Unit-2 LOGISTICS MANAGEMENT

Logistics Management, Inbound, Internal and Outbound Logistics, in SCM Developing the logistics organization for effective Supply chain management, Development of integrated logistics strategy, Logistics in Maximizing profitability and cash flow, 3PL, 4PL, International logistics Reverse Logistics. Transportation in supply chain, Factors affecting transport selection Role of Handling in SCM, Role and importance of Handling systems, Selection of handling systems Breakdown pattern analysis, Spare parts and Equipment Maintenance.

Logistics and Supply Chain Management

Supply Chain: a network of activities that deliver a finished product or service to the customer. The connected links of external suppliers, internal processes, and external distributors.

External Suppliers

Internal Functions

External Distributors

INFORMATION

LOGISTICS
The term logistics comes from the Greek logos meaning "speech, reason, ratio, rationality, language, phrase. The process of planning, implementing, and controlling the efficient, cost-effective flow and storage of goods, services, and related information, from point of origin to point of consumption, for the purpose of conforming to customer requirements. Logistics is a channel of the supply chain which adds the value of time and place utility. Logistics management is known by many names, the most common are as follows : Materials Management Channel Management Distribution (or Physical Distribution) Business or Logistics Management or

Logistics include

LOGISTICS MANAGEMENT
Introduction Logistics is the management of the flow of the goods, information and other resources in a repair cycle between the point of origin and the point of consumption in order to meet the requirements of customers.

Logistics involves the integration of information, transportation, inventory, warehousing, material handling, and packaging, and occasionally security.

Trends in Logistics Management

Increased awareness of strategic benefits of integrated logistics management Third-party logistics services Just-in-time logistics Environmental sensitivity NOW: Supply chains create tremendous amounts of waste material to protect goods in shipment and storage. FUTURE: Distribution will use reverse logistics, the recycling or proper disposal of cardboard, packing material, strapping, shrink wrap, pallets, etc...

Logistics management is the governance of supply chain functions. Logistics management is part of all levels of planning and execution -strategic, operational and tactical. It is an integrating function, which coordinates all logistics activities, as well as integrates logistics activities with other functions including marketing, sales manufacturing, finance, and information technology.

Essentials of logistics helps to know

How logistics allows the flow of goods internationally The various dimensions of logistics Key objectives of a supply chain manager The aspects of an efficient and effective supply chain Why product design is important for the supply chain The basics of an effective supply chain relationship

Distribution
Getting the right material to the right place at the right time in the right quantity: Traffic Management: The selection, scheduling & control of carriers (e.g.: trucks & rail) for both incoming & outgoing materials & products Distribution Management: The packaging, storing & handling of products in transit to the end-user.

ACTIVITIES

Logistics management activities typically include inbound and outbound. In business, logistics may have either internal focus (inbound logistics), or external focus (outbound logistics) covering the flow and storage of materials from point of origin to point of consumption. Transportation management, warehousing, materials handling, order fulfillment, network design, inventory management, supply/demand planning, and management of third party logistics services providers.

INBOUND LOGISTICS Receiving, storing and disseminating incoming goods and material for use. Objectives Of Inbound Logistics 1.Ensure that material received and related information are processed and made available promptly to production, store and other department. 2. Completely and accurately document goods received and goods returned 3. Accept only items that were properly ordered

Continued
4. Accept only materials that meet purchase order specification 5. Safeguard goods received. 6. Ensure that vendor, inventory and purchase order information is accurately updated to reflect receipt. 7. Return rejected items promptly 8. Completely and accurately document all transfer to and from storage 9.Properly transfer all Materials requisitioned. 10. Maintain safe working conditions and storage of hazardous materials

OUTBOUND LOGISTICS
Movement of material associated with storing, transporting , and distribution a firm's goods to its customers. The processes and network used to pick, ship, track and store if necessary items ordered by customers, distribution centers and other supply chain partners.

Outbound Logistics
Activities in distribution performance cycle
Order Processin g
Order Selection Order Transmissio n Customer Order

Order ransportation

Customer Delivery

Benefits
TIMELY DELIVERY

MEETING CUSTOMER DEMAND WITH PERFECTION

BALANCE BETWEEN DEMAND AND

SUPPLY

LOGISTICS STRATEGY
When a company creates a logistics strategy it is defining the service levels at which its logistics organization is at its most cost effective. Because supply chains are constantly changing and evolving, a company may develop a number of logistics strategies for specific product lines, specific countries or specific customers.

