Reading materials

1. Chapter One
An overview of Logistics
An overview of Logistics

2. Chapter Objectives
the basic concepts in logistics management.
the historical evolution of logistics management
 the difference between logistics and supply chain management
 the main functions of logistics management

3. Organization– Defined
A group of two or more people working together to achieve some common
objectives.
Two or more people
Common objective
Organizations can be
Profit making
Private companies
Public enterprises
Share companies
Non profit making
Non Governmental organizations-NGO
Civil service organizations

4. Organization– Defined
Common Objectives
Activities
Resources
Human
Capital
Information
Physical resources
Scarcity of resources?

5. Organization– Defined
Common Objectives
Activities
Resources
Human
Capital
Information
Physical resources
Scarcity of resources?
Then we need management

6. Management – Defined
Management
 a process of planning, organizing, directing, and controlling for
efficient and effective use of scarce resources to achieve
organizational objectives.

7. Management – Defined
Functions of Management
Planning
Organizing
Staffing
Directing
Controlling
Efficiency and Effectiveness

8. Management – Defined
 planning
 Set Objectives
 List the activities to be performed to achieve objectives
 List resources to undertake each activity
 Organizing
 Group similar activities together
 Establish relationship b/n group of activities
 Organizational Structure
 Allocate resources
 Staffing: assigning peoples on the right place or department in the organization.

9. Management – Defined
Directing
Leading …..influencing the others
Motivation …encouraging the employees
Communication
Controlling
Set performance standard
Measure the actual performance
Compare the actual and planed performance
Take action
Corrective
Reward

10. Why Logistics?
To manage effectively and efficiently specifically the physical
resources of the organization ……. But now a days it is more
than that

11. Logistics
largely military origins
is a cross-functional subject
extends beyond the boundaries of the organization into the
supply chain
Did individual organizations can optimize profit conditions for
themselves by exploiting their partners in the supply chain?
Yes in short term
No in long term

12. Logistics
emergence of logistics
development of a cross-functional model of the organization
the need to integrate business processes across the supply network
Competitive advantage

13. Basic concepts of logistics
Logistics has been called by many names
Business logistics
Channel management
Distribution
Industrial logistics
Logistical management
Materials management
Physical distribution
Quick-response systems
Supply chain management
Supply management

14. Basic concepts of logistics
Logistics defined as
The process of planning, implementing and controlling the efficient,
effective flow and storage of goods, services, and related information
from point of origin to point of consumption for the purpose of
conforming to customer requirements

15. Basic concepts of logistics
Logistics defined as
the positioning of resources at the right time, in the right place, at the
right cost, at the right quality.
is seen as a system (the logistics system),
which includes not only all the functional activities determining the flow of
materials and information, but also the infrastructures, means, equipment and
resources that are indispensable to the execution of these activities.

16. Basic concepts of logistics
Body System ?

18. Basic concepts of logistics
Logistics is not restricted to manufacturing operations alone.
It is relevant to all enterprises, including
government institutions such as hospitals and schools, and
service organizations such as retailers, banks, and financial service
organizations
Manufacturing sector

19. Components of Logistics Management
A logistics system is made up of facilities, where one or more functional
activities are carried out
that logistics is dependent upon natural, human, financial, and information
resources for inputs.
Management actions provide the framework for logistics activities through
the process of planning, implementation, and control
The outputs of the logistics system are
competitive advantage,
time and place utility,
efficient movement to the customer, and
providing a logistics service mix such that logistics becomes a proprietary asset of
the organization

20. Components of Logistics Management

21. Components of Logistics Management
Internal Logistics
consists in receiving and storing materials,
in picking them up from the warehouse to feed the production lines
and
in successively moving the semi-finished goods up to packaging and
storing the finished product
External Logistics
 supply logistics and
the distribution logistics

22. Components of Logistics Management
Logistics activities can be conducted by
the company itself or
can be entrusted to a third party (3PL, 4PL).
These choices are made by the company according to the same
logic on which ‘make or buy’-type decisions are based.
They assume an in-depth knowledge of the nature of the costs
that the company bears (fixed costs, variable costs, direct costs,
and indirect costs).

