LOGISTICS PLANNING
CONCEPT OF LOGISTIC:
Logistic covers a variety of business activities for the material
flow from the various sources to the processing facilities and
the distribution of finished products to ultimate users.
FEATURES OF LOGISTIC:
Logistic confirms a uniform flow of goods such as raw
materials, work-in process and finished goods.
Possesses the ability of meeting customer expectations and
requirements of goods.
Ensures delivery of quality products on time.
Provides best possible customer service at the lowest
possible cost.
It is an integration of various managerial functions for the
optimum usage of resources.
Deals with the movement and storage of goods in
appropriate quantity
Enhances productivity and profitability.
The Increased Importance of Logistics
• A Reduction in Economic Regulation
• Recognition by Prominent Non-Logisticians
• Technological Advances
• The Growing Power of Retailers
• Globalization of Trade
Three objectives of logistics strategy:
• Cost reduction (variable costs)
• Capital reduction (investment, fixed costs)
• Service Improvement (may be at odds with
the above two objectives).
Components of
logistics management : Management actions
Outputs of
Planning Implementation Control logistics
Inputs into logistics
Natural resources Marketing
(land, facilities, Logistics management orientation
and equipments) Suppliers Raw In-process Finished Customers (competitive
materials inventory goods advantage)
Time and
Human resources
Logistics Activities place utility
•Customer Service •Plant and warehouse Efficient
Financial resources •Demand forecasting site selection movement to
•Distribution •Procurement customer
communications •Packaging
Information •Inventory control •Return goods handling
resources Proprietary
•Material handling •Salvage and scrap asset
•Order Processing disposal
•Parts and service •Traffic and
support transportation
•Warehousing and
storage
LOGISTIC IN INDIA: In India, logistics is the most
important , yet a neglected field. There is no
professional society which recognises and offers
an integrated systems approach to logistics.
LOGISTICAL MISSION AND STRATEGIC
ISSUES:
The logistical system of an organisation means an
integrated effort that is involved in getting a high
level customer satisfaction at the least cost while
delivering the highest value to its shareholders.
MISSIONS :
To make it possible to provide the right quantity of quality
products at the right time and place in the right physical
condition.
To provide best possible customer service for core
competency.
SERVICE COMPONENTS OF LOGISTICAL SERVICE:
STRATEGIC COMPONENTS: These reflect the vision of
of the top level management of an organisation towards
customer relation in terms of their capability to ensure the
best return against the investment made.
LOGISTICAL COMPONENTS: These components deal
with basic services required for delivery of goods,
including availability of goods as per normal and
unforeseen requirements, fixed replenishment cycle time,
zero defect delivery along with consistency and reliability
in their services.
NON-LOGISTICAL COMPONENETS: These refer to
value added services offered to customers in terms of
financial and technical support for infrastructural
development, credit facility on special occasions, and
training for sharpening their marketing and managerial
skills.
STRATEGIC LOGISTIC PLANNING PROCESS:
The specific process for logistic strategy development and
planning can be explained through the following steps:
1. Corporate Vision: Strategic logistics planning process
starts with defining the corporate vision towards, achieving
the objectives of logistics, the key inputs of logistic
planning process and identification of potential
alternatives of logistic approaches. A well-defined
corporate vision gives future direction to the firm and also
reflects the capability of the management to think beyond
the current trends of marketing.
2. LOGISTIC STRATEGIC ANALYSIS: After defining the corporate
vision towards strategic logistic planning process. The important
functions of this step include:
A. Development of various strategic alternatives.
B. Review and final confirmation of detailed logistic plan.
3. LOGISTIC PLANNING: In this step it is ascertained if there is an
effective implementation of logistic strategy or not. The logistic plan
is an outline of total logistics systems in terms of the following
factors:
a. Functional goals to achieve pre-determined long run logistical
objectives and corporate missions.
b. Programmes and procedures for new logistic projects.
c. Operational activities along with their co-ordination
d. Time for framework of logistics.
e. Authority and responsibility
f. Continuous evaluation and measurement of corporate performance for
improvement of the total logistic system.