Logistic strategy

Why Implement a Logistics Strategy?

The

supply chain constantly changes and that will affect any logistics organization. To adapt to the flexibility of the supply chain, companies should develop and implement a formal logistics strategy. This will allow a company to identify the impact of imminent changes and make organizational or functional changes to ensure service levels are not reduced

The Five Key Issues of Logistics Effectiveness are core to Supply Chain Management

Movement of Product Movement of Information Time / Service Cost Integration, both internal and external, both organizations and systems

Levels Involved in Developing a Logistic Strategy

A company can start to develop a logistics strategy by looking at four distinct levels of their logistics organization. Strategic: By examining the companys objectives and strategic supply chain decisions, the logistics strategy should review how the logistics organization contributes to those high-level objectives. Structural: The logistics strategy should examine the structural issues of the logistics organization, such as the optimum number of warehouses and distribution centers or what products should be produced at a specific manufacturing plant.

CONTINUED

Functional: Any strategy should review how each separate function in the logistics organization is to achieve functional excellence. Implementation: The key to developing a successful logistics strategy is how it is to be implemented across the organization. The plan for implementation will include development or configuration of an information system, introduction of new policies and procedures and the development of a change management plan.

Components to Examine when Developing a Logistics Strategy

Transportation: Does the current transportation strategies help service levels? Outsourcing: What outsourcing is used in the logistics function? Would a partnership with a third party logistics company improve service levels?

Developing logistics organization leads to.

The changes needed with suppliers and customers. The changes need to internal organisation and management practices

Potential action needed

The "doing nothing" future, with lessons from experience Guarding against futures of higher stock levels and competition gains Breaking down traditional silo/closed management

INTEGRATED LOGISTICS

A comprehensive, system-wide view of the entire supply chain as a single process, from raw materials supply through finished goods distribution. All functions that make up the supply chain are managed as a single entity, rather than managing individual functions separately. In other words, system-wide management of entire logistics chain as a single entity, instead of separate management of individual logistical functions.

Components of an Integrated Logistics System

External Supply: links suppliers to operations process Internal Operations: manages in-process material flow Physical Distribution: links operations process to customers

Types of Logistics Strategies

1.

2.
3.

Process Strategy Market Strategy Information Strategy

1990 Mc Ginnis and Kohn Classification

Mc Ginnic and Kohn define four classification of Logistics Strategy. They are: Intensive Logistics Strategy Integrated Logistics Strategy Low Integration Logistics Strategy Low Effectiveness Logistics Strategy

1993 Mc Ginnis and Kohn Classification

Mc Ginnic and Kohn in 1993 show three groups of Strategies. They are: 1. Intense Logistics Strategies 2. Balanced Logistics Strategies 3. Unfocused Logistics Strategies

1993 Mc Ginnis and Kohn Classification

Mc Ginnic and Kohn in 1993 show three groups of Strategies. They are: 1. Intense Logistics Strategies 2. Balanced Logistics Strategies 3. Unfocused Logistics Strategies

Logistics in Maximizing profitability and cash flow

Distribution and logistics have a variety of different impact on financial performance of the organization. A good logistics operation offer opportunities for improving financial performance. For many companies a key measure of success is return on investment(ROI). Logistics can have negative and positive impact on ROI. Network optimization seeks to maximize the companys profits or minimize costs while providing the desired level of customer service subject to relevant constraints, policies, and intangible considerations. Total Profit Optimization The impact of supply chain performance on the bottom line and shareholder value are increasingly well understood. As a result, companies are looking at supply chains not just from a cost minimization perspective, but in terms of maximizing profitability and return on capital or assets employed.

