Logistics and Supply Chain

Management
Logistics Meaning:

Logistics is a process of planning, implementing and controlling of efficient,

effective flow and storage of goods, services and related information from
the point of origin to the point of consumption for the purpose of
conforming to customer expectations.
Features of Logistics Management:

It ensures a smooth flow of all types goods such as raw materials, work-in-
progress and finished goods.
It has the ability to meet customer expectations and requirements of goods.
It ensures delivery of quality product
It offers best possible customer service at least possible cost.
It is an integration of managerial functions
It deals with movement and storage of goods in appropriate quantity
It enhances productivity and profitability
Operational Objectives:

Right Response:

Firms ability to meet the service requirements of its customers by means of

quick response with positive attitude.
Real time communication of information regarding requirements and
availability of logistics service is the core of the right response.
Best possible customer service.
2. Right Quality:

Ensures delivery of right quality products.

Includes consistency of the product and 0- defect delivery.

3. Right Quantity:
Objective of right quality deals with the maintenance of a minimum
possible level of inventory required for a desired level of customer
service.
It reflects the total commitment of logistics system in terms of financial
value for every items of inventory(RM, WIP, FG)
Inventory mgt techniques like JIT,
4. Right Costs trade-offs
Ensures balance between total logistics costs and a desired
level of customer service performance

5. Right Information
For best possible customer service , information regarding
the requirement of goods is the primary aspect.
Point to point information is one of the important element
Logistical Competitive advantage:
It involves the firms ability to differentiate itself with others, in
the eyes of the customer in terms of its various activities and
ensuring economies of scale in operations.

It generates highest level of customer satisfaction and

maximises productivity and profitability by operating at lower
cost.
Generic value chain by porter
 Logistics Cost and value advantage

1. Low cost:
Through superior efficiency logistics can contribute to a cost
advantage that can be leveraged to increase the market
share or enhance profitability.
in case of chemicals and paper industries logistics costs can
exceed 15% of the goods sold.
2. Superior customer service:
order and invoice accuracy
access to information on status
ability to respond to customer inquiries.
3. Value added services:
It includes services like pricing and ticketing of merchandise,
assembling mixed pallets, making drop shipments direct to
stores, arranging for quick replenishment or continuous
replenishment and providing training on software to the
customers.
4. Flexibility:
Its flexible to customise its service and cost offerings
5. Regenerations:
Genuine value and competitive advantage can reinvent itself.
eg generic pharmaceuticals.
Components of Logistic Management

Generic
Customer Service

Order
Network Design
Processing Primary
Inventory
Transportation Management

Storage & Protective

Material Handling
Warehousing Packaging Supportive

Procurement Information Forecasting

Generic Component:
Customer Service- It brings about an interface of logistics
with marketing that determines:
Customer servicee requirements for products and or
competitive advantage.
Corporate vision towards service goals
Development of customer service standard
Logistics
 Functions of Logistics management:
1. Procurement function
It ensures smooth flow of raw materials, parts, and components of specified
quality and quantity from certified suppliers to the production centres.

Input
need
Shipment
Quality

Order
placement Sources
Study

Negotiation
& supply contracts
• After procurement of input materials, there is requirement of logistical functions
such as handling, storage and movement to shop floors and final use in
manufacturing process.
Quality inspection
Maruti Udyog
2. Production Function
It deals with effective and efficient management of work in progress inventory
and its flow between different stages of manufacturing.
3. Physical Distribution function/ Outbound logistics / marketing
logistics:
It refers to the movement of finished goods from the last point of production
to customers.
This facilitates marketing and sale performance of the enterprise.

Output
inventory

Customer
transportation

Protective Distribution
Packaging warehousing
order
processing
Integrated Logistics System
In order to sustain in the competitive market place and retail
market dominantly they developed this integrated logistics system
which will be an interface of procurement, production and physical
distribution functions.

Objectives:
to ensure better customer service
to ensure higher productivity and further curtailment of logistics
cost by means of different functions.
to avoid repetition of similar logistical functions by different levels
and the development of a professional integrated approach.
to properly monitor the performance of existing logistics system.
Logistics consultant

A logistics consultant helps companies improve customer service operations and

develop cost-effective solutions for supply chain, warehouse, material handling, and
distribution issues. Read on for more about the career duties of a logistics
consultant, educational requirements, and employment outlook.

