Category: University of Mumbai BMS Notes

• Inbound Logistics is concerned with pre-production activities of logistics i.e. arranging resources and raw materials for further manufacturing. It constitutes Procurement Performance Cycle
• In Process Logistics is production logistics and provides support activities to the manufacturing. It constitutes Manufacturing Performance Cycle.
• Outbound Logistics includes all those activities which are concerned with physical distribution of finished goods from warehouse to the customer. It constitutes physical Distribution Performance Cycle.

Difference between Inbound and Outbound Logistics

Inbound logistics

The inbound logistics process refers to the inflow of raw materials from suppliers to manufacturing plant. This is the first phase of the value chain. It involves various activities, such as the storage and delivery of raw materials and parts that are going to be used in production. It also includes sourcing the materials, tracking inventory and optimizing the movement of products from suppliers to the store, warehouse or manufacturing unit.

Phases

• Supply flow management. This consists of deciding on and managing the product quantities you need as well as the frequency of procurement to ensure the availability of these goods whenever necessary.
• Procurement of stock. This refers to the purchase of the products required by the production and/or sales department. To purchase goods, you need to select a supplier taking into account factors such as price, quality, delivery date, payment terms, etc.
• Transportation planning. Planning for the arrival of goods is paramount for preventing bottlenecks at your warehouse docks. Everyone involved in this stage should be aware of expected orders and their estimated time of arrival.
• Unloading and receipt of material. This relates to the unloading of goods from the trucks and their movement to the receiving or consolidation area. It’s critical to make sure that the products you receive match those you ordered. The package is also checked in this phase to ensure that it is in perfect condition.
• Choice of unit load. Once the goods have been verified and have undergone quality control, they are placed on/in the appropriate unit load pallets, boxes, or containers which will be used to store, transport, and handle the products.
• Product labeling and consolidation. All information relating to the goods received needs to be recorded in order to add the new products to the existing stock in the system, thus updating the inventory status.
• Storage in the ideal system. Goods that have been labeled and are ready to be stored are moved to the storage system best adapted to their characteristics. The products remain there until they are required in the next stage of the supply chain.

Outbound logistics

Outbound logistics involves the flow of finished products from a company to its end customers. These activities are mainly concerned with the distribution channels and customer service. Outbound logistics, as the name indicate, is the collection, storage, and distribution of the final goods and related information flows, from the manufacturing plant to the end user. It covers all those activities (i.e. selecting, packaging, transporting, etc.) which are involved in the outflow of merchandise from seller to the buyer.

Process:

Storage

The storage process depends on a warehouse using the correct methods to keep the finished goods in a safe environment and ensuring they’re easy for staff to access. Because a customer can order a product at any time, effective organization of the warehouse is essential. It can also be more cost-efficient to store as little product as possible because stored goods aren’t earning a profit, and they occupy space the business can use for other purposes.

Transportation

Transportation is the main process of outbound logistics. Logistics depends on transportation, and companies try to move products from one location to another as efficiently as possible while using the most effective methods. Many factors impact transportation, such as:

• Delays
• Fluctuations in fuel prices
• The dependability of the transport team

Components:

Outbound process

There are numerous essential stages that businesses follow in the outbound logistics process. For example, if a sales department receives a customer purchase order, it first checks the inventory to confirm it can fulfill the order. The department then sends this order to the warehouse, where staff find the product and pack it for delivery to the client. The sales team then charges the customer for the order.

Channels of distribution

Many businesses use channels of distribution instead of working directly with the client. A channel of distribution can be an individual or another business that specializes in distribution. For example, a company that manufactures chairs may have a variety of clients in its distribution channels.

These channels may be websites, shops or other vendors, and they’re responsible for promoting, storing and transporting the chairs. A key part of outbound logistics is selecting distributors that promote the product and have a strong delivery network, which can provide greater reliability.

Inventory system

An effective inventory system is essential for ensuring outbound procedures operate efficiently. Businesses often use their past sales and inventory record to predict future demand and make certain they have enough goods to fulfill orders. Having too much or too little product can cause challenges for a business, whereas having the right quantity can increase the order fulfillment rate and raise profits.

Delivery optimization

Optimizing distribution and delivery is another essential component of outbound logistics. A common approach is to use system barcode scanning for inventory tracking. This helps to keep the client updated on the status of the order, and it helps to prevent errors by making them easily identifiable to both the customer and the fulfilling business. Such a process allows the business to meet its delivery deadlines and increase customer satisfaction.