Profit can be enhanced through increased sales and sales benefit from the provision of high and consistent service levels. One of the aims of all service level agreements is to try to achieve OTIF(ON TIME IN FULL) deliveries. Costs can be minimized through efficient logistics operations which includes reduction in transport, storage as well as maximizing labor efficiency. and inventory holding costs. The amount of capital employed can also be affected by different logistics components. Different types of inventory are held by companies which include raw material, components, work in progress and finished goods. The key logistics functions impact very significantly on stock levels of all these. These impact can occur with respect to stock location, inventory control, stock holding policies, order and reorder quantities and integrated systems, amongst others.

Cash and receivables are influenced by cash to cash and order cycle times- both of these are key logistic functions. Many fixed assets are found in logistic operations: warehouses, depots, transports, material handling equipment. The number, size and extent of their usage affect logistics planning. If the organization outsources some of these or all the operations the investment on fixed assets can be reduced.

Third Party Logistics (3PL)

A 3PL (third-party logistics) is a provider of outsourced logistics services. Logistic services encompass anything that involves management of the way resources are moved to the areas where they are required. The term comes from the military.

In business, 3PL has a broad meaning that can be applied to any service contract that involves storing or shipping things. A 3PL service may be a single service such as transportation or warehouse storage or it can be a system-wide bundle of services capable of managing the entire supply chain.

The term 3PL was originally coined to differentiate logistic providers who used the Inter-net to enhance their services from those that did not.

3PLs are external suppliers that perform all or part of a companys logistics functions, including: Transportation Warehousing Distribution Financial services

Terms contract logistics and outsourcing are sometimes used in place of 3PL.

Types of 3PL

Standard 3PL provider: this is the most basic form of a 3PL provider. They would perform activities such as, pick and pack, warehousing, and distribution (business) the most basic functions of logistics. For a majority of these firms, the 3PL function is not their main activity. Service developer: this type of 3PL provider will offer their customers advanced value-added services such as: tracking and tracing, cross-docking, specific packaging, or providing a unique security system. A solid IT foundation and a focus on economies of scale and scope will enable this type of 3PL provider to perform these types of tasks.

The customer adapter: this type of 3PL provider comes in at the request of the customer and essentially takes over complete control of the companys logistics activities. The 3PL provider improves the logistics dramatically, but do not develop a new service. The customer base for this type of 3PL provider is typically quite small.
The customer developer: this is the highest level that a 3PL provider can attain with respect to its processes and activities. This occurs when the 3PL provider integrates itself with the customer and takes over their entire logistics function. These providers will have few customers, but will perform extensive and detailed tasks for them.

Types of 3PL Providers

Transportation-Based Warehouse/Distribution-Based Forwarder-Based Financial-Based Information-Based

Transportation-Based
Services extend beyond transportation to offer a comprehensive set of logistics offerings. Leveraged 3PLs use assets of other firms. Nonleveraged 3PLs use assets belonging solely to the parent firm. Ryder, Schneider Logistics, FedEx Logistics, and UPS Logistics are examples of 3PLs.

Warehouse/Distribution-Based
Many, but not all, have former warehouse and/or distribution experience. Transition to integrated logistics has been less complex than for the transportation based providers. DSC Logistics, USCO, Exel, Caterpillar Logistics, and IBM are examples of warehouse/distribution-based 3PLs.

Forwarder-Based
Essentially very independent middlemen extending forwarder roles. Non-asset owners that capably provide a wide range of logistics services. AEI, Kuehne & Nagle, Fritz, Circle, C. H. Robinson, and the Hub Group are examples of forwarder-based 3PLs.

Financial-Based
Provide freight payment and auditing, cost accounting and control, and tools for monitoring, booking, tracking, tracing, and managing inventory. Cass Information Systems, CTC, GE Information Services, and FleetBoston are examples of financial-based 3PLs.

Information-Based
Significant growth and development in this alternative category of Internet-based, business-to-business, electronic markets for transportation and logistics services. Transplace and Nistevo are examples of information-based 3PLs.

Why Use 3PL?

3PL Providers

FOURTH PARTY LOGISTICS(4PL)

A 4PL is an integrator that assembles the resources, capabilities, and technology of its own organization and other organizations to design, build and run comprehensive supply chain solutions.

Ex. Li & Fung The firm aggregates demand across hundreds of customers, capacity across thousands of suppliers, and uses detailed information to match supply and demand in the most cost effective manner.

