Logistics Concepts

By –
Vishal Maheshwari
 Logistics Management Definition

Movement ACHIEVE
Logistics •Raw Materials
Management Maximize current &
OF Storage OF •Parts TO future profitability,
is ‘strategic
management’ •Semi- Finished cost effective & time
Goods bound fulfillment of
Information
customer orders
orders.
•Finished Goods

Through Stages of procurement,

WIP and Final Distribution
 t Names
Different
Diff

Physical Distribution
B i
Business L i ti
Logistics
Materials Management
Procurement and Supply
Product Flow
Marketing Logistics
Lets build Logistics Concepts …

BEGINS…
There is …
He believes – acquire the
Procurement & best goods. Inventory is a
Inventory
y Control very
y significant
g to the
Manager management

Logistics means – Keep transit

times low and safety of goods

Tasks he performs -
•Limited budget, I need to buy the best
•Need to have goods and raw material in hand as
and when required by my internal customer
There is …
He believes – Reduce
Production Manager costs wherever possible
and making g sure
products are produced on
time and are of good
quality

Logistics means – Anything which results in

reduce
d WIP inventory
i t and
d reduce
d costs
t and
d
waiting time for his machine/ manpower

Tasks he performs –
Needs to plan, direct, and coordinate the production
activities required to produce millions of goods
every year
There is … He believes – Reduce
costs wherever possible
Logistics & Distribution and making sure
Manager products are given to
ship
hi on time
i and
d are off
good quality

Logistics means – The efficient transfer of goods

f
from source off supply
l through
th h the
th place
l off
manufacture to the place of consumption in a
cost-effective way whilst providing an acceptable
service to the customers

Tasks he p
performs –
Supply + Materials Management + Distribution
There is …
IT Manager
He believes – Automate
everything
y g & minimize man
power

Logistics means– Information flow

should
h ld b be ffastest
t t

Tasks he performs –
C
Create system driven
d information
f fl
flow
There is …
He believes – Give the
camel an inch and
Finance Manager
g make it take an elf

Logistics means – Keep costs low

Tasks he performs –
He deals with everything in figures.
Wants to optimize usage of his funds
There is …
He believes – Customer is
Marketing
g Manager
g God

Logistics means – Make the right product

reach at the right place in right time with
maximum safety

Tasks he performs –
Attract customers and increase sales.
sales
Understand what are competitors offering to the
customers
All need to work in a team
 Procurement &
Inventory Manager Production Marketing
Manager Manager

Finance
IT Manager Manager
g

Logistics &
Warehousing manager

Flesh & Blood of my organisation

 Planning in closed
doors. No idea of
other
th d dept’s
t’ & hi
high
h
WIP due to
inappropriate Orders get
logistics delayed.
Prices are higher.

Reduce costs.
Justify
expenditure

Less funds,
incorrect
information.
Delays in
deliveries

No support from
other dept head. Last minute shipments. Well
Lack of packed and proper documentary
information to evidence. Need for addressing
assist issues in the management
automation meeting
Thus…
M j Ch
Major Challenges
ll to Logistics
L i i andd
Distribution

Delayed Deliveries
Higher costs due to high WIP
High waiting time for Laborers and machines
Inaccurate stocks booked, thus last minute
shipments
Poor communications within departments
Lack off Planningg
 Too look into all this

We welcome a guru/ exponent in logistics and

di t ib ti managementt ….
distribution

Join your hands for ….

 He believes – In keeping
things simple and
transparent. Staunch
The exponent of the field of supporter of automation
logistics, distribution and
consultant to many ….

The role of Logistics

g has changed
g and in
that it now plays a major part in success
of many diff operations and organization

His task – to bail us out of the challenges

to p
propel
p to the next level
 Historical Perspective
p off Logistics
g & Distribution)

1950 – 1960
Unplanned and unformulated

1960-1970
Conceptualized physical distribution

1970-1980
1970 1980
Distribution concept

1980-1990
Third p
party
y distribution

1990-2000
Advance in information technology began to broaden the perspectives of integrating functions across the
organizations.

