logistics and supply chain management

Views:
 
Category: Entertainment
     
 

Presentation Description

PPTs have been prepared to teach the subject to students by Professor Akhil Chandra,Institute of Logistics and Aviation Management

Comments

By: umesh1983 (40 month(s) ago)

Sir, Can you please forwrd tis presentaion on My email id umeshb@glenmarkphama.com

By: hunkyvenk (42 month(s) ago)

plzz sir/ madam i need some info abt scm it will kind f u 2 send dis ppt 2 ma id . ma id vic2venk@gmail.com. waiting 4 ur ppt sir/ma'm.

By: renu_female (43 month(s) ago)

hi, its very nice and easy to understand for everyone. my request is to u please give me the downloading facility for enable me to further proceed. tks Renu

Presentation Transcript

Unit 1: BUSINESS LOGISTICS Logistics management – a paradigm shift Market -logistics objectives Logistics operation; meaning. importance & effectiveness Customer value chain Marketing and logistic mix. Organizing logistic functions.  Unit 2: PRACTICES OF OPERATIONAL LOGISTICS Market survey and customer care service and attributes. Integrated logistics management Understanding costs and benefits-quoting rates for services Determining the customer service level Different mode of payments Operations research & logistics decision making Logistic auditing Relogistics - A new wave for value delivery  Unit 3: LOGISTICS INFORMATION SYSTEM Logistics information needs Designing a logistic information system Role of technology in logistics - Automatic identification technology - Electronic Data Interchange (EDI) - Warehouse simulation - Communication technology  Unit 4: LOGISTIC OUTSOURCING Drivers of outsourcing trends Benefits of logistic outsourcing Selection of service provider Outsourcing-A value proposition  Unit 5: SUPPLY CHAIN MANAGEMENT Supply chain components Economics of distribution Supplier distributor benchmarking  BASIC TEXT: Sunil Chopra, Peter Meindi, and D. V. Kalra: Supply Chain Management (Pearson Education),OR Ronald H. Ballou & Samir K. Srivastava: Business logistics / Supply Chain Management (Pearson Education)

CONTENTS : 

CONTENTS DIGITAL ERA OF MARKETING IMPORTANCE OF SUPPLY CHAIN CHAMPIONS OF SUPPLY CHAIN PROFIT TRANGLE SUPPLY CHAIN DEFINITIONS UPSTREAM AND DOWNSTREAM SCM SUPPLY CHAIN CYCLES 4 CASE STUDIES,WAL-MART, UPS, TOI, HLL SUPPLY CHAIN LEVERS STRATEGIC SOURCING ASSET OPTIMIZATION DISRIBUTION EFFECTIVENESS SUPPLY CHAIN PLANNING ROLE OF IT IN SUPPLY CHAIN

Slide 3: 

EXCITING TIME IN INDIA FOR MARKETING NEW DIGITAL AGE,VC, INTERNET,RFID (SMART TAG TECHNOLOGY), ICT,WIRELESS,MOBILE, E-commerce E-bay, Amazon. COM, i-tunes.com MARKETING IS MANAGING PROFITABLE COSTUMER RELATIONSHIPS CAPTURE VALUE FROM CUSTOMERS IN RETURN IMPORTANCE OF SUPPLY CHAIN

WHAT IS COMMON TO WALMART CARREFOUR DELL SEARS K-MART CATERPILLAR TARGET UPS ( United parcel Service) Grainger TOI These Companies focussed on SUPPLY CHAIN and created Value to CUSTOMER

MAXIMISE SHAREHOLDERS PROFITS AND CUSTOMER’S DELIGHT : 

MAXIMISE SHAREHOLDERS PROFITS AND CUSTOMER’S DELIGHT PROFIT TRANGLE

Aims of organization : 

Aims of organization Customer Satisfaction Value Profitability Competitive Advantage

Supply chain activities transform natural resources, raw material and components into a finished product that is delivered to end customer In SCM companies and corporations involve themselves in supply chain by exchanging information regarding market fluctuations, production capabilities Supply chain,logistic network is System of organizations, People, Technology, Activities and Information and resources In moving a product or service from supplier to customer

Definition of Logistics : 

Definition of Logistics Definition by Council of Logistics Logistics is that part of supply chain process that plans, implements and controls the efficient, effective flow and storage of goods, services, and related information from the point of origin to the point of consumption in order to meet customer’s requirements

SCM Definition by Mentzer et.al. : 