The fundamental advantage that 4PLs may provide comes from greater visibility and coordination over a firms supply chain and improved handoffs between logistics providers.

Difference between 3pl and 4pl

3PL providers provide logistics services with their own assets. For example, a distribution service provider which uses its own resources, e.g. workers, to pack final products for distributing to different markets as per customer's request is seen as a 3PL provider. 4PL providers provide broader logistics/supply chain services. They assemble the resources, capabilities and technology of their own organizations (i.e. their resources) and other organizations (e.g. through agreements) to design, build up and run more comprehensive supply chains. One can interpret that 4PL: deal with business process and linkages as well as individual activities. not all of the services provided by 4PL providers are owned by themselves. 3PL targets a function. 4PL targets management of an entire process.

Reverse Logistics
Process of planning, implementing and controlling the efficient, cost-effective flow of raw materials, in-

process inventory, finished goods and related

information from the point of consumption to the point of origin for the purpose of recapturing value or

proper disposal
- Rogers and Tibben-Lembke -

Reverse Logistics Activities

Handling of returned merchandise

Damage Seasonal inventory Resell via outlet Salvage of outdated products Stockbalancing returns

Recycling and reuse

Material reuse Remanufacturing / refurbishing

Hazardous materials disposition

The Reverse Logistics Process

Source: http://www.rlmagazine.com/img/edition04_ups.jpg

Return Percentages

Source: Rogers and Tibben-Lembke, Going Backwards: Reverse Logistics Trends and Practices, 1998

Forward vs Reverse Logistics

USES OF REVERSE LOGISTICS

Reduce the risk of buying products that may not be hot selling items. Increase the switching costs of changing suppliers.

Competitive Reasons Liberal return policies over the last few years due of competitive pressures. Taking back unwanted products or products customers believe do not meet needs.

Good Corporate Citizenship Use reverse logistics capabilities for altruistic reasons, such as philanthropy. These activities enhance the value of the brand and are a marketing incentive to purchase their products. Clean Channel Clean out customer inventories, so that they can purchase more new goods. Fresher inventories can demand better prices, which in turn, protects margin. Recapture Value and Recover Assets Large portion of bottom-line profits is derived from asset recovery programs. Profit derived from materials that were previously discarded. Legal Disposal Issues As landfill fees increase, and options for disposal of hazardous material decrease, legally disposing of nonsalvageable materials becomes more difficult.

International logistics

The negotiating, planning, and implementation of supporting logistic arrangements between nations, their forces, and agencies. It includes furnishing logistic support (major end items, materiel, and/or services) to, or receiving logistic support from, one or more friendly foreign governments, international organizations, or military forces, with or without reimbursement. International logistics is the design and management of a system that controls the forward and reverse flow of materials, services, and information into, through, and out of the international corporation. Through the implementation of international logistics, the firm can implement cost-saving programs such as just-in-time (JIT), electronic data interchange (EDI), and early supplier involvement (ESI).

When shipping a product overseas, the exporter must be aware of packing, labeling, documentation, and insurance requirements.

To ship a product overseas, exporters have at least four options. Many exporters rely on an international freight forwarder to perform these services. Some companies utilize the services of Shippers Associations. Other companies use express delivery or mail services. It is also possible for exporters to arrange their own shipping

Differences between Domestic and International Logistics

Distance Currency variation Border-Crossing Process (additional intermediaries) Transportation modes Packaging and Labeling requirements Infrastructure

The International Supply Chain

Suppliers Domestic/Import Sourcing Inbound Materials Order Processing Corporation Throughflow Outbound Materials Order Processing Transportation Physical Materials Distribution Management Management Customers Domestic/Export Distribution Order Placement Transportation

Order Processing

Supplier-Firm Interface Transportation Transportation

Costumer-Firm Interface Physical Customer Distribution Service Management Inventory Management Inventory Management

Storage

Storage

Inventory Management

Storage

Forward and Reverse Flow of Information, Products, and Funds

International Inventory Issues

Inventories tie up a major portion of corporate funds, therefore proper inventory policies should be a major concern to the international logistician. Just-in-time inventory policies minimize the volume of inventory by making it available only when needed. The purpose of establishing inventory systems are: to maintain product movement in the delivery pipeline to have a cushion to absorb demand fluctuations

International Packaging Issues

Packaging is instrumental in getting the merchandise to the destination in a safe, presentable condition. Because of the added stress of international shipping, packaging that is adequate for domestic shipping may be inadequate for international shipping. Packaging considerations that should be taken into account are environmental conditions and weight. One solution to the packaging problem has been the development of inter-modal containers. Cost attention must be paid to international packaging.

