ELEMENTS OF LOGISTICS AND

INVENTORY CARRYING
UNIT II
ELEMENTS OF LOGISTICS
• Network design
• Information and control
• Transportation
• Inventory
• Warehousing
• Material handling
• Packaging
NETWORK DESIGN
• Logistics network design is an ongoing process that
involves locating new facilities like distribution centers,
warehouses, and production sites, determining the flows
between them, and managing costs
NETWORK DESIGN
INFORMATION AND CONTROL

Information and control can help improve business

efficiency and performance by using software and
technologies to generate data-driven insights. These
insights can help with:
• Forecasting demand and inventory
Information and control can help determine how
much of each product is needed to meet annual demand,
how much it will cost, and if there are enough resources to
meet the demand.
• Improved accuracy and efficiency
Information systems can help automate manual
processes and reduce the reliance on manual data entry,
which can minimize the risk of errors and improve the
speed at which a supply chain can be managed.
• Better understanding of customer service
Information systems can help establish better
customer service.
• Planning and organizing transportation
Information and control can help decide what orders
need to be picked and packed in warehouses, and can help
plan and organize transportation.
• Triggering operational procedures
Information and control can help design information
systems that can trigger various operational procedures.
• Less order errors and better delivery schedules
Information systems can help reduce order errors
and improve delivery schedules
TRANSPORTATION

Transportation is the operation involved in the actual

physical delivery or movement of products from one place
to another.

TYPES OF TRANSPORTATION
• ROAD
• RAIL
• AIR
• SEA
INVENTORY
MATERIAL HANDLING

Material handling includes four dimensions: movement,

time, quantity, and space.

It includes the following

1. Movement
2. Protection
3. Packaging
4. Storage
5. Control
MATERIAL FLOW
WAREHOUSING
• A warehouse is a building for storing goods. Warehouses
are used by manufacturers, importers, exporters,
wholesalers, transport businesses, customs, etc. They
are usually large plain buildings in industrial parks on the
outskirts of cities, towns, or villages.
Logistic warehouses are specialized facilities designed to
store and manage goods and materials as they move
through the supply chain.
Some key features and functions of logistic warehouses:
1. Storage Solutions:
• Racking Systems: Various types of racks (e.g., pallet
racks, cantilever racks) to maximize space and improve
organization.
• Shelving Units: For smaller items and parts that need to
be easily accessible.
2. Technology Integration:

• Warehouse Management Systems (WMS): Software that

helps manage inventory, track orders, and optimize
warehouse operations.
• Automation: Use of robotics, automated guided vehicles
(AGVs), and conveyor systems to enhance efficiency.
3. Inventory Management:

• Real-Time Tracking: Using barcodes, RFID tags, and IoT

devices to track inventory levels and locations in real-
time.
• Inventory Control: Techniques like FIFO (First In, First
Out) and LIFO (Last In, First Out) to manage stock
rotation and reduce waste.
4. Order Fulfillment:

• Picking and Packing: Efficient systems for picking items

from shelves and packing them for shipment.
• Cross-Docking: Direct transfer of products from inbound
to outbound transportation, minimizing storage time.
5. Distribution:

• Shipping and Receiving Areas: Dedicated zones for the

efficient loading and unloading of goods.
• Transportation Management: Coordination with various
transportation modes (e.g., trucks, trains, ships) to ensure
timely delivery.
6. Security and Safety:

• Surveillance Systems: Cameras and security personnel to

protect against theft and unauthorized access.
• Safety Protocols: Implementation of safety measures,
including fire suppression systems and proper handling
procedures to ensure worker safety.
7. Sustainability:

• Energy Efficiency: Use of energy-efficient lighting, HVAC

systems, and renewable energy sources.
• Waste Management: Recycling programs and strategies
to minimize waste production.
MATERIAL HANDLING
• The process of Moving, Storing, Protecting and
Controlling materials and goods throughout the supply
chain - from manufacturing to distribution is called
Material Handling.
FUNCTIONS OF MATERIAL HANDLING
• LOADING AND UNLOADING
• ORDER FILLING
• INFORMATION HANDLING
ROLE OF MATERIAL HANDLING
• Unloading the incoming material from transport vehicles
• Moving the unloaded material to the assigned storage
place in the warehouse.
• Lifting the material from its storage place during order
picking
• Moving the material for inspection and packing
• Loading the packages, boxes or canons on to the
transport vehicles.
Material Handling Guidlines
• Volumes to be Handled
• Speed in Handling
• Productivity
• Product Characteristics
• Nature of the product
Material Handling Equipments
• Manual System
• Mechanized System
wheeled trolley
Forklift thick
Towlines
Conveyors
wheel conveyor and roller conveyor
Belt Conveyor and chain Conveyor
carousels
Overhead cranes
Stacker Cranes
Robots in Logistics
Order Processing
• Order processing in logistics is the process of fulfilling
customer orders for goods or services, from the time the
order is placed until it's delivered.
Steps in order processing
• Receiving: Accepting the order and any inventory from a
supplier or manufacturer
• Validating: Checking the order for accuracy
• Picking and packing: Finding and collecting the ordered
items, and packaging them for shipping
• Processing payments: Confirming payment
• Shipping: Sending the packages to the customer or a
third-party carrier for delivery
• Customer support: Ensuring customer satisfaction, and
processing returns or refunds if necessary
TRANSPORTATION
• Transportation is a key part of logistics, which is the
movement of goods and information between a provider
and a recipient.
Purpose of Transportation
• Product Movement
• Product Storage - Temporary storage
Stratergy for successful transportation
• Customer requirement
• Timely movement of shipments
• Mode of transportation
• Benchmarking
• flexibility
Participants in transport decisions
• Shipper
• Consignee
• Carrier
• Government
• Public
Factors affecting the decision
• Vehicle related cost
• Fixed Operating cost
• Quantity
• Trip
• Overhead cost
Factors affecting shippers decision
• Transportation cost
• Inventory cost
• Facility cost
• Processing cost
• Service cost
Modes of Transport
• Air
• Sea
• Railways
• Roadways
• Pipline
Factors influencing Transport Economics
• Distance
• Volume
• Density
• Stowability
• handling
• Liability
• Market factors
Documents in Transport Decision Making
• Bill of Lading
A bill of lading (B/L) is a legal document that a carrier issues
to a shipper to acknowledge receiving cargo for shipment.
It's a crucial document in shipping and international trade
that serves multiple purposes:
• Receipt: Confirms the carrier has received the goods for
shipment
• Title: Establishes ownership of the goods
• Contract: Defines the terms of carriage or contractual
agreement between the shipper and the carrier
• Freight Bill
A freight bill is a document that lists the costs and services
for shipping freight, and is issued by the carrier to the
customer as proof of payment. It's similar to an invoice and
includes details about the transaction, such as:
• The name and contact information of the shipper and
receiver
• A description of the goods being shipped
• The time and place the shipment will be delivered
• The cost of transport and other associated fees
• The weight, dimensions, and volume of the shipment
• The assessed rate of freight
• Total charges for freight and handling
• Total changes due
• Payment terms
Shipping manifest