Differences between Inbound and Outbound Logistics

Inbound Logistics refers to the buying, storage, and dispersal, of the incoming goods, to the manufacturing unit. On the other side, outbound logistics implies the transmission, selection, packaging, and distribution of final goods to the end users.

The inbound logistics is aligned towards the usage of resources and raw materials, within the manufacturing or assembly plant. On the contrary, outbound logistics focused on the outflow of final goods or product from the firm to the end customers.

Inbound logistics, is all about sourcing and receiving of raw material and its management, in the organization. Conversely, outbound logistics is mainly deal with customer service and distribution channels.

In inbound logistics, the relationship is between the supplier and the company. Unlike outbound logistics, in which the relationship is between the company and the ultimate customer.

 

Integrated Logistics Management can be defined as the process of anticipating customer needs and wants, acquiring the capital, materials, people, technologies and information necessary to meet those needs, optimizing the goods or service, producing a network to fulfill customer requests and utilizing the network to fulfill customer requirements in a timely manner.

Integrated logistics is thus concerned with bringing connectivity in various logistical activities and performing the logistics function as one single chain rather than many isolated functions. This helps in reducing the operational efforts and costs and performance wise it leads to better customer service and higher revenues for the company.

Flows in Integrated Logistics:

As logistical activities need to be integrated in one single chain, efforts are taken to unite two main categories of flows of logistics viz. Information Flow and Inventory Flow.

(a) Inventory flow: It is concerned with how the raw materials are purchased from suppliers, processed and finally delivered to the customer. It represents the Logistical performance cycle encompassing inbound, in process and outbound logistics. Inventory Flow thus, covers procurement, manufacturing support and physical distribution.

(i) Procurement: Procurement is concerned with getting raw materials from the vendor and make available for further processing as and when required. It aims at carrying out logistics elements related to procurement of materials at lower price. It involves all preproduction logistical activities.

(ii) Manufacturing Support: Manufacturing support is an interface between the procurement and physical distribution. The activities under this flow aims at providing basic support in manufacturing. It includes material handling, managing work in progress inventory and transferring finished goods to warehouse.

(iii) Physical Distribution: includes all those elements of logistics which are necessary to distribute the goods from the manufacturer’s warehouse to the customer’s warehouse. It ensures that goods are delivered to the customer according to his order following 7Rs principle of Customer Service.

(b) Information Flow: Information flow aims at developing coordination among various ends and performs the logistical functions in the righteous manner enabling logistical competency. It includes Planning and Coordination Flow and Operations Flow:

(i) Planning and Coordination Flow: Planning and Coordination is the base of logistics chain that provides an integrated method of working by the participants of value chain. Requirements are consolidated and finally a plan is made to carry out logistical operations in an integrated way to satisfy all the value chain participants.

(ii) Operations Flow: It is concerned with directing operations to receive the order, process it, carrying our functions like warehousing, material handling and transportation and finally distributing the goods according to an order.

Barriers to Integrated Logistics:

Integration of Logistics is not an easy task. There are certain barriers in the whole process. These barriers could be listed as follows:

(a) Organization Structure: Integration of logistical function requires on the part of manager to look beyond the aspects of authority and hierarchy in the organization structure. Traditional perspectives by managers need to be ignored and new integrated approach is essential.

(b) Measurement Systems: Managers generally have a thinking to look their functions individually but integrated logistics require from the part of managers to see their functions as a part of business system. A new measurement system with holistic approach is needed.

(c) Inventory Ownership: Integrated logistics aims at managing inventory in altogether a different way. Whereas, traditionally inventories are managed to maintain sufficient supply and remain in a comfort zone. Integrated logistics aims at modern inventory management techniques like JIT wherein inventory carrying costs are reduced considerably.

(d) Information Technology: Information technology that is required to meet the requirements of integrated logistics is not available easily as it requires cross functional approach. Moreover such technologies are really very expensive.

(e) Knowledge: Competency among the employees involved in integrated logistics is essential Failure to have such competency may not serve the purpose.

Improving service level usually means an increase of costs. The service costs are caused e.g. complaints and correction of mistakes and work phase be done twice. Quality assurance contribute to reducing bad quality and mistakes, but in this case, service level production costs may increase considerably high.

Increasing the number of products stored in warehouse adds more rapid product availability to customer, but increases storage costs and the cost of tied up capital.

Therefore, it is important to find an optimum level, where service is good enough, but at the same time costs as low as possible.
Collection of customer feedback and its processing is necessary in order to identify satisfactory service level for customers.