2000 onwards
Logistics grew in significance as it provided catalyst for major enhancements to businesses
Elements of Logistics & Distribution

Procurement &
Inventory control
Manager

Storage, Warehousing and Material Handling

• Location off Warehouses
• Number and sizes of Distribution depots
• Type of Operations
y management
Inventory g
• What to stock
• Where to stock
• How much to stock
Elements of Logistics & Distribution

Production
Manager

Waiting time of the laborer

Waiting time of the machines
Work in progress Inventory
Elements of Logistics & Distribution

Logistics and
Distribution
Manager

Transportation
• Modes of Transport
• T
Type off delivery
d li Operation
O i
• Load Planning
• Route Planning

Packaging and unitization

• Unit Load
• Protective packaging
• Handling Systems
Elements of Logistics & Distribution

IT manager

Information and Control

• Design of Systems
• Control procedures
• Forecasting
Elements of Logistics & Distribution

Finance Manager

Constraints on costs providing appropriate service levels

Shorten channels off Distribution for
f optimizing
p g costs
WIP costs
Elements of Logistics & Distribution

Marketing
Manager

Right Product
g Place
Right
Right Time
Right Price
Integrated logistics
and supply chain
Concept
 Total Logistic Concept
(Aims to treat all different department in the organization with single integrated system)

To interpret the interrelationship of the different logistics elements in a planned

approach to identify and determine the cost trade-offs.
Four Different Level of Trade-offs
Trade offs have been identified –
Within Distribution Components
Between Distribution Components
Between Company Functions
Between the Company and External Organizations
SCANNING
 Advantages
g of Bar Code Scanning
g
Speed -A bar code label of twelve characters can be wanded in approximately the time it takes a
keyboard operator to make two keystrokes.
Accuracy - For every 1,000
1 000 characters typed by a keyboard operator,
operator there are an average of ten
keying errors. For an Optical Character Reader (OCR), there is one error in every 10,000 reads. With
wands, barcode systems approach one error in every 3,000,000 characters, and with laser technology,
they approach one error in 70 million entries.
Data Integrity - Probable number of substitution errors per 3,400,000 characters
Data Entry Method Errors
Keyboard Entry 10,000
OCR Scanning 300
Barcode scanning 1
Ease of Implementation - Operators of bar code scanners can learn to use the equipment
effectively in less than 15 minutes. System costs are lower than other means of data entry because of the
existence of interfacing hardware and software. Barcode labels can cost less than a penny apiece, are
easily read by thousands of commonly available devices
devices, and can be printed universally
universally.
Cost Effectiveness - Barcode systems have a demonstrated payback period of six to eighteen
months, and they provide the highest level of reliability in a wide variety of data collection applications.
Barcode systems create value not only by saving time, but also by preventing costly errors.
 Bar Code Scanner Comparison
• Handheld vs. Hands-free Scanners
– Hands-free scanners are more efficient when it is easier to bring the barcode to the scanner rather than
the scanner to the barcode. Such examples of this are Point-of-Sale (POS) applications, or automated
assembly
bl lines.
li H dh ld scanners are a better
Handheld b tt fit with
ith large,
l b lk items,
bulky it or when
h you have
h t scan
to
multiple items in different locations. Most applications use handheld scanners.

• Laser vs. CCD Scanning vs. Imaging

– Laser scanners are generally more expensive than CCD scanners,
scanners but can often be more efficient in their
scanning ability. They can be designed to read barcodes from a great distance, allowing workers to scan
items on the top shelf of a warehouse without having to move closer to the item. These scanners are also
a better option when the barcode is not on a flat, hard surface as CCD scanners are used in close contact
situations. Laser Scanners have different options for the distance you need to scan, most come in
standard, long range, and extra-long range capabilities. A situation for a CCD scanner may be a bright
location, typically outside, where placing the scanner directly over the barcode will block out most outside
light giving a quicker and more accurate read. Imaging technology will take a picture of the barcode and
then read the barcode from that image. Though imaging technology may be slower out of the gate, when
the quality of a barcode decreases, the read rate for imagers increases as the imager will look over the
entire height of the barcode to find a complete strand automatically

• What Type of Laser Scanner do I Need?