24. Inputs into Logistics
 Natural Resources
Raw material
Physical resources
Human resources
Financial Resources
Information Resource

25. Inputs into Logistics
Natural Resources
biodiversity and geo-diversity existent in various ecosystems
are derived from the environment
Some of them are essential for our survival while most are used for
satisfying our wants
Every man-made product is composed of natural resources

27. Inputs into Logistics
Human resources
is the only dynamic factor of production
Without human resource other factors of production are useless and
idle
Human resources of an organization can be motivated.
It is the only factor of production which produces more than its input.
It is the only resource which gains more knowledge and skilled in the
long run, where the other resources goes depleting
HR as the nervous system of the organization|

28. Inputs into Logistics
 Raw material
 is the basic material from which goods, finished products or intermediate materials that are also
feed-stocks are manufactured or made
 Feed-stock
is a bottleneck asset critical to the production of other products
 Physical resources
 Physical resources are tangible items that are used in the operation of the business. Some of the
resources are used to operate the business or provide products and services.
 are the possess that are made by man through his abilities and skill like..
 Technology
 buildings
 machinery and equipment
 materials, premises, services, storage facilities and energy supply

29. Inputs into Logistics
Financial Resources
is the money available to a business for spending in the form of cash,
liquid securities and credit lines.
are the cash funds which fill the deficit as a result of the timing
differences between a company's cash payment and cash receipts.
are offered by different investors such as shareholders, lenders and
debt holders, in exchange for remuneration
from
gifts, loans, user fees, contracts, and income from sales
private investments, income-producing activities.

30. Inputs into Logistics
Information Resource
is "Knowledge communicated or received concerning a particular fact
or circumstance.
is an answer to a question
cannot be predicted and resolves uncertainty
The more uncertain an event, the more information is required to resolve
uncertainty.

31. Management Actions
Planning
Organizing
Directing
Controlling

33. Logistics Management
plans, implements, and controls the efficient, effective,
forward, and reverse flow and storage of goods, services, and
related information between the point of origin and the point of
consumption in order to meet customer's requirements.

34. Logistics Management
Suppliers
A party that supplies goods or services
is a person or entity that is the source for goods or services
contractor
subcontractor
vendor

35. Logistics Management
Work in process inventory
production process and has not yet been completed and transferred to
the finished goods inventory
Finished goods
products which have received the final increments of value through
manufacturing or processing operations
are being held in inventory for delivery, sale, or use

37. Outputs of Logistics
Market Orientation (Competitive advantage)
Source of competitive advantage
Cost
logistics is one of the major expenditures for businesses
Efficiency and effectiveness
logistics supports the movement and flow of many economic transactions

38. Outputs of Logistics
Logistics Adds Value by Creating Time and Place Utility
utility represents the value or usefulness that an item or service has in
fulfilling a want or need
Utility refers to the value or benefit a customer receives from the exchange
four types of utility:
form,
possession,
time, and
place
time and place utility, are intimately supported by logistics

39. Outputs of Logistics
Form utility
is the process of creating the good or service
Is the process of putting products in the proper form for the customer
to use.
is generally part of the production or operations process.

40. Outputs of Logistics
Form utility
process of increasing the attractiveness of a product to a group of
consumers by altering its physical appearance.
involve making a product ready for consumption by converting it to a
form that is more beneficial to consumers than the raw materials used
to make it.

42. Outputs of Logistics
Possession utility
 The amount of usefulness or perceived value a consumer derives
from owning a specific product and being able to use it as soon as
possible.
is the value added to a product or service because the customer is able
to take actual possession.
letting the customer have the product, usually after they pay, they can
"possess" it and hold it, transport it etc.
is made possible by credit arrangements, loans, and so on

44. Outputs of Logistics
Time utility
is the value added by having an item when it is needed.
This could occur within the organization
making sure the product is available when people need it

46. Outputs of Logistics
Place utility
is all about having the item or service available where it is needed.
If a product desired by consumers is in transit, in a warehouse, or in
another store, it does not create any place utility for them.
making sure the product is accessible, bring it to the customer, or
have it in convenient place

50. Outputs of Logistics
Without both time and place utility, which logistics directly
supports, a customer could not be satisfied.

