INTRODUCTION TO LOGISTICS

Meaning of Logistics and Logistics Management, Logistics Management to Supply Chain Management, Decision areas in Logistics; Key Players in Logistics; Role of Logistics in (a) Supply Chain, (b) the Economy, (c) the Organization; Role of Government in Logistics; Classification of Logistics Applications.

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SUPPLY CHAIN AND LOGISTICS MANAGEMENT
UNIT-2
INTRODUCTION TO LOGISTICS

MEANING OF LOGISTICS

Logistics is basically a process of transporting goods (either raw material or finished products)
from one point to another point.
Examples:

The two major functions of logistics are transportation and warehousing.
 Transportation:
Many modes of transportation play a role in the movement of goods through supply chains: air,
rail, road, water, pipeline. Selecting the most efficient combination of these modes can
measurably improve the value created for customers by cutting delivery costs, improving the
speed of delivery, and reducing damage to products.
 Warehousing:
When inventory is not on the move between locations, it may have to spend some time in a
warehouse. Warehousing is “the activities related to receiving, storing, and shipping materials to

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and from production or distribution locations. It is a very important factor, we need to consider to
know the logistics meaning.”

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LOGISTICIAN


 If a person works in the field of logistics management, then we can call him a logistician.
 Logisticians manage the whole life cycle of a product, starting from where it is acquired, then
distributed, allocated and finally delivered.

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DUTIES OF LOGISTICIANS
 Manage a product’s life cycle.
 Direct the allocation of materials, supplies, and products.
 Develop business relationships with suppliers and clients.
 Understand clients’ needs and how to meet them.
 Review logistical functions and identify areas for improvement.
 Propose strategies to minimize the cost or time required to transport goods.

EDUCATIONAL QUALIFICATIONS OF LOGISTICIANS
 Companies prefer to hire workers who have at least a bachelor’s degree. Many logisticians
have a bachelor’s degree in business, systems engineering, or supply chain management.

 Bachelor’s degree programs often include coursework in operations and database
management, and system dynamics. In addition, most programs offer courses that train
students on software and technologies commonly used by logisticians, such as radio-
frequency identification (RFID).

IMPORTANT QUALITIES OF LOGISTICIANS
 Communication skills. Logisticians need strong communication skills to collaborate with
colleagues and do business with suppliers and customers.
 Critical-thinking skills. Logisticians must develop, adjust, and carry out logistical plans.
They often must find ways to reduce costs and improve efficiency.
 Customer service skills. Logisticians must know the needs of their customers in order to
coordinate the movement of materials between suppliers and customers. They gain this
knowledge through listening to the customer and applying their knowledge of the products
and systems to provide what is required.
 Organizational skills. Logisticians must be able to keep detailed records and simultaneously
manage several projects in a fast-paced environment.
 Problem-solving skills. Logisticians must handle unforeseen issues, such as delivery
problems, and adjust plans as needed to resolve the issues.

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MEANING OF LOGISTICS MANAGEMENT
Logistics management means to plan, implement and control the effective forward-reverse
movement of goods – plus sharing the related information between the point of origin and the
point of consumption in order to meet customers’ needs.


TYPES OF LOGISTICS
A. Inbound Logistics
A. Outbound Logistics
B. Reverse Logistics
C. Third-Party Logistics (3PL)

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A. Inbound Logistics
It is one of the primary types of Logistics. Basically, inbound logistics means transportation,
storage, and the receiving of the incoming resources (such as raw material or other goods) that
you require to manufacture a product.
Moreover, it can be the delivery of goods that you will procure in your inventory.
The below diagram shows the placement of inbound as well as outbound logistics in an
organization. For example- If you are dealing in footwear, then the inbound logistics in your
company will be the rubber for your shoes, the thread to be used for knitting the shoes, etc.


B. Outbound Logistics
Outbound logistics is a process of delivering the product to the customer on the committed time.
Customer satisfaction is the main objective here and the logisticians take care that the product
should reach the customer safely in minimum cost.
For example- If you are dealing in footwear, then the outbound logistics in your company will
be the shipping of the final product which are shoes, sandals, slippers etc to your customers.


C. Reverse Logistics
Reverse logistics is a process of transporting product from the end customer to the seller. It
includes the collection, inspection, sorting, refurbishing android distribution.
You have undoubtedly faced it at least once that you have ordered a product online and it did not
match your requirements. Then you raise a request for a replacement or refund regarding the
product.
The company picks up that product from your address. So, the process of reaching the product
from your side to the company is reverse logistics.