Duties and Responsibilities

Logistics consultants analyze information to identify and solve any logistics and
supply chain operation problems for their clients. Through strategic planning,
information technology advances, and re-engineering processes, logistics consultants
improve the company's supply chain performance. They give advice on productivity,
materials management, transportation of goods, packaging, order processing,
manufacturing procedures, and quality control.
What Does A Logistics Consultant Do?

In broad terms a logistics consultant helps companies in a variety of

sectors and industries to improve their customer service operations and
develop cost-effective solutions to help them handle their supply chain,
warehousing, material handling and distribution.
Some logistics consultants become long-term partners with major brands
all around the world while some do more work on shorter term projects
which keeps their everyday job highly varied and interesting. Logistics
outsourcing remains a very popular way to benefit from a logistics
consultants' knowledge and expertise.
What are the roles of a logistics consultant?
A logistics consultant is essentially a type of specialised analyst who uses data and information to identify
and solve any logistics and supply chain operation problems for their clients. They make use of advances
in information technology, strategic planning and re-engineering processes to improve the performance of
the company’s supply chain so that goods are moved around more efficiently and the company can make
more profit as a result.

Many logistics consultants also give advice on productivity, quality control, management of materials
(especially those that are perishable or require other special means of storage), transportation of goods to
and from destinations and warehouses, manufacturing procedures and even packaging!
It is important to remember that logistics consultants work in physical distribution, not digital or online
services – they only deal with things that need to be picked up and moved around, not virtual products.
They specialise in helping suppliers secure themselves from the earliest stages of production to the final
stage of delivery where consumers will receive their goods. This helps manufacturing and distribution
companies increase their productivity, reduce their excess costs, update their technological systems and
generally provide a better customer service.
Anyone wanting to become a logistics consultant needs to look at getting a bachelor’s or master’s degree
in a business discipline such as economics, marketing, management or accounting. People studying
computer and information sciences or engineering also have the potential to go into the field. Look for a
business school that will help you learn consulting techniques through clubs or roleplaying exercises, and
keep an eye out for internships to get hands-on training and learn networking skills. A lot of consultancy
firms will provide on the job training for promising graduates who have a background in logistics and
safety, so this is also an avenue worth pursuing.
5 ways to improve your logistical efficiency in a way that it leads to improved customer relations
and revenue growth.
1. Get an Information Management System:
If you can afford go for a customized information management system. It will benefit your
business
in a range of areas including warehouse management, supply chain management, order
tracking,
inventory management and accurate delivery of customers’ orders. If you can’t afford a custom
solution,
search for a reliable and affordable warehouse/stock management software that could provide
you more
visibility of products and system and enable to quickly process the customers’ orders.
Remember, half of your problems are solved when you manage and use information in
an optimized manner.
2. Keep a Sizable Inventory at your Warehouse:
This is a big problem with businesses as not everyone has a big enough warehouse to manage
their stock in larger quantity.
This leads to supply shortage and delayed orders in many instances. If your products are
selling like hotcakes and you lack the desired
inventory management facility, why not considering third party warehousing? According to the
Property Data Report 2013, there is £80bn worth of warehousing in the UK. It’s not just the
United Kingdom, International Business Times report also suggest that 3PLs market is set to
surpass $900 billion market value by 2020.
3. Train Your Staff:
Staffers who are habitual of managing orders and information in the traditional way must
be trained on the modern techniques. This can be done internally by your HR department
or you can ask the software vendor to arrange training sessions for your team. Moreover,
you can invite the system architect and your data management team to come over and
provide weekly insight to your team on the floor and warehouses. This will enable smooth
flow of information across the value chain.