51. The Role of Logistics in the Organization
Logistics Supports Marketing
getting the product to the right place
Marketing objective:
Allocate resources to the marketing mix to maximize the long-run profitability
of the firm.
Logistics objective:
Minimize total costs given the customer service objective where
Total costs = Transportation costs +Warehousing costs +Order processing and
information costs +Lot quantity costs + Inventory carrying costs.

52. Evolution of logistics
1956 to 1965-A Decade of Conceptualization
 Four major developments solidified this conceptualization:
development of total cost analysis,
offered a method for measuring logistical activities
application of the systems approach,
provided an framework for analysis of complex relationships
increased concern for customer service,
revised attention to marketing channels.
During 1962 and 1963 the National Council of Physical Distribution
Management was established. NCPDM

53. Evolution of logistics
1966 to 1970-A Time to Test for Relevancy
a time during which the basic concepts of logistics were tested
the predicted cost and service benefits became reality
physical distribution
the management of order processing, warehousing, transportation, and inventory
control on an integrated basis
materials management began to develop
as an attempt to integrate the planning and logistical dimensions of purchasing and
manufacturing
performance measurement
establishment of physical distribution and materials management
organizations faced significant opposition in many firms

54. Evolution of logistics
1971 to 1979-A Period of Changing Priorities
 a period of prolonged uncertainty in almost every dimension of enterprise
activity
the availability of low-cost energy became a critical concern….
why fuel cost increase & shortage of materials
 transportation and storage are among the largest and most visible energy
consumers
Economic crisis
ecological concerns
logistics activities ranked high among the sources of environmental impact and
potential pollution

55. Evolution of logistics
1971 to 1979-A Period of Changing Priorities
enterprise priorities and related programs to cope with the ever-changing situation
shifted from servicing demand to maintaining supply
attention focused on procurement because of the sheer consequence of supply failure
rapid adoption of materials management concepts
adoption of just-in-time movement and long-term contractual commitments emerged
Emphasis began to focus on proactive rather than reactive procurement
mainframe computer models for logistical system design and control confirmed
significant logistical problems often have an organizational and institutional rather than
a technical base
attention began
potential of third-party logistical arrangements as an alternative solution to the growing complexity
of logistical support
institutionalization of logistics within the organizational structures

56. Evolution of logistics
 1980 to 1985-A Period of Significant Political and Technological Change
 transportation deregulation,
the introduction of microcomputer technology, and
the communication revolution.
Universal Product Coding (UPC)
Electronic Data Interchange (EDI)
Computer-to-computer ordering

57. Evolution of logistics
1986 and Beyond-Toward Integrated Logistics
 why Integrated logistical management.
there is a great deal of interdependence between all logistical areas which can
be exploited to the advantage of the enterprise
a narrower or restricted approach creates the potential for a dysfunctional
interface
the control requirements for each operation are similar
is an increasing awareness that many trade-offs exist between manufacturing
economies and marketing requirements that can be reconciled by a well-
designed logistical system
complexity of contemporary logistics require innovative solutions

58. Evolution of logistics
1986 and Beyond-Toward Integrated Logistics
 Logistics Management
Supply Chain Management
providing excellence to customers by moving the product to the final
destination and making it a priority to meet all requirements set forth by
customers
Transfer
Value Chain Management
Transfer + adding value

60. Conti....ed
 The main difference between a value chain and a supply
chain is that the supply chain deals with building the
product and getting it to the consumer, while the value
chain looks for ways to enhance the product's value as it
moves along that supply chain.

62. Objectives of business logistics
Minimize costs
Storage costs
Operational
management costs
Stock out costs
Transport costs
Plant and equipment costs
Maximize profits and service level

63. Chapter Two: Logistics Activites
Logistics Activities
Planning
Organizing
Directing
Controlling

64. Basic functions of logistics
1.1. Order processing
 Any delivery process can only function if there is an order
processing system in place.
 Order processing systems vary from business to business
- from a Shopify store to an ERP.

