INTRODUCTION TO LOGISTICS

AND LOGISTICS PLANNING

College: K.C College
Subject: Elements of Logistics and Supply Management

Group Members
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Maria boltwala-6
Aisha furniturewala-13
Urvi panchal-27
Disha Parmar-29
Avinaash Dawra-70
Taruna Manwani-71
Jyoti solanki-72

Index
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Sr No

Topics

Sign

Introduction

Objectives Of Logistics

Types of Logistics

Function Of Logistics

Why logistics matters

Logistics Management

Logistics Planning

Bibliography

Introduction
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The word logistics is derived from the Greek word logistike, meaning science
of computing and calculating. In ancient times logistics involved the practical art
of moving armies engaged in combats. Since that time logistics has come to imply
moving men and material on war footing to achieve desired results. The term
logistics was first used by the military to describe the activities associated with
maintaining a fighting force in the battle field and in its strictest sense, to describe
the housing of troops. Logistics is concerned with getting the products and services
when they are needed and when they are desired. Logistics is concerned with the
organization, movement, and storage of material and people. It deals with the
planning and control of the flow of materials and related information in
organizations. Its main objective is to get the right materials to the right place at the
right time while optimizing the total operational costs of this process.
It is difficult to accomplish any marketing or manufacturing without logistical
support. It involves the integration of information, transportation, inventory,
warehousing, material handling, and packaging. Over the years the meaning of the
term logistics has gradually expanded to include business and service activities.
The domain of logistics activities is to provide customers with the right goods in
the right place at the right time. It ranges from providing the necessary
subcomponents for manufacturing to having inventory on the shelf of the retailer to
having the correct quantity and type of blood available for a surgical procedure in a
hospital.
Logistics is the management of the flow of resources between the point of origin
and the point of consumption in order to meet some requirements.
For example: Of customers or corporations.
The resources managed in logistics can include physical items, such as food,
materials, equipment, liquids, and staff, as well as abstract items, such as time,
information, particles, and energy. The logistics of physical items usually involves
the integration of information flow, material handling, production, packaging,
inventory, transportation, warehousing, and often security. The complexity of
logistics can be modeled, analyzed, visualized, and optimized by dedicated
simulation software. The minimization of the use of resources is a common
motivation. The major issue that logistics attempts to resolve is to decide how and
when raw-materials, semi-finished, and finished goods should be acquired, moved,
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and stored. It is essentially a planning process and an information activity .So an

integrative process that optimizes the flow of material and supplies through the
organization and its operations to the customer
A fundamental characteristic of logistics is its holistic, integrated view of all the
activities that it encompasses. Therefore, while procurement, inventory
management, transportation management, warehouse management, and
distribution are all important components, logistics is primarily concerned with the
integration of these activities to provide maximum value to the overarching
system.
The operating responsibility of logistics is the geographical repositioning of raw
materials, work in process, and finished inventories where required at the lowest
cost possible.
LOGISTICS is defined as Time related positioning of resources
The
whole concept of logistics is based on 7 Rs (of customer service) which are:

Right product
Right quantity
Right quality
Right way
Right time
Right cost
Right customer

DEFINITIONS:
The art of managing the flow of material and products from the source to
user. The logistic system includes the total flow of material, from the
acquisition of raw materials to the delivery of finished products to ultimate
user.
The process of strategically managing the movements and storage of
materials, parts and finished inventory from suppliers between enterprise
facilities to customers
Logistics is the process of strategically managing the procurement,
movement and storage of materials, parts and finished inventory through
the organization and its marketing channels in such a way that current and
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future profitability are maximized through the cost-effective fulfillment of

orders.
Logistics is the art and science of management, engineering and technical
activities concerned with requirements, design and supplying, maintaining
resources to support objectives, plans and operations.
Planning implementing and controlling the physical flow of material and
finished goods from point of origin to point of use to meet customer`s need
at a profit
The branch of military science having to do with procuring, maintaining
and transporting material, personnel and facilities.

