Logistics & SCM Management

Prof: S.B.Choughule EMIB-IIFT-New Delhi Member of Logistics Committee

Maharashtra Chambers Of Commerce & Industry

Logistics
Indias logistics sector is in the tremendous growth path. Logistics activities are expanding due to, Globalization Expansion of manufacturing base in India Logistics hub Fast growing retail sector

Elements of Logistics Activities included in Logistics Management

Procurement- Sourcing & purchasing Warehousing & Storage of finish product

Material Handling at warehouses ports & ICD Transportation goods with various mode Inventory Control Minimization Physical Distribution of finish product

Information & Communication

Packaging

Defination of Logistics
The management of the storage and flows of goods, services and information throughout from origin of suppler to the end user of finish products 3 R in Logistics 1) Right time 2) Right quantity 3) Right place
Mumbais Dabewala is best logistics service provider

Types of Logistics
Inbound From procurement of raw material at origin to the factory (production centre ) with various mode of transport Outbound Supply of finish product from factory to distribution centres ESSAR steel Ltd is best example in India

Procurement
Domestics market Quality & price Foreign market Transportation cost Import duty Order processing job order Vendor selection based on following two Lead time Economic Order Quantity

WAREHOUSE
A warehouse is a commercial building for
storage of goods. Warehouses are used by manufacturers,importers, exporters, wholesalers , transport businesses, customs The warehousing sector is another vital link in the logistics chain, one which is evolving at a rapid pace. Where once a big shed and a forklift was all that was needed

Repacking is done in warehouse

Type of warehouse Public and bonded warehouses

General view of warehouse

Transportation
Goods must be transported from their place of production to the many locations of their consumers. This operation is an important marketing function. Primary carriers are those using their own equipment for the transportation of goods. There are five types of primary carriers for the transport of goods: railroads, waterway carriers, motor-freight carriers, pipelines and air-freight carriers.

Transportation
Various mode of Transport Sea Road Rail Air Pipeline Electronic

Sea Transport
Used by firms for delivery of goods from distant suppliers, mostly conducted in containers of varied size. This mode is ideal for transportation of heavy and bulky goods and suitable for products with long lead times.

Road
Used by suppliers to deliver goods in a cost effective manner and best suited for short distances. Many transport companies have expertise for fast delivery, packaging etc. for making scheduled delivery.

Rail Transport
Indian Railway have 10 zones CONCOR is carrying containers only Govt has issued 15 private companies to transport goods including containers

Air
Used mostly for delivery of high value and tow volume goods from distant suppliers, usually not connected by any other mode of Transportation. It is also suitable for emergent item to be imported for some specific requirement.

Cargo handling
It is important to carefully arrange the stowage of packaged cargo, such as cartons, cases and drums, in order to maximize the use of available space. This will effectively maximize freight capacity while helping to prevent cargo from shifting during transportation. Finally, in order to avoid cargo displacement and other subsequent damage, which can be caused by external factors during transport, it is essential to secure cargo within the container. Certain normal methods of stowage and securing are explained next

Palletization
The loading of cargo, traditionally performed manually, has been expedited by the use of pallets and forklifts. Moreover, compared to manually loaded cargo, the palletized form is more likely to prevent displacement or damage. To maximize space, it is imperative to utilize pallets that can be loaded into containers without leaving unfilled space.

Inventory Control
Inventory movement Forecasting Inventory control minimum inventory at given point Infrastructure in India affecting inventory country

Physical Distribution
Out bound logistics Distribution Channels Whole sellers Retails End User Customer

Information
Communication from every stage Helps for production planning

IT Website Internet

Logistics cost
Break up of cost Transport -40% Inventory 24% Order processing and Administration -10% Warehousing 10 % other cost -16% -----------------------------------------Total 100% --------------------------------------------Which cost can be saved?

Logistics Cost
India INC increasingly looking to cut their logistics costs in a bid to improve their profit margins, Thus role of Logistics is important According to Logistics expert , even company save 1 % of logistics cost India will save rs 25,000 crore

Logistics cost % of GDP

USA -8% North America -10.77 Europe -11.79 Asia pacific -11.64 Remaining 11.74 India -13 -14 %

3rd Party Logistics

Third Party Logistics (3PL) provider handles all or most of freight of the organizations including the management of information by the third party, freeing the company from day to day interaction with carriers, and having to oversee hundreds or thousands of shipment. New and cheaper information flow resulting from internet enabled solutions, will lead not only achieving immediate cost reductions in operations but also to enormous productivity gains over the next few years.

3rd Party Logistics market

Outsourcing of 3rd Party Logistics business (3PL) in India is all set to acquire a size of US$ 90 million by 2012 as the concept introduced in US and Europe is fast catching up the pace to increase the efficiency of domestic corporates through efficient logistic functions, according to the ASSOCHAM.

Development of SCM
Material Management -1970
>Purchasing & stock keeping >Allocation & scheduling

Extended Material Management -1980 >Production planning & control Logistics Management -1090 >Order processing control & distribution Supply Chain Management After 1990 >Suppliers Suppliers to Customers Customers

SCM Integrated approach

SCM is the integrated approach of planning , sourcing making and delivering product from raw material to end user customer SCM considering suppliers supplier to customers Customers Example 1) Garware Marine Industries Ltd Re logistics is part of SCM

Drivers of SCM
There are 4 drivers of effective SCM Inventory Cost of holding and availability Transport Moving inventory from place to place
speedily

Facilities places where inventory is stored, assembled

or fabricated factory- warehouse ports CFS ICD

Information -information flows from one place of SCM

to other supplier to manufacturer transporter ware operator -distributor retailers

Case study
There are 20, 000 imported containers are lying at
JNPT to evacuate from port to ICD What would be the impact on logistics management of manufacturing company located at New Delhi ?

And comments on 1) facilities 2) cost 3)inventory

ICD Patpargang New Delhi

Logistics & SCM

Transport is a back bone of Logistics & logistics is a sole of SCM SCM is a key word of to days business

Thanks

5 April 2010 Prof: S.B. Choughule Shamc2001@yahoo.co.in