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Integrating Logistics or

Integrated Logistics
S.L.Ganapathi

Work of Logistics
Network Design
Information flow/Documentation
Transportation
- national & international
Inventory
Warehousing, material handling &
packaging

Logistics Integration why?


In the context of overall business performance logistics
exist to allow inventory to achieve desired time ,place
and possession benefits at lowest cost.
Inventory has little value until it is positioned at the right
time and location to support ownership transfer or value
creation
If a firm does not consistently satisfy time and place
requirements it has nothing to sell.
Max strategic benefit from Logistics can come from full
range of functional work must be done on an integrated
basis
Excellence in in each link of logistics chain alone cannot
guarantee overall optimal result

What is a Supply Chain?

Source: Principles of Supply Chain Management: A Balanced Approach by Wisner, Leong, and Tan
2005 Thomson Business and Professional Publishing

Integrated Logistics- process

Inventory Flow
Physical Distribution
Manufacturing support
Procurement
Information Flow
Planning & Coordination Flows
Operational Requirements

Integration
Integration does not mean command of
Logistics of the company under one unit or
person
This would mean the end to end logistics
in sync to meet the market demand

Local Optimization versus Local


Optimization
A typical Logistics chain could have several
elements
e.g. An import from Chicago to Delhi
Road/Rail movement in USA
Ocean Freight to Indian Port
Inland Transport to Delhi
Customs clearance
Last mile Delivery
Many divisions may handle different functions but
reducing cost in each link may not be the least
total cost

Barriers to Internal Integration

Organization Structure
Measurement systems
Inventory Ownership
Information Technology
Knowledge Transfer Capability

Cycle View of Supply Chains

Customer

Customer Order Cycle


Retailer

Replenishment Cycle
Distributor

Manufacturing Cycle
Procurement Cycle

Manufacture
r
Supplier

Cycle View of Supply Chains


Each cycle occurs at the interface between two
successive stages
Customer order cycle (customer-retailer)
Replenishment cycle (retailer-distributor)
Manufacturing cycle (distributor-manufacturer)
Procurement cycle (manufacturer-supplier)
Cycle view clearly defines processes involved and
the owners of each process. Specifies the roles
and responsibilities of each member and the
desired outcome of each process.

Push/Pull View of Supply


Chains
Manufacturing
Procurement,
Replenishment cycles

PUSH PROCESSES

Customer
Order

PULL PROCESSES

Customer
Order Arrives

Local Optimization versus Global


Optimization
Supply Chains and Logistics Chains have links which are
following one another
Each link have distinct costs
Many times different persons from different department
deal with different links of the chain in sourcing and
buying
Each one could look at the least cost effective option
Collectively from end to end the total costs may be more
If the SCM coordination committee which has members
form across the function they could decide on least end
to end cost/effective option

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