Objectives of logistics
Rapid response
Flexibility objective of an organization: Some companies measure this as
response time to customers order. On an average how much time do we
need to fulfill one particular type of customers order in a year? This is a
measure of rapid response. Logistics should ensure that the supplier is able
to respond to the change in the demand very fast. Entire production should
change from traditional push system to pull system to facilitate rapid
response. Instead of stocking, the goods and supplying on demand, orders
are executed on shipment to shipment basis information Technology plays an
important role here as an enabler. IT helps management in producing and
delivering goods when the consumer needs them. This results into reducing
of inventory and exposes all operational deficiencies. Now the management
resolves these deficiencies and slashes down costs. [Concept of SMED and
KANBAN as practiced by JIT companies in Japan or elsewhere]
Minimum variance
D-delivery objective of an organization, this can be measured as On Time
Delivery
or OTD. If 100 deliveries are made in a month/quarter/year how many
reached as per the commitment made to the customer? This percentage is
OTD.
Any event that disrupts a system is variance. Logistics operations are disrupted by
events like delays due to obstacles in information flow, traffic snarls, acts of god,
wrong dispatches, damage in transit. Traditional approach is to keep safety stocks
and transport the goods by high cost mode. The cost of this approach is huge.
Logistics is expected to minimize these events, thereby minimize and improve on
Time Delivery.
Minimum inventory

This is component of cost objective of a company. Inventory is associated with

a huge baggage of costs. It is termed as a necessary evil. Objective of minimum
inventory is measured as Inventory Turns or Inventory Turnover Ratio.
Americans call this measure as turn velocity. Logistics management reduces
these turns without sacrificing customer satisfaction. Lower turns ensure
effective utilization of assets devoted to stock. [Concept of single piece flow as
practiced by JIT companies in Japan or elsewhere]. Logistical management
should keep the overall well being of a company in view and fix a minimum
inventory level without trying to minimize the inventory level as an isolated
objective
Movement consolidation
Transportation is the biggest contributor to logistics cost. Transportation cost
depends on product type, size, weight, distance to be transported etc. For
transporting small shipments just in time [reduction in inventory costs] expensive
transport modes are used which again tend to hike the costs. Movement
consolidation is planning several such small shipments together [of different types
of shipments] by integrating interests of several player s in the supply chain.
Generally, large shipment size and long distances reduce transportation cost per
unit. Movement consolidation shall result into reduction in transportation costs
Quality
If the quality of product fails logistics will have to ship the product out of
customers premises and repeat the logistics operation again. This adds to costs and
customer dissatisfaction. Hence logistics should contribute to TQM initiative of
management. In fact, commitment to TQM has made the management world over
wake up to the significance of logistics function. Logistics can play a significant
role in total quality improvement by improving the quality of logistics performance
continuously and continually
Two Main View Points of Logistics
Inbound logistics

Creation of value in a conversion process heavily depends on availability of inputs

on time. Making available these inputs on time at point of use at minimum cost is
the essence of Inbound Logistics. All the activities of a procurement performance
cycle come under the scope of Inbound Logistics.
Scope of Inbound Logistics covers transportation during procurement operation,
storage, handling if any and overall management of inventory of inputs. Several
activities or tasks are required to facilitate an orderly flow of materials, parts or
finished inventory into a Manufacturing complex. They are sourcing, order
placement and expediting, transportation, receiving and storage. Overall,
procurement operations are called inbound logistics. Inbound logistics have
potential avenues for reducing systems costs.
Delivery time, size of shipment, method of transport & value of products involved
are different from those of physical distribution cycles. Normally delivery is large
as a low cost transportation mode is chosen. As the value of inventory is low, size
of shipment is large & transit inventory costs are low.
Outbound Logistics
Value added goods are to be made Value added goods are to be made available in
the market for customers to perceive value. Finished goods are to be distributed
through the network of warehouses and supply lines to reach the consumer through
retailers shops in the market. During conversion value is added to the raw
materials and as a result value of the inventory in this case is very high unlike
inputs. Now the size of shipment, modes , of transport and delivery time are
different as compared to inputs. Activities of shipment, distribution performance
cycle come under the scope of Outbound Logistic

