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Logistics and SCM an over view

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Logistics and SCM an over view B.V.L.Narayana SPTM RSC BRC Definitions TRANSPORTATION movement of goods and/or people from one place to another (Wikipedia). – PowerPoint PPT presentation

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Title: Logistics and SCM an over view


1
Logistics and SCMan over view
  • B.V.L.Narayana
  • SPTM
  • RSC BRC

2
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).

3
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)

4
Logistics vs SCM
  • Four perspectives
  • Traditional SCM part of logistics
  • Re-labeling SCM logistics
  • Unionist Logistics part of SCM
  • Intersectionist Logistics NU SCM

5
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.

6
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

11
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

12
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

31
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

32
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

33
Link between sales volume and annual inventory
turnover ( haskett 1985)
34
Differentiated service levels (Haskett 1985)
35
Logistics process
36
Role of logistics in strategy
37
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

38
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

39
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

40
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

41
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

44
THANK YOU
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