Transportation in the Supply Chain

Introduction
Transportation refers to the movement of product from one location to another as it makes its way from the beginning of a supply chain to the customers handle. Many manufacturers & retailers have found that they can use state of the art supply chain management to reduce inventory & warehousing costs while speeding up delivery to the end customer. Any supply Chains success is closely linked to the appropriate use of transportation. Wal- Mart has effectively used a responsive transportation system to lower its overall costs. At DCs, Wal- Mart uses crossdocking, a process in which product is exchanged between trucks so that each truck going to a retail store has products form different suppliers.

There are two keys players in any transportation that takes place within a supply chain. The shipper is that party that requires the movement of the product between two points in the supply chain. The carrier is the party that moves or transports the product. F Ex. when Dell uses UPS to the ship its computers from the factory to the customer, Dell is the shipper & UPS is the carrier.

Factors Affecting Carrier Decisions

The vehicle- related is incurred whether the vehicle is operating or not & is considered fixed for short-term operational decisions by the carrier. Fixed operating cost is generally proportional to the size of operating facilities. This includes any cost associated with terminals, airport gates & labor that are incurred whether vehicles are operating or not. Trip-related cost includes the price of labor & fuel incurred for each trip independent of the quantity transported. Quantity-related cost are loading / unloading costs & a portion of the fuel cost that varies with the quantity being transported. Overhead cost includes the cost of planning & scheduling a transportation network as well as any investment in information Technology. A carriers decisions are also affected by the responsiveness it seeks to provide its target segment & the prices that the market will bear.

The various modes of transportation include water, rail, intermodal, truck, air, and pipeline & package carriers. Water is typically the least expensive mode but is also the slowest whereas air & package carriers the most expensive & the fastest. Rail & water are best suited for low-value. Large shipments that do not need to be moved in a hurry. Air & package carriers are best suited for small, high-value, emergency shipments. Intermodal TL carriers are faster than rail & water but somewhat amore expensive. LTL carriers are best suited for small shipments that are too large for package carriers but much less than a TL.

Inter-modal

Use of more than one mode of transportation to move a shipment to its destination. Most common example: rail/truck Also water/rail/truck or water/truck Grown considerably with increased use of containers Increased global trade has also increased use of inter-modal transportation More convenient for shippers (one entity provides the complete service) Key issue involves the exchange of information to facilitate transfer between different transport modes

Making Transportation Decisions in Practice

Managers should ensure that a firms transportation strategy supports its competitive strategy. Firms should evaluate the transportation function based on a combination of transportation costs, other costs such as inventory affected by transportation decisions, & the level of responsiveness achieved with customers. Managers should consider an appropriate combination of company-owned & outsourced transportation to meet their needs. Wal- Mart has used responsiveness transportation to reduce inventories in its supply chain. Given the importance of transportation to the success of their strategy, they own their transportation Fleet & manage it themselves. Transportation systems for the new economy need to be very responsive but most also be able to exploit every opportunity for aggregation, some cases even with competitors, to help decrease the transportation cost of small shipments.

Managers must use the information technology available to help decrease cost & improve responsiveness in their transportation networks. Satellite based communication systems allow carriers to communicate with each vehicle in their fleet. The supply chain goal is to minimize the total cost while providing the desired level of responsiveness to customers.

