LOGISTIC MGT PPTS FOR BBA AND MBA STUDENTS

LOGISTIC MGT

1. Logistics Management Pooja Gupta

2. Meaning Logistics is concerned with getting products and services where they are needed and when they are desired. In a modern society most if the customers take excellent logistics service from company as granted and tend to notice logistics only when there is a problem. Logistic is the process of planning, implementing and controlling the efficient, effective flow of goods storage of goods, services and related information from the point of origin to the point of consumption for the purpose of conforming to customer requirements. Logistics Management - Logistics management is a process of planning, executing, and controlling the efficient, effective, flow and storage of goods and services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirement.

3. Importance/ Objectives of Logistics 1. Operating Objectives: In terms of logistical system design and administration, each firm must simultaneously achieve at least six different operational objectives. These operational objectives, which are the primary determinants of logistical performance, include rapid response, minimum variance, minimum inventory, movement consolidation, quality, and life-cycle support. 2. Rapid Response: Rapid response is concerned with a firm’s ability to satisfy customer service requirements in a timely manner. Information technology has increased the capability to postpone logistical operations to the latest possible time and then accomplish rapid delivery of required inventory. The result is elimination of excessive inventories traditionally stocked in anticipation of customer requirements. 3. Minimum Variance: Variance is any unexpected event that disrupts system performance. Variance may result from any aspect of logistical operations. Delays in expected time of customer order receipt, an unexpected disruption in manufacturing, goods arriving damaged at a customer’s location, or delivery to an incorrect location-all result in a time disruption in operations that must be resolved.. 4. Minimum Inventory: The objective of minimum variance involves asses commitment and relative turn velocity. Total commitment is the financial value of inventory deployed throughout the logistical system. Turn velocity involves the rate of inventory usage over time. High turn rates, coupled with inventory availability, means that assets devoted to inventory are being effectively utilized

4. 5. Movement consolidation: One of the most significant logistical costs is transportation. Transportation cost is directly related to the type of product, size of shipment, and distance. Many Logistical systems that feature premium service depend on high-speed, small-shipment transportation. 6. Quality improvement: A fifth logistical objective is to seek continuous quality improvement. Total quality management (TQM) has become a major commitment throughout all facets of industry. Overall commitment to TQM is one of the major forces contributing to the logistical renaissance. 7. Life-Cycle support: The final logistical design objective is life-cycle support. Few items are sold without some guarantee that the product will perform as advertised over a specified period.

5. Major Logistic Function/Scope/Roles Below is the list of major logistic function, you all must be aware of them all. Order Processing. Material Handling. Inventory Management. Warehouse Management. Transportation. Packaging and Labelling . Information and Control.

6. 1. Order Processing There are many ways of submitting an order like  By Mail  By Telephone  Through Salesperson  Through Computer and EDI  In some cases, orders are generated by suppliers for their customers. 2. Warehousing Almost every organization is bound to store its products because there is some gap in the production and consumption. 3. Inventory Management The inventory is also one of major logistic function in which the effective level of inventory is maintained. 4. Transportation Major logistic function also include the transportation in which certain decisions about the transportation of goods are made in the light of the interests of the organization. Transportation function is important because it affects the delivery performance, pricing of product, and condition of the arrived goods etc.

7. Total Cost concept/ System Approach A system is a collection of elements or components that are organized for a common purpose. It also a set of detailed methods, procedures, and routines established or formulated to carry out a specific activity, perform a duty, or solve a problem. There are four distinct and essential ingredients of a system. Input includes raw-materials, machines, man-hours, components or parts, drawing, instructions and other paper works. Then comes process which includes operations (actual production process). Operations may be either manual or mechanical or chemical. Operations convert inputs into output. The third ingredient output includes finished products, finished goods (parts), and services. Finally, there is a fourth ingredient, control , which gives rise to the need of management,

8. Total Cost Concept in Material Management: Procurement Costs: This includes the expenses associated with sourcing materials, such as purchasing costs, transportation, customs duties, and supplier management costs. Inventory Costs: These cover the expenses related to holding inventory, including storage costs, insurance, obsolescence, and the opportunity cost of tying up capital in inventory. Ordering Costs: These are the costs incurred every time an order is placed, including costs of processing orders, paperwork, and communication with suppliers. Carrying Costs: These encompass the expenses of maintaining inventory, such as warehouse space, utilities, labor for handling, and inventory management systems. Stockout Costs: These represent the costs associated with not having sufficient inventory to meet demand, including lost sales, rush orders, and potential damage to customer relationships.