SCM Definition by Mentzer et.al. SCM is defined as the systematic ,strategic coordination of the traditional business functions and the tactics across these functions, within a particular company and across business within the supply chain, for the purpose of improving the long term performance of the individual companies in the supply chain and the supply chain members collectively

Slide 10: 

Functional and Process Perspective ORDER - TO - DELIVERY PROCESS SUPPLY CHAIN PROCESS Procurement Distribution Manufacturing Logistics

Supply Chain flows : 

Supply Chain flows Products Services Information Financial resources Demand forecasts

KEY ACTIVITIES Customer service staff in coordination with marketing determine customer needs and wants for logistics customer service Determine customer response to service Set customer service levels Transportation Mode and transport service selection Freight consolidation Carrier Routing Vehicle scheduling Equipment selection Claims processing Rate Auditing Inventory management Raw Materials and finished goods stock policies Short term sales Forecasting Product mix at stocking points Number, size and location of stocking points Just in time push and pull strategies Information flows and service management

Support Activities : 

Support Activities Warehousing Material handling Purchasing Protective packaging Information maintenance Cooperate with production/operations

Key Problem in SCM : 

Key Problem in SCM Design a supply chain network that delivers high quality products to the right customers at the right time at minimum cost

Slide 15: 

Example of a Typical Supply Chain: IBM Europe PC Supply Chain

Slide 16: 

Order/ Product Flow through Supply Chain Functions Order Management Channel A Channel B Customer Channel C Product Distribution Manufacturing Demand Planning Supply Planning Part Supply Orders Demand Forecast Component Requirement Parts Production Plans Products Products Orders Products Products Orders Orders

Slide 17: 

SUPPLY CHANGE MANAGEMENT Managing Upstream and downstream Value added Flows of materials, final Goods and Related Information among suppliers, the company, Resellers and Final Consumers VALUE CREATION BY COLLABORATING HORIZONTALLY(suppliers,retailers and customers) SUPPLIERS Company Resellers Customers Inbound Logistics, Material Mgt ,inventory control etc Outbound Logistics physical distribution REVERSE LOGISTICS

Slide 18: 

Cycles of supply chain process Customer order cycle Replenishment cycle Manufacturing cycle Procurement cycle Interface CUSTOMER RETAILER DISTRIBUTER MANUFACTURER SUPPLIER A CYCLE VIEW OF SUPPLY CHAIN CYCLES ARE TRIGGERED BY CUSTOMER ORDER,REPLENISHMENT ORDERS FROM DISTRIBUTORS OR BY FORECAST OF OF CUSTOMER DEMAND AND CURRENT PRODUCT AVAILABILTY IN FINISHED GOODS WAREHOUSE

Slide 19: 

Case study WAL-MART A US 350 BILLION US DOLLAR COMPANY, OF SAM WALTON AND DAVID GLASS HEADQUARTERED AT 1.2 MILLION SQAUARE FOOT DISTRIBUTION CENTER AT ARKANSAS,BENTONVILLE,MOVES 2.3 BILLION CARTON PER YEAR, 24/7, TWELVE MILES OF CONVEYER STREAM ELECTRIC ARMS GUIDE EACH STREAM AND GUIDE OUT BOXES ORDERED BY STORES ANOTHER CONVEYER BELT SWEEPS THEM IN TRUCKS RUSHING PRODUCTS TO RESPECTIVE SHELVES OF STORE LIFTING OF PRODUCTBY CUSTOMER AND CASHIER SCANS SENDS INFO TO SUPPLIERS EVEN IN CHINA Matching thus Supply and fluctuating demand increasing responsiveness to planning manufacturing capabilities leading towards just in time approach WALMART SYMPHONY-DELIVERY,SORTING,PACKING,DISTRIBUTION.BUYING,MANUFACTURING,RECORDING,REORDERING,DELIVERY,SORTING,PACKING……………..

Slide 20: 

CASE STYDY United Parcel service UPS A 36 BILLION us dollar Supply Chain outsourcing company Repairs Toyota LAPTOPS DIRECTLY Manages LOGISTICS FOR E-BAY Supply chain for papa John’s PIZZA SERVICES HP PRINTERS DIRECTLY UPS SLOGAN {“ YOUR WORLD SYNCHRONIZED) MANAGES OUTSOURCING OF SUPPLY CHAIN

Case Study TOI Remote publishing in 18 centers on communication channel reducing freight cost by Air E-Paper on India-times portal, E-Kiosks World’s largest English newspaper SAP digital workflow for space selling, prepress and electronic printing,CTP, Improvement in Physical distribution through electronic Labeling on bundles and automatic loading on trucks to delivery points/warehouses improving supply chain

Case study HLL was market leader in detergent powder and soap with products as Surf and Rin till sixties Nirma(kirsen Patel) in 1969 was introduced in detergent powder and bar segment and by 1992, nirma captured 55% market share challenging both surf and rin putting extreme prssure on HLL HLL countered nirma by setting third party production UNIT like Stefan chemicals with cheaper and more efficient supply chain and produced WHEEL exceeding sale of 1000 crore Moral of the story is only superior cost,quality,delivery and technological performance do not guarantee success but process linkages are the keys.