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D. Third-Party Logistics (3PL)
 The third-party logistics are focused only on the transportation of products from one end to
another end and nothing else.
 It doesn’t matter whether it’s a seller to consumer or consumer to the seller. They take the
responsibility of delivering the products two right places at the right time.
 It helps the businesses to focus on their primary operations instead of engaging their time in
monitoring the delivery services.

MODELS OF LOGISTICS

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First-Party Logistics (1PL)


The 1st party logistics to referred to a firm or individual, that has their own cargo, freight and can
transport goods and merchandise from one point to another point.


Second-Party Logistics (2PL)

 Second Party Logistic Model (2PL). The manufacturer hires a carrier or warehouse manager
as a subcontractor for the operational execution of a clearly defined transport or logistic task.
The organization and follow-up remain the responsibility of the manufacturer. The relation
supplier is often only cost-driven and short-term, with the logistic actor doing what the client
instructs, and being paid accordingly.

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 An organization or enterprise that maintains assets like vehicles or airplanes to transport
products from one place to another is a 2PL. The same local farm might hire a 2PL to
transport their vegetables, cereals, or eggs from the farm to the supermarket.



Third-Party Logistics (3PL)


 Third-Party Logistics (3PL Service ) is a powerful service handle that frees the Business
Company, and enables it to focus on other aspects of the business, by managing the
outsourcing of operational logistics, from warehousing to delivery, for the Business
Company.


 A number of services pertaining to the logistics of supply chain are provided by 3PL
Providers. These services include transportation, warehousing, picking and packing,
inventory forecasting, order fulfillment, packaging and freight forwarding.


 Considering all of the above, there is no doubt that a 3PL (Third-Party Logistics) provider is
important for the smooth functioning of a business.


Fourth-Party Logistics (4PL)

 Under this arrangement, the companies do not have any physical assets to be used for moving
products. Instead, they play a consulting role in managing the process for their clients. They
will contract 3PLs, freight companies, and other companies to deliver the necessary support.
Some clients consider them to be a fulfillment concierge, based on their expertise in
assembling and managing an outsourced supply chain.


Fifth-Party Logistics (5PL)

 This is an upgrade to the consulting level of 4PL. In this case, the provider combines the
shipping needs of multiple 3PLs. That allows for leveraging market dominance to negotiate
favorable carrier rates. For example, some companies use 5PL to run all aspects of the supply
chain. The provider sources services and negotiates appropriate contracts on your behalf
under this arrangement.

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7 “RIGHTS” FOR BETTER LOGISTICS MANAGEMENT

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 RIGHT PRODUCT
Freight companies should have complete information about the kind of product, they are going to
ship. Proper product knowledge is important for the management of time and resources.


 RIGHT CUSTOMER
Logistics companies should know their target market so that they can identify their potential
customers. By targeting the right customers in the market, they will have a better chance of
gaining leads.


 RIGHT QUANTITY
It is important to know the right quantity of products to be sent to retailers. Thanks to modern AI
systems, companies can make the right prediction for the quantity of good to be sent in near
future based on past records. This gives an idea about truck bookings to be done in advance.
Right quantity varies from business to business and from season to season.

 RIGHT TIME
In the world of shipping management, time plays a critical role. There should be no delay when
it comes to delivery of the product to end customer. Prior planning and management needed to
be done in advance, for shipping in right time.

 RIGHT CONDITION
Logistics firms should make sure about the condition of the product when it reaches the end
customer. The products shouldn’t be broken, and the packaging must be intact. There should be
proper R&D, so that product reaches the customer in right condition.

 RIGHT PRICE
The companies have to take care of price along with managing all the shipment processes.
Logistics companies have to monitor better freight routes and forecast exact lading units for cost
efficiency. This ensures lowest cost from their end.

 RIGHT PLACE
What’s the point of above six factors, if the product doesn’t reach to its target location? There
should be proper location tracking of truckloads from both customers as well as company end.
This will help in determining the delivery of the consignment to the right place.