Customer needs can be met, for example, by packing products for store handling and ensuring their handleability. Customer needs are often associated with delivery time or reliability of delivery and companies give related to them service promises. Well-managed complaint may increase company’s image and ultimately, turn to a clear competitive advantage.

Three principals of service

Service can be planned by three different principals or by a combination of them, depending on customer and product:

• Self-service principal: Customer orientation can be based on self-service principal, if customer doesn’t see service to create delivery process value. Typical to this service is customer’s own participation, use of up to date information networks, low unit cost of the process and ease of service
• Normal service: when share of service increases it is so called normal service, which means traditional customer service and requires service personnel presence. For example, visiting store’s fish desk or pharmacy.
• Tailor-made service: tailored services are characterized by customer fitting room, appointment and expensive process cost. As examples, investment advisory, legal clearance or negotiating mortgage.

The danger of part optimization

In logistics, there is a risk of part optimization. In this case, in one function service level is high, but measures implemented in other functions of the company tears it up. Such situations may arise e.g. between storage and transportation and buying and selling, for example, so that customer’s urgently needed spare parts kept in the stock, but they are transported to customer very rarely then the warehouse operates in vain or sales promises quick delivery but purchase keep deliveries from sub-suppliers with long delivery periods so that the product can not be delivered quickly.

Service may suffer too in connection with, for example, packing or delivery, and it is particularly harmful if carefully planned and implemented supply chain management fails in the final stage of logistics chain, for example, product is damaged during assembly in customer’s premises. In this case, resources being wasted and it will lead to financial losses and failure of customer promises.

Customer Satisfaction

Having good customer service in the transportation industry will ultimately improve your customer satisfaction levels. Customer satisfaction is important, even in the logistics industry in fact, especially in the logistics industry. Why the whole process might seem as simple as picking up a customer’s delivery and delivering it to its destination, customer satisfaction ultimately comes down to what your business can offer them outside of that simple process. Online services to track their shipments can work wonders, but human interaction is just as effective. Keep your customers up to date on their shipments if you can, or explain to them from the outset what will happen with their deliveries. Keeping a customer satisfied will keep them a customer.

Customer Relationships

Customer relationships play a part in customer satisfaction, but will also play a part in the success of your business. A good customer relationship will not only keep them coming back as ‘repeat customers’, but they are also more likely to suggest your business to other people and bring you in more clients over time. They chose your business initially, so make sure you give them enough reasons to come back and not look elsewhere to your competitors. Customer relationships can be a simple way of doing this with minimal, if any, costs so it’s well worth the bit of extra effort.

Brand Image

Good customer service in the transportation industry is going to make your brand look good. Poor customer service is what drives people to leave bad reviews. When someone complains about a company, it’s usually about the customer service they received as opposed to the product. If a product is faulty, customers can be appeased by good customer service whether that’s an apology or a replacement and this works in Logistics too. If your company is apologetic if something goes wrong, bad reviews and complaints are less likely. Showing you care through good customer service will do your business and your brand image a world of good.

Logistics is not just concerned with material or information transitions but it support marketing function, product development, price promotion and helps in bringing new ideas to provide customer service. It ensure that firm should provide fast, accurate and quality service.

Logistical competency leads to increased revenue, create opportunity for major cost savings in operations and simplify complexity of distribution network. Logistics competency includes the ability to analyze and design new distribution networks and optimize existing networks.

It also include management of information required of order processing and demand forecasting. It encompasses managing of all logistical performances in such a manner that it results into optimization.

Thus, summing up, it could be said that Logistical competency is the assessment of a firm’s capability to provide competitive services to the customers at the lowest possible cost.

3 Cs Model of Logistical Competency:

3 Cs model of Logistical competency suggests that the three Cs in Logistics i.e.  Company, Customer and Competitor, all are quite important for the growth and survival of business and economy at large. The 3 Cs model of Logistical competency generates competitive advantage for the firm. The 3 Cs are discussed herewith:

There exists a 3 way relationship between three parties as represented in the above diagram. Customer is one who shows the desire to buy the products. He always search for products with best quality and low price. Company works hard for selling their products so as to satisfy these desires of customers. It utilizes all its assets in the optimum way and always see to it that customers are influenced to buy their products only. Competitor is one that tries to fascinate an magnetize the customer. He also utilizes all his assets in the best possible way and tries to influence the customer.

There exists a 3 way relationship between three parties as represented in the above diagram.

• Customer is one who shows the desire to buy the products. He always search for products with best quality and low price.
• Company works hard for selling their products so as to satisfy these desires of customers. It utilizes all its assets in the optimum way and always see to it that customers are influenced to buy their products only.
• Competitor is one that tries to fascinate an magnetize the customer. He also utilizes all his assets in the best possible way and tries to influence the customer.