Examples of Supply Chains in India : 

Examples of Supply Chains in India Automotive - Telco, ALL, Mahindra, Maruti Aerospace - ADA, HAL Chemicals - Asian Paints, Apollo tyres, Reliance Apparel - Madura Coats, Reliance Food - Cadbury, Parle, Amul Products, HLL Consumer durables - HLL, P & G Forest Products - Papermills Construction - L & T Pharmaceutical - Ranbaxy, Glaxo Electromechanical – Kirloskar, L & T Tooling - HMT, Widia, Mico PC/ Computer - IBM, WIPRO, HCL, Intel

Slide 24: 

THRIVING INDIAN RETAIL SCTOR TO GROW WITH 25% GR LARGEST INDUSTRY WITH POTENTIAL OF 250BILLION US DOLLAR IN INDIA IS LARGEST SOURCE OF EMPLOYMENT AFTER AGRICULTURE IT SEEN AS BIGGEST ENABLER OF SUCCESS ORACLE AND SUN PROVIDING IT SOLUTION IN RETAILING IT FOR FINANCE,ACCOUNTING,BUSINESS INTELLIGENCE,VENDOR DEVELOPMENT AND MANAGEMENT, MERCHANDISING AND INVENTORY MANAGEMENT,FACILITIES MANAGEMENT,STORE MANAGEMENT,CRM,BRANDING, MARKETING,SALES PROMOTION , HR] AND LAST BUT NOT THE LEAST SUPPLY CHAIN MANAGEMENT RETAIL SECTOR

SUPPLY CHAIN LEVERS EFFECT EVA LEVERS VIZREVENUE,COST,WORKING CAPITAL AND FIXED CAPITAL : 

SUPPLY CHAIN LEVERS EFFECT EVA LEVERS VIZREVENUE,COST,WORKING CAPITAL AND FIXED CAPITAL SUPPLY CHAIN LEVERS Strategic Sourcing Distribution Effectiveness Supply Chain planning Asset Optimization EVA- Economic value added Suply chain levers

Slide 26: 

Wheel of Fortune Automatic Pilot The price is Right Strategic partnership LOW HIGH LOW HIGH Financial Impact Strategic Importance Strategic Sourcing Framework

Slide 27: 

Our Business Requirements Pyramid

Slide 28: 

Business Requirements/Evaluation Model A long-term capital investment should support A : Assurance of Supply Vendors’ tech. capability, org. stability & reliability of equipment Q : Quality Continuity of production and output quality consistency S : Service After sales service : availability of spare parts / technical support C : Cost Current and future competitiveness I : Innovation Flexibility for different products, upgradability to new technology R : Regulatory Regulatory compliance; Safety requirements; Environmental objectives

Slide 29: 

Reduce Downtime Reduce Cycle Time Reduce Inventory level Reduce investment In receivable Optimize Supplier credit De-Bottlenecking Increse fixed Asset turn Increse Capital turn Fixed asset Working capital Asset optimisation Framework for maximizing asset utilization

Slide 30: 

A MAJOR GLOBAL COMPANY INCRESED ITS ROA (measurable benefit of improving SCM) BY ALLIGHNING ITS FUNCTIONAL ACTIVITIES WITH SUPPLY CHAIN STRATEGY. READ THE HARD NUMBERS OF IMPROVEMENT. Sales revenue Increase from 2b to2.102b COSTS Inv.c.cost.dec by5M Prod.cost by1m, Transp c.by1m Proc.c. by1m Working capital Inventory investment.dec.by45m Fixed capital Dist.center.investment. dec.by3m Net income incr from 100m to 108m Assets Cap. Invested. Dec.from 700m to 652m ROA increased from 14.29%-100/700 to16.56%-108/652 Source HBR2007

Slide 31: 

