Logistics and supply chain management.sreesh

Explain about supply chain management and logistics.and their influence over marketing field

1. MODULE - 1

2. Q. What is logistics?

3. Q. Explain the components of logistics.

4. Q. What are the factors affecting logistics ?

5. Q. What is supply chain ?

6. Q. What is the goal of supply chain management ?

7. Q. Explain about the paradim exist in supply chain management.

8. Q. What is modularization in supply chain management?

9. Q. What is modularization in supply chain management? Modularizaton in supply chain management is a method of working with suppliers to deliver products in a shorter time frame. Standardisation is essential to modularisation because it helps simplify the complexity and bring uniformity. Modularisation helps to achieve homogeneity – a condition where products and services start looking more and more similar. Homogeneity, in turn, encourages substitution and/or switching between suppliers and hence commoditisation of the relevant market. This essentially leads to falling prices and growing volumes.

10. Q. What is the role procurement in supply chain management ?

11. Q. What is the role procurement in supply chain management ? Procurement means obtaining some things or services with optimization of cost, time, space, other factors depends upon requirement. In supply chain it's one the of very important things. As supply chain consist of numerous chains at various points procurement needs are different and different specialist may require at different point. For e.g. In supply chain of chemical industry for procurement of raw materials can be performed by some chemical engineer but for decision of it's logistics, transporter/shipping vendor will be performed by other person having knowledge of shipping. The procurement at warehouse activities (repacking, labelling , storing, safety etc.) might be done by some other specialist. So procurement may look like small part of SCM but it occur at each chain and is of great significance.

12. 27 Procurement Concerned with purchasing and arranging in-bound movement of materials, parts, and/or finished inventory from suppliers to manufacturing or assembly plants , warehouses, or retail stores thereby ensuring availability of materials/ assortments where and when needed. -Inbound logistics. In a given marketing situation, manufacturers’ physical distribution is same as retailers’ procurement operations.

13. 28 Procurement Performance Cycles Sourcing Order placement and Expediting S U P P L I E R S Transportation Receiving

14. 29 The procurement operations are identified as inbound logistics. International procurement often requires large shipments necessitating the use of barges, ocean going vessels, trains and multiple truckloads for transportation. The lower value of materials and components as compared to finished product implies greater trade-off between higher cost of maintaining inventory in transit and the use of low cost modes of transport. As the cost of maintaining inventory in the pipeline is less per day than the cost of maintaining finished inventory, there is no benefit for paying higher freight rates for faster inbound transport.

15. 30 Procurement performance cycles are invariably longer excepting in those cases where the value of material or component may justify paying higher freight rates for faster inbound transport. A critical issue in procurement is uncertainty in respect of price change, and/or supply discontinuity.

16. Q. What is the role of distribution management in supply chain mmanagement ?

17. The "new" supply chain and distribution channel has several key components, which fall under the supply chain management "umbrella." These components include: 1. Distribution--the physical logistics of moving inventory along a chain of distribution.  2. Inventory management--the entities that control how much is moved and where it is stored. 3. Customers--identifying who the "real" customers are and keeping their loyalty despite all of the changes to the supply chain and distribution channel.

18.  Q. What is the Difference Between Logistics and Supply Chain Management?

19.  Q. What is the Difference Between Logistics and Supply Chain Management? Logistics typically refers to activities that occur within the boundaries of a single organization and supply chains refer to networks of companies that work together and coordinate their actions to deliver a product to market. Also, traditional logistics focuses its attention on activities such as procurement, distribution, maintenance, and inventory management. Supply Chain Management (SCM) acknowledges all of traditional logistics and also includes activities such as marketing, new product development, finance, and customer service

20. Q. How do we define supply chain?

21. 37 How do we define supply chain? A network of organizations that are having linkages, both upstream and downstream in different processes and activities that produce and deliver value in the form of products and services in the hands of ultimate consumer. Customers Retailers Shirt Manufacturer Weavers of Fabrics Yarn/Fibre mfrers Downstream Upstream

22. Q. What is the influence of network in supply chain ?

23. 39 Network Design Network design is the prime responsibility of logistics managers since a firm’ facilities and structure is used to provide products and materials to the customers. Logistics facilities typically include manufacturing plants, warehouses, cross-dock operations, and retail stores. Determining the number and type of facility required, their geographic locations, and the work to be performed at each is an important part of network design. In certain situations, some of the facility operations may be outsourced to service specialists.