HANDLING SYSTEMS IN SCM

ROLE OF HANDLING IN SCM

HANDLING IN SCM
Material handling cannot be avoided in logistics, but can certainly be reduced to minimum levels. The productivity potential of logistics can be exploited by selecting the right type of handling equipment. The selection of material handling equipment cannot be done in isolation, without considering the storage system. Investment in the material handling system will be sheer waste if it is not compatible to the warehouse layout plan. The layout will create obstacles for free movement of equipment and goods, resulting in poor equipment productivity. Recent trends indicate preference for automated system with higher logistics productivity to enhance

Everyone wants more control. The more control you have, the better you perform. Similarly good material handling systems give you control on productivity. Distribution, manufacturing, and warehousing are the areas where material handling plays a major role. To do these things well, you need control of processes, of equipment, of personnel, of space and also of time. The basic questions frequently asked are: When do things get done? How many people does it take to do them? Do your material handling systems increase control or hinder it? What is cost involved? What is the up time of system?

Role of material handling in supply chain

In the last several years material handling has become a new, complex, and rapidly evolving science. For moving material in and out of warehouse many types of equipment and system are in use, depending on the type of products and volume to be handled. The equipment is used, in loading and unloading operations, for movement of goods over short distances. For bulk handling of material at logistics nodes such as shipyards, ports and airports different type of equipment is used.

In warehouses, material handling operation is performed at the following stages: Unloading the incoming material from transport vehicle. Moving the unloaded material to assigned storage place in warehouses. Lifting the material from its storage place during order picking. Moving the material for inspection and packing. Loading packages/boxes/cartons on to transport vehicles. The efficiency of material handling equipments adds to the performance level of the warehouse. The internal movement of goods has a direct bearing on the order picking and fulfillment cycle.

The warehouse, wherein the material handling equipments is in use, is more sensitive to labor productivity than the manufacturing center as material handling is more labor intensive. There is a scope for reducing labor and enhancing productivity by emerging technology in material handling. A good material handling system will enhance the speed and throughput of material movement through the supply chain.

Material handling guidelines

The material handling function reflects on the efficiency and speed of warehouse operation, which ultimately result in elongated or compressed order completion cycles. For designing an effective and efficient material system, the guidelines normally followed are: > Designing the system for continues flow of material, i.e. idle time should be zero. >Going in for standard equipment, which ensures low investment and flexibility in case of changes in material handling requirements in the future. >Incorporating gravity flow in material flow system >Ensuring that the ratio of the dead weight to the payload of material handling equipment is minimum.

Various material handling systems are in use, right from those that are fully manual to the ones that are fully automatic. However, the selection of a particular system depends in factors such as: Volumes to be handled Speed in handling Productivity Product characteristics (weight, size, shape) Nature of the product (hazardous, perishable, crushable) Recent trends indicate preferences for system with higher logistical productivity. However, investment cost goes up in more productive material handling system using sophisticated equipment. Hence, in a majority of case a combination of both manual and mechanized systems is quite common

Material Handling Systems - Types

Materials handling systems provide transportation and storage of materials, components and assemblies.

Material handling activities start with unloading of goods from delivery transportation, the goods then pass into storage, onto machining, assembly, testing, storage, packaging, storage, and finally loading onto transport. TYPES: Lifting and Transport Equipment Storage Equipment Automated Handling Equipment Automated Guided Vehicles (AGVs) Robotics

Material handling: designed for safe transportation

Container crane

Transfer crane

Mobile harbour crane

importance of Handling systems

The materials handling equipment is concerned with the storage, protection as well as the movement of goods along with their delivery, distribution and proper utilization. The efficiency of these equipments can be proved by analyzing the increasing turnouts as well as the maximized productivity as observed in case of the factories or organizations. The counter balance lift truck too plays a tremendous role in the smooth functioning of the factories and warehouses by facilitating the safe transportation of the products from one place to the other without any difficulty.

However, certain steps have been mentioned that can help you to check whether the materials handling equipment are efficiently functional enough.
1)

The very first step that is involved in order to find this out is to acquire all relevant information associated with the functions of these weightlifting devices. It helps analyze the need of such equipment for the operation of the storehouses. The counter balance lift truck and the counterbalance forklift truck that are most widely used in the warehouses to execute difficult tasks are the birds of same feathers. There are several companies that are engaged in the production of these lift trucks. On the other hand, the emergence of the computerized material handling system has boosted the overall functioning of the factories with the utmost level of efficiency. These computerized systems include AGV, AS/RS, conveyors and handling robots. The most important thing to be taken into consideration is the essential intensive cleaning of materials handling equipment, in order to ensure that the products are not damaged during handling, processing, and storage, and during the distribution as well.