DISTRIBUTION EFFECTIVENESS- KEY AREAS CHANNEL MANAGENENT= DEFINE PROFILE OF CHANNEL MEMBERS, IDENTIFY PERFORMANCE METRICS AND MANAGE THEIR PERFORMANCE AND PROFITABILITY MINIMISE COST TO SERVE OF VARIOUS CHANNEL PARTNERS USE ROI PRINCIPLE TO MANAGE CHANNEL PARTNER PERFORMANCE LOGISTICS- Configure network based on least total Delivered cost to identify optimal linkages between manufacturing locations and delivery points TRANSPORTATION MANAGEMENT-Manage base of transport service providers to minimize freight costs and ensure desired service level by evaluating them on infrastructure , service and delivery capabilities

Slide 32: 

Supply chain planning- AN INTEGRATED PLANNING TO ENSURE AVAILABILITY OF RIGHT FINISHED GOODS AT DESIRED POINT IN TIME FOR DELIVERY TO THE CUSTOMER IF NOT DONE MAZOR RISKS ARE LOST SALES BUILD UP INVENTORY IDLE TIME ON CRITICAL EQUIPMENT SHORTAGE OF A KEY RAW MATERIAL RIGHT SKILLS SUCH AS UNDERSTANDING OF BEST PRACTICES,PROCESS DESIGN,PROJECT MANAGEMENT,CHANGE MANAGEMENT AND INFORMATION TECHNOLOGY CAN ONLY BRING BENEFITS OF SCM TO COMPANIES

Slide 33: 

Role of IT and Telecommunications on supply chain Global positioning system tracking location of delivery trucks Satellite communication channels Transmitting material requirements through Web based EDI Capturing demand and replenishment data through bar code technology RFID tags, bar codes. Scanners, robotic arms and computers for real time material and product movement ERP software from SAP, ORACLE for modern and cost effective integrated SCM with three macro processes like CRM,ISCM, SRM with focus on customer, internal supply chain with focus on internal processes,Supplier relationship management focusing on interface with supplier, MM modules FULL Network connectivity with its partners with VPN based Extranet

Slide 34: 

Well orchestrated Supply chain will reduce Manufacturing cost Inventory cost Replenishment lead time Transportation cost Shipping and receiving cost and INCRESE Level of product Availability , and PROFITIBILITY

Slide 35: 

MICRO-CHIP WITH ANTENNA REPLACING BAR CODE IDENTIFY EACH STAGE IN SUPPLY CHAIN PRODUCT SPECS, WHICH MANUFACTURER EXPIRY DATE RADIO FREQUENCY IDENTIFICATION TEMPERATURE DAILY AND SEASONAL CUSTOMER HABITS PRIORITISATION WHEN WE PRODUCE,WHEN WE SHIP AND PUT EXACTLY AT RIGHT PLACE IN TRUCK

Logistics/sc interfaces with marketing : 

Logistics/sc interfaces with marketing

Marketing Management is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges with target groups that satisfy individual and organizational objectives MARKETING CONCERN IS TO PLACE ITS PRODUCT OR SERVICES IN CONVENIENT DISTRIBUTION CHANNELS TO FACILITATE THE EXCHANGE PROCESS MARKETING WOULD PRIMARILY BE RESPONSIBLE FOR MARKET RESEARCH,PROMOTION,SALES-FORCE MANAGEMENT AND THE PRODUCT MIX WHICH CREATE POSSESSION VALUE IN THE PRODUCT

Objectives of Business Logistics/SC : 

Objectives of Business Logistics/SC ROLA=CONTRIBUTION TO REVENUE - Logistics Operating Costs/ Logistics Assets ROLA ( return on Logistics Assets)

Organizing Logistics Function-Chapter15 : 

Organizing Logistics Function-Chapter15 LOGISTICS DIVISION A DIVISION B Order entry and processing Inventory management and production scheduling Transportation Procurement Warehousing and material management

Supply Chain Measures : 

Supply Chain Measures Supply chain Measures fall under 4 main categories. Cost Assets Reliability Flexibility

Benchmarking supply chain performance using financial data : 

Benchmarking supply chain performance using financial data Total length of the chain: The total lenghth of the chain is arrived by adding up the days of inventory for raw materials, work in progress and finished goods.The firm with minimum value is said to have best performance Total length of chain in days=DRM+DWIP+DFG Companies like Dell will perform very well on this measure

Evaluating the efficiency of Supply chain management : 

Evaluating the efficiency of Supply chain management Supply chain management costs(SCC)=distribution cost(DC) +inventory (INV)(all inclusive)*inventory carrying cost(ICC) Supply chain inefficiency Ratio =SCC/NS NS=net sales Firms with efficient supply chain systems will have relatively low inefficiency ratio

Supply Chain working capital productivity : 