Types of Logistics
Return Logistics (Reverse Logistics):
In order to increase the sales as well as the market share, many companies
advertise that their goods will perform well over a period of time. The customer is,
therefore, led to believe that in case he buys the product of that company, he is
assured of satisfactory performance of the product. But at the same time, it is very
much obvious that the company cannot assure the satisfactory performance of each
and every of its product which is sold in the market. Few of the products sold may
not perform as advertised over the specific period of time. Such products need to
be brought back by the company to confirm good customer service. Multination
Companies (MNCs) to protect their market image and to stall its competitors from
grabbing its customers, recall immediately the defective or substandard product
from the market. Product recall is a critical competency resulting from increasingly
rigid quality standards product expiration dating responsibility for hazardous
consequences The company has, therefore, to take into account the defective goods
that would be returned while framing the total logistical system network and
calculating the total cost of such a system of network. Incorporating the goods
returned in the total logistical systems network and cost is called as Return
Logistics. Return Logistics requirement also result from the increasing number of
laws prohibiting random scrapping and disposal on one hand, while encouraging
recycling of waste such as beverage containers, packaging materials, etc. The most
significant aspect of return logistical operation is the need for maximum control
when a potential health liability exists. E.g.: a contaminated drug in the market is
extremely dangerous and the company has to recall all the stock of contaminated
drug.
Military Logistics

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Military logistics is the art and science of planning and carrying out the movement
and maintenance of military forces. In its most comprehensive sense, it is those
aspects or military operations that deal with: Design, development, acquisition,
storage, distribution, maintenance, evacuation, and disposition of material,
evacuation, and hospitalization of personnel, acquisition or construction,
maintenance, operation, and disposition of facilities.
Third Party Logistics (3PL)
3PL, Third Party Logistics describes businesses that provide one or many of a
variety of logistics related services. Types of services would include public
warehousing, contract warehousing, transportation management, distribution
management, freight consolidation. A 3PL provider may take over all receiving,
storage, value added, shipping, and transportation responsibilities for a client and
conduct them in the 3PLs warehouse using the 3PLs equipment and employees or
may manage one or all of these functions in the clients facility using the clients
equipment, or anything combination of the above. 3PL can be defined as the
Business of proposing physical distribution reforms to a client and undertaking
comprehensive physical distribution services.Third party logistics (3PL), a new
business model for physical distribution, originated in
the U.K. & became highly popular in U.S. in the 1990s. 3PL providers offer
innovative alternatives to clients in the form of comprehensive logistics services.
Because 3PL requires that providers have intimate access to the corporate strategy
of their clients, relationships are based long term contracts as a rule The growing
demand for 3PL can be attributed to both demand,& supply side factors. (1)
faced with deregulation & growing competition, transport companies are seeking
new business opportunities, & (2) clients are seeking to outsource their logistics
operations cut costs & focus management resources on core businesses.
Fourth Party Logistics
Traditionally, suppliers and big corporations have been meeting the demands by
increased inventory, speedier transportation solutions posting on-site service
engineers and many times employing a third party service provider. Today they
need to meet increased levels of services due to e-procurement, complete supply
visibility, virtual inventory management and requisite integrating technology. Now
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corporations are outsourcing their entire set of supply chain process from a single
design, make and run integrated comprehensive supply chain solutions. This
evolution in supply chain outsourcing is called Fourth Party Logistics the aim
being to provide maximum overall benefit. Thus a fourth party logistics provider is
a supply chain integrator that assembles and manages the resources, capabilities
and technology of its own organization with those of complementary service
provider to deliver a comprehensive supply chain solution. It leverages the
competencies of third party logistics providers and business process managers to
deliver a supply chain solution through a centralized point of contact. As the fourth
party logistics provider caters to multiple clients, the investment is spread across
clients-thus taking the advantage of economies of scale.