Thus Company has to strive very hard in order to retain the customers. They do so by providing cost advantage to the customers and value advantage to the customer. Competitors also tries to bring down their cost and provide value advantage to the customers. Company and competitors strive for cost differentials.

And that’s how in the whole process, wherein company and competitors, both are trying to provide value advantage to the customers by becoming efficient, the logistical competency is achieved.

Parameters to achieve Logistical Competency:

Logistical Competency can be achieved with the help of certain parameters. These parameters stand like five pillars in completing the logistics mission of the company. These parameters are as described as follows:

(a) 1st- Network Design: A manufacturer may have multiple facilities of plant, warehouses and distribution centres. Network design aims at forming a structure so as to perform logistical activities efficiently and effectively. The manufacturing units and warehouses may be located in various geographical areas, far from each other. In the same way distribution centres will be disperse across different areas. Network design tries to establish connectivity among all these facilities for better performance of logistics operations and more importantly to provide better customer services resulting in customer satisfaction.

(b) 2^nd– Information Management: Information Management is essential component here. It is required for demand forecasting and order processing. Logistical performance depends a lot upon how the information is received, shared among the different facilities in the network and ultimately used to make the customer delivery according to the order placed by him. Contemporary technology is used in logistics for the same. Softwares like ERP, CRM, and technologies like EDI, ePOS, etc. are widely used for information management.

(c) 3rd- Transportation: Transportation is required for the movement of goods from one party to another. Transportation accounts for 60 to 70% of the logistics costs. Logistical function of transportation deals with decision like choosing right mode of transport, deciding to have one’s own feet or to outsource, deciding on the total cost, transportation infrastructure, reliability of mode and so on.

(d) 4th Inventory Management: In order to control total cost it is quiet significant to control and manage the inventory. Inventory management is concerned with maintaining the requisite levels of inventory in such a way that there is neither understocking nor overstocking. Sufficient levels of stock are to be maintained to satisfy the customers’ requirements.

(e) 5th- Warehousing, Material Handling and Packaging: Logistics is also concerned with maintaining the storage area wherein heaps of goods are stored till they are demanded by customers. Such logistical function is called as warehousing. Logistical function of warehousing deals with the decision size, number, layout, location and nature of warehousing.

Material handling is an art and science of moving, packaging and storing of substances in a form. It includes lifting and shifting of materials in order to save space, cost and time. The overall productivity of logistics is improved with automation and mechanisation of material handling system.

On other hand, incorrect methods and system of material handling results in high costs. Packaging is required for efficient handling and storage of goods. It is also essential for protection of goods from any loss or damage, specially during transit. Packaging adds to the shelf life of any product and makes it durable for longer time. Packaging, which is quiet attractive, make the goods easily saleable in the market. Packaging is also very much necessary for providing convenience and ease of handling to the end users.

Thus Logistical competency can be enhanced by right logistics mix and proper network design.

Customer service in logistics is the activities, service actions are provided, acting as added value. The aim is to bring more value than the core service that customers need and bring the most satisfaction to customers. For businesses or business organizations today offer more services to customers besides their main products.

The bigger your business is, the more complex your supply chain gets. It can be hard to maintain perfect customer service because everyone involved in the shipping process is constantly affecting a company’s reputation through customer experience. In client service, it’s impossible to be perfect, but it is possible to be better and provide your customers with the best service possible. Customers want to have a smooth, easy experience when working with a company. It is up to the company on how good that service can be delivered.

If you are striving to build long-term relationships with your customers and gain their loyalty, you should consider shifting from product-oriented strategy to customer-focused one. Here are some useful tips on how to take customer service to the next level:

1. Choose the tools and partners accurately. No matter what strategies and technologies you use, there is always a human factor present. That’s the reason why choosing partners properly will enhance your customers’ experience. If you are outsourcing your logistics to a 3PL provider, make sure they have skilled and professional brokers and a network of experienced and reviewed carriers. Such services offer logistics management from A to Z and will take most of the hassle away. But as you select a key link in your logistics, you should invest time researching how to pick the best third-party logistics provider.
2. Transparency and personal approach. Try to make the process as easy as possible for the customer. Supply chain visibility will reduce the time your client’s spending on shipping, therefore improving the overall experience they get from working with you. Transparency involves not only shipment tracking but also the option to compare available prices, services and understand how they work without any trouble. The more personalized approach you provide, the higher your chances are to retain customers. Send tracking updates and reports to customer to keep them in the loop, ranging from shipment transits to weather reminders. This strengthens your company’s credibility and simplifies the process for your customers.
3. Establish the last mile delivery. This is a final and crucial element in the transportation process and obviously demands more concentration. The last stage of delivery is the most vulnerable to mistakes or damages that may occur due to different reasons. To reduce the likelihood of such circumstances, assure that everything goes the way it should.
4. Provide feedback. No matter what issue took place, the response should be swift and intended to solve the customer’s problem, or at least to figure out what is the issue. Businesses should invest more in their staff training to reduce the chance of errors while interacting with customers. Solving problems that occurred on behalf of your company can make a big difference in a customer’s experience with your company. Many 3PL companies provide customer service and can help their customers simplify this complicated process.
5. Technology & analysis. Don’t underestimate the power of data: new technologies let businesses track every step of the customer, existing or potential. Knowing the deep insights of your audience leads to better performance, updated strategies, and better service. Such innovations like transportation management systems, tracking devices and CRM systems let businesses study customer’s behavior and improve marketing strategies. So, researching and analyzing big data is the best way to achieve a better understanding of customers’ demands.

Important factors for customer service in logistics

1. Time

For today’s life, time is always the most important factor. Therefore, in customer service of logistics, time is an extremely important factor to create customer satisfaction.

Not only for the logistics industry but for any industry, the shorter the time the customer receives the product, the more satisfied the customer will be.

2. Reliability

This is an indispensable factor for customer service in logistics. For reliability, the brand will always be the most important factor for customers. If the brand of service that your company provides is more reliable. Then customer service has the opportunity to satisfy larger customers.

Typically, when we buy products, if we buy in reputable brands, we will always feel safer. We will not need to worry or pressure on fraud or anything like that when using that product.

3. Price

The price competition has never cooled down in the market today. Especially when customers always like cheaper products. Or rather, there is a price that suits their needs.

If your logistics service can provide the same items, same quality (or higher quality). But with cheaper prices, obviously, you will have a huge advantage.

4. Flexibility

Flexibility is the ability to flexibly deliver products according to customers’ needs. Currently, customers always want to use products that can solve their problems. Therefore, if possible, always customize the product so that it can best suit customer needs.

Elements

1. Supply chain management:

For supply chain management in logistics services, customers only need to deliver goods, the rest of your company will help them design a reasonable supply chain. In addition, you will also receive orders, plan to ship and collect invoices. In order to create a trust for your customers, do these tasks quickly and responsibly.

2. Shipping service

3. Warehousing service

To create a customer service in professional and methodical logistics. You create a storage service with the cross-docking system. This will significantly reduce the storage costs of goods and increase business efficiency.

4. Other services

Other services in logistics include:

• Customs procedures.
• Additional insurance procedures for goods.
• Advising and guiding customers on the shipping process.

Logistics is derived from a Greek word “logistike” which means the “science of computing and calculating.”

Logistics is one of the important activities of business today. Logistics is basically concerned with making the products and services available to the users rightly. In past, ‘logistics’ concept was used by military organisations. It implied the movement of men and other physical resources required during war by military troops to achieve them. However after world war-II concept of logistics was associated with industries and that paved the way for business logistics.

Logistics management is a business function that generates heaps of benefits for the firms through proper management of logistical activities. It is concerned with effective flow of materials, with all aspects i.e. inflow of material purchased, flow of materials through manufacturing process and outflow i.e. flow of materials to customers. The aim is to satisfy customer’s requirements.

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.”

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.

Components of Logistics Management

Logistics management consists of three major components:

1. Order processing or Input

This component is the first process of logistics where information about the resources and production is gathered based on which the products are manufactured. In the case of freight forwarding, order processing refers to the step where the various source of vendors and transportation are gathered for the importing or exporting of goods.

2. Inventory Management

Inventory management plays an important role in the supply chain management system. As the name suggests, inventory management helps the logistics company in allocating the resources like transport vehicles, labour and other resources according to the order received by the client. This helps in making sure that no orders or freights are being left out or are being delayed for delivery.

3. Freight transportation

This is the last and the major component of logistics management. After the order is processed and the resources are allocated in order to transport the freight to the destination. Various routes and types of transportation are analysed to check which transportation and the routes will deliver the product on or before the delivery time. There are tools and software which analyse these factors with the help of artificial intelligence and machine learning tools and provide the best plans to the logistics company.