65. Order processing
getting orders from customers
checking on the status of orders
communicating to customers about them
filling the order and making it available to the customer
checking inventory status
customer credit, invoicing, and accounts receivable

66. 2. Inventory management
 Inventory control is among the logistics functions that are often
grouped together under the inventory/warehousing umbrella.
 For the purposes of this guide, we separate inventory and
warehouse management processes.
The most significant difference between the two systems is the
human factor.
While inventory management focuses only on product or stock,
warehouse management involves managing employees and shipping
shipping or freight personnel operating in the warehouse
environment.
 Inventory refers to stocking finished goods in a storage facility.

67. 3. Warehousing is the process of storing physical
inventory for sale or distribution.
 Warehouses are used by all different types of businesses
that need to temporarily store products in bulk before
either shipping them to other locations or individually to
end consumers.

68. Warehousing and Storage
supports time and place utility by allowing an item to be
produced and held for later consumption
near the location where it will be needed, or transported later
warehouse activities relate to layout strategy,
design,
ownership,
automation,
training of employees

69. 4. Packaging
 Packaging includes all the activities and operations
implemented to prepare goods for handling and
transportation to and from customers - in case of reverse
logistics and returns specifically
 Packaging is one major logistic function as it determines
delivery success.
 Packaging
as a form of advertising/marketing
protection and storage from a logistical perspective
provides protection during storage and transport
can ease movement and storage

70. 5. Cargo handling
Cargo handling is one of the major logistics activities that
can't be overlooked when discussing logistics functions.
Getting the package and handling procedures right is the
foundation of physical distribution.
It's equally important for safe storage and transportation.

71. 6. Transportation
 movement of materials and goods from point of origin to point
of consumption/disposal
Last but not least is the transportation itself.
 Naturally, transportation is among the main logistics
functions,
 It's required at every step of every supply chain and the
way companies build their transportation management
system and functions determines the success of supply
chain management.

72. selection of the mode
air, rail, water, truck, or pipeline
the routing of the shipment,
assuring of compliance with regulations
selection of the carrier
the largest single cost among logistics activities

73. Logistics Activities
Customer Service
Output of logistics system
 It involves getting the right product to the right customer at the
right place, in the right condition and at the right time, at the
lowest total cost possible
Customer Service
Customer Satisfaction
Expectation
Customer Success
Requirement

74. Logistics Activities
Demand Forecasting
 Demand forecasting is the process of using predictive
analysis of historical data to estimate and predict customers'
future demand.
What we forecast?
Demand
Technology
Environment

75. Logistics Activities
 Logistics Communications
Communication must occur between:
The organization and its suppliers and customers.
The major functions within the organization, such as logistics, engineering,
accounting, marketing, and production.
The various logistics activities listed previously.
The various aspects of each logistics activity, such as coordinating warehousing of
material, work in process, and finished goods.
Various members of the supply chain, such as intermediaries and secondary
customers or suppliers who may not be directly linked to the firm.

76. Logistics Activities
Parts and Service Support
providing after-sale service support
include
delivery of repair parts to dealers,
stocking adequate spares,
picking up defective or malfunctioning products from
customers, and
responding quickly to demands for repairs

77. Logistics Activities
Plant and Warehouse Site Selection
Determining the location of the company's plant(s) and
warehouse(s) is a strategic decision
consider the location of
customers,
suppliers,
transportation services,
availability and wage rates of qualified employees,
governmental cooperation

78. Logistics Activities
Procurement
outsourcing of goods and services
the purchase of materials and services from outside
organizations
supplier selection,
negotiation of price, terms and quantities,
supplier quality assessment

79. Logistics Activities
Return Goods Handling
Why?
problem with the performance of the item
the customer changed his or her mind
complex
Costs tend to be very high

80. Logistics Activities
 Reverse Logistics
 Why
Protecting the environment
Scarcity of resources
Availability of technology
For future generation
 removal and disposal of waste materials left over from the production, distribution, or packaging processes
 Issues
temporary storage
transportation to the disposal,
reuse,
 reprocessing
recycling location
 concern for recycling and reusable packaging grows

81. END OF CHAPTER TWO