3. Logistics Management
Process of moving and positioning inventory to meet
customer’s requirements at the lowest possible cost.
Difference between logistics and SCM?
4. Business Application of Logistics
Physical Distribution
Distribution Management
Proper movement and storing of finished goods
Marketing and Logistic
Closer to customers
The process of planning, implementing and
controlling the efficient effective flow and storage of
goods and services and related information from the
point of origin to the point of consumption for the
purpose of conforming to customer’s requirement
6. Elements of Logistic Management
Customer Order process
Location Analysis
Inventory Control
Material Handling
Packaging
Transportation
Customer Service
7. Distribution Management
The movement of material, usually finished goods or
parts from suppliers to customers.
All activities related to physical distribution need to be
managed
Impact of DM on
8. Impact of Distribution Management on
Product margins and profit
Marketing budget
Final retail pricing
Sales management practices
15. Pool Distribution VS Normal LTL
Pool distribution is the
distribution of product
to numerous destination
points within a particular
geographic region.
LTL direct shipped to the
regional terminals in
truck load quantities.
16. LTL
LTL is the transportation of relatively small freight.
The alternatives to LTL carriers are parcel carriers or
full truckload carriers parcel carriers usually handle
small packages and freight that can be broken down
into units less than 150 pounds (68 kg). Full truckload
carriers move freight that is loaded into a semi-trailer.
Semi trailers are typically between 26 and 53 feet (7.92
and 16.15 m) and require a substantial amount
of freight to make such transportation economical.
18. TRANSPORTATION MANAGEMENT
A transportation management system (TMS) is a
subset of supply chain management concerning
transportation operations and may be part of an
enterprise resource planning system.
The management of transportation operations of
all types, including tracking and managing every
aspect of vehicle maintenance, fuel costing, routing
and mapping, warehousing, communications, EDI
implementations, traveler and cargo handling, carrier
selection and management, accounting.
19. Transportation in SCM
Suppliers
Transportation- Product Movement
Stores-Factory- Product Storage
Transportation- Product Movement
Manufacturing process 1
Transportation- Product Movement
Manufacturing process 2
Transportation- Product Movement
Warehouse-Distributors- Product Storage
Transportation- Product Movement
Dealer-Retailers- Product Storage
Customer
23. Railroads
Capable of carrying a wide variety of products, much more so that
other modes.
Very small number of carriers; likely only one will be able to serve any
one customer location.
Trend is to merge smaller companies into larger ones with ultimate goal
of having perhaps two transcontinental rail carriers.
Rail is a long haul, large volume system (high fixed costs; own rights-
of-way).
Accessibility can be a problem.
Transit times are spotty, but are generally long.
Reliability and safety are improving and are generally good.
Premium intermodal services
Straight piggyback and containerized freight
Double stacks
Road Railer service
24. Motor Carriers-By Road
The motor carrier industry is characterized by a large number of small firms.
In 1999, there were 505,000 registered motor carriers.
Low cost of entry causes these large numbers.
Used by almost all logistics systems and account for 82 percent of U.S. freight
expenditures.
Consists of for-hire and private carriers.
The motor carrier industry is characterized by a large number of small firms.
In 1999, there were 505,000 registered motor carriers.
Low cost of entry causes these large numbers.
Used by almost all logistics systems and account for 82 percent of U.S. freight
expenditures.
Consists of for-hire and private carriers.
High accessibility
Transit times faster than rail or water.
Reliability can be affected greatly by weather.
Relatively high cost compared to rail and water; trade-off is faster service.
25. Water Carriers-By Sea
General cargo ships
Large high capacity cargo holds
Engaged on a contract basis
Many have self-contained cranes for loading/unloading
Tankers
Specially designed for liquid cargoes
Largest vessels afloat, some VLCCs at 500k+ tons
Container ships
High speeds for ships; increasingly more common and important
Larger vessels can handle up to 5,000 containers.
.
26. Air Carriers-By Air
Limited number of large carriers earn about 90% of the
revenue.
Any of the air carriers can carry air freight although some
haul nothing but freight.
Cost structure is highly variable; do not own rights-of-way.
