LOGISTICS MANAGEMENT 2

Definition Of LOGISTIS What is Logistics ?  “ Logistics means having the right thing at the right place, at the right time  Business Logistics deals with all move- store activates that facilitate product flow from one point of raw material acquisition to the point of final consumption, as well as the information flow that set the product in motion for the purpose of providing adequate levels of customer service at a reasonable cost.  Logistics is also defined as the process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point to origin to point of consumption for the purpose of confirming to customer requirements ”. Note that this definition includes inbound, out bound, internal, and external movements,,and return of materials for environmental purposes.

 Main Logistics Activities 1- Transportation 2- Inventory Maintenance 3- Order Processing  Supporting Activities 1- Warehousing 2- Materials handling 3-Protective packaging 4- Acquisition 5-Production 6- In formation maintenance

CustomerServices

Customers Vendors Marketing Finance Logistics Other Functions Production ENVIRONMENTS POLITICALSOCIAL

ProductionFormUtility MarketingPossessionUtility Logistics Place Utility Time Utility

LOGICTICS Sample Activates : Transportation Inventory Maintenance Order processing Warehousing Materials Handling Interface Activities Customer Service Standards Pricing Packaging Retail Location Interface Activitie s Products Scheduling Plant location Purchasing MARKETING Sample activities: Promotion Market research Product mix Sales Force Management PRDUCTION Sample activities Quality control Detailed plant Loading In plant materials handling Equipment maintenance Production Logistics interface Marketing Logistics Interface A generalized view of logistics activities among traditional business activities of the firm

Cost Trade Off  Definition of trade off Adding more of one cost item while subtracting some of another cost item to achieve more desirable results.  Total cost concept Refer to the recognition that conflicting cost patterns should be examined collectively balanced at optimum

Transportation costs Order – processing costs Cost Total costs ( addition of transportation, inventory and order – processing Costs ) Inventory costs Rail TruckAir Basic cost trade- offs in selecting a mode of transportation

Main Function of Business Logistics 1. Physical Distribution 1. Physical Distribution (outbound). From the firm to the customers. 2. Materials Management 2. Materials Management( inbound or Sourcing or physical supply) From the suppliers to the firm.

Physical distribution  It is the brunch of business logistics that deals with the movement storage and processing of orders for a firm ’ s output. In terms of cost, it is the most important branch for most firms because it absorbs roughly two thirds of the logistics cost.  Physical distribution is primarily concerned with finished and semi finished goods. I.e. goods that company offers for sale, and which the firm plans no further processing

DeclineMaturityGrowthIntroduction Time A generalized Product – life – cycle curve

The product life cycle  Four stages as shown in the figure  Introduction stages : the physical distribution strategy is cautious, with stocking restriction but ready to serve customers at high level of cost attract customers  Growth stage : Sales are likely to increase but planning is particularly difficult for physical distribution. It is a fairly short period.  Maturity stage :sales at a peal level and longer and stable period. Planning and control are possible. So reduction in logistics costs can be realized.  Decline stage: the number of stocking points is likely to be reduced and stocks are drawn back towards regional points or to the firm

Strategic Distribution arrangements 1. Direct shipments 1. Direct shipments from production line to consumers. 2. Direct shipments 2. Direct shipments from plant inventories to consumers 3. Indirect shipments 3. Indirect shipments through a warehousing system

 A. The role of acquisition  B. Meeting operating requirements : 1- supply to operating requirements 2- to inventory  C. Creating the operating schedule.  D. Breaking down the operating schedule Objective of materials management

Traffic Management Responsibilities  Mode and Transport Service Selection  Routing  Loading balancing  Vehicle Scheduling  Tracing  Freight consolidation  Claims processing  Rate auditing

Inventory Management Reasons for inventories  They improve customer service  Encourage production economies  Permit purchase and transportation economies  Hedge against price changes  Protect against demand and lead time uncertainties  Hedge against contingencies

Types of Inventory  Inventories may be in the pipeline  Stocks for speculation  Stocks may be Regular or cyclical in nature.  Safety Stocks :  Obsolete, dead, or shrinkage stocks