Supply Chain working capital productivity Supply chain working capital (SWC) SWC=inv+ AR-AP INV=INVENTORY All inclusive of raw materials, semi finished goods and finished goods AR=Accounts receivable AP=Accounts payable SWCP( Supply chain working capital productivity) =NS/SWC

Linking supply chain and business performance : 

Linking supply chain and business performance Impact of various supply chain initiative can be estimated in terms of costs and benefits using the following broad groupings. Cost reduction is achieved by – By reduced inventory Reducing logistics expenses Reducing direct material expenses Reducing indirect material expenses

contd : 

contd Improving revenue and profitability by -selling higher margin products Achieving higher market share Reducing lost sales Attacking new markets Decreasing supply time to market

contd : 

contd Reducing working capital by Reducing inventory Reducing accounts receivable

contd : 

contd Improving operational efficiency by Reducing procurement expenses Increasing asset utilization Delaying capital expenditure

chrysler : 

chrysler Chrysler in 2006 after the turnaround by lee-Iacocca FAILED BY SITTING ON INVENTORY OF 83 DAYS OF UNSOLD FINISHED GOODS.CHRYSLERS DEALERS WERE RELUCTANT TO LIFT ANY MORE CARS AS THEY ALSO HAD A HIGH INVENTORY OF 100 DAYS

Supply chain operation reference(SCOR)MODEL,SOURCE WWW.SUPPLY-CHAIN : 

Supply chain operation reference(SCOR)MODEL,SOURCE WWW.SUPPLY-CHAIN SCOR HAS DEVELOPED 11 PERFORMANCE MEASURES Delivery performance Order fulfillment performance Fill rate Order fullfilment lead time Perfect order fulfilment Supply chain response time Production flexibility Total logistics management cost Value added productivity Warranty cost Cash to cash cycle time Inventory days of supply Asset turns

Assignment,September,2009,page 1 : 

Assignment,September,2009,page 1 Question 1 Calculate the length of total length of chain for company A and Company B. Comment from the calculated data , which is having a better performance

Assignment,September,2009,page 2 : 

Assignment,September,2009,page 2 DRM=RM*365/CRM DWIP=SFG*365/CP DFG=FG*365/CS CRM,CP,CS Data are for one financial year CRM is annual cost of raw material, CP is annual cost of production, CS is annual cost of sales Company A DRM=1CR*365/10CR=36.5 DAYS DWIP=1CR*365/50 CR=7.6 DAYS DFG=20 CR*365/100 CR=73DAYS Total number of days=36.5+7.6+73=117.1 days Company B DRM=50Lacs*365/10cr=18.25 DAYS DWIP=50 LACS*365/5CR=36.5DAYS DFG=1CR*365/25CR=14.6DAYS Total number of days=18.25+36.5+14.6=69.35 days

Assignment,September,2009,page 3 : 

Assignment,September,2009,page 3 Question2. Which company is better on supply chain inefficiency ratio as performance measure. Quantify the results based on data given below for company A and Company B question3 Which company is better on supply chain working capital productivity. Quantify the results based on data given below for company A and Company B Company A SCC=DC+INV*ICC RM=1CR,SFG=1CR,FG=18CR,DC=5CR,NS=100CR,AR=2CR,AP=5CR SCC=5+20*.2=9CR,SCI=SCC/NS=9/100=.09 Company B RM=50L,SFG=50L,FG=1CR,DC=20L,NS=30CR,AR=1CR,AP=50LACS SCC=2+2*.2=2.4,SCI=SCC/NS=2.4/30=.08 SCC=Supply chain management cost, INV=total inventory ICC=Inventory carrying cost, DC=Distribution cost, NS=Net Sales, RM=Raw Material inventory, SFG=Semi Finished Goods inventory, FG=Finished goods Inventory

Numerical contd : 

Numerical contd Company A SWC=20+2-5=23CR,SWCP=100/23=4.3 Company B SWC=1CR+1CR-.5=1.5CR,SWCP=30/1.5=20

Assignment,September,2009 : 

Assignment,September,2009 Question 3 Define Return on logistics cost and discuss its dependence on revenue and logistics assets

Unit 2 : 

Unit 2 PRACTICES OF OPERATIONAL LOGISTICS Market survey and customer care service and attributes. Integrated logistics management Understanding costs and benefits-quoting rates for services Determining the customer service level Different mode of payments Operations research & logistics decision making Logistic auditing Relogistics - A new wave for value delivery