These components together help in delivering the best quality goods to the consumers and is delivered on time. These components help in reducing the additional costs and increasing the productivity of the work, therefore the logistics company will be able to provide the best services with great quality to their clients and consumers.

Functions of Logistics Management

(i) Network Design

Network design is one of the prime responsibilities of logistics management. This network is required to determine the number and location of manufacturing plants, warehouses, material handling equipment’s etc. on which logistical efficiency depends.

(ii) Order Processing

Customers’ orders are very important in logistics management. Order processing includes activities for receiving, handling, filing, recording of orders. Herein, management has to ensure that order processing is accurate, reliable and fast.

Further, management has to minimize the time between receipt of orders and date of dispatch of the consignment to ensure speedy processing of the order. Delays in execution of orders can become serious grounds for customer dissatisfaction; which must be avoided at all costs.

(iii) Procurement

It is related to obtaining materials from outside suppliers. It includes supply sourcing, negotiation, order placement, inbound transportation, receiving and inspection, storage and handling etc. Its main objective is to support manufacturing, by providing timely supplies of qualitative materials, at the lowest possible cost.

(iv) Material Handling

It involves the activities of handling raw-materials, parts, semi-finished and finished goods into and out of plant, warehouses and transportation terminals. Management has to ensure that the raw-materials, parts, semi-finished and finished goods are handled properly to minimize losses due to breakage, spoilage etc. Further, the management has to minimize the handling costs and the time involved in material handling.

(v) Inventory Management

The basic objective of inventory management is to minimize the amount of working capital blocked in inventories; and at the same time to provide a continuous flow of materials to match production requirements; and to provide timely supplies of goods to meet customers’ demands.

Management has to maintain inventories of:

• Raw-materials and parts
• Semi-finished goods
• Finished goods

(vi) Packaging and Labeling

Packaging and labeling are an important aspect of logistics management. Packaging implies enclosing or encasing a product into suitable packets or containers, for easy and convenient handling of the product by both, the seller and specially the buyer.

Packaging facilities the sale of a product. It acts as a silent salesman. For example, a fancy and decorative packaging of sweets, biscuits etc. on the eve of Diwali, makes for a good sale of such items.

Labeling means putting identification marks on the package of the product. A label provides information about – date of packing and expiry, weight or size of product, ingredients used in the manufacture of the product, instructions for sale handling of the product, price payable by the buyer etc.

(vii) Warehousing

Storage or warehousing is that logistical activity which creates time utility by storing goods from the time of production till the time these are needed by ultimate consumers.

Here, the management has to decide about:

• The number and type of warehouses needed and
• The location of warehouses.

(viii) Transportation

Transportation is that logistical activity which creates place utility.

Transportation is needed for:

• Movement of raw-materials from suppliers to the manufacturing unit.
• Movement of work-in-progress within the plant.
• Movement of finished goods from plant to the final consumers.

Operational Objectives of Logistics

Logistics aims at providing the goods to the customers at the right time and at right price.

Considering the same, operational objectives of logistics can be listed and explained as follows:

• Quick response:

(a) One of the important objectives of the logistics is to quickly response to the customer requirements.

(b) Logistics ensures the customers’ demands are met as and when they arise; in order to keep them satisfied.

(c) Quickly responding to the customers’ requirements through right logistics mix is essential in order to make them goods available rightly.

(d) It increases the customer loyalty and enhances the business values.

• Managing and improvement quality:

(a) Customer satisfaction is associated with getting the right delivery with apt quality.

(b) Right logistics mix ensures enhanced quality and thereby leads to customer satisfaction.

(c) Failure to meet customers’ expectations in terms of quality results in increased cost.

(d) Thus, the objective is to achieve zero defect logistics performance in order to augment business profits.

• Minimum inventory:

(a) As stated earlier, in order to control the total cost, it is quiet significant to control and manage the inventory.

(b) High inventory leads to high inventory carrying costs

(c) Logistics management aims at maintaining reasonable levels of inventory that shall not increase the cost.

(d) Using modern techniques in logistics like JIT, Kanban, etc. is solution for the same.

• Minimum variance:

(a) Variance in logistics refers to the difference between the expected and the actual logistical performance.

(b) This difference between the expected and actual logistical performance may arise on account of inefficient logistics mix.

(c) Variance may lead to the inefficiencies leading to increase in cost.

(d) However, minimum the variance, maximum the logistical improvement.

5. Movement consolidation:

(a) Movement consolidation is associated with logistical function: transportation.

(b) Movement consolidation refers to grouping smaller shipments into larger one.

(c) This helps in reducing the overall transportation costs.

