SOM Assignment

8/2/2019 SOM Assignment

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Logistics is the management of the flow of goods between the point of origin and the

point of destination in order to meet the requirements of customers or corporations.

Logistics involves the integration of:

Information Transportation, Inventory, Warehousing, Material handling Packaging and often security.

The mediums of logistics services in India can be categorized in the following ways:-

Airways Land Transport Railways Waterways

Importance in the economyOne such study indicated that about 30 per cent of the working population in the UK are

associated with work that is related to logistics. Another study undertaken by Armstrong and

Associates (2007) found that, for the main European and North American economies, logisticsrepresents between about 8 per cent and 11 per cent of the gross domestic product of each

country. For developing countries this range is higher at around 12 per cent to 21 per cent with

India at about 17 per cent and China at 21 per cent. It is to be expected that the logistics costs of

developing countries will decrease over the next few years.

The breakdown of the costs of the different elements within logistics has also been addressedin various surveys. One survey of US logistics costs undertaken by Establish/Herbert Davis

(2008) indicated that transport was the most important element at 50 per cent, followed byinventory carrying cost (20 per cent), storage/warehousing (also at 20 per cent) customer

service/order entry (7 per cent) and administration (3 per cent).This survey also produced a pan-

European cost breakdown. This placed transport at about 40 per cent, warehousing at about 32per cent, inventory carrying cost at about 18 per cent, customer service/order entry at about 5 per

cent and administration at about 5 per cent of overall costs. In both studies the transport costelement of distribution was the major constituent part, particularly due to high fuel costs. UStransport costs are especially affected by this due to long distances travelled.

Features of logistics industry in Indian economy

A number of small-integrated players Transportation costs account for nearly 40%of production costs. Logistics costs around 13% of GDP, compared to 8% in the US. Growth in Indian economy is the major driving factor for the demand in logistics industry Chemicals, metals, FMCG, cement and textiles have been identified as the top five

contributors to logistics revenues
http://en.wikipedia.org/wiki/Transportationhttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Warehousinghttp://en.wikipedia.org/wiki/Materials_managementhttp://en.wikipedia.org/wiki/Packaginghttp://en.wikipedia.org/wiki/Securityhttp://en.wikipedia.org/wiki/Securityhttp://en.wikipedia.org/wiki/Packaginghttp://en.wikipedia.org/wiki/Materials_managementhttp://en.wikipedia.org/wiki/Warehousinghttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Transportation


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Key logistics processes

Order fulfillment: probably the most common that is quoted. Order fulfillment isconcerned with the ability to turn a customers specified requirements into an actualdelivered order. Thus, it embraces many of the traditional functions usually recognized as

being a part of the logistics operation. Order fulfillment will involve the information

elements of receiving and documenting an order through to the physical means of

selecting and delivering the goods.

New product introduction: This is an area where many companies find they haveproblems. There are many logistics issues related to the introduction of new products into

the marketplace. Very oft en existing, standard logistics structures and processes are

insufficient to enable a satisfactory launch of a new product. One of the main problems is

the inability to respond sufficiently quickly. Standard processes are designed to deal with

known products. There are two likely consequences of introducing new products usingexisting processes. The first is that the product takes off very quickly and very well but

there is insufficient flexibility in the supply chain to ratchet up supply to the requiredlevels. The second is that demand is lower than initially expected and so there is an

oversupply of stock, which eventually leads to products being sold off at discount rates or

becoming obsolete

New product development: This example the idea is to design the product so that it canreach the market as quickly as possible from the initial design plan through to

availability. The aim is to link the development of the product with the logistical

requirements so that all secondary developments (of which there are normally very many)

can be identified and re-engineered in the shortest possible time.

Product returns: There is a growing requirement in many businesses to provide aneffective process for the return of products. This may be for returns that come back

through the existing distribution network or through a new one that is specifically set up.

It may also be for product returns that will be reworked or repackaged to go into stock,

product returns for subsequent disposal, or packaging returns that may be reused or

scrapped. In the light of developments in environmental legislation, this is a very

important area for process design or redesign

Aftermarket or service parts logistics: For many companies the supply of a product orseries of products is inextricably linked to the subsequent provision of service parts to

support the continuous use of the initial products. For many logistics operations, neitherthe physical structure nor the associated processes for the original equipment are really

capable of providing a suitable support mechanism for the spare parts as well. This is

another example of the need for the development of processes specifically designed to

undertake a particular task.

Information management: Advances in information technology have enabled a vastamount of detailed data and information to be available and manipulated very easily. This


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has led some companies to recognize the need to devise suit able processes to ensure that

data are collected, collated and used in a positive and organized way. For logistics, this

means detailed information can be made available for individual customers, concerning

not just their product preferences but also any customer service requirements that are

distribution-specific (delivery time preference, order size preference, invoicing

requirements, etc). This enables a much more positive, proactive approach to be adopted

when considering particular customer relationships

Some of the core functions of logistics


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Positioning of Logistics in the Organisation Value Chain

Logistics has always been changing with time, previously logistics was not involved in

organizational value chain, but with time people started realizing the value of logistics inorganization structure, given below are the two figures showing the traditional organizational

structure, where it is self explanatory that logistics is not particularly defined, second figure

shows a well defined logistics structure, in core organizational structure


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Relationship With Other Corporate Functions

With Production Production schedule

Production control

Plant warehouse design

Raw material stocks

With Marketing Customer servicesPackaging

Distribution centre location

Inventory levels

Order processing

With Finance Stock-holdingStock-control

Equipment financing

Distribution cost control

Role Of The Logistics Or Distribution Manager

Contribution to corporate strategic planning An understanding of the functional interfaces An understanding of distributions activities Familiarity with the external environment as it relates to distribution Insights regarding competitor distribution strategies Familiarity with customers distribution needs Familiarity with channels of distribution Distribution area


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Advantages of contributing to corporate plan Understanding of impact of corporate strategy on distribution activities increased physical distribution responsiveness Increased sensitivity to the distribution environment Identifying distribution opportunities Improving communication Preparing for strategic planning Know the company Develop a broader perspective of distribution Know the distribution environment Develop rapport/liaison with others Improve communication skills

Traditionally, the three main operational areas of responsibility are related to;

Transport: Primary transport, delivery operations, vehicle routing , and scheduling,vehicle procurement, etc

Warehousing: Goods inward, bulk storage, order picking, marshalling, materials handlingequipment,

Information: Stock location, stock control, order processing , budgeting,, monitoring, andcontrol

From the point of view of supply chain planning, the key roles for logistics manager with

a broad remit might summarized as

To lead the design, creation, configuration and parmanent setting of the entire supplychain To create the framework and the dialogue that determine the perfomance taegets along

the whole chain

To drive the system and monitor and report the entire logistics operation performanceagainst agreed targets


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To review how problem can be solved and performance improvementA Flow Chart Of Logistics Planning

Documents

SOM Assignment