Logistics management aims to coordinate activities from procurement to delivery to satisfy customers at lowest cost. It links suppliers, production, distribution and customers through materials and information flows. The ultimate goal is customer satisfaction by establishing organizational linkages to the marketplace. Effective logistics can provide competitive advantage through cost leadership or value differentiation. Logistics optimization reduces costs and improves customer service through activities like transportation, inventory, warehousing and information management.

3. Competitive Advantage Customers seeking benefits at acceptable cost Company A (Asset utilization) Company B (Asset utilization) Cost differential

5. Commercial success Cost advantage Value advantage

8. Productivity and Value Matrix Commodity Market (1) Cost Leader (2) Service Leader (3) Cost and Service Leader (4) Productivity Advantage V a l u e A d v

14. Underlying Philosophy Behind Logistics Concept Suppliers Procurement Operation Distribution Customers Materials Flow Information Flow

33. Factors affecting transportation performance Transportation performance Cost Speed Consistency

47. Integrated Logistics Customers Physical distribution Manufacturing support Procurement Suppliers Inventory Flow Information Flow

57. Physical distribution performance cycle Customer order Order transmission Order processing Order selection Order transportation Order delivery to the customer

63. Procurement Performance Cycles Sourcing Order placement and Expediting S U P P L I E R S Transportation Receiving

83. Inventory Control Procedures Perpetual Review Periodic Review

89. Inventory Planning Methods Fair Share allocation Distribution Requirement Planning

90. Fair Share Allocation Plant Warehouse Inventory- 600 units Distribution Centre-1 Distribution Centre-2 Distribution Centre-3 Inventory= 50 units Daily use= 10 units Inventory= 100 units Daily use= 50 units Inventory= 75 units Daily use= 15 units

96. Plant Warehouse Regional warehouse Regional warehouse Distribution centre Distribution centre Distribution centre Distribution centre Distrib ution centre Distribution centre C U S T O M E R S

97. Raw Materials Warehouse Part A Part B Sub-assembly A Part C Part D Part E Sub assembly B Sub assembly C Final Assembly (Manufacturing) Plant Warehouse

111. Components of Forecasting Process Orders History Tactics Forecast database Forecast Administration Forecast Technique Forecast Support System Forecast Process Forecast Users Finance Marketing Sales Production Logistics

116. Transportation Functionality Product Movement Product Storage

122. Principles of Transportation Economies of Scale Economies of Distance

125. Tapering Principle Distance C O S T

126. Participants in Transportation decisions Government Shipper Carrier Consignee Public

129. Features of Different Modes of Transportation Modes of Transportation Rail Highway Water Pipeline Air

132. Cost Structure in respect of Motor Transport Fixed costs such as overheads and vehicle cost are low relative to railway Variable costs such as driver, fuel, tyres and repairs are high relative To railways.

138. Nature of Traffic versus Mode of Transportation Mode Nature of Traffic Rail Extracting industries, heavy manufacturing, agricultural commodities Highway Medium and light manufacturing, distribution between wholesalers and retailers. Water Mining and basic bulk commodities, chemicals, cement, agro-based products. Pipeline Petroleum, gases, slurry. Air Emergency, perishables, limited marketing period, high value premium products.

139. Cost Structure for Each Mode of Transportation Mode Fixed Cost Variable Cost Rail High- equipment terminals, tracks etc. Low Highway Low-highways provided by public funds Medium- fuel, maintenance. Water Medium- ships and equipment Low-capability to transport large amount of tonnage. Pipeline Highest-rights-of-way, construction, control stations, pumping capacity. Lowest-no labour cost of any significance. Air Low-aircraft and cargo handling system. High-fuel, labour and maintenance .

182. Cost of Packaging L o s S B y D a m a g e

193. Scrap/Waste Disposal Scrap Material Input Material Processing Material Output Recycle Disposal