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DIFFERENCE BETWEEN LOGISTICS AND SUPPLY CHAIN

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DECISION AREAS IN LOGISTICS

The firm has to take some important decisions in this regard. The firm has to take the following
important decisions:
1. Determination of distribution hub.
2. Inventory Control System.
3. Material Handling System.
4. Procedure to Process Orders.
5. Route Planning and Transportation Decisions.



1. DETERMINATION OF DISTRIBUTION HUB

Distribution hub may be described as those centres, where the firm stores a large quantity of its
product mix. Distribution hub caters the supply of a firm’s products at various selling points.
If the market potential or size of the market is small the firm’s setup single distribution hub for
two or more market segments.

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Example: Food Hub

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The following “Four Cs” formula may care useful in the setting of distribution hub.

1. Cost: The price of land, construction cost and other overheads should also be taken into
consideration. Cost Effective Centres should be given preference.
2. Connectivity: Those places should be given preference, having Road, rail, sea and air
connectivity with maximum selling points.
3. Control: Distribution hub should be established in such a manner, so the firm can effectively
control its marketing of operations.
4. Cooperation: For getting success cooperation of middleman or channel members is
important.

2. INVENTORY CONTROL SYSTEM

 Next Important logistics or physical distribution decision is about inventory control
system.
 At the specified distribution hubs, the firm stores its goods and products. It is very
important to decide that in which quantities the different products should be stored in
different distribution hubs.
 The firm has to take the decision regarding the minimum level of inventory of different
products, which will be kept at every time.

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3. MATERIAL HANDLING SYSTEM
 The material handling system is an important part of Logistics or physical distribution
decisions.

 It involves the handling of goods or products from a production centre or plant to
warehouses of distribution Hubs and warehouses to the places of loading for the
transportation to consumption centres.

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4. PROCEDURE TO PROCESS OF ORDERS
 Another important decision regarding Logistics or physical distribution is to decide the
procedure to process orders from a middleman or channel members.
 Process of Orders can be made smooth and fast if required information is handy with
decision-making authority.
 These of information are:
1. Balance stock of product at the distribution hub.
2. Stock position at the middle man.
3. The present demand for the product in the different markets of the firm.
4. Due position of payments of middlemen.
5. Past record of the middleman.
 Computerized system to process the orders may be very helpful. The company may link
its computer network with its channel members.

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5. ROUTE PLANNING AND TRANSPORTATION DECISION
Route planning is the process of computing the most cost-effective route involving
maximum number of stops with minimum time taken for delivery of products.
Businesses use real time route planning software to determine the best route to execute
deliveries.


When it comes to delivery management, route optimization includes even more parameters
like:
 Type of delivery.
 Order priorities.
 Depot and pick-up sites.
 Wait times at pick-up.
 Access points to drop-off.
 Drivers schedules & shifts.
 Vehicle types (speed & capacity)

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KEY PLAYERS IN LOGISTICS

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ROLE OF LOGISTICS

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A. SUPPLY CHAIN

The success of an organization depends largely on the efficient role of logistics in supply
chain management. Supply chain management (SCM) is the comprehensive process of
coordination and management of the entire production flow of goods and services from
the beginning of the production process through delivery to the consumer.
Logistics is an integral part of SCM that refers to the planning of the movement and
storage of the goods from the producer to the end consumer.

Top 10 Roles of Logistics in Supply Chain Management

1. Order Processing
2. Warehouse Management
3. Inventory Management
4. Transportation
5. Packaging
6. Demand Forecasting
7. Quick Response
8. Material Handling
9. Fleet Management
10. Information and Control

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B. ECONOMY

Logistics directly contributes to economic activity through investment in warehousing, road, rail,
sea and air transport. It also creates many excellent jobs, providing skilled careers for
thousands. But that is not why logistics matters economically to the UK. It matters because all
economic activity depends on the existence and efficiency of logistics.
To carry out farming, fishing, mining, manufacturing and selling to the public, you need to move
the goods that are created. To import goods to enhance our standard of living, or export goods to
generate money for the economy, you need logistics.
Key facts
Examples of industries relying on UK logistics (by all modes):
 Farming, forestry, mining: 36bn tonne kms per year
 Food and drink products: 38bn tonne kms
 Machinery: 10bn tonne kms per year
 Mail/parcels: 9bn tonne kms per year

C. ORGANIZATION

 Logistics is also known as Physical Distribution management. Logistics is an activity
carried out by many different companies for the physical distribution of goods. FMCG,
consumer durables, and many other industries regularly manufacture goods. These goods
have to be transported to the distributors and dealers and lastly to the end consumer.
Logistics is the means to transport the goods from the company to the middlemen or the
end consumer.