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Function Of logistics
Transportation management: Transportation enables the means of transfer
of inventory given the location & network framework developed earlier.
This involves the selecting the modes of transportation like Air, Water, Rail,
Road & the decisions relating to outsourcing this activities to other
agencies. Selection of the modes of transportation depends on the following
factors:
Speed & reliability
loss& damage
Inventories
Freight rate
Market competitiveness
Company policy & customer influence
External market influences.
Inventory management: Inventory management concerns with the decision
regarding the amount of type & material stored at various facility location.
These decisions will be affected by the decision made under the function of
facility location & transportation e.g.: the location of warehouse & retail
outlets.& modes of transport whether fast or slow will affect the quantity
type of material to be stored at facilities location.
Warehousing management: Warehousing provide the adequate space for
the inventory at the right location, unpack aging, sorting, & consolidation of
material & modification of material elements if required .the role of
warehouse provide the economic & service benefit to the logistical system
Packaging: It helps in achieving the objective of maintaining the material in
the right condition through the logistics process. Packaging decision is
impacted by requirement of other activities like protection & facilitation
during transportation, material handing & storage as so ultimately customer
requirements.
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Why Logistics Matters?

In the past, logistics was considered a custodial activity. Storekeepers were the
custodians of supplies stored in small storerooms and large warehouses.
Consequently, the science (and art) of logistics, and the people who make the
health logistics system work, were not considered an important part of family
planning, HIV and AIDS, or vaccination programsto name only a few.
Fortunately, as time passed, more and more program managers have come to
understand how important logistics is to a programs success. he goal of a health
logistics system is much larger than simply making sure a product gets where it
needs to go. Ultimately, the goal of every public health logistics system is to help
ensure that every customer has commodity security. Commodity security exists
when every person is able to obtain and use quality
Essential health supplies whenever he or she needs them. A properly functioning
supply chain is a critical part of ensuring commodity security financing, policies,
and commitment is also necessary. Effective supply chains not only help ensure
commodity security, they also help determine the success or failure of any public
health program. Both in business and in the public sector, decision makers
increasingly direct their attention to improving supply chains, because logistics
improvements bring important, quantifiable benefits. Well-functioning supply
chains benefit public health programs in important ways by
increasing program impact
enhancing quality of care
improving cost effectiveness and efficiency.
Logistics increases program impact
If a logistics system provides a reliable supply of commodities, more people are
likely to use health services. Customers feel more confident about the health
program when they have a constant supply of commoditiesit motivates them to
seek and use services. Figure 1-1 shows the impact of improved product
availability.
Notice that, as the availability of a mix of contraceptive methods improves, the
contraceptive prevalence rate (CPR) for the public sector increases. When a choice
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of contraceptive methods is available in Health programs cannot succeed facilities,

more women use contraception. When more unless the supply chain delivers a
women use contraception, it impacts a number of key reliable, continuous supply
of health public health indicators: maternal mortality, infant commodities to its
customers. Mortality and total fertility rates all decrease. No product? No program!
Logistics matters.
Logistics enhances quality of care
Well-supplied health programs can provide superior service, while poorly supplied
programs cannot.
Likewise, well-supplied health workers can use their training and expertise fully,
directly improving the quality of care for clients. Customers are not the only ones
who benefit from the consistent availability of commodities. An effective logistics
system helps provide adequate, appropriate supplies to health providers, increasing
their professional satisfaction, motivation, and morale. Motivated staff are more
likely to deliver a higher quality of service.
Logistics matters.
Logistics improves cost efficiency and effectiveness
An effective supply chain contributes to improved cost effectiveness in all parts of
a program, and it can stretch limited resources. Strengthening and maintaining the
logistics system is an investment that pays of in three ways. (1) It reduces losses
due to overstock, waste, expiry, damage, pilferage, and inefficiency;
(2) It protects other major program investments; and (3) it maximizes the potential
for cost recovery.

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Importance of Logistics to a Company:

Small business owners also conduct distribution logistics with inventory and
warehousing. And, every small business owner can tell you about how they handle
reverse logistics, with returned merchandise or refusal of services. Larger
businesses may deal in all four logistic fields.
In the business environment, logistics either have an internal or external focuses
(inbound or outbound). Depending upon the business involved, this part of the
chain can be simple or complicated. For more complicated procedures, third parties
often are hired to conduct any one of the four fields within business logistics.
Third-party logistics (3PL) involves using external individuals or organizations to
execute logistics activities that have traditionally been performed within an
organization itself. If, for example, a company decides to export its product, it may
hire a person or organization to help with distribution logistics. Today, there is a
movement toward building fourth-party logistics (4PL), which integrates 3PL
competencies and other organizations to design, build, and run comprehensive
supply chain solutions. A 4PL general contractor would manage other 3PLs,
truckers, forwarders, custom house agents, and others, essentially taking
responsibility of a complete process for the customer.
Another specialty includes logistics consulting services. Firms in this industry
specialize in the production and distribution of goods, from the first stages of
securing suppliers to the delivery of finished goods to consumers. Such firms give
advice on improvements in the manufacturing process and productivity, product
quality control, inventory management, packaging, order processing, the
transportation of goods, and materials management and handling. In the process,
these consulting firms might suggest improvements to the manufacturing process
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in order to use inputs better, increase productivity, or decrease the amount of

excess inventory. Consulting firms in this segment of the industry also advise on
the latest technology that links suppliers, producers, and customers together to
streamline the manufacturing process.
Even project management requires logistics, as one vein of this science coordinates
a sequence of resources to carry out projects. Typical constraints in project
management include scope, time, and budget, or the same constraints involved in
business logistics. The time constraint refers to the amount of time available to
complete a project.

Logistics Management
Logistic management provides a major source of competitive advantage in other
words a position of enduring superiority over competitors in terms of customer
preference may be achieved through logistics. Logistics management encompasses
all material flow management. From the inflow of purchase material into works
material flow through manufacturing processes and material flow to customers
logistic management covers both physical flow of products as well as information
flows. It evolves procedures hat meet customer service at minimum cost. The cost
reduction is achieved by speeding the flows of materials, work in process and
finished products. Logistics management is the part of supply chain
management that plans, implements, and controls the efficient, effective, forward,
and reverse flow and storage of goods, services, and related information between
the point of origin and the point of consumption in order to meet customer's
requirements. A professional working in the field of logistics management is called
a logistician.
1. Materials management
2. Channel management
3. Distribution (or physical distribution)
4. Supply-chain management
The Chartered Institute of Logistics and Transport (CILT), established in the
United Kingdom in 1919, received a Royal Charter in 1926. The Chartered
Institute is one of the professional bodies or institutions for the logistics and
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transport sectors that offers professional qualifications or degrees in logistics

management.
DEFINITION:
The process of planning, implementing and controlling the efficient,
effective flow and storage of goods a d services related information right
from the point of origin to the point of consumption in order to satisfy
customers requirement.
Logistics management includes the design and administration of systems to
control the flow of materials, work in progress and finished inventory to
support business unit strategy

Automation software
Software or cloud-based SaaS solutions are used for logistics automation which
helps the supply chain industry in automating the workflow as well as management
of the system. There is few generalized software available in the new market in the
said topology. This is because there is no rule to generalize the system as well as
work flow even though the practice is more or less the same. Most of the
commercial companies do use one or the other of the custom solutions.
But there are various software solutions that are being used within the departments
of logistics. There are a few departments in Logistics, namely: Conventional
Department, Container Department, Warehouse, Marine Engineering, Heavy
Haulage, etc.
Software used in these departments
Conventional department: CVT software / CTMS software.
Container Trucking: CTMS software
Warehouse : WMS/WCS
Improving Effectiveness of Logistics Management
1. Logistical Network
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2. Information
3. Transportation
4. Sound Inventory Management
Logistics Management in India in Todays Context
Logistics in Indian Business Environment

Liberalization opens our door to competition.

Global business has long supply & distribution lines.
Changing Indian customer, aware, demanding and less brand loyal
Competition ensures that product differentiation in terms of quality is difficult.
Product life cycles are shrinking
Our markets are shifting from sellers to buyers
Many consumer products are moving into commodities market
In India, large distances separate production and consumption centers. Essential
commodities have to travel from Food Corporation Warehouses to consumers
through PDS.
Still Logistics performance in India has not been impressive Fruits and
vegetables are grown at various places but do not enjoy access to market.
LOGISTICS IN THE GLOBALISATION
Logistics functions are same domestically and globally but differ in four Ds i.e.
distance, documents, diversity in culture and demand of customer. In the global
logistics distances are longer, documentation is more extensive, customer demand
varies to satisfy cultural differences within both, countries and regions. Developing
strategies to respond to the 4 D environment is the global challenge for logistics
management.
There are some factors that facilitate globalization and necessitate global logistics
and also some barriers that continue to impede global logistics. Logistics
management must balance the cost of overcoming these barriers with the potential
benefits of going goal