24. 40 Network design determines the type of the inventory and the quantity to be stocked at each facility, and the assigning of customer orders for shipment. Network of facilities also includes information and transportation as a part of entire structure from where logistical operations such as processing of customer orders, maintaining inventory and material handling are performed. The network design must consider geographical variations.

25. 41 The factors influencing modifications of network design are: Change in demand and supply Product assortments Changes in suppliers’ source of supplies. Manufacturing requirements. The first step towards achieving competitive advantage lies in superior network design, as the real competition is not between two companies but between efficiency and effectiveness in managing their supply chain network.

26. Q. What is the influence of distribution in supply chain management?

27. 43 Physical Distribution Establishes linkage of marketing channel with its customers facilitating the movement of a finished product to the final destination of a marketing channel. Would need a proper marketing effort resulting into desired assortment being delivered when and where needed.-Outbound logistics. Fulfills objective of implementation of time and space dimension of customer service as an integral part of marketing.

28. 44 Physical distribution performance cycle Customer order Order transmission Order processing Order selection Order transportation Order delivery to the customer

29. 45 Significance of physical distribution performance cycle As it links a firm with its customers, it helps create marketing and manufacturing initiatives into an integrated efforts. It resolves conflicting interface between marketing & manufacturing. As marketing is dedicated to delighting customers, it would like to maintain broad product line with high inventory regardless of each product’s profit potential. By doing so, any customer's requirement, no matter how small or large would be satisfied.

30. 46 Traditional mindset in manufacturing is to control cost, which is achieved by long production runs. Continuous manufacturing processes maintain economies of scale and reduce per unit cost. Therefore, a narrow line of products is mass produced. Inventories are kept to resolve the inherent conflict between these two philosophies. The above is achieved by forward deployment of inventory throughout the logistical system in anticipation of future sales on the basis of forecasted information.

31. Q. How to reduce physical distribution operational variance ?

32. 48 How to reduce physical distribution operational variance Improve accuracy of forecast Improve order management and coordination with the customers. Have responsive and flexible cycle.

33. Module 2

34. Q. Explain PLC in supply chains ?

35. PLC Stages The new product development stage.  This stage is very expensive for the enterprise. The company experiences a lack of sales revenue and sustains considerable losses that are commensurate with the scale and complexity of the product to be launched. The introduction to the market stage.  This period in the product lifecycle is very costly, with relatively low volume and continued losses again within the scale of the effort. The stage of growth.  This stage is marked by a gradual reduction of economies of scale, with a step-by-step increase in sales (assuming a successful product), and the emergence and increase of profit. The mature stage.  The mature stage is defined by very low costs. Sales of the product are at a peak. A reduction in the product's price—possibly through competitive pressures—and significant profitability can be seen. The stage of decline.  This stage shows a reduction in sales, a continued drop in prices, and a subsequent reduction in profit.

36. Q. Explain manufacturing strategy stages in supply chain.

37. Decision Phases of a Supply Chain Supply chain strategy or design Supply chain planning Supply chain operation

38. Supply Chain Strategy or Design Decisions about the structure of the supply chain and what processes each stage will perform Strategic supply chain decisions Locations and capacities of facilities Products to be made or stored at various locations Modes of transportation Information systems Supply chain design must support strategic objectives Supply chain design decisions are long-term and expensive to reverse – must take into account market uncertainty

39. Supply Chain Planning Definition of a set of policies that govern short-term operations Fixed by the supply configuration from previous phase Starts with a forecast of demand in the coming year

40. Supply Chain Planning Planning decisions: Which markets will be supplied from which locations Planned buildup of inventories Subcontracting, backup locations Inventory policies Timing and size of market promotions Must consider in planning decisions demand uncertainty, exchange rates, competition over the time horizon

41. Supply Chain Operation Time horizon is weekly or daily Decisions regarding individual customer orders Supply chain configuration is fixed and operating policies are determined Goal is to implement the operating policies as effectively as possible Allocate orders to inventory or production, set order due dates, generate pick lists at a warehouse, allocate an order to a particular shipment, set delivery schedules, place replenishment orders Much less uncertainty (short time horizon)

42. Decisions in Planning Supply Chain: Forecasting the demand for the coming year Which markets will be supplied from which locations? The inventory policies to be followed The timing and size of marketing and size of marketing and pricing promotions

43. Steps in Supply Chain Operations: Set delivery schedules of trucks and placing orders Allocate a particular order to particular shipping mode or shipment Generate pick lists at a warehouse Set a date that the order to be filled. Allocate inventory or production to individual orders.

