MODULE-I

Concept of logistics: Introduction, Objective, Types, Concept of Logistic Management, Evolution,

Role of logistics in economy, Difference between logistics and supply chain, Logistics and Supply
Chain Management, Logistics mix, Logistics and competitive advantage.

INTRODUCTION-
LOGISTICS: CONCEPT, DEFINITION, ORIGIN AND EVOLUTION-
Logistics management is the part of the supply chain process that plans, implements, and controls
the efficient, effective flow and storage of goods, services, and related information from the point of
origin to the point of consumption to meet customer requirements.
Logistics management may be defined as follows:
According to the Council of Logistics Management, logistics can be defined as “that part of supply
chain process that plans, implements and controls the efficient, effective flow and storage of goods,
services and related information from the point of origin to the point of consumption”.
Logistics Management is an all-inclusive term that encompasses both planning and execution of four
key aspects of logistics, i.e. transportation, distribution, warehousing and purchasing. Another
pertinent factor that logistics management takes into account is the flow of goods in forward and
reverse order.
Logistics management consists of the process of planning, implementing and controlling the
efficient flow of raw-materials, work-in-progress and finished goods and related information- from
point of origin to point of consumption; with a view to providing satisfaction to the customer.
ORIGIN AND EVOLUTION:
Years 30 “Military logistics”
After the Second World War, the interest of business by the logistics process arises and an analogy
is established between military logistics and technical material supply and military logistics is begun
to be related to industrial production.
Years 50 “Conceptualization of logistics”
Logistics becomes more important due to the transition that goes through the most developed
countries, from an economy characterized by excessive demand to an economy with excess supply,
with these being their main characteristics:
First developments of the total cost of logistics operations.
It focuses on the concern to satisfy the customer.
Distribution channels are of particular importance. You want to sell any product anywhere.
Increase new products, as a result the product lines are originated.

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60 Years “Outsourcing”
Logistics took a new approach where “outsourcing” was the most appropriate mechanism to reach
customers, since it had as its main objective the subcontracting of other companies because the flow
of goods or information was efficient and reached all parts that were within the reach of the
company.
Years 70 “The concept of trial logistics”
Customer service becomes an indispensable requirement to continue competing with market leaders.
Progress in the concept of physical distribution.
There are periods of recession and growth in the world economy.
Development of the inventory management strategy.
The technology for the industrial revolution that occurred during these times began to emerge, and
the cost of information technology was reduced to improve the quality, which brought about an
improved mechanism for the supply of the goods Or information accurately and precisely at the time
the customer made their order, this mechanism is called “Just in Time”, that is just in time
Since the 80’s “Modification of preferences”
The energy crisis of the moment drives the movement towards the improvement of transport and
storage.
Just in Time’s approach was modified by Quick Response (QR) and Efficient Consumer Response
(ECR) with the sole purpose of seeking a precise delivery with the exact amount, when and where
needed, to meet To the customer.
Changes in supply chain preferences where special attention is paid to suppliers,
distributors and customer service, defining the end-user’s demand.
Inventories, total logistics costs are reduced, and delivery times are shorter.
Logistics operations are energy-intensive: environmental-ecological concern is born.
1990 “Promotion of logistics”
Logistics went on to become a more integrated process in terms of its external and internal
environment, in other words, its internal processes within the company were managed according to
the relationships that were with its customers and suppliers.
This process of integration causes logistics management to begin with a strategic plan regarding the
design of how to reach the final customers, in order to go out and minimize competition, establishing
efficient plans for the supply of the products.
Technology continues to position itself in conventional Logistics processes and Distribution
channels
Outsourcing services

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Demand for logistics services expands
Day by day it is observed that to put into practice a good business logistics management is essential,
it has developed over time and is now a basic aspect. A perfectly designed logistics project is the
most strategic tool to compete with the demanding current market, achieving customer loyalty.
TYPES-
Classification of Logistical Activities:
Logistics (or Logistical Activities) may be broadly classified into two categories:
Inbound logistics; which is concerned with the smooth and cost effective inflow of materials and
other inputs (that are needed in the manufacturing process) from suppliers to the plant. For proper
management of inbound logistics, the management has to maintain a continuous interface with
suppliers (vendors).
Outbound logistics (also called physical distribution management or supply chain management); is
concerned with the flow of finished goods and other related information from the firm to the
customer. For proper management of outbound logistics, the management has to maintain a
continuous interface with transport operators and channels of distribution.

