Logistics and SCM an over view

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Logistics and SCMan over view

• B.V.L.Narayana
• SPTM
• RSC BRC

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Definitions

• TRANSPORTATION
• movement of goods and/or people from one place
  to another (Wikipedia).
• Logistics is defined as that part of the supply
  chain process that plans, implements, and
  controls the efficient flow and storage of goods,
  services, and related information from the point
  of origin to the point of consumption in order to
  meet customers requirements. The
  Council of Logistics Management (1998).

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Definitions

• Supply chain management (SCM) is the management
  of a network of interconnected businesses
  involved in the ultimate provision of product and
  service packages required by end customers
  (Wikipedia)

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Logistics vs SCM

• Four perspectives
• Traditional SCM part of logistics
• Re-labeling SCM logistics
• Unionist Logistics part of SCM
• Intersectionist Logistics NU SCM

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Logistics vs SCM

• Stock Lambert (2001) suggest supply chain
  management is the management of eight key
  business processes
• (1) customer relationship management,
• (2) customer service management,
• (3) demand management,
• (4) order fulfillment,
• (5)manufacturing flow management,
• (6)procurement,
• (7) product development and commercialization,
• (8) returns.
• These processes subsume or include much of
  logistics,purchasing, marketing and operations
  management.

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Logistics vs SCM

• The supply chain manager would be involved in the
  negotiations,but not the purchase order
  transmission.
• At the intersection, SCM co-ordinates cross
  functional efforts across multiple firms. SCM is
  strategic, not tactical.

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Evolution of logistics integration
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3rd player logistics

• A third-party logistics provider is a firm that
  provides outsourced logistics services to
  companies for part, or sometimes all of their
  supply chain management function
• Four types
• Standard do pick, pack, warehousing and
  distribution
• Service developer also does tracking, tracing
  and cross docking
• Customer adapter takes control of logistics
• Customer developer integrates with customer and
  runs logistics

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4th player logistics

• A 4PL is an integrator that assembles the
  resources, capabilities, and technology of its
  own organization and other organizations to
  design, supply chain solutions
• Is a non asset based 3PL
• Owns only computer systems and intellectual
  capital and uses a 3PL to deliver service

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Logistics centre

• A Logistics Center
• hub of a specific area where
• all the activities relating to transport,
  logistics and goods distribution
• both for national and international transit
• carried out, on a commercial basis, by various
  operators.
• Common user facility, neutrally operated
• Principles involved are
• Territorial planning and infrastructure
  rationalization
• Transportation quality best solutions at lower
  effective costs
• Inter-modality development

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Key reasons for satisfaction

• STRONG RELATIONSHIPS
• Working at operational level
• Executive support
• Strong contracts
• Description of services
• Performance monitoring
• Measurable and attained metrics
• Improvements in service levels
• Reduction in costs

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Extent of outsourcing of 3PL
As percentage of total logistics costs
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Indian logistics industry

• Indian GDP 1 trillion dollars
• GDP will grow at 5 over next ten years
• Logistics costs 14 of GDP
• Will reduce to 10 of GDP in next ten years
• Value of industry 140 billion dollars
• Transportation costs
• 40-45 of total logistics costs
• Industry size 56 63 billion dollars

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Why logistics?

• Strategic role in business
• Location in relation to markets
• Presence in markets
• Location of plant, sources of raw material
• Standards of customer service

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Why logistics?

• Factors enhancing Influence of logistics
• Increasing number of alternatives to meet cost
  and service standards
• Containerization, ICT, Air services
• Threat of energy shortages
• Threat of material shortages.
• Wide range of swings in business cycles
• Emphasis on inventory management
• Governmental interventions in transport chains

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Link between sales volume and annual inventory
turnover ( haskett 1985)
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Differentiated service levels (Haskett 1985)
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Logistics process
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Role of logistics in strategy
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Logistics Strategy audit

• Levels of service expectation
• Customers
• Competitors provide
• How service levels are achieved
• By competitors
• Number of outlets for product distribution
• Type and location
• Location and focus of plants to strategy

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Logistics strategy audit

• Location of company on logistics life cycle
• One business
• All businesses
• Have we done in our logistics programme
• Postponement and speculation
• Standardization, consolidation, differentiation
• Match between strategy and level of costs and
  service in line with customer expectations

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Logistics strategy audit

• Extent of channel vision employed
• Implications of technological trends
• Implications of regulatory trends
• Match between strategy and logistics policy
• Extent of support by logistics policy to overall
  strategy

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Logistics strategy audit

• Postponement and speculation
• Delay commitment of resources to avoid inventory
  build upJIT, finishing distribution centres
• Standardization of core products
• Modular production systems
• Consolidation of services
• achieve economies of scale in logistics
• Differentiate distribution
• Depending on order cycles

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Indian logistics industry

• Indian railways
• Earns 45000 crores as freight
• 10 billion dollars
• Gets 15-19 of market share in transportation
• 7 of logistics industry share
• If share increased to 15 - earnings jump to
• 21 billion dollars or 92000 crores
• May require some increase in transport capacity
• Will require skills

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References

• The state of logistics outsourcing for 2008
• 13th annual survey done by Capgemini and Georgia
  institute of technology downloaded from
  www.3plstudy.com
• Logistics cost and service 2008
• Council of supply chain management professionals
  downloaded from www.establishinc.com
• Wikipedia

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THANK YOU