S 27 Logistics and Supply Chain Mangement

8/8/2019 S 27 Logistics and Supply Chain Mangement

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Session 20

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Logistics and Supply Chain

Management


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Agenda

240-

y Logistics

y Supply Chain Management

y

Warehousing Management Fundamentalsy Transportation Management Practices

y Role of IT


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Nature and Importance of Marketing

Logistics

340-

y Involves getting the right product to the right customers in the right

place at the right time.

y

Companies today place greater emphasis on logistics because:y customer service and satisfaction have become the cornerstone of marketing

strategy.

y logistics is a major cost element for most companies.

y the explosion in product variety has created a need for improved logistics

management.y Improvements in information technology has created opportunities for major

gains in distribution efficiency.


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Retail Logistics

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y Retail logistics incorporates the following functions :

y Thephysical movement of goods

y The holding of these goods at stock holding points

y

The holding of goods in quantities required to meet the demand from theend consumer

y The management and administration of the process


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Inventory

When to orderHow much to order

Just-in-time

Costs

Minimize Costs ofAttaining Logistics

Objectives

WarehousingStorage

DistributionAutomated

Order ProcessingReceivedProcessed

Shipped

Logistics

Fun

ctionsTransportation

Rail, Truck, Water,

Pipeline, Air,Intermodal

Major Logistics Functions

540-


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Rail

Nations largest carrier, cost-effectivefor shipping bulk products, piggyback

Rail

Nations largest carrier, cost-effectivefor shipping bulk products, piggyback

TruckFlexible in routing & time schedules, efficient

for short-hauls of high value goods

TruckFlexible in routing & time schedules, efficient

for short-hauls of high value goods

WaterLow cost for shipping bulky, low-value,

non perishable goods, slowest form

WaterLow cost for shipping bulky, low-value,

non perishable goods, slowest form

Pipe

lineShip petroleum, naturalgas, and chemicals

from sources to markets

Pipe

lineShip petroleum, naturalgas, and chemicals

from sources to markets

AirHigh cost, idealwhen speed is needed or

distance markets have to be reached

AirHigh cost, idealwhen speed is needed or

distance markets have to be reached

Transportation Modes

640-


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1. Speed

2. Dependability

3. Availability

4. Costs

5. Others

Checklist for ChoosingTransportation Modes

ChoosingTransportation Modes

740-


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Concept Recognizes that Providing Better CustomerService and Trimming Distribution Costs Requires

TeamworkTeamwork, Both Inside the Company and Among All the

Marketing Channel Organizations.

Cross-Functional Teamwork inside the Company

Building Channel Partnerships

Third-Party Logistics

Integrated Logistics Management

840-


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Logistics management

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y The core of SCM is in logistics management.

y Logistics strategy can either be pull strategy or a push strategy.

y At the heart of logistics is the distribution centre. It serves several

functions from co-ordinating inbound transportation ,receiving

,checking , storing ,cross docking and coordinating outbound

transportation.


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Logistics Strategy

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Pull Supply Chain

Merchandise shipped tostores based on sales andinventory levels in thestores

Push Supply ChainMerchandiseshipped to the

stores based onforecasted sales

rate

(c) Brand X Pictures/PunchStock


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Activities Performed by Distribution Center

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y Managing inbound transportation

y Receiving and checking merchandise

y Storing or cross docking merchandise

y Preparing merchandise for the sales floor

y Ticketing and marking

y Putting on hangers

y Shipping merchandise to

stores

y Managing outboundtransportation

Ryan McVay/Getty Images


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Advantages of Using a Distribution

Center

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y Effects of forecast error for individual

stores are minimized

y Enables retailers to carry less

merchandise in the store

y Easier to avoid running out of stocky Retail store space is more expensive than

space at the distribution center



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Logistics in India

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y Size $ 50 billion per year

y Growth rate 40% per annum

y 60% through road

y 15% of the business comes from organized players


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Reverse Logistics

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y Disposition of returned goods through:

y Putting back into inventory

y Sold through liquidation centres

y Broken down to component parts

y The basic approach is how to recapture value in this flow

Customer

Retailer DistributionCentre

Vendor


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Key Logistics Activities

1540-

y Customer Servicey Demand Forecastingy Distribution communicationy Inventory controly Materials handlingy

Order processingy After sales parts and service supporty Plant and warehouse site locationy Procurementy Packagingy Returned goods handlingy

Reverse logisticsy Salvage and scrp disposaly Traffic and transportationy Warehousing and storage


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GLOSSARY OF ACRONYMS COMMONLY

USED IN CHANNEL LOGISTICS

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y SCM (Supply Chain Management)

y WIP (Work In Process inventory)

y SKU (Stock Keeping Unit)

y 3PL (3rd Party Logistics providers)

y QR (Quick Response)y ECR (Efficient Consumer Response)

y ABC (Activity Based Costing)y EOQ (Economic Order Quantity)

y MRP (Materials Requirements Planning)

y JIT (Just In Time)

y EDI (Electronic Data Interchange)

y VAN (Value Added Network)

y CRP (Continuous Replenishment Program)y CAD/CAM (Computer-Aided Design and Computer-Aided Manufacturing)y POS (Point Of Sale)