44. What are the factors affecting supply chain?

45. Factors of supply chain

46. Q. What are the types of models in supply chain?

47. Management Information System 65 Modeling for SCM Forecasting Models - These models allow prediction of demand based on past data or other parameters that are independently available. They enable better planning, given the lead-time necessary for response. Location Models - These models identify the optimal location of facilities such as plants and warehouses, considering the inbound and outbound transportation costs as well as the fixed and variable costs of operation at the locations under consideration. These are usually formulated as Mixed Integer Programming Models.

48. Management Information System 66 Modeling for SCM (cont’d) Distribution Network Design Models - These models are usually comprehensive in nature, deciding between two, three and even four stages of distribution network, location of warehouses and break-bulk points, and sometimes even the transportation. Allocation Models - These models help in optimally allocating commodities from sources to destinations in a multi-source, multi-destination environment. The costs considered for optimisation are production costs and warehousing costs. The constraints considered can be due to demand, capacity, route restrictions, etc.

49. Management Information System 67 Modeling for SCM (cont’d) Inventory Models - Inventory plays a major role in SCM. - Inventory can be of various types such as: - Batching and shipment inventories - Buffer stocks to take care of uncertainties - Pipeline inventory ( primary and secondary transportation ) These models minimize the total relevant cost, based on trade-offs among, inter alia, inventory carrying cost, ordering cost, stock-out cost, transportation cost, taxes & duties, etc.

50. Management Information System 68 Modeling for SCM (cont’d) Routing Models - These models allow optimal routing on a transportation network from a given source to a destination. The models used are the Shortest Path Problem, the Traveling Salesman Problem and the Vehicle Routing Problem. Decision Support Systems that interactively use the expertise of the decision maker by providing graphical support through a map (i.e., using a Geographical Information System ) are also very useful in such decisions.

51. Management Information System 69 Modeling for SCM (cont’d) Scheduling Models - These models enable allocation of resources to particular activities. Depending on the criteria of interest and the number of resources, the models are of aid in evaluating appropriate rules for allocation. Alternative Analysis - This model simply proposes the identification of alternatives, criteria for decision making and analysis of the alternatives across the criteria to arrive at the best choice. Formal approaches such as simulation and analytic hierarchy process could be used in assessing the implications of the criteria.

52. Q. Explain about the evolution of supply chain management.

53. Evolution of SCM Stage 1: Vendor – Purchase – Production - Distribution – Retailer Stage 2: Materials Management - Logistics Management Stage 3: Supply Chain Management

54. Procurement Planning Manufacturing Planning Distribution Planning Demand Planning Sequential Optimization Supply Contracts/Collaboration/Information Systems and DSS Procurement Planning Manufacturing Planning Distribution Planning Demand Planning Global Optimization Sequential Optimization vs. Global Optimization

55. Q. Explain about supply chain integration.

56. Introduction Supply chain integration  is a close alignment and coordination within a supply chain, often with the use of shared management information systems. REASON BEHIND USING SCI Reduce time to market Reduce cost Increase service level Reduce the bullwhip effect Better utilization of resources Effectively respond to changes in the market place Managed Inventory

57. Types of using SCI Manually Technology (Through Software ) Reason Behind Using Software Total asset visibility Enhanced system Integration Effective collaboration

58. Types of SCI Strategies PUSH STRATEGY PULL STRATEGY PUSH-PULL STRATEGY

59. PUSH STRATEGY Production decisions based on demand forecasts. Manual purchase orders and invoices are employed. Ordering decisions based on inventory & forecasts. Challenges Forecast is rarely accurate as it is futuristic. Difficult to predict customer demand for a long period . Bullwhip effect. Ex: cold drinks

60. PULL STRATEGY Production is demand driven. Coordinated with true customer demand rather than forecast demand Faster information flow & acuuracy mechanisms are used. Distribution facilities are transformed from storage points to coordinators of flow. Ex : Wal-Mart (using Automated Inventory Tracking ) Dell Challenges Harder to take advantages of economics. When lead times are long that it is impractical to react to demand information.

61. Push Type Pull Type Initiated by supplier Initiated by customer orders Demand is forecasted Work on actual demand Respond to Speculated forecast Reactive to customer forecast Require information for material planning & master production Information on actual demand is transmitted throughout the entire chain.