OBJECTIVES-
Significance (or OBJECTIVES) of Logistics Management:
Logistics management is significant for the following reasons:
Cost Reduction and Profit Maximization:
Logistics management results in cost reduction and profit maximization, primarily due to:
Improved material handling
Safe, speedy and economical transportation
Optimum number and convenient location of warehouses etc.
Efficient Flow of Manufacturing Operations:
Inbound logistics helps in the efficient flow of manufacturing operations, due to on-time delivery of

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materials, proper utilization of materials and semi-finished goods in the production process and so
on.
Competitive Edge:
Logistics provide, maintain and sharpen the competitive edge of an enterprise by:
Increasing sales through providing better customer service
Arranging for rapid and reliable delivery
Avoiding errors in order processing; and so on.
Effective Communication System:
An efficient information system is a must for sound logistics management. As such, logistics
management helps in developing effective communication system for continuous interface with
suppliers and rapid response to customer enquiries.
Sound Inventory Management:
Sound inventory management is a by-product of logistics management. A major headache of
production management, financial management etc. is how to ensure sound inventory management;
which headache is cured by logistics management.
ROLE OF LOGISTICS IN ECONOMY-
 Logistics management impacts the global economy in a number of ways. First, it helps to
facilitate trade and commerce. By making it easier and more efficient to move goods and
services around the world, logistics management helps to break down barriers to trade and create
new opportunities for businesses to grow and expand.
 Second, logistics management can help to reduce costs. By streamlining the flow of goods and
services, logistics management can help businesses to save money on transportation,
warehousing, and inventory costs. This can lead to increased profits for businesses and lower
prices for consumers.
 Third, logistics management can help to improve efficiency. By ensuring that goods are
delivered on time and in the right condition, logistics management can help businesses to
improve their customer service and reduce waste. This can lead to increased customer
satisfaction and loyalty.
 Fourth, logistics management can help to improve sustainability. By using sustainable practices,
logistics management can help businesses to reduce their environmental impact. This can lead to
a cleaner and healthier planet for everyone.
Overall, logistics management is a critical function that plays an important role in the global
economy. By helping to facilitate trade, reduce costs, improve efficiency, and improve sustainability,

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logistics management can help to create a more prosperous and sustainable world.
Here are some specific examples of how logistics management has impacted the global economy:
1. The development of global supply chains has allowed businesses to access new markets and
reduce costs. For example, the production of a smartphone typically involves components from
dozens of countries around the world. By using logistics management to coordinate the
movement of these components, businesses can reduce the cost of production and make their
products more affordable for consumers.
2. The rise of e-commerce has put a premium on efficient logistics management. E-commerce
retailers need to be able to quickly and efficiently deliver goods to customers who are ordering
online. By using logistics management to optimize their shipping and delivery processes, e-
commerce retailers can improve customer satisfaction and boost sales.
3. The increasing importance of sustainability has led businesses to focus on more sustainable
logistics practices. For example, some businesses are using renewable energy to power their
warehouses and distribution centers. Others are using less packaging to reduce waste. By using
sustainable logistics practices, businesses can reduce their environmental impact and improve
their bottom line.
Logistics management is a complex and ever-changing field. However, by understanding the key
concepts and activities involved, businesses can improve their efficiency, reduce their costs, and
improve their customer satisfaction. This can lead to increased profits, improved sustainability, and a
more prosperous and sustainable world.
DIFFERENCE BETWEEN LOGISTICS AND SUPPLY CHAIN, LOGISTICS AND SUPPLY
CHAIN MANAGEMENT-
The terms logistics and supply chain management are sometimes used interchangeably. Some say
there is no difference between the two terms, that supply chain management is the “new” logistics.
To compound this, what is considered supply chain management in the United States is more
commonly known as logistics management in Europe, according to the blog for PLS Logistics
Services, a logistics management firm in Pennsylvania.
When the question was posed in an Inbound Logistics article, the answers varied based on the
functions of a supply chain (or logistics) professional handled. Some thoughts from their readers:
 “There isn’t a difference today,” said Wayne Johnson of American Gypsum.
 “Supply chain management incorporates the field of logistics and logistics is a number of sub-
processes within SCM,” said Michael Kirby of National Distribution Centers.
 “A ‘supply chain management’ company is generally a third-party operator managing the total

