Logistics

Supply Chain Management

Legends of Logistics

Dabbawala’s (Video)

Supply Chain Management

Logistics is

“The process of planning, implementing andcontrolling the efficient, effective flow and storage

of goods, services and related information from pointof origin to point of consumption for the purpose of customer Satisfaction”

(council of logistics management)

Supply Chain Management

Business Logistics◦ The planning, implementation, & control of the

efficient & effective flow and storage of goods, services, & related information from point of origin to point of use or consumption in order to meet customer requirements

Military Logistics◦ The design & integration of all aspects of

support for the operational capability of the military forces (deployed or in garrison) and their equipment to ensure readiness, reliability, & efficiency

Supply Chain Management

Event Logistics◦ The network of activities, facilities, and

personnel required to organize, schedule, and deploy the resources for an event to take place and to efficiently withdraw after the event

Supply Chain Management

• Logistics has existed since the beginning of civilization. Raw material and finished products had always to be moved, though on a small scale. Things began changing with the advance in transportation. Population began moving from rural to urban areas and to business centre. No longer did people live near production centre, nor did production take place near residence centre. The geographical distance between the production point and consumption point increased. And logistics gained importance.

Supply Chain Management

THE PURPOSE OF LOGISTICS SYSTEM Right quantities of the Right goods to the Right places at the Right time in the Right condition at the Right cost.

Supply Chain Management

A Simple Logistics Channel

Supply Chain Management

Raw materials

supply point

Raw materials

supply point

Production facility

MarketCustomers

MarketCustomers

MarketCustomers

Product Flow

Supply Chain ManagementA Multi-Echelon Logistics Channel

Raw materials

supply point

Raw materials

supply point

Production facility

Retailer

Product Flow

Retailer

Retailer

Retailer

Retailer

Retailer

Warehouse

Warehouse

Raw materials

supply point

Two Main Types:

Inbound logistics:  The management of materials from suppliers and vendors into production processes or storage facilities.

Outbound Logistics:  The process related to the movement and storage of products from the end of the production line to the end user.

Supply Chain Management

Steps toward improving Logistics performance

• Make transport a customer service activity instead of a cost

• Reduce your stock pipeline to cut costs and improve service (go easy by low inventory)

• Pick as soon as you can (pick once, pick right and cut the cost time and error)

• Is everything you are doing is really necessary

Supply Chain Management

Transportation: Transport or transportation is the movement

of people and goods from one place to another. Industries which have the business of providing actual transport, transport of people or goods and services referred to as transport industries.

Supply Chain Management

Basic modes of transport By Air

By Road ◦ By Train

By Sea

Supply Chain Management

Considerations in Transportation Cost / Rates Reliability Safety / Damages Insurance Speed / Time Mode of Transportation Routes / sectors Vehicles type Urgency / Priority In-house / Outsource

Supply Chain Management

Supply Chain Management

3rd Party Logistic Service providers“Third-party Logistics is simply the use of an

outside company to perform all or part of the firm’s materials management and product distribution function.”

-- Simchi-Levi (2000)

Supply Chain Management

Characteristics of 3PL Perform outsourced logistics activities Process management / Multiple activities More customized services Long-term commitments (1~ 3 years)

Supply Chain Management

Advantages• Cost reduction• Focus on core competency• Improved efficiency, service and flexibility

Disadvantages• Loss of control• Impact on in-house workforce

Supply Chain Management

Current State -- Market Size

Supply Chain Management

34.239.6

46.0

54.0

1997 1998 1999 2000

3PL market is growing

( $ Billions )

Current use of 3PL by industry

Supply Chain Management

75.9

71.1

61.4

56.2

53.8

82.2

Percentage of 3PL use in different industries Industry

Computer

Consumer

Retail

Chemical

Medical

Auto

Source "What's ahead for 3PLs“ Modern Materials Handling, April, 2000