62. PUSH-PULL STRATEGY It’s a two-in-one strategy using both push & pull strategies in different stages of supply chain. Back end process are operated in push manner & front end process are operated in pull manner. Ex : Dell computers.

63. Strategy Implementation Depending upon the time line the company implement the push-pull strategy at various stages of SC. Example : M&M company Collaboration : is a process of decision making among interdependent parties in the supply chain .

64. Internet & SC Integration Reasons behind Internet in SC Integration : In internet along with buying & selling servicing customer & collaborating with business partners is done with ease & speed. IT helps business firm to redefine their Business model to improve enterprise performance. To gain the competitive advantages .

65. E-business SC integration Information Integration Synchronized Planning Workflow Coordination New Business Models

66. CPFR ( Collaborative Planning Forecasting & Replenishment ) A software systems allows retailers & manufacturer to share information on past sales , future price & promotion measure . Benefits of using CPFR Improvement in sales. System efficiency. Cash Flow. Return-on-asset (ROA) performance.

67. Module 3

68. 86 Principals of Logistics Information Information flow is a key element of logistics information. The common forms of logistics information are: Customer and replenishment orders Inventory requirements Warehouse work orders Transportation documentation Invoices. Traditional paper-based information flow results in slow, unreliable, and error-prone information transfer thereby increasing operating cost and decreasing customer satisfaction.

69. 87 As technology costs are declining and usage is easier, logistics managers are managing information electronically at reduced logistics expenses with increased coordination resulting in enhanced services by offering better information to customers. The specific technologies include electronic data interchange (EDI), personal computers, artificial intelligence, wireless communications,bar coding and scanning.

70. 88 For effective logistics information, timely and accurate information flow is critical because of the following three reasons. (1) Customers perceive that information about order status, product availability, delivery schedule and invoices is necessary element of total customer service. (2) Information can reduce inventory by minimizing demand uncertainty. (3) Information facilitates allocation of resources for achieving strategic advantage.

71. 89 Information Functionality Logistics information system links logistics activities into an integrated process that is built on the following four levels of functionality. Transaction system Management control Decision analysis Strategic planning

72. 90 Transaction system: Initiates and records the individual logistics activities in a sequence as given under: Order entry Inventory assignment Order selection Shipping Pricing Invoicing Customer inquiry

73. 91 Customer order receipt Inventory assigned to the order Directing material handlers to select the order Movement, loading and delivery of order Printing of invoice for payment

74. 92 Management control Focuses on performance measurement and reporting.The common performance measures include: Financial Customer service Productivity Quality A few examples are: Transportation and warehousing cost per kg.-Cost measure Inventory turnover-Asset measure

75. 93 (c) Case fill rate-Customer service measure (d) Cases per labour hour-Productivity measure (e) Customer perception-Quality measure. Decision analysis Vehicle routing and scheduling Inventory management Facility location Operational trade-offs and arrangements e.g. vertical integration versus third party outsourcing.

76. 94 Strategic planning Strategic alliances with various value chain members. Development of firm capabilities and scanning market opportunities. Customer responsiveness to improved services.

77. 95 Principles of designing LIS applications The principles underlying the designing of logistics information systems applications are: Availability Accuracy Timeliness Exception-based LIS Flexibility Appropriate format

78. 96 Availability Rapid availability of information is extremely necessary to respond to customers and improve management decisions. Customers frequently need quick access to inventory and order status information regardless of managerial, customer, or product order location. Many times it warrants the need for decentralized logistics operations so that information system is capable of being accessed and information updated from anywhere in the country or even the world. Information availability reduces substantially the operating and planning uncertainty.

79. 97 2. Accuracy Logistics information must accurately reflect both current status and periodic activity for customer orders and inventory levels. ‘Accuracy’ is the degree to which LIS reports match actual physical counts or status. In case of low consistency between physical and information system inventory levels, buffer stock becomes necessary to accommodate the uncertainty. Increased information accuracy reduces inventory requirements.

80. 98 3. Timeliness - Timeliness refers to the delay between the occurrence of an activity and the recognition of that activity in the information system. Logistics information must be timely to provide quick management feedback. Timely information reduces uncertainty and identifies problems, thus reducing inventory requirements and increases decision accuracy. When a continuous physical product flow may exist such as “work in process” to “finished goods”, information system providing inventory status may be updated on an hourly, shift, or daily basis. Real time or immediate updates are timelier but result in increased record-keeping efforts.