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 overall movement of product whether inbound or outbound,” said William Behrens of
Associated Transport Systems, Inc.
Purchasing, materials handling, logistics, transportation, inventory control, and supply chain
management have continued to evolve, causing many of these functional areas to intersect with one
another. This intersection has resulted in blurred definitions for some of these terms such as logistics
and supply chain management.

While these two terms do have some similarities they are, in fact, different concepts with different
meanings. Supply chain management is an overarching concept that links together multiple
processes to achieve competitive advantage, while logistics refers to the movement, storage, and
flow of goods, services and information within the overall supply chain.
What is Supply Chain Management?
Supply chain management, as explained by Michigan State University professors in the text Supply
Chain Logistics Management, involves collaboration between firms to connect suppliers, customers,
and other partners as a means of boosting efficiency and producing value for the end consumer. The
textbook considers supply chain management activities as strategic decisions, and set up “the
operational framework within which logistics is performed.”

It is the efforts of a number of organizations working together as a supply chain that helps manage
the flow of raw materials and ensure the finished goods provide value. Supply chain managers work
across multiple functions and companies to ensure that a finished product not only gets to the end
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consumer but meets all requirements as well. Logistics is just one small part of the larger, all-
encompassing supply chain network.
What is Logistics?
The Council of Supply Chain Management Professionals defines logistics as “part of the supply
chain process that plans, implements and controls the efficient, effective forward and reverses flow
and storage of goods, services and related information between the point of origin and the point of
consumption in order to meet customer’s requirements.”
In Supply Chain Logistics Management, Michigan State University’s professors define logistics as
activities – transportation, warehousing, packaging and more – that move and position inventory and
acknowledge its role in terms of synchronizing the supply chain.
The objective behind logistics is to make sure the customer receives the desired product at the right
time and place with the right quality and price. This process can be divided into two subcategories:
inbound logistics and outbound logistics.
Inbound logistics covers the activities concerned with obtaining materials and then handling, storing
and transporting them. Outbound logistics covers the activities concerned with the collection,
maintenance and distribution to the customer. Other activities, such as packing and fulfilling orders,
warehousing, managing stock and maintaining the equilibrium between supply and demand also
factor into logistics.
Key Differences
It is important to remember that while the terms should not be used interchangeably, they do
supplement each other. One process cannot exist without the other. Here are some key differences
between the two terms that will help you keep from blurring the lines between them.
 Supply chain management is a way to link major business processes within and across
companies into a high-performance business model that drives competitive advantage.
 Logistics refers to the movement, storage, and flow of goods, services and information inside
and outside the organization.
 The main focus of supply chain is a competitive advantage, while the main focus of logistics is
meeting customer requirements.
 Logistics is a term that has been around for a long time, emerging from its military roots, while
supply chain management is a relatively new term.
 Logistics is an activity within the supply chain.
LOGISTICS MIX-
The Logistics Activity Mix refers to the various activities that are involved in the planning,