 The roles of logistics feature transportation/delivery, storage, packaging, cargo handling,
distribution processing, and information processing, and many systems have been put in
place to deliver products from the production location or factory to the consumer quickly
and on time.

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ROLE OF GOVERNMENT IN LOGISTICS
1.Public Investment: Creating Large-Scale Shared Infrastructure
 Funding Roads
 Creating a Rail Network
 Military Infrastructure
 Education and Research
2. Permitting Land Use and Regulations
3. Attracting Private Investment: Incentives, Subsidies, and Taxes
 Government Recruiting of Land Developers
 Build It and They Will Use It
4. Logistics-Friendly Laws and Regulations
 Non-Taxing Tax Structures
 Conveyance Size Limits
 Free Trade Zones
5. Government Efficiency
 Faster Service: Time-Efficient Government
6. Sustainability
7. External Alliances, Diplomacy, and Trade Relations
8. Positive Feedback in Government and the Economy


CLASSIFICATION OF LOGISTICS APPLICATION
The logistics industry carries out a large part of operational functions in the online business
ecosystem. The logistics industry has to do it all, whether shipping through couriers, movers,
packers, warehouse management, fleet management, order tracking, or order fulfillment. It
would be fair to state that the entire ecommerce and online retail industries primarily depend on
the logistics industry.
In 2021, like most industries, the logistics industry, too, is undergoing a gradual yet permanent
transformation in terms of tech adoption. Since the onset of the COVID-19 pandemic, the

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logistics industry has been at the forefront of disruption. The pandemic tested the supply chain
resilience to the hilt and paved the way for quick tech adoption across the industry.
Digitization and incorporation of technologies make the sector more advanced, connected, and
lucrative. The concept of logistics mobile app development has solved the major challenges
faced by stakeholders. Logistics apps:
 Eliminate a lot of paperwork and endorse automation
 Solves all the tracking difficulties and challenges
 Optimizes, dispatches, and routes
 Reduces all the warehouse management errors
 Reduces delivery time and costs

Logistics includes managing multiple aspects like a warehouse, vehicle management, carrier
tracking, and so on. Hence the first step in your logistics mobile app development journey would
be to decide the niche for your business. There are mainly five types of logistics apps that
improve the working quality of your logistics organization. Here are the five types:
 Route Optimization
 Fleet Management
 Asset Tracking and Management
 Warehouse Management
 All-In-One Logistics and Transportation

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I. ROUTE OPTIMIZATION
Route optimization is the process of discerning the most cost-effective route for a vehicle
carrying a shipment. It not only saves cost but also time and workforce in the long run. You can
set the best route for your drivers with the help of GPS technology.


II. FLEET MANAGEMENT
 Fleet management is the management of:
o Commercial motor vehicles such as cars, vans, trucks, specialist vehicles (such as
mobile construction machinery), forklifts, and trailers
o Private vehicles used for work purposes (the 'grey fleet')
o Aviation machinery such as aircraft (planes and helicopters)
o Ships
o Rail cars
o Non-powered assets such as generators, tanks, gear boxes, dumpsters, shipping
containers, trailers, excavators, and other equipment that can't run on its own
power.

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III. ASSET TRACKING AND MANAGEMENT


Asset tracking, sometimes referred to as asset management, is the method you use to track
your physical assets, whether you scan barcode labels attached to them or you use GPS or RFID
tags that broadcast their location.

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IV. WAREHOUSE MANAGEMENT
A warehouse is the backbone of any business because this is where a major amount of
investment sits. In fact, the warehouse itself is an investment, and therefore one must know in
and out of the warehouse and the products kept in the warehouse.
Warehouse Management is about optimizing and controlling the processes of operations and
storage of the products in the warehouse right from the moment the inventory enters the facility
until it is sold, becomes obsolete, consumed, or moved to another place.

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V. ALL-IN-ONE LOGISTICS AND TRANSPORTATION
An all-in-one logistics app consists of all features mentioned above. Transport and logistics app
development are in huge demand. They benefit enterprises with cost-effective transportation,
location tracking, fuel management, and more. We suggest all-in-one delivery logistics app
development to enhance productivity and meet delivery benchmarks.


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