81. 99 4. Exception-based LIS LIS should be strongly exception oriented and utilized to identify decisions that require management attention, particularly in respect of very large orders, products with little or no inventory, delayed shipments, and declining operating productivity. 5. Flexibility LIS must be able to provide data tailored to meet the requirements of a specific customer. For example, some customers may want invoices aggregated across certain geographic boundaries or divisions or retailer. Retailer ‘A’ may want individual invoices for each store, while Retailer ‘B’ may desire an aggregated invoice that totals all stores.

82. 100 6. Appropriate Format Logistics reports and screens must contain right information in the right structure and sequence. For example, LIS showing a distribution centre inventory status with one product and one distribution centre listed per screen. This format will require customer service executive check inventory status at each distribution centre when attempting to locate inventory to satisfy a specific customer order. This implies that if there are five distribution centres, a review and comparison of five computer screens is required.

83. 101 (c) Appropriate format would provide a single screen with inventory status for all fve-distribution centres. (d) The combined screen makes it much easier for a customer service executive to identify the best source for the product. (e) This can be considered as an appropriate format as one single screen or report contains and effectively presents all relevant information for a decision maker. An effective format should integrate past and future information regarding on hand inventory, demand forecast, and planned receipts for each single tem at a distribution centre.

84. 102 Logistics Information Systems Planning & Coordination Flows -Capacity Plan Logistics Plan Manufacturing Plan Procurement Plan Operating Flows Order management Order processing Distribution operations Transport & shipping Procurement

85. 103 A. Planning & Coordination Flows Capacity Plan Developed keeping in mind the internal and external manufacturing , warehousing, and transportation resources. For each product, capacity plans determine the “where”, “when” and “how much” for production, storage, and movement. Capacity problems can be resolved either by resource acquisition or alliances i.e. contract manufacturing or facility leasing. Estimating production capacity requirements through prior scheduling or contract manufacturing helps in managing capacity constraints.

86. 104 Postponement of production or delivery i.e. by delaying production and shipment until specific requirements are known and capacity can be allocated is another method of solving such problems. Sometimes, it may become necessary to offer customer incentives such as discounts or allowances in order to postpone delivery. Capacity constraints have a major influence on monthly or weekly production for each manufacturing location.

87. 105 Logistics plan The future logistics requirements are based on forecasts, customer orders and sales promotions. The forecasts are based on sales and marketing inputs in conjunction with historical activity levels. Customer orders include current orders, future committed orders, and contracts. Mathematically, logistics requirements can be computed as Forecasts(sales/marketing inputs, historical trends) + Customers orders(current orders, future committed orders, contracts)+ Promotions(sales promotion, advertising)= Period demand – Inventory on hand- Planned receipts = Period logistics requirements.

88. 106 Logistics requirements must be integrated with both capacity constraints and manufacturing requirements to achieve the best performance. Manufacturing Plan Facilitate scheduling of production resources and resolve day-to-day capacity bottlenecks within the materials management system. Primarily, bottlenecks may result from raw materials shortages or daily capacity limitations. Manufacturing requirements determine the master production schedule (MPS), manufacturing requirement plan and consequently material requirement plan(MRP- I/II).

89. 107 MPS defines weekly or daily production and machine schedules, whereas MRP coordinates the purchase and arrival of materials and components to support the manufacturing plan. Both logistics requirements and manufacturing requirements must operate in parallel. Procurement Plan Procurement plan schedules material releases, shipments, and receipts. The requirement schedule is used for purchase negotiations and contracting.

90. 108 B. Operating Flows Operating flows include the information activities required to receive, process, and ship customers orders and to coordinate the receipt of purchase orders. These include: Order management Order processing Distribution operations Transportation and shipping Procurement

91. 109 Order management Involves entry and maintenance of customer orders using communication technologies such as mail, phone, fax, or EDI. Offers information regarding inventory availability and delivery dates to establish and confirm customer expectations. Order management in combination with customer service representatives form the basic interface between the customer and enterprise LIS.

92. 110 Order processing Involves assigning and allocating available inventory to customer and replenishment orders. Allocation may take place on a real time basis or batch mode. Batch mode means orders are grouped for periodic processing, such as day or shift. Order processing also includes selection of order from distribution centre or warehouse and pack it for shipment. Order processing also includes selection of order from distribution centres or warehouses and pack it for shipment.

