Logistics & SCM , IIPMB

1. Integrated Logistics Management
PRESENTED By:
09- Chirag Bargoti
12- Dhrubajit Malakar
23- Midhun T Clement
31- Pavankumar Nadagoudra
38- Ravindra reddy
42- Sagardeep S D
62- Yogita

2. LOGISTICS
 Planning, implementing, and controlling the physical flow
of goods, services, and related information from points of
origin to points of consumption to meet customer
requirements at a profit.

3. INTEGRATED LOGISTICS
 Process of anticipating customer needs and
wants
 Acquiring the capital, materials, people,
technologies and information necessary to meet
those needs and wants
 Optimizing the goods-or-service-producing a
network to fulfill customer requests
 Utilizing the network to fulfill customer request in
a timely way

4. INTEGRATED LOGISTICS MANAGEMENT
 Cross functional teamwork inside
the company
 Building channel partnerships
 Third party logistics

5. OBJECTIVES OF INTEGRATED LOGISTICS
MANAGEMENT
 Rapid response
 Minimum variance
 Minimum inventory
 Movement consolidation
 Life cycle support

6. ACTIVITIES RELATED TO
INTEGRATED LOGISTICS
 Physical Distribution
 Materials Management
 Logistics Engineering
 Business Logistics
 Logistics Management
 Integrated Logistics Management
 Distribution Management
 Supply Chain Management

7. OPERATIONS INVOLVE IN
INTEGRATED LOGISTICS
 Inbound Logistics
 Conversion/Operations
 Outbound Logistics

8. KEY FACTORS IN EFFECTIVE
LOGISTICS SYSTEM:
 Shippers
 Suppliers
 Carriers (railroad, air, water, pipeline)
 Warehouse providers
 Freight Forwarders
 Terminal Operators (ports)
 Government (regulator of logistics)

9. WHY LOGISTICS?
 Effective logistics is becoming a key to winning and
keeping customers
 Logistics is a major cost element for most companies
 The explosion in product variety has created a need for
improved logistics management
 Information technology has created opportunities for
major gains in distribution efficiency

10. TOTAL QUALITY MANAGEMENT
 The way of managing organization to achieve
excellence
 Total – everything
 Quality – degree of excellence
 Management – art, act or way of organizing,
controlling, planning, directing to achieve certain
goals

11. “A management philosophy embracing all
activities through which the needs and expectations
of the CUSTOMER and COMMUNITY, and the
objectives of the organization are satisfied in the
most efficient and cost effective manner by
maximising the potential of ALL employees in a
continuing drive for improvement.”

12. EFFECT OF TQM (QUALITY IMPROVEMENT)
 Improve Quality (Product/Service)
 Increase Productivity (less rejects, faster job)
 Lower Costs and Higher Profit
 Business Growth, Competitive, Jobs, Investment

13. TQM SIX BASIC CONCEPTS
1. Leadership
2. Customer Satisfaction
3. Employee Involvement
4. Continuous Process Improvement
5. Supplier Partnership
6. Performance Measures

14. CRITERIA 1
LEADERSHIP
 Top management must realize importance of quality
 Quality is responsibility of everybody, but ultimate
responsibility is CEO
 Involvement and commitment to CQI
 Quality excellence becomes part of business
strategy
 Lead in the implementation process

15. CRITERIA 2
CUSTOMER SATISFACTION
 Customer is always right – in Japan customer is
“King”
 Customer expectations constantly changing – 10
years ago acceptable, now not any more!
 Delighting customers (Kano Model)
 Satisfaction is a function of total experience with
organization
 Need to continually examine the quality systems
and practices to be responsive to ever – changing
needs, requirements and expectations – Retain and
Win new customers

16. CRITERIA 3
EMPLOYEE INVOLVEMENT
 People – most important resource/asset
 Quality comes from people
 Deming – 15% operator errors, 85% management
system
 Project teams – Quality Control Circles (QCC), QIT
 Education and training – life long, continuous both
knowledge and skills
 Suggestion schemes; Kaizen, 5S teams
 Motivational programmes, incentive schemes
 Conducive work culture, right attitude, commitment

17. CRITERIA 4
CONTINUOUS PROCESS IMPROVEMENT
 View all work as process – production and business
 Process – purchasing, design, invoicing, etc.
 Inputs – PROCESS – outputs
 Process improvement – increased customer
satisfaction
 Improvement – 5 ways; Reduce resources, Reduce
errors, Meet expectations of downstream
customers, Make process safer, make process
more satisfying to the person doing