Customer service when utilized effectively is a prime variable that can have significant impact on creating demand and retaining customer loyalty. Logistics customer service is….. The speed and dependability with which items ordered can be made available Another definition calling customer service as fulfillment process as …. The entire process of filling the customer’s order. This process includes the receipt of order,managing the payment, picking and packing the goods, shipping the package , delivering the package, providing customer service for the end user and handling possible the return of goods

Customer service Pre-transaction elements Written statement of policy Statement in hands of customer Organizational structure System flexibility Technical services Transaction elements Setting stock levels Selecting transportation mode Elements of order cycle Delivery time Transship System accuracy Order conveniences substitution Post transaction elements Installation Warranty Repairs Alterations Product tracking Customer claims Complaints Product packaging

6 physical distribution service elements by product type 1.In Stock Performance 2. Lead time 3. Consistency of delivery 4. order progress information Protective packaging Cooperation in handling shipping problems Rate them in order of preference

Primary elements of customer service are captured within the concept of order cycle time Order cycle time is ‘the elapsed time between when a customer order , purchase order or service request is placed and when product or service is received by customer Total order cycle time=order transmittal to customer retail outlet(order consolidation and transmission of orders to warehouse)+order processing and assembly(bill of lading preparation,credit clearence,order assembly in warehouse) +additional stock acquisition time(if stock out,additional time to acquire stock from plant)+delivery time from factory(shipping time from warehouse and customer shipment processing)

Frequency distribution for total order cycle time when out of stock situation occurs Order cycle time frequency o

Order entry and order filling at plants and and warehouses are consuming 50 per cent of order cycle time and it should be targeted for order cycle time reduction. Order entry and production/warehousing processing 36 days Transport to consolidation point 2 days Freight consolidation 7 days Freight pick up 1 days Transport to port vessel waiting 2 days Ocean transit 18 days Deconsolidation 4 Customs clearance 2 Inland transport to inventory point 1

Defining a sales service relationship Threshold Diminishing returns Decline See the curve on page 108 in the textbook and discuss

Measuring service Order entry Minimum,maximum and average time for order handling Percent of orders handled within target time Order documentation accuracy Percent of order documents with errors Transportation Percent of delivery on time Percent of orders delivered by customer request date Damage and loss claims as a percent of freight costs Inventory and product availability Stockout percentage Percent of orders filled complete Order fill rate and weighted avarage fill rate Average percent of items on backorder Items fill rate Product damage Number of returns to total orders Value of return to total sales Production / warehouse processing time Minimum, maximum and average time to process orders

Three fundamental dimensions of customer service are Availability, performance and reliability. Some Definitions : 

Three fundamental dimensions of customer service are Availability, performance and reliability. Some Definitions Availability--- Availability is the capacity to have inventory when it is desired by a customer. The 3 measures are stockout frequency, fill rate, order shipped complete. Stock out frequency-----Stock out frequency is a measure of how many times demand for a specific product exceeds availability. Stock out frequency is a starting point in measuring inventory availability Fill Rate------- Fill rate measures the magnitude or impact of stock out over time. If a customer orders 50 units and only 47 units are available, the order fill rate is 94 per cent.(47/50) Order shipped complete---- order shipped complete is a measure of times that a firm has all the inventory ordered by a customer.Order shipped complete establishes the potential times that customers will receive perfect orders Base stock---- determined by forecast variance requirements and held to support basic availability Safety stock-----To cover demand that exceeds forecasted volumes and to accommodate unexpected operational . Safety stock exists to accommodate forecasted and cushion delivery delays during base stock replenishment.

Operational performance--- Speed---performance cycle speed is the elapsed time from when an order is placed until shipment arrival viewed from customer’s perspective Typically faster the planned performance, the lower the level of inventory investment required by customers. Consistency-----consistency refers to a firm’s ability to perform at the expected delivery time over a large number of performance cycles. Flexibility---Operational flexibility refers to a firm’s ability to handle extraordinary customer service requests such as product modification or customizations for specific markets or customers, new product introduction. A firm’s overall logistical competency depends on the capability to ‘go extra yard’’. Mal function/Recovery –During service failures, capability to have contingency plans and to anticipate the service breakdowns and have recovery Reliability---Logistics quality is all about reliability. Ability to comply to levels of planned inventory availability and operational performance is key to provide reliable service.A major part of service quality is continuous improvement

Forecasting Demand Demand levels and their timings affect Capacity levels, financial needs and general structure of business Logistician must know where demand level will take place and when. SPATIAL VERSUS TEMPORAL DEMAND Spatial location of demand is needed to plan warehouse locations, balance inventory levels across the logistics network and geographically allocate transportation resources. Temporal demand deals with seasonality in the demand pattern. short term forecasting methods deal with temporal variation(when) Temporal demand deals with time while spatial demand deals with space(where) REGULAR VERSUS LUMPY DEMAND Regular demand patterns are given as random, or seasonal as given on page 299. Lumpy demand pattern is intermittent because of low volume overall and a high degree of uncertainty as to when and at what level demand will occur.