– Heat and light will cause thermal labels to darken. Dirt, oil or grease will cause bad reads unless infrared
scanners are used which can detect high-carbon inks below the smears and stains that occur on factory
floors. Remember,, too,, that if yyou laminate or otherwise pprotect the label,, this will affect yyour choice of
scanner. In addition, ambient light can also curtail the effectiveness of fixed beam readers. For these
conditions you would require a high density laser scanner, or an imager, as they both will read poor quality
barcodes with great accuracy.
 Bar Code Label Factors
• B - Barcode Scanner: What kind of scanning device will be used. Labels can have different light
absorbing characteristics, which can improve the performance and efficiency of scanner.
• A - Attach: Smooth, rough, grooved, curved, or dirty surfaces will affect label selection.
• R - Rate: How many labels are you printing per minute?
• C - Clock: How long must the label last? What is the shelf-life of the product the label is on?
• O - Operating Environment: Will the label be exposed to extreme heat or cold, dryness or
wetness, light, extreme handling, or chemicals?
• D - Do-it-yourself: Did you know that you do not have to buy a printer for every label application?
• I - Inches: It is a matter of inches! The simple question, "how big is my label?" is the first
consideration. Labels can come as small as 1/8" x ½" or as large as 11" x 17".
• N - Need: What exactly is you labeling need? For example,
example some barcoding applications occur on
tags that hang from an item, rather than stick to it. There are many different ways to barcode on
item such as hanging tags, ID cards, metal tags, and direct print. Make sure that labels will suit
your needs best.
• G – Glue
• BAR HEIGHT
• "X" DIMENSION - width
• CHARACTER DENSITY, CONTINUOUS/DISCRETE, FIRST PASS READ RATE, RIBBON
FACTORS, LAMINATES, ADHESIVES
 RFID

• RFID stands for Radio-Frequency IDentification. The acronym refers to small electronic devices
that consist of a small chip and an antenna. The chip typically is capable of carrying 2,000 bytes
of data or less.

• The RFID device serves the same purpose as a bar code or a magnetic strip on the back of a
credit card or ATM card; it provides a unique identifier for that object. And, just as a bar code or
magnetic strip must be scanned to get the information,
information the RFID device must be scanned to
retrieve the identifying information.
 Are RFID’s Better than Bar Code Scanners?
• A significant advantage of RFID devices over the others mentioned above is that the RFID device
does not need to be positioned precisely relative to the scanner. We're all familiar with the
difficulty that store checkout clerks sometimes have in making sure that a barcode can be read.
A d obviously,
And b i l credit
dit cards
d and
d ATM cards
d mustt be
b swiped
i d through
th h a special
i l reader.
d

• In contrast, RFID devices will work within a few feet (up to 20 feet for high-frequency devices) of
the scanner. For example, you could just put all of your groceries or purchases in a bag, and set
the bag on the scanner. It would be able to query all of the RFID devices and total your purchase
immediately (Read a more detailed article on RFID compared to barcodes.)
immediately. barcodes )

• RFID technology has been available for more than fifty years. It has only been recently that the
ability to manufacture the RFID devices has fallen to the point where they can be used as a
"throwaway" inventory or control device. Alien Technologies recently sold 500 million RFID tags to
Gillette at a cost of about ten cents per tag.
tag

• One reason that it has taken so long for RFID to come into common use is the lack of standards in
the industry. Most companies invested in RFID technology only use the tags to track items within
their control; many of the benefits of RFID come when items are tracked from company to
p y or from country
company y to country.
y
 Problems with RFID

• Some common problems with RFID are reader collision and tag collision. Reader collision occurs
when the signals from two or more readers overlap.
overlap The tag is unable to respond to simultaneous
queries. Systems must be carefully set up to avoid this problem. Tag collision occurs when many
tags are present in a small area; but since the read time is very fast, it is easier for vendors to
develop systems that ensure that tags respond one at a time. See Problems with RFID for more
details.
 RFID Works – How?
• A Radio-Frequency IDentification system has three parts:

• A scanning antenna
• A transceiver with a decoder to interpret the data
• A transponder - the RFID tag - that has been programmed with information.
 Distribution channel management

• Distribution channel management encompasses all activities dealing

with the distribution function of the firm
• The distribution strategy provides guidelines for decision making
• The distribution
Th di t ib ti managementt function
f ti can beb viewed
i d as happening
h i in
i
two phases: the ex ante phase (strategic) and the ex poste phase
(operational)
 Channel Management tasks

Design of the
channel structure
Ex ante
Phase
Establishing the
channel
Distribution Channel Strategy
•Channel Objective
•Activity Finalization
•Organizing
g g the activities Motivating
Ch
ChannellM
Members
b
•Developing Policy Guidelines
Ex Poste
Phase
Resolving Conflicts
among channel
members
 Distribution channel design