4. MANAGING CHANGE: This is the final step in the strategic
planning that deals with managing change by developing a cohesive
organisational environment. This helps in ascertaining an efficient
way of conducting business. The significant factors that involve
managing change effectively are as under:
Clear cut definition of the mission and objectives of the logistics
activities.
Communication of the logical mission and objectives to subordinates
along with its contributional capabilities
Comprehensive specification of authority, responsibility, role, function
and tasks of each and every position in the organisational hierarchy
Co-ordination mechanism between logistics function and their related
functions.
Organising training programmes to meet the requirements of the new
logistical system to ascertain successs.
OPERATIONAL OBJECTIVES:
RIGHT RESPONSE
RIGHT QUANTITY
RIGHT QUALITY
RIGHT VALUE
RIGHT COSTS-TRADE OFF
RIGHT INFORMATION
COMPONENTS OF LOGISTIC MANAGEMENT:
1) GENERIC COMPONENT:A generic component includes
the following activities:
a) Customer Service: This creates an interface of logistics
with marketing which determines the following factors:
Customer service requirements for products and/or
competitive advantage
Corporate vision towards service goals
Service expectations of customers and their response
Development of customer service standard
Logistics cost-service trade-off
Infrastructural requirements
Development of evaluation and appraisal mechanism.
PRIMARY COMPONENTS:
A)NETWORK DESIGN
Number, size and location of facility network required to
perform logistic operations.
Relationship among location facilities
The customer service capabilities
Infrastructure of each facility centre
B) TRANSPORTATION
Requirement, availability and regularity of the transport
service
Modes of transport and co-ordination between them
Transport cost, freight and tariff
Fleet Management
Transit, insurance and claim processing
Time, speed and intact delivery
Point-to point information regarding the movement of good
status
C) INVENTORY MANAGEMENT
Stocking policies for raw materials
Work in process and finished gods
Zero-inventory
Just-in time
Push or pull inventory strategies
Inventory cost
Product mix at stocking points
Number, location and size of stocking points
Approach towards safety block, recorder point and lot size
D) ORDER PROCESSING:
Order receiving and recording
Speedy order processing and transmission
Order inventory and interface procedures
Ordering and back order systems
Warehouse picking and packing
Dispatch Schedule
Point-to-point information about order status
Accurate, legal and required documentation
Order processing cost
SUPPORTIVE COMPONENTS:
a) STORAGE AND WARE HOUSING
Warehouse location and configuration
Infrastructural facilities
Operational mechanism
Space determination
Goods placement
Up-to-date recording of goods’ stock position
Protecting and preserving the physical attributes of goods
Proper loading and unloading system
Marshalling goods for dispatches
Warehousing cost
b) Materials Handling:
Safe, smooth and speedy placing and positioning of goods
to facilitate their movement and storage
Material handling equipment selection and replacement
policies
Storage and retrieval frequency of goods
Material handling equipment and operating cost
Usual life and resale or scrap value of equipment.
c) PROTECTIVE PACKAGING:
Protection from loss and damage
Design of package required for handling and storage
Market value of the package
Re-use of package
Scrap value of the package
Packaging cost
d)PROCUREMENT:
Make or buy decision
Vendor selection and management
Quality specification
Supply Schedule
Vendor service capability
Vendor-company relationship
Vendor training and development
Procurement cost
e) INFORMATION:
Information requirement for logistics system
Sources of data and their reliability
DBMS for processing, analysis and storage
Formats for information presentation to facilitate decision
making
Computer infrastructure
Information cost
f) FORECASTING:
Nature and trend of demand
Elements of forecast
Forecast of technique and system
FUNCTION OF LOGISTIC MANAGEMENT:
a) PROCUREMENT FUNCTION: This function involves the
smooth flow of raw materials, parts and components of
specified quality and quantity from quality-certified
suppliers to the production centre.
b) PRODUCTION FUNCTION: The production function of
logistics involves efficient and effective management of
work-in-process inventory and its flow between the
different stages of manufacturing.
PHYSICAL DISTRIBUTION SYSTEM: Physical
distribution means the movement of finished goods from
the last point of production to customers to end-users.