Derived versus independent demand In derived demand, it is dependent on requirements specified in production schedule. Like tires dependency on new cars ordered. Both have alternate ways of forecasting demands. When demand is independent, statistical forecasting procedures work well. Derived demand are highly biases and not random. When causes for demand variation are unknown and result from many factors, random -ness exists which require statistical based forecasting procedures.

Forecasting methods, qualitative, historical projections, and casuals : 

Forecasting methods, qualitative, historical projections, and casuals Qualitative methods are through judgmental, intuition, surveys or comparative methods Historical methods work on basic premise that future time pattern will be replication of the past.. Accuracy within a period of six months is quite good. Casual methods follow cause and effect relationship like knowing level of customer service provided, the level of sales is projected. Casual methods come in variety of forms , Statistical as in the case of regression and econometric models and descriptive as in the case of input-output, life cycle and computer simulation models.

Integrated Logistics (unit 2) Logistics is viewed as competency that links an enterprise with customer with its customers and suppliers. Information flows in the form of Sales activity, forecasts and orders. The info. Is refined into specific manufacturing and purchasing plans. The information is refined into specific manufacturing and purchasing plan. As products and material are procured, a value added inventory flow is initiated that ultimately results in ownership transfer of finished products to customers. Process is viewed in terms of two interrelated efforts, inventory flow and information flow. In today’s competitive world, firms must expand their integrated behaviour to incorporate customers and suppliers. Extension is referred as supply chain management

Integrated logistics system is an interface of the procurement function, production function, and physical distribution function with following objectives. -to have better customer service by appropriate value adition for superior customer value. -to ensure higher productivity and further curtailment in logistics cost by means of synergy between all three logistics function -to monitor performance of existing logistics function so that continuous improvement can be carried out. In integrated system there is a high degree of coordination between material management system, and physical distribution management along with marketing and production management system. Integrated logistics system refers to a set of activities concerned with storage and flow of all materials, information and control system. Refer page 37 and 38 and figue 1.9, book by Prof. D.K. Agarwal.

Reverse Logistics : 

Reverse Logistics Reverse supply chain deals with reverse flow of material where the product moves back from the end customer to the manufacturer. It can deal with entire product or a part of product like packaging material like the bottles in which coke is sold. New Product return –firms are offering liberal return policies where customers can return the product within a few months of purchase. In U.S. approx. 6 per cent of retail purchase is returned by customers. End of life product return-Because of tough environmental regulations , firms in developed market have to take responsibility of their product at the end of life of their product and must provide for collection and product remanufacturing or proper disposal. Many firms have been promoting the idea of a green supply by ensuring that they reuse most of the components of the return products. BMW has been working on the idea of totally reclaimable automobile. Product returns also take place during intermediate stage of product life cycle as observed in case of Mattel, toy manufacturer who had to recall chinese made toys. Reverse chains are difficult to manage because of uncertainties in quantity and timings. Further they may not have economies of scale in collection and transportation. Most firms have not been able to integrate their forward and reverse supply chains Reverse supply chain will become an important issue in coming decade..

Quoting rates for services What are the factors that influence transport mechanics? What are the the cost structures that influence expense allocation ? What are the rate structures that form foundation for actual customer charges? Various criteria are used for deciding the rates 1. Distance being major influence contributes to variable cost such as labor, fuel and maintenance Volume transport cost per unit of weight decreases as load volume increases. Density Efforts to increase product density will generally result in decreased transportation cost. Stowability refers to product dimensions affecting the space utilization.Odd sizes and shape do not stow well and waste space Handling Manner in which produccts are physically grouped together e.g. taped, boxed etc affects handling cost Liability product characteristics like susceptibility to damage, perishibility, susceptibility to thefts, susceptibility to combustions or explosin and value per pound.Shippers reduce the risk by packaging,taking insurance cover

Cost structures Transportation costs are classified into combination of categuries. Variable costs the variable category include direct carrier costs associated with movement of each load. Fixed Costs like terminals, rights of way, info system, and vehicles Joint costs like backhaul costs from point B to A Common costs terminal or management expenses. This is apportiones according to number of shipments handled. Pricing Strategies Cost of service strategy carrier establishes a rate based on the cost of providing the service plus profit margin. Value of service strategy is based on perceived shipper value rather than cost of actually providing the service for high value goods