93. 111 Distribution operations Distribution operations must have synergy with inventory control and warehousing systems. LIS in distribution operation would include product receipt, material movement, and storage and order selection. In a batch environment, LIS guides tasks done by each material handler handling forklifts, pallets etc in the warehouse. In a real-time time environments, the technologies like bar coding, automated handling equipment are used to reduce time elapsed between the decision and action.

94. 112 Transport and shipping The activities include shipment planning, scheduling, shipment consolidation, transport documentation generation, and carrier management. Historically, transportation and shipping emphasizes generation of documentation and rate generation. Modern LIS in transportation and shipping lays more stress upon auditing, routing and scheduling, invoicing, reporting and performance monitoring.

95. 113 Procurement Includes management of purchase order preparation, amendment, release, vendor evaluation and vendor rating. Procurement LIS must be able to track and coordinate material receipt, facility capacity, inbound and outbound movements, and performance measurement.

96. 114 Application of Information Technology The specific technologies that have widespread use in logistics are: Electronic Data Interchange (EDI) Personal Computers Artificial intelligence Communication technology Bar coding and scanning

97. 115 Electronic Data Interchange Intercompany computer-to-computer exchange of business documents in standard formats. Determines capability of communicating information between two organizations electronically instead of traditional mail, courier or even fax. LIS would consist of real time data on inbound material flows, production status, product inventories, customers’ shipments and incoming orders.

98. 116 Can be visualized in two different perspectives viz. external perspective and internal prospective. External perspective includes need to communicate order shipment and billing information with vendors, financial institutions, transport carriers, and customers. Internal perspective includes exchange of information on production schedule and control data. Benefits of EDI are: Increased internal productivity though faster information transmission as well as reduced information redundancy. Better accuracy by reducing the number of times and individuals involved in data entry. Improved channel relationship. Increase ability to compete internationally.

99. 117 (e) Reduced labour cost associated with printing, mailing, and handling paper-based transactions, telephone and other clerical activities. 2. Personal computers Low cost and high portability with a capability of bringing accurate and timely information to the decision maker whether in office, at the warehouse, or on the road. Responsiveness and flexibility offered by decentralized PCs results in more focused service capability.

100. 118 The use of LAN , WAN and Client/server architecture offers benefits of decentralization, responsiveness and flexibility throughout the enterprise. The client/server network can globally track inventory in motion,provide shipment information to the customers when desired and also facilitate decisions regarding facility location, inventory analysis, routing and scheduling. The decisions are invariably in respect of Which markets to serve? Which product to pick next in the warehouse?

101. 119 (c) Driver reporting and deliver information. (d) Reporting vehicle location (e) Identifying lowest-cost fuel stop. 3. Artificial Intelligence Aimed at making computers imitate human reasoning and are more concerned about rationalizing rather than numeric processing. The applications are: Carrier selection International marketing & logistics Inventory management

102. 120 4. Communication technology Application of radio frequency, satellite communications, and image processing technologies can relate quickly to the product movement and decentralization. Radio frequency: used within relatively smaller areas such as distribution centres to facilitate two-way information exchange Real-time communication with material handlers such as fork lift drivers and order selectors.

103. 121 Updating instructions and priorities to fork lift drivers on real time basis. (b) Satellite communication Useful for providing a fast and high volume information around the globe. Communication dishes on the top of vehicles allow communication between driver and shippers. Provides up-to-date information regarding location and delivery and allows dispatchers to redirect trucks in response to need or traffic congestion.

104. 122 Used by the retail chains to transmit quickly daily sales to headquarters that helps in activating store replenishment and also to provided input to marketing regarding local sales pattern. (c) Image processing Relies upon fax and optical scanning technology. Used in transmission of fright bill information Proof of delivery receipt Bills of lading. As the consignment gets delivered to customers, supporting documents are sent to image processing locations where it is electronically scanned and logged onto the system.

105. 123 Electronic images of documents are then transmitted to main data centre where they are stored on optical laser disk and customers can access the documents through computer linkages or phone call to the service representatives. As the customers experience the competitive benefits of real time information transfer, there will be increase demand for this communication technology.

106. 124 Warehousing The primary purpose of a warehouse management is to control the movement and storage of materials within an operation. Warehousing can be viewed as a place to store inventory as well as a facility for switching the inventory. Warehousing is becoming significant to achieve the following objectives: To reduce inventory To reduced labour costs To increase storage capacity To increase customer service To increase inventory accuracy.