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execution, and control of a company's physical flows of goods and services.
In order to help improve the process, one must dive into the key components. Here are the five major
components of logistics management: Planning: storage, warehousing, and materials
handling. Packaging and utilization. Inventory control.
LOGISTICS AND COMPETITIVE ADVANTAGE-
Businesses are always searching for a competitive advantage that will set them apart from others
offering a similar product or service. The competitive advantage is gained by offering a customer
services of greater value, lower pricing or greater benefits. Without a distinguishing advantage,
what is the lure for a potential customer to select one provider over the other? Businesses without a
competitive advantage will have a harder time maintaining their relevance in the market.
In today’s global economy, being adaptive and flexible is the key to staying relevant. Changes to the
logistics industry have been driven by reasons such as the price of oil, labor costs, security, trade
regulations, labor stoppages, vessel capacity and technology. Having the personnel, practices and
tools to proactively adapt to these changes will give a company the competitive advantage.
Here are a number of solutions that if used will help a company gain the competitive advantage:
 Shipper Associations / Consortiums: By being a part of a shippers association, a business can
benefit from lower transportation rates due to the competitive negotiations and economies of
scale.
 Transportation Management Systems (TMS): Such platforms allow a business to manage their
data flow more efficiently and allows for visibility of performance and cost. Keeping an eye on
costs, transit times, delivery performance, freight claims, and compliance will allow for strategic
thinking and put a company a step in front of its competitors.
 Auto-Tender Functionality: This feature allows freight to be tendered directly to carriers, greatly
reducing the time spent scheduling a shipment. When set up using a least cost carrier, the
savings combined with the efficiency gain provide a great advantage.
 Advanced Tracking: Visibility and transparency are becoming more and more important in
business. Advanced tracking features have been adopted to give customers real-time information
on where their goods are.
These best in class features help companies gain the competitive advantage with lower costs and
increased productivity. The resulting higher quality of service, will help gain new clients and retain
existing ones.

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 MODULE-II

Integrated logistics: Introduction, Objective, Concept of Integrated Logistics, Information flow,

Inventory flow, Inventory Ownership, Measurement system, Barriers, Logistics Performance Cycle,
Procurement Performance Cycle.

INTRODUCTION, OBJECTIVE, CONCEPT OF INTEGRATED LOGISTICS-

Integrated logistics refers to the seamless coordination and management of all the activities involved
in the movement and storage of goods from their point of origin to their final destination. It involves
the integration of various supply chain components, such as transportation, warehousing, inventory
management, and order processing, to create a unified, efficient system.
By breaking down silos and promoting collaboration between different functions, integrated logistics
enables businesses to optimize their supply chains, reduce costs, and improve overall efficiency.
This holistic approach to logistics management not only streamlines operations but also enhances
visibility, allowing businesses to respond more effectively to market demands and customer needs.
OBJECTIVE-
The main objective of logistics management is to execute proper planning on transportation modes
and inventory available to satisfy the customers. This leads to a smooth freight moving process and
timely delivery of products or goods
Key Components of Integrated Logistics
Transportation management
Effective transportation management is crucial to the success of an integrated logistics strategy. This
involves the planning, execution, and monitoring of all transportation activities, including selecting
the most efficient modes of transport, optimizing routes, and tracking shipments in real-time.
Implementing a transportation management system (TMS) is essential to achieving these objectives
and improving overall logistics performance.
Warehousing and distribution
Warehousing and distribution are critical components of integrated logistics, as they involve the
storage and movement of goods within the supply chain. An integrated approach to warehousing and
distribution ensures that these activities are closely coordinated and aligned with other supply chain
functions. This can lead to significant improvements in inventory management, order fulfillment,
and overall customer satisfaction.
Inventory management
While this blog post is not focused on inventory management, it is worth mentioning that integrated

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logistics seeks to optimize inventory levels across the supply chain. By adopting advanced inventory
management techniques and leveraging real-time data, businesses can minimize stock outs, reduce
carrying costs, and maintain optimal inventory levels to meet customer demand.
Order processing
Order processing is the backbone of any supply chain, as it involves the receipt, handling, and
fulfillment of customer orders. Integrated logistics ensures that order processing is streamlined and
closely aligned with other supply chain functions. This can lead to faster order turnaround times,
improved order accuracy, and enhanced customer satisfaction.
Information technology
Information technology plays a critical role in integrated logistics, as it enables the seamless
exchange of data and information between different supply chain components. Investing in advanced
IT systems, such as enterprise resource planning (ERP) software, TMS platforms, and warehouse
management systems (WMS), is essential for facilitating integration and promoting data-driven
decision-making.
The Benefits of Integrated Logistics
Improved efficiency
By breaking down silos and promoting collaboration between different supply chain functions,
integrated logistics leads to significant improvements in overall efficiency. This can result in
reduced operating costs, faster order turnaround times, and enhanced customer satisfaction.
Greater visibility
Integrated logistics enhances visibility across the entire supply chain, enabling businesses to monitor
and manage their operations more effectively. With access to real-time data and advanced analytics,
businesses can make more informed decisions and respond more quickly to changing market
conditions.
Increased flexibility
An integrated logistics approach allows businesses to adapt more easily to fluctuations in customer
demand, market trends, and other external factors. This flexibility is crucial for maintaining a
competitive edge in today’s rapidly changing business landscape.
Better customer service
By streamlining operations and improving visibility, integrated logistics enables businesses to
provide a higher level of customer service. This can lead to increased customer loyalty, repeat
business, and positive word-of mouth, all of which are vital for long-term success.
Scalability
Integrated logistics provides a strong foundation for growth, as it enables businesses to scale their