4. Redefine SOP:
Redefine your standard operating procedures to make sure that your team is moving the
right wheel at the right time. This requires few small but strategically very important steps.
In this regards, make sure to work on the following domains.
• Free flow of information across the value chain
• Daily, weekly, and monthly analytics report- to guide the floor, development, packaging,
and sales team about the sales flow and market behavior trends.
• Double checking the orders – humans are prone to error and may lead to shipment of
order for second time. This adds more bucks to the cost and yields loss. Therefore,
introduce double checking.
• Design a system with connected but different role for the people who understand the
signs and pay heed to their JDs.
• Print your key policy jargons and paste across the facility.
• Your SOP should address the strategic questions like could your warehouse be a
revenue source for you? How to ensure error-free order tracking? How to reduce
delivery time?
5. Learn from the Competition:
Only 20% start-ups last longer than 1 year because most of them
cease to learn. No matter whatever industry or market you are in,
competition and market can be a great source of free knowledge.
By actively monitoring the competition, you can learn:
• Updated best practices of logistics management
• Software and systems to manage information flow
• Techniques/training programs for your staff
• Modern operations management techniques in academic circles
Hopefully these suggestions will help you improve your logistical
efficiency in an effective manner and lead to improved customer
relations.
Logistics Information System

An interacting structure of people, equipment, and

procedures which together make relevant
information available to the logistics manager for
the purposes of planing, implementing and control.

Information flow makes a logistical system dynamic.

Quality and timeliness of information are key factors in
logistical operations.
Bowersox and Closs
25
 How Information Systems
Facilitate Logistics Management
• Decide when, what to produce, store, move
• Rapidly communicate orders
• Communicate orders, track order status
• Check inventory availability, monitor levels
• Track shipments
• Plan production based on actual demand
• Rapidly communicate product design change
• Provide product specifications
• Share information about defect rates, returns

26
Logistics Information System

LIS combine hardware and software to manage,

control, and measure logistics activities.

Computers System and application

Servers programs
Internet technologies
Input and output devices
Communication channels
Barcode, RF, storage media

27
Logistics Information System

LIS perform three vital roles in business firms.

– Logistics processes and operations,
– Logistics decision making; and
– Strategic competitive advantage
Major application categories of information
systems include:
– Operations Support Systems; and
– Management Support Systems

28
Logistics Information System

LIS Benefits
Increased product visibility and control
Improved knowledge of key logistics network component
capabilities and capacity
Enhanced economic value
Cost reductions
Sales increases
Creation of competitive advantage
Direct linkages to customers

29
Overview of Logistics Information System

Internal External
Finance/Accounting Customers
Marketing LIS Vendors
Logistics Carriers
Manufacturing Supply chain partners
Purchasing

Order Management
System Warehouse Management
• Contact with customer System Transportation
• Stock availability Stock level management Management System
• Crediting checking Order picking Shipment consolidation
• Invoicing Picker routing Routing and scheduling
• Product allocation to Picker assignments and Claims
customer work loading Tracking
• Fulfillment location Product availability Bill payment
estimating Freight bill auditing 30
Order processing system
• Customer location Industry/external data
• Order history • Market share
Operating data • Product offering
• Salesperson • Freight payment
• Revenues • Demographic trends
• Transportation history • Economic trends
• Order status • Inventory
• Credit files
• Product movement Company records
Management
• Competitive reactions • Cost of capital
• Sales forecasts • Cost of logistics
• Future trends activities
• New markets • Standart costs

Logistics Database

Report generation • Product traking and

• Order performance forecasting
• Shipment performance • Performace and cost
• Damages and returns reports
31
 Technologies in LIS

Bar code
Point-of-Sale ( POS)
EDI
RF-RFID

32
Contemporary Logistics Information Technologies
Bar Coding
 barcodes stored data in series of parallel black and white
bars of various widths and spacing. They can be read by
optical scanners called barcode readers or scanned from an
image by special software.

33
 Bar Coding

The Universal Product Code (UPC) is a specific

type of barcode, that is widely used in the United
States and Canada for tracking trade items in stores.
Turkey code: 869
Code 128, Code 39
EAN Code(International Article Number)-Europe
and Turkey
TOBB, Milli Mal Numaralandırma Merkezi

34
 Barcode Types
LOGISTICS MANAGEMENT

Country code Firm code Product code Control digit

Fundamentals of

4 digits (can 5 digits(can

3 digits 1 digit
change) change)

Exp:
869 9567 90009 4

Lambert
Stock 35
Ellram
36
Contemporary Logistics Information Technologies
Point of Sales Data
 Technology that allows firms, in real time, to know what
and where an item is being sold through scanning of
individual barcodes when an item purchased at the
retail level.
 Using this information, product forecasting, make better
purchase decision and customization, and reduce the
chance that an item will be out of stock.
 Zara-POS usage

37
 RFID

RFID system consists of an antenna and a

transceiver, which read the radio frequency and
transfer the information to a processing device,
and a transponder, or tag, which is an integrated
circuit containing the RF circuitry and
information to be transmitted.

