Basics Of Logistics

Supply Chain & Logistics

Supply Chain : It is a network of activities which transforms raw materials into Finished Goods to
Customers.
Logistics : Movement of materials in Supply Chain is called "Logistics"
Flow of

Product-------> Information-------> Fund .

Phases in Logistics
1) Inbound Logistics: Movement of materials from the point of origin to point of
production.
other names physical supply , upstream
2) Outbound Logistics: Movement of finished goods from the point of production to
the

point of consumption. other names physical distribution, Down

stream

of

3) Reverse Logistics: Movement of damaged, expired, unsold products from the point
consumption to the point of production

Purchasing or Buying------> Transport------> Warehouse------> Factory------> Transport--------> Warehouse------> Customer------> Consumer

Note: Here the customer is whole saler, distributor or retailer
Word LOGISTICS derived from
1) Greek -- Logistikos --- means calculation using Mathematical standards
2) Latin -- Logistcus --- same meaning
3) French -- Logistique -- word related to army or military ( Movement of men and materials
in
the war)

Types of Logistics
1) Business Logistics -- is the blend of greek mission plus french operations. Application of
logistics
techniques or principle in business or a commercial management.

2) Military Logistics -- is the planning and movement of military force, arms and ammunitions in
a
disciplined order
3) Event Logistics -4) Service Logistics --

Objectives of Logistics
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.

Cost Minimisation
Increasing the profit
Customer satisfaction
Reducing DLT
Cash Spin
Cash to cash convertion
Generate Business
Low cost Delivery
Speedy delivery or quick response
Right condition or reduce damage
Provide best service
Reliability
Repeated Business
Inventory Reduction
LT --> Lead Time
DLT --> Deliver Lead Time (This is the Gap between order placement and order receipt)
7 R's in Logistics ( R means Rights )

1.
2.
3.
4.
5.
6.
7.

Right Product
Right Place
Right Price
Right Customer
Right Condition
Right Time
Right Quantity
5 P's in Logistics

1.
2.
3.

Product
Place
Price

4.
5.

Promotion
Production
Definitions of Logistics
" It is a process of Planning, Implementing, and Controlling the efficient and effective flow of
goods/services and related information from the point of origin to point of consumption conforming to
customer requirements". ( CLM Definition )

" It is the process of implementing 7 R's to achieve Customer satisfaction " (Shine Babu)
" The procurement, maintenance, distribution, and replacement of personnel and materiel".

(Websters

Dictionary)

Demand Forecasting : it is the art of determining future market conditions

Erratic Customer order
inorder to overcome this problem there are several methods used
1.
2.
3.
4.
5.

MTO: MAKE TO ORDER

MTS: MAKE TO STOCK
A.O: ASSEMBLE TO ORDER
E.O: ENGINEER TO ORDER
JIT: JUST IN TIME
LOGISTICS PRINCIPLE
1) WHEN THE SERVICE LEVEL INCREASE THE COST WILL ALSO INCREASE
2) WHEN THE SERVICE LEVEL REDUCES THE CUSTOMER SATISFACTION WILL ALSO REDUCE
3) ACHIEVE DESIRED LEVEL OF CUSTOMER SATISFACTION AT REASONABLE COST.

What should a Manufacturer DO

1.
2.
3.
4.
5.
6.
7.
8.

Right Quantity Purchase

Reliable/Right Product
Reasonable Storage
Right Quantity Production
Right Time Delivery
Customer Satisfaction
Product Quality
Best Service Provider

Different Types of Service Providers

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.

Fleet Operator (Truck)

Rail Operator
Water (ship + inland)
Shipping Lines
Warehouse Operators
Terminal (CFS, PORT)
3PL
Brokers
Customs House Agents
C&F
Freight Forwarders
Cargo Consolidators
Ship Brokers
Logistics Companies
4PL
Container Leasing Company
Container manufacturing Company
Container Repairing Company
Mainly Two Types of Service Providers

a) Asset Based
b) Non-asset Based

VOCC - Vessel Operating Common Carriers

NVOCC - Non-Vessel Operating Common Carriers

Participents in Transportation

1.
2.

Seller- who sells the product

Buyer - Who buys the product

3.
4.
5.
6.

Service Provider - Who makes the Facilitation to sell the product

IT Service Provider - Who Provides Technical Services Such as computer, internet, phone
etc

Goverment - Who controls The entire activities

Public - Who is getting all merits and de-merits of all this activity
Stuffing - Loading into the container
Destuffing - unloading from the container
MRO - Maintenance Repair and Operating
MTO - Multi Model Transport Operator
FTL - Full Truck Load
LTL - Less Than a truck Load
LCL - Less than a container Load
FCL - Full Container Load

INVENTORY- Asset or resources of a company kept for own use or for sale. Raw materials, Finished
Goods, Work in Progress, MRO, Sub Assemblies
Consolidation - Means combining or grouping of cargos to achieve an economic Freight