2) 3)

4) 5)

6) 7)

The materials handling equipment, however, helps in the smooth rolling of the business at ease and with efficiency. Thus, in short, it may be concluded that both these devices serve to be beneficial for the factories that are concerned with the storage, protection and transportation of raw materials and finished goods.

SELECTION AND DESIGN OF HANDLING SYSTEM

Materials handling systems are expensive to purchase and operate. The expenses are those of initial costs, labor cost for operating the material handling equipments and maintenance and repair costs. The indirect expenses are those resulting from damaged or lost materials, delays in material deliveries and accidents. Since these expenses are quite substantial, greater attention of management is needed to the design and selection of materials handling systems. Since the pattern of flow of material in a plant definitely affects the materials handling costs, it is vital that the design and layout of buildings must be integrated with the design of the materials-handling

Hence, the selection and design of the materials handling system should be done along with the development of the layout as each one affects the other. For example, if overhead cranes are to be used, the structure of the building must be strong enough to support the operation of these services. If heavy loads are to be transported on trucks, floors must have adequate support to withstand these loads. Adequate floor space has to be provided in the layout for fixed position handling devices such as conveyors.

MATERIAL HANDLING SYSTEM

Steps to be followed in the selection and design of materials handling systems are:
1. Identification of the appropriate systems. 2. Review of design criteria and objectives of the handling system. 3. Collection of data regarding flow pattern and flow requirements. 4. Identification of activity relationships between departments. 5. Determination of space requirement and establishment of material flow pattern. 6. Analysis of material and building characteristics. 7. Preliminary selection of basic handling system and generation of alternative systems considering feasibility of mechanization and equipment capabilities. 8. Evaluation of alternatives with respect to optimal material flow, utilizing gravity, minimum cost, flexibility, ease of maintenance and capacity utilization. 9. Selection of the best suitable alternative system and checking it for compatibility with the layout. 10. Specification of the system. 11. Procurement of the equipment and installation of the system.

SPARE PARTS
A spare part, service part, or spare, is an item of inventory that is used for the repair or replacement of failed parts. Spare parts are an important feature of logistics management and supply chain management, often comprising dedicated spare parts management systems.

Capital spares are spare parts although acknowledged to have a long life or a small chance of failure would cause shutdown of equipment for a prolonged period because of the long delivery of their replacement. Spare parts are an outgrowth of the industrial development of interchangeable parts and mass production.

SPARE PARTS MANAGEMENT

The objective of spare parts management is to ensure
the availability of spares for maintenance and repairs of the plant and machinery as and when required at an optimum cost .
There is a need for systematic actions while managing spare parts as given below: a. Identification of spare parts b. Forecasting of spare parts requirement c. Inventory analyses d. Formulation of selective control policies for various categories e. Development of inventory control systems f. Stocking policies for capital & insurance spares

g. Stocking policies for rotatable spares or subassemblies h. Replacement policies for spare parts i. Spare parts inspection j. Indigenization of spares k. Reconditioning of spare parts l. Establishment of spare parts bank m. Computer applications for spare parts management.

EQUIPMENT MAINTENANCE

Maintenance, Repair and Overhaul involves fixing any sort of mechanical or electrical device should it become out of order or broken (known as repair, unscheduled or casualty maintenance). It also includes performing routine actions which keep the device in working order (known as scheduled maintenance) or prevent trouble from arising (preventive maintenance). MRO may be defined as, "All actions which have the objective of retaining or restoring an item in or to a state in which it can perform its required function. The actions include the combination of all technical and corresponding administrative, managerial, and supervision actions. MRO operations can be categorized by whether the product remains the property of the customer, i.e. a service is being offered, or whether the product is bought by the reprocessing organization and sold to any customer wishing to make the purchase.

Maintaining spares and redundant machinery in a prime state, ready for operation, can be a daunting proposition, particularly given that most of the planet is covered with a substance that tends to attack these stored and standby machines Machinery can be idle from intermittent use, standby (redundancy), storage for spare parts, or for temporary decommissioning. This article looks at practices that protect equipment characterized as decommissioned, short-term storage or storage of stand-by capacity.