To consume
a product Channels

Service outputs Participates in

have to be delivered channel flows

Activities have
to be performed
Thus performs activities
 Channel design
g effort decisions

• The service output levels

• The flows or activities that are associated with the
achievement of the service output levels
• The type of entity who would be entrusted with the
performance of each of these flows
p
 Parameters for comparing channel designs

• Efficiency
• Eff ti
Effectiveness
• Equity
• Scalability
• Flexibility
 The channel establishment plan

• The main purpose of the channel to be set-up

• The profile
Th fil off the
th customers
t who
h are the
th target
t t market
k t
for the channel
• The needs and requirements of the target market with
regard to the identified service outputs provided by the
proposed/ existing channel:
• Analysis of the operations of the existing channels that
deal in similar p
product/service lines
• Detailed activity chart for achieving the service output
objectives
• Details about the various channel constituents who
will be performing these tasks
• The cost of performing the activities
• The designated roles and responsibilities of the
channel constituents
• The proposed remuneration for performing these
roles and responsibilities
• Standards for measuring the performance
• Procedures for reporting and information sharing
• Monitoring mechanisms
• Criteria for appointing the channel members
 Logistics strategy

• Cost reduction
• Capital reduction
• Service improvement
 Logistics Planning
Inventory Management Transportation decisions
•Inventory levels •Modes of transport
•Deployment
D l t off inventories
i t i •Carrier
C i routing/scheduling
ti / h d li
•Control methods •Shipment size /consolidation

Customer
Service
g
goals

Location decisions
•Number, size and location of facilities
•Assignments of stocking points to sourcing points
•Assignment of demand to stocking points
 Components of inventory carrying cost

Capital cost Inventory

Investments

Inventory Insurance and

service costs Taxes
Inventory
carrying cost Warehouse rent
rent,
Storage space maintenance
costs charges

Inventory Obsolescence
carrying cost Damage&
Pilferage
Shrinkage
Relocation
costs
ALL ABOUT TRANSPORTATION
 Transportation

• Modes –
– Road
– Rail
– Air
 Types of Road Transport

Capacity
Type of vehicle
( g )
(Kgs)
3 Wheeler 200
Tata Ace 500
LCV – Tata 407 2000
MCV - Tata 709 /
3000
Eicher
HCV – 9T Truck 7000
HCV - 20ft container 7500
HCV - 32ft container 10000
HCV - 40ft container
t i 12500
 Types of Transport

PRIMARY TRANSPORT SECONDARY TRANSPORT

Full Truck Loads Full Truck Loads

Less Than Truck Loads Less Than Truck Loads
Dedicated Loads Piece Meal
Milk Run
Dedicated Loads
 Pain Points in Transportation

• Lack of Real time Visibilityy of Freight

g & Assets
• Labor Issues
• Rising Fuel Prices
• Mis-Ships
• Cash to Cash Cycle Times
• Ch
Changing
i Indian
di Taxation
i Pl Platform
f
• Safety
 USP’ss o
US of Transport
a spo t Co

• For Customers
– Speed of Delivery
– Reliability
– Reducing g Logistics
g Cost as % of sales
– Speed to reach markets
– Reducing Working Capital
– Value added Solutions
– Provide Global Standards at Indian Prices ☺

• For Government
– Simplify Procedures
– Invest in Technology
– Set Global Protocols
 What
W at iss to be do
done?
e?

• Provide complete
p suites – Express
p Distribution/ Multi
User & Single User Vehicles
• Provide VAS – Reverse Logistics, Control Tower
• Invest in Technology & training people
• Create Most Effective Load Schedules
• Optimising Asset Utilization
• Real Time Exception Management
• Optimise Fuel Consumption
• POD Tracking
• Reduction of Errors
 Relationship between logistics, cost, and number of
warehouses

Total cost

Total Inventory cost

cost
Transportation
cost

Warehousing
cost

Number of warehouses
 Strategy
St ategy for
o Opt
Optimising
s g Moto
Motor Freights
e g ts

• 5 Best Strategies are –

– Straight Pooling
– Shipment Aggregation
– Shipment Consolidation
– Continuous Movements
– Cross-Dock Pooling
Straight Pooling
Shipment
p Aggregation
gg g
Shipment Consolidation
Continous Moves
Cross Dock Pooling
Thanks