18. CRITERIA 5
SUPPLIER PARTNERSHIP
 40% prod. Cost comes from purchased materials,
therefore supplier Quality Management important
 Substantial portion quality problems from suppliers
 Need partnership to achieve quality improvement –
long-term purchase contract
 Supplier Management activities
 Define product/program requirements;

19. CRITERIA 6
PERFORMANCE MEASURES
 Managing by fact rather than gut feelings
 Effective management requires measuring
 Use a baseline, to identify potential projects, to
asses results from improvement
 E.g. Production measures – defects per million,
inventory turns, on-time delivery
 Service – billing errors, sales, activity times
 Customer Satisfaction measures

22.  Six sigma is a business statistical Strategy.
 Is to identifying defects and removing them from
the process of products to improve quality.
 A defect is defined as any process output that
does not meet customer specifications.
 Statistical measure to objectively evaluate
processes.

23.  The Six sigma was founded by Motorola in the
1970s.
 Out of senior executive Art Sundry's criticism of
Motorola’s bad quality.
 They founded a connection between increases in
quality and decreases in costs of production.
 Bill Smith, “Father of six sigma” introduce this
quality improvement Methodology to Motorola.

24. • Quality management program developed by Motorola in
the 1980s.
• Management philosophy focused on business process
improvements to:
Eliminate waste, rework, and mistakes
Increase customer satisfaction
Increase profitability and
competitiveness

25. WHEN SIX SIGMA BE USED?
 Depends on the type of business,
 “If there are processes that generate a lot of
negative (customer) feedback,
 Customers internal or external, components of
Six Sigma considered to study and rectify
problem.”

26. Six Sigma Objectives
Overall Business
Improvement
Six Sigma methodology focuses on business
improvement. Beyond reducing the number
of defects present in any given number of
products.
Remedy Defects/Variability
Any business seeking improved numbers
must reduce the number of defective
products or services it produces. Defective
products can harm customer satisfaction
levels.

27. Reduce Costs
Reduced costs equal increased profits. A
company implementing Six Sigma principles
has to look to reduce costs wherever it
possibly can--without reducing quality.
Improve Cycle Time
Any reduction in the amount of time it takes to produce a
product or perform a service means money saved, both
in maintenance costs and personnel wages. Additionally,
customer satisfaction improves when both retailers and
end users receive products sooner than expected. The
company that can get a product to its customer faster
may win her business.

28. Increase Customer Satisfaction
Customer satisfaction depends upon
successful resolution of all Six Sigma’s other
objectives. But customer satisfaction is an
objective all its own.

29. WHERE CAN SIX SIGMA BE APPLIED?
 Production
 Design
 Service
 Purchase
 HRM
 Administration
 Quality Department
 Management
 IT…

30. SIX SIGMA
 Customer first & uses facts and data to derive
better solution
 Target:
 Improving customer satisfaction
 Reducing cycle time
 Reducing defects

31. 3 SIGMA VS. 6 SIGMA
 Spends 15-25% of
sales dollars on cost
of failure
 Inspection to find
defects
 Benchmarks against
their competition
 Believes 99% is good
enough
 Spends 5% of sales
dollars on cost of
failure
 Don’t produce
defects
 Benchmarks against
the best in the world
 Believes 99%is
unacceptable
3 Sigma Company 6 Sigma Company

32. NON LINEAR DECREASE
Sigma DPMO
2 308,537
3 66,811
4 6,210
5 233
6 3.4

33. Methodologies
Six Sigma projects follow two project methodologies :
1. DMAIC
2. DMADV
These methodologies, composed of five phases.

34. 1. DMAIC
DMAIC is used for projects aimed at improving an
existing business process.
2. DMADV
DMADV is used for projects aimed at creating new product
or process designs.

35. 1. DMAIC
The DMAIC project methodology has Five
phases:
1. Define
2. Measure
3. Analyze
4. Improve
5. Control

36. 1.Define
2.Measure
Define the system, the voice of the
customer and their requirements, and
the project goals, specifically.
Measure key aspects of the current
process and collect relevant data.

37. 3.Analyze
4.Improve
Analyze the data to investigate and verify cause-
and effect relationships. Determine what the
relationships are, and attempt to ensure that all
factors have been considered. Seek out root
cause of the defect under investigation.
Improve or optimize the current process
based upon data analysis using techniques
such as design of experiments, poka yoke or
mistake proofing, and standard work to create
a new, future state process. Set up pilot runs
to establish process capability.