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operations more easily and efficiently. With a cohesive, well-coordinated supply chain, businesses
can expand their product offerings, enter new markets, and adapt to changing customer needs
without compromising on quality or customer satisfaction.
Integrated logistics is the future of supply chain management, offering numerous benefits, including
improved efficiency, greater visibility, increased flexibility, and better customer service. By
adopting an integrated logistics approach and leveraging advanced technology, businesses can stay
competitive in today’s globalized economy and achieve long-term success.
Information flow, Inventory flow-
Information flow is a crucial component of activities in logistics. The appropriate
exchange of information between the sender and the recipient is the key condition for
moving goods between their dispatch and reception point. Each flow of raw materials
and goods is also accompanied by the flow of information.
Inventory flow refers to how a business controls and manages the movement of products through its supply
chain. It involves creating a system or set of procedures that are followed to make sure that inventory is
physically moved to the next supply chain stage.
Inventory Ownership-
Owned Inventory means any inventories of raw materials, manufactured and purchased parts, work in
process, packaging, stores and supplies, unassigned finished goods inventories (which are finished goods not
yet assigned to a specific customer order) and merchandise, in each case owned by the Sellers and held or
used ...

Vendor Managed Inventory (VMI):

This is a very popular concept in Asia and majority of High Tech/IT manufacturers use this solution. What is VMI? The title indicates the meaning

and objective of the solution. The inventory that is required by the manufacturer is managed and maintained by the supplier at the back yard of the

manufacturer. The objective of VMI is that by pushing the decision making responsibility further up the supply chain, the manufacturer will be in a

better position to support the objectives of the entire integrated supply chain resulting in a sustainable competitive advantage. This solution creates a

transparent supply chain enabling supplier and buyer to avoid uncertainties in supply. Centralizing and automating the replenishment decision also

helps reduce the distortions in ordering introduced when there are several intermediaries that place orders in a supply chain. The big change to supply

chain is that VMI transforms push supply chain to pull supply chain thus avoiding wastages and uncertainties.

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As you can see from the above graphical presentation, in a VMI environment three parties are involved. The first one is the Vendor, the second one is

the manufacturer or the buyer and the third one is the 3PL appointed by the buyer to store, manage and supply vendor material to the production line

as and when required. The buyer provides indicative yearly consumptions and allows the vendor to develop safety stocks and reorder points to ensure

that the VMI hub never runs out of inventory. One can notice the responsibility of inventory planning is shifting to the vendor instead of buyer. This

model also provides the certainty to the Vendor with regard to demand for their product. This model is very popular in raw material supply

environment. However, this model can be customised to a finished goods environment.

Some of the benefits of VMI:

1. At K-mart, customer service measures have gone form the high 80s to the high 90s. Inventory turns on seasonal items have gone
from 3 to between 10 and 11, and for the non-seasonal items form 12-15 to 17-20.
2. ACE Hardware, the large hardware cooperative, has seen fill rates rise 4% to 96% in the past few years.
3. Fred Meyer, the 131-unit chain of super-centres in the Pacific Northwest, reduced inventories 30% to 40%, while sales rose and
service levels increased to 98%. This was due to a VMI program implemented with two key food vendors.
4. Grand Union, a New Jersey-based grocery retailer with more than 100 stores and three DCs, improved inventory turns by close to
80% and achieved 99% service levels.

, Measurement system-
, Barriers, Logistics Performance Cycle, Procurement Performance Cycle.

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