A shipping manifest is a legal document that lists all the

items being transported on a ship or container. It's used for
a variety of purposes, including:
• Customs clearance: Shipping manifests are used as
customs documents at ports of entry.
• Port operations: Manifests help with port operations.
• Tracking shipments: Manifests can be used to track
shipments throughout the transportation process,
including when freight is loaded or unloaded.
• Generating invoices: Carriers use manifests to generate
invoices for importers and exporters.
• Providing instructions: Manifests can include pick-up
and delivery instructions, as well as special handling
requirements for hazardous materials or dangerous
goods.
• Confirming receipt: Manifests can confirm that the
importer has received all the items they ordered.
• Providing evidence: Manifests can serve as evidence of
a contract if items are damaged or not delivered.
DEMAND FORECASTING
• Demand forecasting is a business practice that helps
logistics companies predict future demand for goods,
storage, transportation, and other services.
• Logistics demand forecasting is a way for companies to
accurately anticipate the demand for products and
shipments throughout the supply chain, even under
uncontrollable conditions or circumstances.
KEY FACTORS INFLUENCING FORCASTING
• Data quality
• Seasonality
• market trends
• External events
METHODS OF FORCASTING
• QUALITATIVE METHOD
• TIME SERIES
• CAUSAL
• SIMULATION
QUALITATIVE METHOD
• This forcast is used when we have less or no historical
performance.
Four common approach
1. Data to determine
2. Experts familiarity of product
3. Industry and customer preference
4. Expert’s Opinion
TIME SERIES
• This method relay on the Historial data of demand to
predit the Future.
• This method is ideal for items generally defined historical
pattern and does not change readically from one to two
years. ex - staple stocks in a retail store food, house hold
goods and beverages.
CASUAL METHOD
• This method is used when there is visible correlation
between one or more variable to the demand for the
product.
SIMULATION
• This is a very sophisticated method in which organistion
evaluates many “what if”
• This method provides answers on impact of product
demand
if price increased or
if income decreased etc
Methods of forcasting
• Active demand forecasting
Uses specialized knowledge, statistical techniques, and
information sources that computers can't easily access.
• Passive demand forecasting
Analyzes historical data to predict future customer needs.
This method is useful for seasonal demand.
• Internal forecasting
Examines operations to identify potential barriers to growth
or untapped potential.
• External macro forecasting
Focuses on external factors that can influence demand and
sales, such as cultural shifts, to prepare and streamline the
supply chain.
• Econometrics
Widely used to forecast demand for products, groups of
products, and the economy as a whole. Econometric
methods are considered more reliable than other
forecasting methods.
• External forecasting
Considers macroeconomic indicators, industry trends, and
the competitive landscape to understand broader market
forces and potential supply chain bottlenecks.
• Trend projection
Uses trends in product demand over time to anticipate
patterns and base forecasts.
• Delphi method
A qualitative method that uses expert opinions on a market
forecast. This method involves sending a questionnaire to a
group of demand forecasting experts and requires a skilled
facilitator.
STEPS IN FORCASTING
• Identify the purpose
• Specify the time period
• Choose a method
• Collect data
• Evaluate the data
PERFORMANCE MEASUREMENTS
• Logistics performance measurement is the process of
collecting, analyzing, and reporting data on various
aspects of your logistics operations.
• A Benchmark is a standard of performance.
Benchmarking helps identify standard of performance of
an organization.
Forms of Benchmarking
• Internal Benchmarking
Studies practices within the organization
• External Benchmarking
Determine performance of the other companies
• Quantitative Benchmarking
Helps organization set improved objectives
• Process Benchmarking
how top companies establish a specific process.
through research, surveys, site visits etc
Benefits of Benchmarking
• Exposes organization to innovations and breakthrough
• Allows organization to see beyond the barriers - think
outside the box.
• Provides organization with a Methodology to implement
and manage the change.