107. 125 Typically, the warehouses received merchandise by rail or road and the materials were moved manually to a storage area within the warehouse and piled up on the floor in stacks manually. Due to above, though different products were stored in the same warehouse it was difficult to identify the merchandise with respect to a particular order. On the receipt of the customer orders, products were handpicked and placed on the wagons and these wagons were pushed out of shipping area.

108. 126 Role of Warehousing in Logistical System Provision of strategic storage, though an effective distribution system should not have the necessity of inventory for an excessive length of time, sometimes storage becomes inevitable. Acting as a switching facility Provision of economic and service benefits.

109. 127 Economic Benefits Consolidation Break-bulk Cross-docking Postponing Stock piling

110. 128 Consolidation Plant A Plant B Plant C Consolidation warehouse Customers A B C

111. 129 The benefits and features are Realization of lowest possible transportation rate. Reduction of congestion at a customer’s receiving dock. Manufacturing plants can use warehouse as a forward stock location or as sorting and assembly facility. Combines the logistical flow of small shipments to a specific market area. A single firm may use consolidation warehousing or a number of firms may join together and hire the consolidation service.

112. 130 Break-bulk Plant A Break-bulk warehouse Customer A Customer B Customer C

113. 131 Break-bulk operations receive combined orders from manufactures and ships them to individual customers. Break-bulk warehouse splits individual orders and arranges for local delivery. Cross-dock facility is similar to break-bulk except that it involves multiple manufacturers. In transit-mixing and release as well as manufacturing support are also included in cross dock facility.

114. 132 Cross-docking Company A or Plant A Company B or Plant B Company C or Plant C Distribution centre Customer A Customer B Customer C

115. 133 In Transit mixing and release Plant A Plant B Plant C Warehousing Transit mixing point Product D Customer X Customer Y Customer Z Customer W

116. 134 Manufacturing Support Vendor A Vendor B Vendor C Manufacturing warehouse Assembly plant

117. 135 The features and benefits of cross-dock facilities are: The full trailer loads of product arrive from multiple manufacturers and as the product is received it is sorted and allocated to customers. The product is then moved across the dock to be loaded onto the trucks destined for appropriate customer. The trucks are then transported to retail outlets once the same have been filled with the mixed product from multiple manufacturer.

118. 136 Warehouse Design Principles to be considered in warehousing designing are: Design criteria Handling technology Storage plan Design criteria Factors to be considered are: Number of storeys in the facility Height utilization, and Product flow

119. 137 Design of a typical warehouse Receiving area Bulk storage area Rack storage area Order picking area Packaging or unitizing area Stacking area Finished product flow

120. 138 (b) Economies of scale in movement. Warehousing activities should be designed to move a group of cases such as master cartons or containers, as grouping or batching reduces the number of activities and hence the cost. C. Storage plan High sales volume or fast moving products should be stored in a location that minimizes the distance it is moved such as low height storage racks. The objective is to minimize the travel distance and also the need for extended lifting. Low sales volume or slow moving product can be assigned locations that are distant from the centre or higher up in the storage rack.

121. 139 Storage plan based on product movement Storage space for low volume products Storage space for low volume products Storage space for low volume products Storage space for low volume products Storage space for low volume products Storage space for low volume products Storage Space For High Volume products Primary gangway

122. 140 Warehousing strategies Private Public Contract

123. 141 Private Warehouses Operated by the firm owning the product i.e. facility may either be owned or leased. Quite often the warehouses requiring specific material handling activities designed to fit exact needs of the firm may not be available on hire. Generally efficient warehouse should be planned around a material handling system in order to encourage maximum efficiency of product flow. Firms with specialized customers or products often develop their own warehouse.

124. 142 Public Warehouses Classified on the basis of range of specialized operations performed, as under General merchandise e.g. paper, small home appliances and household maintenance goods. Refrigeration facilities to preserve food products, pharmaceutical medicines and certain chemicals requiring specific ambient temperature. Bulk commodities requiring specialized material handling systems such as liquid chemicals, tres, and textile fabrics.

125. 143 Contract Warehouses Contract warehouses provide all logistics activities such as Transportation Inventory control Order processing Customer services, and Returns Assume total responsibility for enterprises that desire only to manufacture and market.