(d) Logistics thus aims at movement consolidation and thereby enhances logistical performances and reduces logistics costs.

6. Logistical lifecycle support:

(a) Logistics function does not end with delivery of goods to customers. It also includes support mechanisms that form the lifecycle.

(b) Lifecycle support mainly includes after sale service and reverse logistics.

(c) After sales can include all such activities like guarantees, warranties, maintenances, repairs, etc. that enables providing support to customers, after goods are sold and subsequently used by consumer.

(d) Reverse logistics may include all activities which involve flow of goods from customer to the manufacturer. It may arise on account of quality issues, defects, and damage in transit, product expiry, incorrect order, reusability, recycle. etc.

7. Other miscellaneous objectives:

(a) Minimum damage to products

(b) Efficiency in order processing

(c) Making right delivery

(d) Enhancing Customer satisfaction.

In commerce, supply chain management (SCM), the management of the flow of goods and services, involves the movement and storage of raw materials, of work-in-process inventory, and of finished goods as well as end to end order fulfillment from point of origin to point of consumption. Interconnected, interrelated or interlinked networks, channels and node businesses combine in the provision of products and services required by end customers in a supply chain.

Supply-chain management has been defined as the “design, planning, execution, control, and monitoring of supply-chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally.”

SCM practice draws heavily from the areas of industrial engineering, systems engineering, operations management, logistics, procurement, information technology, and marketing and strives for an integrated approach. Marketing channels play an important role in supply-chain management.

Current research in supply-chain management is concerned with topics related to sustainability and risk management, among others. Some suggest that the “people dimension” of SCM, ethical issues, internal integration, transparency/visibility, and human capital/talent management are topics that have, so far, been underrepresented on the research agenda.

Although it has the same goals as supply chain engineering, supply chain management is focused on a more traditional management and business based approach, whereas supply chain engineering is focused on a mathematical model based one.

The various objectives of Supply Chain Management which are also applicable for International Logistics and Supply Chain management.

1. To maximize overall value generated

The higher the supply chain profitability or surplus, the more successful is the supply chain.

The supply chain profitability is the difference between the amount paid by consumer to purchase the product and the cost incurred by organization to produce and supply the product to the customer at right time.

2. To look for Sources of Revenue and Cost

There is only one source of Revenue i.e. customer.

Appropriate management of the flow of information, product or funds is a key to supply chain success.

3. Replenishment of the Material or Product whenever required
4. Cost Quality Improvement
5. Shortening time to Order
6. Faster Speed to Market
7. To meet consumer demand for guaranteed delivery of high quality and low cost with minimal lead time.
8. Efficient supply chain
9. To achieve world class performance
10. More awareness of supply chain dynamics and efficiency
11. To fulfill customer demand through efficient resources
12. To optimise pre and post production inventory levels
13. Good understanding of business characteristics
14. Provide flexible planning and control mechanism
15. Reduce transportation cost
16. Greater labour efficiency, equipment and space efficiency
17. To maximize efficiency of distribution side
18. To reduce system wide cost of company to satisfy service level requirement

(Company costs: Manufacturing, Fixed assets, inventories, transportation)

(Service levels: Response time Hrs/day/week/month)

19. Helps in better decision

Functions

A supply chain includes all efforts pertaining to the production and delivery of a product/service from suppliers to customers. SCM includes:

• The management of demand and supply
• Raw materials and parts sourcing
• Manufacturing and/or assembly
• Warehousing
• Tracking inventory
• Order Management
• Distribution across multiple channels
• Delivery to the customer

Supply Chain Management plays a crucial role in the success of the enterprise and customer satisfaction. The knowledge of SCM can also be leveraged to support disaster relief operations, medical missions, and handle similar emergencies.

Any business needs resources to trade. Further, it uses these resources to create products/services which the consumers are willing to pay for. This is known as the ‘transformation process’.

Participants

Producers

Producers or manufacturers are organizations that make a product. This includes companies that are producers of raw materials and companies that are producers of finished goods. Producers of raw materials are organizations that mine for minerals, drill for oil and gas, and cut timber. It also includes organizations that farm the land, raise animals, or catch seafood. Producers of finished goods use the raw materials and sub-assemblies made by other producers to create their products.

Distributors

Distributors are companies that take inventory in bulk from producers and deliver a bundle of related product lines to customers. Distributors are also known as wholesalers. They typically sell to other businesses and they sell products in larger quantities that an individual consumer would usually buy. Distributors buffer the producers from fluctuations in product demand by stocking inventory and doing much of the sales work to find and service customers. For the customer, distributors fulfill the “Time and Place” function – they deliver products when and where the customer wants them.