Transit times are fastest of the modes, but rates are highest.
Average revenue per ton mile 18 times higher than rail;
twice that of motor carriers.
Seek goods with a high value to weight ratio.
Accessibility is low as is capability.
Reliability subject to weather more than other modes.
27. Pipelines
Refers only to the oil pipelines, not natural gas
Not suitable for general transportation
Some research has been performed to move minerals
in a liquid medium, but outside of a few attempts to
transport slurried coal via pipeline, no real successes
have occurred.
Accessibility is very low.
Cost structure is highly fixed with low variable costs.
Own rights-of-way much like the railroads.
Major advantage is low rates.
29. How To Select Mode of
Transportation
Transit Time: Boat takes a lot longer than air but is
cheaper.
Predictability: The estimated transit time and the actual
transit time can vary. Receiving a product before the
expected arrival date can be as bas as receiving it late.
Airfreight is generally more predictable and less variable.
Cost of Transportation: Airfreight is the most expensive
mode of transportation but may be justified when products
are critical or perishable.
Non-economic factors: Foreign governments might give
preferential treatment to certain national transportation
company or limit the amount of usage for a certain mode of
transportation. Customers may demand specific mode.
30. How To Select Mode of
Transportation
Cost
Speed
Consistency
Distance
Volume-cost per unit
Density
Stowability-dimensions
Handling
33. Intermodal Transportation
Refers to use of two or more modes of transportation
cooperating on the movement of
shipment by publishing a through rate.
Logistics managers are looking for
the best way to move shipments and these often
attempt to take advantage of multiple modes of
transportation, each of which has certain useful
characteristics.
35. Warehousing
A warehouse is a location with adequate facilities
where volume shipments are received from a
production centre, broken down re-assembled into
combinations representing a particular order or orders
and shipped to the customer’s location/s.
Number of warehouse
Types of warehouse
Location of the warehouse
36. Third Party Logistics
A third-party logistics provider (abbreviated 3PL, or
sometimes TPL) is a firm that provides service to its
customers of outsourced (or "third
party") logistics services for part, or all of their supply
chain management functions.
39. Benefits of 3PL
Save time
Don’t need to invest in:
Trucks
Training
Development
Help expand
New markets
International
No roads
Narrow your focus
Allows you to focus on your strengths
Don’t get spread too thin
Reach more customers more effectively
Can ensure delivery times
can help a company run leaner
40. Services Provided By 3PL’s
Transportation
Mgt
21%
Private Fleets
7%
Intermodal
4%
Warehousing
21%
Value Added
20%
International
9%
Integrated
9%
Other
5%
Lead Logistics
4%
42. Short comings of 3PL
Lack of Direct Oversight
One of the downsides of using 3PL services is that the
client businesses have no direct control over their
operation. They are relying on the 3PL company to
consistently come through in delivering the promised
services. This lack of direct control means that client
companies are at the mercy of any problems the 3PL
company faces. Beyond the possible loss of business,
the damage that results from 3PL services failing to
deliver certain products on time are the client
company's problem, not the 3PL service's.
43. Short comings of 3PL
Dependency
Handing over logistics to a 3PL service is a large commitment.
Businesses need a reliable structure to function. Logistical
downtime can translate into large amounts of lost productivity
and revenue. Consequently, while the free market dictates that a
business which is dissatisfied with its 3PL service could always
find another, or develop its own logistical infrastructure, the
reality is not so simple. Switching the nature of a company's
logistical support can cost the company a great deal in
unforeseen costs resulting from the transition. When businesses
contract with 3PL services it creates a dependency which is no
small matter to change. This dependency puts the client
company in uncomfortable situations if pricing schemes or
service reliability from the 3PL service is not working out as
expected.
44. 10 Commandments of Outsourcing
Logistic
1. Develop a strategy for outsourcing
2. Establish a rigorous provider selection process
3. Clearly define expectations
4. Develop a good contract
5. Establish sound policies and procedures
6. Identify and avoid potential points of friction
7. Communicate effectively with your partner
8. Measure performance and communicate results
9. Motivate and reward provider
10. Be a good Partner
