ASSIGNMENT :- MBA 3RD SEM

DEVESH KUMAR
2019533534
SUBMITTED TO – PRO. AMBIKA KHURANA

Question – What s Logistic and define its objectives and function.

Answer *
Logistics refers to the overall process of managing how resources are acquired,
stored, and transported to their final destination. Logistics management involves
identifying prospective distributors and suppliers and determining their
effectiveness and accessibility. Logistics managers are referred to as logisticians.

"Logistics" was initially a military-based term used in reference to how military

personnel obtained, stored, and moved equipment and supplies. The term is now
used widely in the business sector, particularly by companies in the manufacturing
sectors, to refer to how resources are handled and moved along the supply chain.

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.
According to Phillip Kotler, “Market logistics involve planning, implementing
and controlling physical flow of material and final (finished) goods from the
point of origin to the point of use to meet customer requirements, at a profit.”

A practical and simple way to look at logistics, as quoted from The Handbook of

Technology Management, “is as having the right item in the right quantity at the
right time at the right place for the right price in the right condition to the right
customer.”

Relation to Supply Chain Management

Logistics management is a subset of the larger supply chain management. Supply
chain management plans, implements and controls the efficient flow of storage,
goods, services and related information from the point of origin to the point of
consumption. This is done for the purpose of meeting the requirements of
customers.

Logistics management in business works across all industries. Its aim is to manage
the fruition of project life cycles, supply chains and resultant efficiencies. As
businesses grow more complex and expand into a global marketplace, business
logisticians have evolved into something called supply chain logisticians.

With logistics management in business the focus is twofold: inbound logistics for
internal functions and outbound logistics for the external flow from the point of
origin to the point of consumption. Logisticians focus on inventory management,
purchasing, transportation, warehousing, consultation and the organization and
mapping of these processes.
OBJECTIVE OF LOGISTIC
OTHERS ARE –

Rapid response
F-flexibility objective of an organization: Some companies measure this as
response time to customer’s order. On an average how much time do we need to
fulfill one particular type of customer’s order in a year? This is a measure of rapid
response.
Logistics should ensure that the supplier is able to respond to the change in the
demand very fast. Entire production should change from traditional push system to
pull system to facilitate rapid response. Instead of stocking, the goods and
supplying on demand, orders are executed on shipment to shipment basis
information Technology plays an important role here as an enabler. IT helps
management in producing and delivering goods when the consumer needs them.
This results into reducing of inventory and exposes all operational deficiencies.
Now the management resolves these deficiencies and slashes down costs. [Concept
of SMED and KANBAN as practiced by JIT companies in Japan or elsewhere]
 
Minimum variance
D-delivery objective of an organization, this can be measured as ‘On Time
Delivery’
or OTD. If 100 deliveries are made in a month/quarter/year how many reached as
per the commitment made to the customer? This percentage is OTD.
Any event that disrupts a system is variance. Logistics operations are disrupted by
events like delays due to obstacles in information flow, traffic snarls, acts of god,
wrong dispatches, damage in transit. Traditional approach is to keep safety stocks
and transport the goods by high cost mode. The cost of this approach is huge.
Logistics is expected to minimize these events, thereby minimize and improve on
Time Delivery.
 
Minimum inventory
 
This is component of cost objective of a company. Inventory is associated with a
huge baggage of costs. It is termed as a necessary evil. Objective of minimum
inventory is measured as Inventory Turns or Inventory Turnover Ratio. Americans
call this measure as turn velocity. Logistics management reduces these turns
without sacrificing customer satisfaction. Lower turns ensure effective utilization
of assets devoted to stock. [Concept of single piece flow as practiced by JIT
companies in Japan or elsewhere]. Logistical management should keep the overall
well being of a company in view and fix a minimum inventory level without trying
to minimize the inventory level as an isolated objective
 