RFID systems can be used just about anywhere,

from clothing tags to missiles to pet tags to food --
anywhere that a unique identification system is
needed.

38
 Contemporary Logistics Information Technologies
Radio Frequency Identification
(RFID)

 Yard, Warehouse & Factory

Management, Transportation
Management

 Item-level tracking
 Automatic Non-Line-of-Sight Scanning

39
RFID tags come in three general varieties:
passive, active, or semi-passive (also known
as battery-assisted).

Passive tags require no internal power

source-only active when a reader is nearby
to power them, whereas semi-passive and
active tags require a power source, usually
a small battery.

Passive tags have practical read distances

ranging from about 10 cm (4 in.)
40
 Active Tags
Active tags typically have much longer range and
larger memories than passive tags, as well as the ability
to store additional information sent by the transceiver.

Some active RFID tags include sensors such as

temperature logging which have been used to monitor
the temperature of fresh produce or certain
pharmaceutical products.

Other sensors that have been married with active

RFID include humidity, shock/vibration, light,
radiation, temperature, and atmospherics like ethylene.

41
 Semi-passive Tags
Semi-passive tags are similar to active tags in that
they have their own power source, but the battery
only powers the microchip and does not broadcast
a signal.

The RF energy is reflected back to the reader like a

passive tag. An alternative use for the battery is to
store energy from the reader to emit a response in
the future.

Greater sensitivity than passive tags, typically 100

times more.
42
Contemporary Logistics Information Technologies
Radio Frequency (RF)
 Relay information via electromagnetic energy waves
from a terminal to a base station, which is linked in
turn to a host computer.
 Typically used in a warehouse or
distribution center, RF technologies
provide the communications
capability between operating personel
(e.g. Fork lift drivers, loading dock
personnel, etc.) and centralized
computer capabilities.

43
 Definition of EDI
Inter organizational, computer-to-computer
exchange of business data in a standard,
machine-processable format.

Unstructured Structured

Fax EDI
E-Mail Order entry
Person-to-person Computer-to-computer

44
 Definition of EDI

The purpose of EDI is to eliminate

dublicate data entry and to improve the
speed and accuracy of information flow
by linking computer applications
between companies.

Levi’s-integrated its customer order

processing system using a QR(quick
response)-EDI: LeviLink

45
 Definition of EDI
Transfer of structured data, by agreed
message standards from one computer
system to another without human
intervention.
Cheques, bill of lading

46
 Types of EDIs

Proprietary Systems (One to Many) involve an

EDI system which is owned, managed, and
maintained by a single company
Value-added Networks (Many to Many) includes a
third party firm that acts as a central
clearinghouse
Industry Associations have their own EDI
standards

47
 EDI Standarts

For EDI to function properly, computer

language compatibility is required.

Users must have common communication

standards.

Trading partners must have common

definition words, codes and symbols; and a
common format and order of transmission.

48
 EDI Versus
Traditional Methods

PO POST OFFICE PO ORDER

BUYER'S SELLER'S
ENTRY
COMPUTER COMPUTER

EDI FLOW
PURCHASING

PURCHASING BUYER'S PURCHASING SELLER'S ORDER

APPLICATION ENTRY APPLICATION
49
Source: Margaret A. Emmelhainz, Electronic Data Interchange: A Total
Management Guide (New York: Van Nostrand Reinhold, 1990), p. 5.
 The Benefits of EDI
Comparing with non-electronic communication

Quick access to information,

Better customer services,
Reduced paperwork,
Better communications,
Increased productivity,
Improved tracing and tracing,
Cost efficiency,
Competitive advantage,
Improved billing.

50
 DSS
Modeling-simulation( what if games)
Artificial intelligence(AI): an
comprehensive term that involves voice
synthesis and recognition, game playing
systems, robotics, natural language
translators and expert systems(ES)
Benetton-POS-EDI-AI
Expert Systems
Natural language recognition
Neural networks

51