LOGISTICS & SUPPLY CHAIN MANAGEMENT

Faculty

Vijay Parekh
(B.Tech (IIT), M.S. Univ. of Wisconsin USA)

Activities involved in getting the product to consumer in case of a manufacturing company

Product Returns Customer Raw material from vendor

Inward Store

Retail Stores

To the Production Floor

Distribution Centres

In Production Packaging Labelling

Finished Product Warehouse

Logistics Organization

CEO
Logistical Operations Procurement Manufacturing Quality Control Material handling Accounts

Logistical Resource planning Market forecast Order processing Capacity plan Finance plan

Logistical support Packaging Inventory control Warehousing Transportation

LOGISTICS

Evaluation
a) b) Total marks: 100 Terminal exam: 60 Internals: 40 Project 20 Class participation 15; Team - 10, Individual 5 c) Attendance 5

Class Participation
Summary / Recap Class question/answers Quiz Contributions - individual

Example Highest points 100 by Team 3 = 10 80 points Team 6 = 80/100*10 = 8 marks

Reference Books
Title: Logistics, Logistics Management, Supply Chain Management Donald Bowersox & David Closs (Text Book) Martin Christopher Bloomberg, Lemay & Hanna Coyle, Bardi, Langley Edward Frazelle

Development of Logistics

Military beginning of Logistics

Emperor Leon VI, 900 AD defines Logistics in his book Tactics, the Book of Military Science as To pay the army, suitably arm & organize it, supply it with battle equipment, look after its needs appropriately and prepare for every phase of the campaign. Military officers had a title of Logistikas

What aspects should be included in a short Battle Logistics?

Battle Logistics
Goals Personnel Provisions Arms & ammunition Transportation Communication Medical facilities Evacuation

Logistics Science & Creativity

Logic + Artistic = Logistics Combine traditional work areas into integrated & innovative strategies

Battle Logistics

Goals : aggressive, defensive, extent Personnel: number, skills, rank Provisions: food, water, uniform Arms & ammunition: type, number, matching and in working condition Transportation: to move people & armaments; fuel tankers Communication: 2 way; backup Medical facilities: doctors, nurses, medicines Evacuation: wounded, retreat

Logistics and War

War between Armies: the army with better logistics wins Field Marshal Rommel beats the Allies in Africa due to superior logistics Desert Fox War between Companies: the company with superior logistics wins Likewise logistics is the bed rock of trade & business. Take away logistics support and trade & business would collapse

Competitive Advantage How does a company differentiate itself from competitors?

3Cs Triangular Linkage

Need Satisfaction at acceptable cost

Customer

DIFFERENTIATION

Company
Assets & Utilization

Competitor
Assets & Utilization

Logistics Ensures Future Leadership

Future Leader Cost Leadership Service Leadership

Productivity Advantage

Volume

Cost Per Unit

Cost Leadership
Lower cost of production due to greater

volume
Fixed costs spread over greater volume
Experience curve

Service Leadership
Customers buy benefits (satisfaction) not only services or products. Service Differentiation: Delivery: time, location Financial: payment terms & ease Responsiveness: speed, demo, installation

Council of Logistics Management (CLM)

Defines logistics 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

Logistics is the flow of material, information and between consumers & suppliers
Edward Frazelle

Logistics is the flow of material, information and money between consumers & suppliers
Edward Frazelle

Logistics Key Activities

Demand Forecasting Obtain orders from customer Procurement Material handling Warehousing & storage Inventory management Transportation Reverse logistics: salvage, recycling, disposal Customer service Information management

Dr. Plowman views business logistics as the integrated management of: * pre production or in-bound factors * post production or out-bound factors

PLM Product Life - Cycle Management

Logistics management throughout the entire system or product life cycle. Cradle to Grave

The 7 Rs of Logistics Effectiveness

Right Cost Right Item

Right Time

Right Customer

Right Place Right Condition

Right Quantity

Essentially
1. accurate interpretation of customer requirement: market survey, analysis, understanding e.g. polyester 2. precise execution: vendor process customer from point of origin to point of requirement & in some cases point of disposal medical, spent radio active material 3. no damage or deterioration in transport: e.g. Pratap exports 4. efficiency to minimize cost: planning, speed of execution, low rejection / wastage e.g. expiry

Logistics - Goal
To achieve targeted level of customer service at the lowest possible total cost

Cost Elements / Key Activities of Logistics of a Manufacturing Organization

LOGISTICS

Logistics Master Planning LMP

Investigate: describe, measure, benchmark Innovate: simplify, optimize, apply best practices Implement: systemize, automate, people friendly

Implement

Investigate

Innovate

Operating Objectives Of Logistics

Rapid & Consistent Response
Minimum inventory

Reduction in overall operations cost

Efficient after-sales services

Logistics Planning & Organization

LOGISTICS

Logistics planning

Goals
Strategic plans: long term product identification, production capacities, finance, alliances (JV / M&A) Tactical plans: facility location, finance, transportation analysis

Operational plans: procurement, inventory, production, accounts, customer service

LOGISTICS

Logistics Organization

Characteristics Flatter Process integration Information networked Empowered employees

Logistics positioned higher up in the organization structure

LOGISTICS

Value Differentiation
Economic value in a product or service:

Commodity Market

Cost Leader

Service Leader

Cost & Service Leader

Cost Adv. Commodity or only cost difference

Re-engg Integration with supplier Asset utilization. Inventory reduction

Service excellence Reliability Less lead time JIT Responsive

Very hard to compete with Distinct value Cost competitive Customization

Mumbai to Baroda
Mode Air Train

Carrier
Ticket Price Time

IA
1250 50 mins

Rajdhani
650 5 hours

Mumbai - Baroda
Mode Carrier Price Travel time Time to airport Before departure Air IA 1250 + 250+100 50 mins 11/2 hours 1 hour Train Rajdhani 650 + 50 + 25 5 hours hour 10 min

Exit airport 20 min Baroda to destn 45 min Total Time 41/2 hours

10 min 15 min 6 hours

Mumbai to Bhavnagar
Mode Air

Carrier
Cost Total cost

IA
1200+250+100 1550

Train Ist or AC chair Guj. Mail + Saurashtra Expr 600+400+50+25 1075

Travel time
Other time Total time

1 hour
31/2 hours 41/2 hours

8+2+4 = 14 hours
1 hour 15 hours

LOGISTICS

Supply Chain Management in a Manufacturing Plant

Receiving and Inspection Raw Materials, Parts, and In-process WareHousing

Production

Finished Goods Warehousing

Inspection, Packaging, And Shipping

Materials Management Purchasing Production Control Warehousing and Inventory Control Shipping and Traffic

Physical materials flow Information flow

Customers

Suppliers

Logistics Science & Creativity

Logic + Artistic = Logistics Combine traditional work areas into integrated & innovative strategies