Retailers

Retailers stock inventory and sell in smaller quantities to the general public. This organization also closely tracks the preferences and demands of the customers that it sells to. It advertises to its customers and often uses some combination of price, product selection, service, and convenience as the primary draw to attract customers for the products it sells. Discount department stores attract customers using price and wide product selection. Upscale specialty stores offer a unique line of products and high levels of service. Fast food restaurants use convenience and low prices as their draw.

Customers

Customers or consumers are any organization that purchase and use a product. A customer organization may be an organization that purchases a product in order to incorporate it into another product that they in turn sell to other customers. Or a customer may be the final end user of a product who buys the product in order to consume it.

1. Right Product

A company who offers this kind of service must first know the kind of products that they are going to handle and transport. Having the right knowledge will give you an advantage to properly and efficiently manage both your time and resources.

2. Right Place

The right product must be delivered to the right place. Courier services provided by an LMS company must have knowledgeable drivers as well as a systematic delivery system and tracking. Both customer and the provider must have a synchronized location tracking to ensure that the products are delivered to the right place.

3. Right Price

Pricing is very essential and all products and services. They must have an appropriate price value in order to track the company income and expenses. A good system for storing and updating the right prices ensures success in  LMS.

4. Right Customer

Every LMS Provider must know their target market to identify the right customers. If they will offer their services to the right market, they have more chances of gaining leads and customers that will most likely to avail them. Some uses the traditional marketing while others use digital marketing to reach more customers around the globe.

5. Right Condition

Every product or goods that are to be entrusted by the customers to LMS providers must be stored and delivered with the right condition. This is where the specifications must be referred to in order to place it on required facilities to maintain its quality.

6. Right Time

Time is very important when it comes to logistics, clients are more concern on the time of delivery. That is why every service provider must know the right time to deliver the products and in a very efficient way. Every system has a tracking functionality to monitor all deliveries and making sure that they arrive on time.

7. Right Quantity

Knowing and specifying the right quantity is also one of the key in a successful LMS. Since most of the providers are third party, companies that relies on their service must be careful in sending the right amount or quantity of goods to be delivered. Thanks to our modern technological developments that 3PLs can now manage all quantities of goods to ship/deliver.

Taking the Order

The purchase order is central to any transaction between the parties in a supply chain. This document contains all the necessary details such as the technicalities of the product and commercial terms. Proper logistics ensures that this document is processed in time so as to ensure an effective performance cycle and to clear out any doubt about availability of materials and payment terms.

Inventive Inventory

An ideal inventory is one which has effective storage capabilities to ensure smooth supply but can also cut down cuts. Logistics ensures this minute balance between market opportunities and budgeting. More than often a poorly managed inventory can eat away a major chunk of the profit in a supply chain because it includes expenses for pilferage and insurance also.

The War is the Warehouse

The warehouse is the central nervous system in a supply chain and acts as the control room for everything logistical. An organization’s merit is determined by its effective warehousing decisions. Factors like location, number, size, layout and design plays a huge role in how the logistics of a supply chain will pan out.

The Tricky Nature of Transport

Transport is what keeps the supply chain moving literally and figuratively and it is the single most important component in the logistical side of supply chain management. The physical transfer of goods is the actual supplying process and it cannot falter by any means. The transport infrastructure should be carefully studied so as to ensure a fast delivery which is not too expensive. Determining the urgency of a supply is also important.

Mastering Material Handling

Material handling is an often ignored aspect when it comes to the role of logistics in supply chain management since lack of proper material handling often leads to damages and delays and incidental costs. The automation in the material handling process has been a boon for logistical productivity. The volume, speed and the level of service all must be taken into consideration to ensure that the material handling process goes smoothly.

Packaging Must Be Perfect

Logistical or industrial packaging is central to ensure the effectiveness of the actual physical distribution of a product. This directly affects the logistical side of a supply chain as opposed to product packaging which is governed by what the market needs. Logistical packaging can ensure minimal damage during material handling and save on important storage space. The packaging cost often depends on the utilization of the load.

Information is Incredibly Important

Logistics helps in transferring information across a supply chain and therefore an information system plays a crucial role in ensuring a superior service to customers. Information technology tools are constantly used to identify access, store, analyse and retrieve important data which can help a firm strengthen the function of logistics in their supply chain.

Logistics can be considered as a mundane and boring series of activities but it is behind the well oiled supply chain machinery that keeps any business up and running!