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The Basic Supply Chain

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Supply chain management is the delivery of economicvalue to customers through management of the flow ofphysical goods and associated information from vendorsto customers

RETAILER

Supplier

Raw/Packing MaterialWarehouse

Stock Manufacturer

ManufacturerWarehouse

Stock

RetailerWarehouse

Stock

RetailStore

Capacity CapacityStock Stock Stock Stock

Flow of orders

Flow of goods

Consumers

Feedback

Products


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Supply Chain Objectives

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Right

Deliver

Product

Place

Time

Price & Profit


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Typical Supply Chain

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Suppliers Manufacturing DistributionCenter(s)

Customers

Physical flows

Information flows

Financial flows


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Complexity

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Physical flows (100+ SKUs)

Information flows (GRNs, POs, GPs )

Financial flows (CNs, DNs, cheques )

Suppliers

100+

Manufacturers3 +

DistributionCentre 20+

Customers???


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Pressures

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Competition

Prices

EnvironmentalConcerns

Technology

ProductLifecycles


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History of the supply chain initiative

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yCrafted with Pride in the USA - 1984

y 1985 - delivery time - apparel supply chain - 66 weeks

y 40 weeks - spent in warehouses or in transit major losses

y The result - development of QR Quick Response

y The industry adopted the Universal Product Code

y Enabled Electronic Data Interface , and Point Of Sale scanning systems

y Sales directly to outlets instead of through Distribution Centres

y Efficient Consumer Response started by the grocery industry in the US

y From Materials Planning in the 70s to Resources Planning in the 80s to

Enterprise planning in early 90s to SCM in 1995


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SCM Framework

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CustomerService

STRATEGIC

Channel DesignNetwork Strategy

STRUCTURAL

Warehouse design and operationsTransportation Management

Materials Management

FUNCTIONAL

Information SystemsPolicies and ProceduresFacilities and Equipment

Organisation and Change Management

IMPLEMENTATION


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SCM -- Underlying Philosophy

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Integration !!!Marketing team which analyses sales data and working out how to meet

targetsMerchandising team for understanding customer needs

Materials team getting the best price for the merchandise


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Need for SCM in Retail

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y Short Life Cycles

y High Volatility

y Low Predictability

y High Impulse Purchase


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Lead Times

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y Time to MarketyRecognising a market opportunity and converting it

into a product or servicey Example pre cooked meals in India

y Time to Servey Time taken to convert an order into delivery by the

supply chain

y Time to React to changes in demandy The Lead Time Gapy The difference between the logistics pipeline and

customer order cycle


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Innovations in SCM

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y Vendor Managed Inventory through EDI

y Collaborative Planning Forecasting and Replenishment

y Cross docking


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Vendor Managed Inventory

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Collaborative Planning Forecasting and

Replenishment

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y Alignment of forecasts of retailer and suppliers

y Managing them on exception basis

y Sharing of forecasts, results and data on the internet


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Cross Docking

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y Wal-marts Bentonville warehouse has 19 conveyor belts; can ship 360

cartons a minute

y 264 dock doors take goods from suppliers trucks and ship them through

116 shipping lanes to 125 stores

y Merchandise flows directly from

the vendors trucks through the

retailers distribution center and is

loaded on the trucks going to the

retailers stores without being

stored in the distribution center



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Benefits of Efficient Supply Chain Management

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Fewer stockouts merchandise will be available when the

customer wants them

Tailoring assortments the right merchandise is available at

the right store

Customers respond to the convenience as evidenced by

increased salesRyan McVay/Getty Images


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Minimizing Stockouts

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Royalty-Free/CORBIS

Forecast demand accuratel

Make suremerchandise in

stockrooms is onthe shelves

Buyers placeorders at theright time

with vendors

Stores need to placeorders with

distribution centersin a timely fashion

DistributionCentersneed to

send rightquantities

Managers need toprovide enough lead

time for deliveries


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Wal-Marts Sustainable Advantage

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Wal-Marts success is its information and supply chain managementsystems. Why are competitors lagging behind?


The software is unavailableelsewhere and is constantlyupdated and improved

Wal-Mart made a substantialinvestment in developing itssystems and has the scaleeconomies to justify it.


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Food and Grocery Supply Chain

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Farmer Farmer Farmer

Consolidator Commission Agent

Traders

Wholesalers

Retailers

Consumers


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Food and Grocery Supply Chain

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y 35 to 40% wastage in supply chain

y Organised retail procuring straight from farmers and

consolidators

y

Also investing in cold storage and refrigerated vansy Hub and spoke approach at state level

y May even have two or three hubs in bigger states

Documents

S 27 Logistics and Supply Chain Mangement