Movement consolidation
Transportation is the biggest contributor to logistics cost. Transportation cost
depends
on product type, size, weight, distance to be transported etc. For transporting small
shipments just in time [reduction in inventory costs] expensive transport modes are
used which again tend to hike the costs. Movement consolidation is planning
several such small shipments together [of different types of shipments] by
integrating interests of several player s in the supply chain. Generally, large
shipment size and long distances reduce transportation cost per unit. Movement
consolidation shall result into reduction in transportation costs
 
Quality
If the quality of product fails logistics will have to ship the product out of
customers’ premises and repeat the logistics operation again. This adds to costs and
customer dissatisfaction. Hence logistics should contribute to TQM initiative of
management. In fact, commitment to TQM has made the management world  over
wake up to the significance of logistics function. Logistics can play a significant
role in total quality improvement by improving the quality of logistics performance
continuously and continually

Functions –
Logistics is a process of movement of goods across the supply chain of a company.
However, this process consists of various functions that have to be properly
managed to bring effectiveness and efficiency to the supply chain of the
organization.

Order processing

It is an important task in functions of logistics operations. The purchase order

placed by a buyer to a supplier is an important legal document of the transactions
between the two parties.

This document incorporates the description or technical details of the product to

supply, price, delivery period, payment terms, taxes, and other commercial terms
as agreed.

The order processing activity consists of the following steps:

 Order checking for any deviations in agrees upon or negotiated terms

  Prices, payment, and delivery terms.
 Checking the availability of materials in stock.
 Production and material scheduling for shortages.
 Acknowledging the order indicating deviations if any.

Inventory control

Inventory management is to keep enough inventories to meet customer

requirements, and simultaneously its carrying cost should be lowest.

It is basically an exercise of striking a balance between the customer service for

not losing the market opportunity and the cost to meet the same.

The inventory is the greatest culprit in the overall supply chain of a firm because of
its huge carrying cost, which indirectly eats away the profits. It consists of the cost
of financing the inventory, insurance, storage, losses, damages, and pilferage.

Warehousing

Warehousing is the storing of finished goods until they are sold. It plays a vital role
in logistics operations of a firm. The effectiveness of an organization’s marketing
depends on the appropriate decision on warehousing.

In today’s context, warehousing is treated as switching facility rather than a storage

of improper warehousing management. Warehousing is the key decision area in
logistics.
The major decisions in warehousing are:
 Location of warehousing facilities
 Number of warehouses
 Size of the warehouse
 Warehouse layout
 Design of the building
 Ownership of the warehouse
Transportation

For movement of goods from the supplier to the buyer, transportation is the most
fundamental and important component of logistics.

When an order is placed, the transaction is not completed till the goods are
physically moved to the customer’s place. The physical movement of goods is
through various transportation modes.

In logistics costs, its share varies from 65 to 70 percent in the case of mass-
consumed, very low unit-priced products.

Firms choose the mode of transportation depending on the infrastructure of

transportation in the country or region. Cost is the most important consideration in
the selection of a particular mode of transport.

 Material handling and storage system

The speed of the inventory movement across the supply chain depends on the
material handling methods. An improper method of material handling will add to
the product damages and delays in deliveries and incidental overheads.

Mechanization and automation in material handling enhance the logistics system

productivity.

Other considerations for selection of a material handling system are the volumes to
be handled, the speed required for material movement and the level of service to be
offered to the customer.

The storage system is important for maximum space utilization (floor and cubic) in
the given size of a warehouse.
Logistical packaging

Logistical or industrial packaging is a critical element in the physical distribution

of a product, which influences the efficiency of the logistical system. It differs
from product packaging, which is based on marketing objectives.

However, logistical packaging plays an important role in damage protection, case

in material handling and storage space economy. The utilization of load has a
major bearing on logistical packaging with regard to the packaging cost.

Information

Logistics is basically an information-based activity of inventory movement across

a supply chain. Hence, an information system plays a vital role in delivering a
superior service to the customers.

Use of IT tools for information identification, access, storage, analysis, retrieval

and decision support which is vital among the functions of logistics is helping
business firms to enhance their competitiveness.