38. 5.Control
Control the future state process to ensure that any
deviations from target are corrected before they result
in defects. Implement control systems such
as statistical process control, production boards, visual
workplaces, and continuously monitor the process.

39. 2. DMADV
DMADV project methodology has Five
phase:
1. Define
2. Measure
3. Analyze
4. Design
5. Verify

40. 1.Define :
2.Measure
Define design goals that are consistent
with customer demands and the enterprise
strategy.
Measure and identify CTQs (characteristics
that are Critical To Quality), product
capabilities, production process capability,
and risks.

41. 3.Analyze
Analyze to develop and design
alternatives.
4. Design
Design an improved alternative, best
suited per analysis in the previous step

42. 5. Verify
Verify the design, set up pilot runs,
implement the production process
and hand it over to the process
owner(s).

43. • Executive Leadership (CEO and other top level
managers)
• Champions (act as the leaders of black belts. And
also )
• Master Black Belts (chosen by champions, give
their full effort to six sigma. Help to champions and
guide the Black belts and green belts).
• Black belts (working under Master Black Belts, they
are applying six sigma to specific projects).
• Green Belts (Working under the black belts).

44. Implemented Methodologies
Total
Quality
Managemen
t
Zero
defects
Quality
Control

45. FOCUS OF SIX SIGMA
• Accelerating fast breakthrough performance
• Significant financial results in 4-8 months
• Ensuring Six Sigma is an extension of the
Corporate culture, not the program of the
month
• Results first, then culture change!

46. THE ROLES OF SIX SIGMA BREAKTHROUGH
STRATEGY PLAYERS
CHAMPIONS
 Create the vision of six sigma for the company
 Define the path to implement six sigma across
the organization
 Develop a comprehensive training plan for
implementing the break through strategy
 Carefully select high-impact projects
 Support development of ‘statistical thinking’

47.  Ask black belts many questions to ensure that
they are properly focused
 Realize the gains by supporting six sigma
projects through allocation of resources and
removal of roadblocks
 Hold the ground by implementing black belt
recommendations
 Make sure that project opportunities are acted
upon by the organization’s leadership and the
finance department
 Recognize people for their efforts

48. MASTER BLACK BELTS
 Understand the big business picture
 Partner with the champions
 Get certified as master black belts
 Develop and deliver training to various levels of
the organization
 Assist in the identification of projects
 Coach and support black belts in project work
 Participate in project reviews to offer technical
expertise

49. BLACK BELTS
 Act as breakthrough strategy experts and be
breakthrough strategy enthusiasts
 Stimulate champion thinking
 Identify the barriers
 Lead and direct teams in project execution
 Report progress to appropriate leadership
levels
 Solicit help from champions when needed

50.  Influence without direct authority
 Determine the most effective tools to apply
 Prepare a detailed project assessment during
the measurement phase
 Get input from knowledgeable operators, first-
line supervisors, and team leaders
 Teach and coach breakthrough strategy
methods and tools
 Manage project risk
 Ensure that the results are sustained.

51. GREEN BELTS
 Function as green belts on a part-time basis,
while performing their regular duties
 Participate on black belt project teams in the
context of their existing responsibilities
 Learn the six sigma methodology as it applies
to a particular project
 Continue to learn and practice the six sigma
methods and tools after project completion

52. SIX SIGMA BREAKTHROUGH STRATEGY
PLAYERS FOR AN ORGANISATION
 Executive Team
 Champion
 Master Black Belt
 Black Belt
 Green Belt
 Board of Directors
 Chief Development
Officer
 Development Officers
 Assistant
Development Officer
 Senior Field Officer /
Field Officer
Six Sigma Title Leaders of Extension

53. IMPORTANCE OF SIX SIGMA
 Focus on improving productivity and quality by
reducing impact of “Hidden Factor” leads to high
Cost of Poor Quality(COPQ).
 Statistical and quality tool to increase capacity,
reduce cost and improve yields without spending
significant capital.