Combination strategy This strategy establishes the transport price at some intermediate level between the cost of service minimum and the value of service maximum. RATING Class Rates first step is grouping or classification or grouping of the product being transported. Second step is determination of of price rate based on classification of product and the origin destination point of the shipment Less than truckload shipment (LTL) of identical products will have higher ratings than carload (CL) or truck load (TL) shipments. Higher the rating, higher is the transportation cost. Rate Administration once classification rating is obtained for the product, specific rate must be determined. The rate per hundred weight is usually based on the shipment origin and destination. An alternative to the per hundred charge is per mile charge commonly applied to TL shipment. Since entire vehicle is used in a full TL delivery, the per mile approach here is better.

Freight all kind (FAK) rates Here mixture of products are transported. FAK are line haul rates as they replace class, exception,or commodity rates.

Logistics information system purpose is collecting, retaining and manipulating data within a firms is to make decisions, ranging from strategic to operational and to facilitate the transactions of the business Information sharing throughout supply chain from enterprise wide information systems such as SAP, ORACLE, Baan, People soft and J.D. Edvards is because of larger computer memory space, faster computing, increased access to info. throughout organization and improved platforms for transmitting information such as EDI and internet, portals, instant messaging etc

Slide 77: 

THRIVING INDIAN RETAIL SCTOR TO GROW WITH 25% GR LARGEST INDUSTRY WITH POTENTIAL OF 250BILLION US DOLLAR IN INDIA IS LARGEST SOURCE OF EMPLOYMENT AFTER AGRICULTURE IT SEEN AS BIGGEST ENABLER OF SUCCESS ORACLE AND SUN PROVIDING IT SOLUTION IN RETAILING IT FOR FINANCE,ACCOUNTING,BUSINESS INTELLIGENCE,VENDOR DEVELOPMENT AND MANAGEMENT, MERCHANDISING AND INVENTORY MANAGEMENT,FACILITIES MANAGEMENT,STORE MANAGEMENT,CRM,BRANDING, MARKETING,SALES PROMOTION , HR] AND LAST BUT NOT THE LEAST SUPPLY CHAIN MANAGEMENT RETAIL SECTOR

Logistics Information System Major subsystems are Order Management system (OMS) Warehouse management system (WMS) Transport management system ( TMS) REF. FIGURE 5-6, PAGE 152 logistics Information system External Customers Vendors Carriers Supply chain partners Internal Finance and accounting Marketing Logistics Manufacturing Purchasing OMS Stock availability Crediting checking Product allocation to customers Fulfilment location WMS Stock level management Order picking Picker routing Picker assignments and work loading TMS Shipment consolidation Vehicle routing Mode selection Claims Tracking Bill payment Freight bill auditing

Logistics planning,developing customized logistics solutions, implementing solutions,warehouse management, air and sea freight forwarding, and transportation,assembling and repacking of goods LOGISTIC OUTSOURCING Drivers of outsourcing trends Benefits of logistic outsourcing Selection of service provider Outsourcing-A value proposition 3PL Services  Shipment consolidation Warehouse management Rate negotiations Fleet management/operations Logistics info system Product returns Order processing Relabeling/repacking Customer spare parts Inventory management Product assembly Product testing Multimodal transport Supply Chain Management

Third Party LogisticsManufacturing companies to Concentrate on core competenciesOutsource transportation, Warehouses Management, Bills and order processing to third partyDo what you are best at and leave all other non value added activities to more suited playersBenefitsCost Reduction-Due to specialized services being offered, benefits of economies of Scale and lesser cost of services, pooling of idle time resourcesMaximizing Revenues by concentrating on core areas and utilize financial and nonfinancial resources where it can maximize returns .3PL Providers take care of routine work that frees human resources and time spent on routine functioning3PL providers provide optimal supply chain by application of IT like choosing best combination of multimodal movement. : 

Third Party LogisticsManufacturing companies to Concentrate on core competenciesOutsource transportation, Warehouses Management, Bills and order processing to third partyDo what you are best at and leave all other non value added activities to more suited playersBenefitsCost Reduction-Due to specialized services being offered, benefits of economies of Scale and lesser cost of services, pooling of idle time resourcesMaximizing Revenues by concentrating on core areas and utilize financial and nonfinancial resources where it can maximize returns .3PL Providers take care of routine work that frees human resources and time spent on routine functioning3PL providers provide optimal supply chain by application of IT like choosing best combination of multimodal movement.