9. System Approach in Material Management: Supply Chain Perspective: Material management involves various interconnected processes within the supply chain, including procurement, production, inventory management, and distribution. Adopting a system approach helps in understanding the interdependencies among these processes and optimizing them collectively. Integration of Functions: Material management is not limited to a single department but involves coordination among multiple functions such as procurement, production planning, logistics, and finance. Taking a system approach enables seamless integration of these functions to achieve overall efficiency. Feedback Mechanisms: Systems thinking emphasizes the importance of feedback loops to monitor performance, gather data, and continuously improve processes. Material managers can implement feedback mechanisms to identify bottlenecks, anticipate demand fluctuations, and adjust inventory levels accordingly. Lifecycle Perspective: A system approach in material management considers the entire lifecycle of materials, from sourcing to disposal. This includes factors such as sustainability, environmental impact, and end-of-life management, ensuring responsible stewardship of resources throughout the material's lifecycle.

10. Coordination function of Logistics 1. Planning: Planning for materials is of utmost importance. Planning decides which materials are needed, when they are needed, and in how much quantity. 2. Organizing: Organizing involves developing a hierarchical structure which describes the various positions of personnel and their reporting relationship in terms of responsibility, authority and accountability. Organizing is indicated on an organization chart which, in the classical situation, forms a pyramidal structure. A good organization structure is essential, so that no confusion remains in the minds of managers with respect to their roles and responsibilities. There is a clear flow of information from top to bottom and vice versa. 3. Staffing: Staffing function consist of recruiting and retaining of suitable individuals in various positions in the unit. To do this, management assesses future needs and makes necessary arrangements to meet them. Although this is the personnel department’s direct responsibility the material manager is also indirectly involved so far as the people under this supervision and control and concerned.

11. 4. Directing: Directing signifies communication from top to bottom. In case of material management, the materials manager receives instructions from top management about this broad objectives, which usually fall under the following categories: Low price of materials High inventory turnover ratio. Continuous supply of materials. Systematic record-keeping. 5.Controlling : A materials manager occupies the central position in the sense that, he is linked with supplier, salespersons, production department, design and development department, apart from direct link with the top management.

12. Benefits of Integrated system approach Implementing an integrated system approach in material management offers several benefits: Improved Efficiency : Integration streamlines processes by eliminating duplication of efforts and reducing manual interventions. It facilitates seamless data flow across different functions, enabling faster decision-making and response to changes in demand or supply. Optimized Inventory Levels : Integrated systems provide real-time visibility into inventory levels, demand forecasts, and production schedules. This visibility helps in maintaining optimal inventory levels, minimizing stockouts , and reducing excess inventory holding costs. Cost Reduction : By optimizing inventory levels, streamlining procurement processes, and minimizing operational inefficiencies, integrated systems contribute to cost savings across the material management process. Reduced carrying costs, lower procurement costs, and minimized obsolescence contribute to overall cost reduction. Enhanced Supplier Collaboration : Integrated systems enable closer collaboration with suppliers through features such as electronic data interchange (EDI), vendor-managed inventory ( VMI ), and supplier portals. This collaboration improves communication, reduces lead times, and enhances overall supply chain responsiveness. Better Customer Service : Integrated systems allow organizations to respond more effectively to customer demand by ensuring the availability of products when and where they are needed. This leads to improved customer satisfaction, loyalty, and retention.

13. Data-driven Decision Making : Integrated systems provide access to comprehensive data and analytics, enabling material managers to make informed decisions based on real-time information. Data-driven insights help in identifying trends, forecasting demand, and optimizing material management strategies. Compliance and Risk Management : Integrated systems help in ensuring compliance with regulatory requirements, industry standards, and quality specifications throughout the material management process. They also facilitate risk identification and mitigation by providing visibility into potential supply chain disruptions and vulnerabilities. Continuous Improvement : Integrated systems support a culture of continuous improvement by facilitating performance monitoring, feedback mechanisms, and process optimization. They provide the foundation for implementing lean principles, Six Sigma methodologies, and other improvement initiatives aimed at enhancing efficiency and effectiveness.