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Module 2

Logistics Management

Operations and Supply Chain Management

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Syllabus- LOGISTICS MGT.

1. BUSINESS LOGISTICS (2 HRS) Logistics management a paradigm shift Market -logistics objectives Logistics operation; meaning. importance &

effectiveness Customer value chain Marketing and logistic mix. Organizing logistic functions.

2.PRACTICES OF OPERATIONAL LOGISTICS

(2 HRS) 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

3.LOGISTICS INFORMATION SYSTEM (1

HR) Logistics information needs Designing a logistic information system Role of technology in logistics - Automatic identification technology - Electronic Data Interchange (EDI) - Warehouse simulation - Communication technology

4.LOGISTIC OUTSOURCING (1 HR) Drivers of outsourcing trends Benefits of logistic outsourcing Selection of service provider Outsourcing-A value proposition

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Logistics Management- The Supply Chain Imperative by Vinod V. Sople

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Syllabus- SUPPLY CHAIN MGT.

5.SUPPLY CHAIN MANAGEMENT (1 HR)

Supply chain components Economics of distribution

Supplier distributor benchmarking

6.SOURCING, TRANSPORTING ANDPRICING PRODUCTS (2 HRS)

Transportation in supply chain

Strategic cost management initiativesacross global supply chain

Greening of supply chain

7.DESIGNING SUPPLY CHAIN NETWORK

(2 HRS) Factors influencing distribution in the supply

chain.

Distribution networks in practice.

Models for facility location and capacityallocation

8.COORDINATION IN SUPPLY CHAIN (1HR)

Effect of lack of coordination on Performance

Partnership relationship management

Technology in supply chain

- Supply chain IT Framework - Future of IT in Supply Chain

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Logistics Management- The Supply Chain Imperative by Vinod V. Sople

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Logistics is the . . . process of

planning, implementing, and controllingthe efficient, effective flow and storage

of goods, services, and relatedinformation from point of origin to point

of consumption for the purpose ofconforming to customer requirements.

Council of Logistics

What is Logistics?

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What is SCM?

Supply Chain Management deals withthe management of materials,information, and financial flows in anetwork consisting of suppliers,

manufacturers, distributors, andcustomers. (Stanford Supply ChainForum)

So, Logistics and Supply Chain areequivalent terms.

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Boeing 787

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Source: THE BOEING COMPANY

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Global Business Logistics

Important issues to consider: To gain a competitive advantage, global sourcing is a given for

companies engaging in global marketing strategies.

The longer the supply chain, the more cooperation andcoordination is required between production, marketing,

purchasing and the logistics management group. World trade is growing as fast logistics systems have

had the effect of shrinking the world, empoweringcompetitive trade.

Foreign trade has grown in tonnage and in value for

the United States and other nations. Lower labor costs from international outsourcing is a

critical component of the supply chain.

Focused manufacturing fits well into an international

logistics strategy.7

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Global Markets and Global Corporations

Trade barriers continue to fall, accelerating globalbusiness activity.

Global markets result from the generalhomogenization of global needs and wants. Local needs suborned to lower-priced, higher-quality products.

Preferences for international products can also be related toattempts to copy other more prosperous cultures.

To effectively serve global markets, firms shouldconsider adopting integrated worldwide strategies.

These firms are more likely to search for global

sourcing for materials and components, depots,assembly, distribution centers, and logistics.

Global firms typically design synchronous strategiesaround technology, marketing, manufacturing, and

logistics.8

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Value Chain (Michel Porter)

9 Logistics Value Chain

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Value Chain explained

Inbound Logistics Operations preceding Manufacturing

Movement of raw materials & components for processing

Operations Storage and movement of raw materials and components

within the manufacturing premises

Inventory management of stored materials and in-processgoods

Outbound Logistics

Operations following the production process

Warehousing, transportation, inventory management offinished products10

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Integrated Value Chain

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Logistics Functions

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Three Categories

Production when should a resource be produced: aggregate resource

planning, and production scheduling.

where should a resource be produced: facility location andproduction allocation

Storage/Inventory when should a resource (material, machine or labor) be put in

inventory and taken out of inventory: economic-order-quantitymodels, safety stock models and seasonal models, andspecialized topics of fleet management, and personnel planning

where should a resource be stored: inventory echelons Transportation

where should resources be moved to, and by what mode androute: terminal location, vehicle routing, and shortest path methodsand network flow allocation

when should resources be moved: distribution rules13

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Logistics Functions

Order Processing

Inventory Management

Warehousing

Transportation

Material handling and storage Logistics packaging

Information and use of IT

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Summary

Logistics spans 3 functional areas

Procurement

Manufacturing

Distribution

Productivity improvement in logistics reduces operating costsand releases resources. Some ways are inventory reduction,quick response, minimum product damage, reliable andconsistent delivery performance and minimum deviations andfreight economy

Logistics is viewed as a system concept of material flow from thesource of supply through manufacturing to final point ofconsumption.

Logistics covers functions like order processing, warehousing,inventory control, transportation, packaging and information flow

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Mumbai Dabbawalas

5000 Dabbawalas

Deliver home cooked food to about 200,000 people around Mumbaisuburb

35-40 tiffins per Dabbawalla, each of 2kg

They are transported with cycle, local train or handcart.

Color code denotes owner, work address and floor

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7am-9am Tiffins collected from homes

9am-11amBoard trains, sort boxes at intermediary stations according to deliveryarea (single tiffin can change hands three to four times)

11am-12pm Arrive Bombay, fan out to loading points, more sorting and loading on tohandcarts, bicycles and persons

12.30pm-1pm Deliveries

2pm Process moves into reverse

6pm Empty tiffins returned to homes

Video

http://ted-mumbai%20dabbawalas.flv/http://ted-mumbai%20dabbawalas.flv/

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Dabbawalas- Management facts

Time management and accuracy: Even though customers are

growing, they have color coding system, which ensures thatevery Tiffin goes to correct person. This meal on wheel systemstarted from British Raj at 1850.

Customer is King: They are not being thought in any businessschools. They just know to serve the customer in best way.

No technical support: They have not more technical or logisticsupport. They perform with almost 100% accuracy.

Marketing and advertising: They have distributed their leafletswith Microsoft laptops in Mumbai, offering mini discount offer forfood delivery.

Management Presentations: They have Bombay Tiffin BoxSupply Charity Trust which represent the whole system. Some of

them asked to give presentations in about their managementskills

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Question?

Analyze Mumbai Dabbawalas, using Michel Portervalue chain

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Seven Eleven Case Study

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Analyze Seven-eleven, using Michel Porter value chain

What are the unique customer service measures that 7-11

employs

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