventory storage points Points where the flow of inventory is temporary stopped (i.e. Retail stores, warehouses, factories, vendors)
  17. 17. INFORMATION FLOW Links Nodes (Non)Electronic Methods - Revenues, Product, costs, Inventory, levels,Warehouse, Utilization, Forecasts, Transportation Rates Data collection & processing points- computerized or manual
  18. 18. LOGISTICS NETWORK APPRAISAL Demand Customer Service Product Characteristics Logistics Costs Pricing Policies • Level of Demand & Geographical Dispersion • Expansion / Reduction at the current facilities • Open/Close facilities • Inventory Availability, Speed of Delivery, Order-Filling Speed & Accuracy • Re-planning when service levels are changed due to competitive forces, policy revision etc.. • Logistics costs & sensitivity to viz.. weight, volume, value, risk • Alter package design or finished state of the product during shipment and storage • Re-planning when substantial changes are made • High logistics costs can be reduced via frequent re- planning • Depends on who pays for the delivery of goods
  19. 19. STRATEGY FORMULATION
  20. 20. LOGISTIC CYCLE Selection Quantification & Procurement Inventory Management & Distribution Use Management Support Policy & Legal Framework
  21. 21. APPROACH / FRAMEWORK Current Approach To Market Segmentation Identifying Key Buying Behavior Identifying Key Buying Behavior Measuring Logistics Strategies Drivers Specific Approach to Market Segmentation ( Channel )
  22. 22. STRATEGY DRIVERS Differentiated Distribution Total Cost Concept Mixed Strategy Standardization Consolidation
  23. 23. DISTRIBUTION DIFFERENCES ABC Analysis = Product Costs, SalesVolume Shipment = Direct from warehouse or direct to Customers Warehouse Movement = Fast (Field), Slow (Centralized), Medium (Regional) Order = Regular, Back Orders
  24. 24. POSTPONE TIMES Labeling Packing Manufacturer Manufacture • Product under several brand names • High unit value products / value fluctuations • Product under several brand names • High unit value products / value fluctuations • Products with several versions • Products whose cube is greatly reduced if shipped unassembled • High unit value product with price fluctuations • Products with several versions • Products whose cube is greatly reduced if shipped unassembled • High unit value product with price fluctuations Timing • High unit value products • Large No.of distributionWHS • High product value fluctuations
  25. 25. POSTPONEMENT CHARACTERISTICS Technology / Process Product Market - Short product life cycle - High sales functions - Short & reliable lead times - Price competition - Varied markets & customers - Modules with High similarity - Specific formulation of products/ specific peripherals - High value density of products - Product cube and/or weight increases through customization - Feasible to decouple primary & postponed operations - Limited complexity of customizing - Modular product design - Sourcing from multiple location
  26. 26. CHANNEL STRATEGIES
  27. 27. LOGISTIC - CHANNEL STRATEGIES Supply to Order Supply to Stock Responsive Supply Chain Efficient Supply Chain • Excess capacity • Quick changeovers • Short lead items • Flexible processing • Premium transportation • Single order processing • Economical production runs • Finish goods inventories • Economical buy quantities • Large shipment sizes • Batch order processing
  28. 28. SUPPLY – STOCKTO ORDER Predictable Mature Unpredictable / Introductory • Predictable: Stable demand pattern • Mature : Competition is keen & profit margins are low • Low-cost supply channel • Often innovative, new product development incorporating new technology leading to higher profit margin
  29. 29. STRATEGIC IMPLEMENTATION
  30. 30. IMPLEMENTATION FRAMEWORK From theTeam Understand Current Requirement Baseline the System Understand Business Need Identify Performance Outcomes Business Case Analysis Establish Agreement / Business Model Development Model Manage Change Process Manage Implementation Implement & Oversight
  31. 31. MEASURING LOGISTIC PERFORMANCE
  32. 32. MEASURING STRATEGY PERFORMANCE ▪ Cash Flow ✓ Money that strategy generates ▪ Saving / Profile Improvement ✓ The change in all relevant costs associated with strategy ▪ ROI ✓ The ratio of the annual savings from the strategy to the investment required by strategy
  33. 33. DRIVER SEGMENTATION Key = H – High : L – Low : S – Show : L* - Long More Efficient Average More Responsive Variety L H Volume L H Demand &Variability L H Demand uncertainty H L Order LeadTime L H Delivery Frequency L S Delivery Reliability L H Product Customization H L Product Quality L H Product Innovation L H YourCompetitorYourProfile
  34. 34. SERVICE KEY PERFORMANCE MEASURES • Inventory and Product availability ✓ Stock out percentage ✓ % of orders filled complete ✓ Order fill rate and weighted average fill rate ✓ Average percentage of items on backorder • Item fill rate ✓ % of order items that the picking operations actually fills within a given period of time • Product Damage ✓ Number of returns to total orders ✓ Value of return to total sales • Production /Warehousing ProcessingTime ✓ Minx, Max,AverageTime to Process Orders
  35. 35. SERVICE KEY PERFORMANCE MEASURES (CONTINUE…) • Order Entry • Min, Max, Avg time for order handling • % of order handled within target time • Order DocumentationAccuracy • % of order documents with errors • Transportation • % of deliveries on time • % of orders delivered by customer request date • Damage and loss claims
  36. 36. THANKYOU - JALADHI KUMAR BHATT

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