54. DISTRIBUTION CHANNEL OF

55. WHAT IS DISTRIBUTION ?
 Right product
 Right quantity
 Right place
 Right time
CHANNEL ????
“HOW”

56. The major functions include
 order processing
 warehousing
 inventory management
 transportation

58. HI(STORY)
-Founded in 1994 as by Jeff Bezos
-Based in Seattle, Washington
-the global leader in e-commerce
- 1995 the company went online
Timely shipment satisfied customers  improved market share  repeat business

59. CNTD…
 Initially…online book retailer…
no warehouse-no stock
located close to INGRAM’s BOOK GROUP
-physically handle and ship the books
 Growth in domestic and international volumes
 Amazon had to share its profit margins with Ingram
 Ingram’s distribution capacity supports many other booksellers.
Service issues for Amazon during peak demand
- had to increase inventory levels and obtain strategically
located distribution facilities

60. PRODUCTS
 Books
 Movie, Music and Games
 Digital Download
 Kindle
 Computer And Office
 Electronics
 Home and garden
 Grocery, Health and beauty
 Toys, kids and baby
 Clothing, Shoes and jewelry
 Sports equipment and wears
 Tools, Auto and industrial

62. Five international stores of
Amazon.com
Amazon Canada, Amazon France, Amazon UK,
Amazon Japan, Amazon Germany.
Reasons:
 The Mother-Tongue Issue
 The Shipping Issue
 The Currency Issue
 The Local Product Issue
 The National Pride Issue
 Proper inventory control

63. DISTRIBUTION CHANNEL-DIGITAL

64. DISTRIBUTION CHANNEL-
On-line channel has significant
cost benefit
-E-Books-Kindle reader
-Amazon MP3 & Cloud Player
-Instant Video
-Mac Download store
-App Store for android
-Amazon Cloud drive
-Amazon Game Studios & Softwares

65. DISTRIBUTION CHANNEL-PHYSICAL

66. DISTRIBUTION CHANNEL-
 Centalized distribution centers
 Faster response time
 Lower transportation cost
 Use a hybrid approach in stocking and pricing
 Pricing varies for delivery options
 Supply Chain Strategy
 Pure pull
 Push-pull

73. -most advanced order processing and fulfillment
operations
"Amazon's goal is to collaborate
with our suppliers to increase
efficiencies and improve inventory
turnover,"

74. -Large quantity of small
parcels and packages are
involved in
e-commerce related
merchandise
-variety of delivery
options, including
overnight and various
international shipping
options
WHOLESALER
AMAZON.COM
CUSTOMER
INFORMATION
INFORMATION PRODUCT
PRODUCT

75. DIRECT PURCHASES
WHOLESALER
AMAZON
CUSTOMER
INFORMATION
INFORMATION
PRODUCT
PRODUCT
PUBLISHER/
SUPPLIER
INFORMATION

76. GETS PAID BEFORE PAYING THE DISTRIBUTOR
WHOLESALER
AMAZON
CUSTOMER
INFORMATION
INFORMATION
PRODUCT
PRODUCT
PUBLISHER/
SUPPLIER
INFORMATION

77. Distributer/
manufacturer
CUSTOMER
INFORMATION
INFORMATION
PRODUCT
Drop-shipping
channel

78. -HIGHLY AUTOMATED PICK-PACK-SHIP PROCESSES
WHOLESALER
AMAZON
CUSTOMER
INFORMATION
INFORMATION
PRODUCT
PRODUCT
PUBLISHER/
SUPPLIER
INFORMATION
Other Sellers
INFORMATION

79. SUPPLY CHAIN FEATURES OF AMAZON
 It has world’s largest Linux Database, with a total capacity of
7.8 terabytes, 18.5 TB and 24.7 TB respectively.
 The Central Amazon Data warehouse is made up of 28
Hewelett Packard server, with four CPUs per node, running
Oracle 9i database software.
 The architecture handles millions of back-end operations
and third party seller queries.
 It operates 7 websites that support their business operation
globally and offers 20 million items for sale.

80. A PLETHORA OF APPROACHES
 Outsourcing
 Bar-Coding / RFID
 Collaborative Transportation Management
 Just in Time Inventory
 Vendor Managed Inventory
 Quick Response
 Collaborative Planning, Forecasting and
Replenishment
 Activity Based Costing
 Build to Order Partnerships / Alliances
 Auctions / Exchanges

81. SUPPLY CHAIN OF AMAZON.COM
81
Warehouse
Retailer
Customer
Publisher
Customer
Distributor
Amazon
Pull
Pull
Publisher

82. MULTI-TIER INVENTORY MODEL
82
Inventory Aggregation respond to fluctuation in
demand with lower level of safety stock.

83. PARTNERS
83

84. TECHNOLOGY PARTNERS
84

85. HOW DEALS THE SUPPLY CHAINS WITH
FLUCTUATING DEMAND?
Amazon.com carries high-demand title in inventory,
whereas it purchases low-demand titles from
distributor in response to a customer orders .
Reduction in various costs like ;-
- Inventory cost
- Facility cost
- Transportation costs
- Information costs
85

89. T
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