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Logistics Planning
The internal production capacity expansion plans and also suppliers expansion
plans are concurrently decided on the basis of sales forecast. Outsourcing
is given priority only a f t e r i n t er n a l c a p a c i t y i s f u l l y u s e d . Th e
m o n ey i s a l r e a dy s p e n t f o r i n t er n a l c a p a c i t y i n f r o m o f p l a n t
m a c h i n e r y a n d persons the cost already gets added due to those
expenses. So vendoring out should be considered only after the internal
capacity is fully used up. The extent of future logistical
activities is based on forecasts customer orders and
promotions. The budget for the inventory has to be made plan for efficient
logistical operations and t he plans for Manufacturing and procuring the inventory
items have to be synchronized this synchronizing should be preferably done
by dedicated software dedicated Software is available in MRP and MRP1
packages The procurement of materials required for manufacturing and
order fulfillment the logistics activity flows outline the sequence of logistics
Operations from order receipt through order processing distribution And
dispatching and transportation to customer delivery this involves Inventory
management activities in order to reconcile inventory availability based on
prior planning and ordering for actual requirements.
Definition:
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Planning is the list of the activities to achieve a typical goal, which is

fitting in the budgeted expenses and possible to achieve. T h e p l a n n i n g i s
t h e m a i n f u n c t i o n a t e a c h a n d e v e r y group in the company. At the top of
company people have to device the mission for the company. They have
to set a goal for the company. To achieve the goal of the company proper
planning has to be done
Logistics planning process
Proper logistics planning entails considering logistical aspects throughout the
various stages of the procurement process. It contributes to efficient procurement
processes, and reduces the risk of incurring problems that may lead to additional
costs and delay.
Logistics planning starts at the needs assessment phase of procurement by
considering the desired result of the requisitioned and the end-user and from there
working backwards to determine what will lead to a successful completion of the
activity. Ideally this process should begin even before the requisition is placed,
through close cooperation and efficient communication between the operational
unit requesting the purchase and procurement officers.
Phase 1: Problem Definition and planning
1. Feasibility Assessment
Situational analysis(to provide senior management with the best
understanding of the strengths and weaknesses of the existing capabilities
and includes internal review, market assessment and competitive evaluation
and Technology Assessment)
Supporting logic development ( evaluates current procedures and practices
and identifies areas with improvement potential and includes clear plans for
potential redesign )
Cost benefit estimate ( Benefits should be categorized in terms of services
improvements and cost reduction)
2. Project Planning:
Statement of objectives
Statement of constraints
Measurement standards (includes definitions of how cost components are
calculated and also relevant customers service measures and method of
calculation.
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 Analysis procedures
Project work plan (a project work plan must be determined and the resources
and time required for competitions identified)
Phase 2: Data Collection and analysis
1. Assumptions And Data collection:
Define analysis approach and techniques (most common techniques are
analytical, simulation and optimization)
Define and review assumptions ( Includes Business assumptions; market
consumer, and product trends and competitive actions, Management
assumptions alternative distribution facilities, transport modes, logistics
processes and fixed and variable costs and Analysis assumptions defines
the constraints and limitations that must be included to fit the problem to
the analysis technique)
Identify data resources
Collect Validation Data (The objective of validation is to increase
management credibility regarding the analysis process and to ensure that
the results of the analysis accurately reflects the reality. Comparison
should focus on historical activity and expense levels)

2) Analysis
Define analysis questions ( involves defining specific analysis questions
concerning alternatives and the range of acceptable uncertainty)
Complete and validate baseline analysis
Complete alternative analysis
Complete sensitivity analysis
Phase 3 Recommendations and Implementations
1. Development of Recommendations
Identify the best alternatives
Evaluates Costs and Benefits
Develop a Risk Appraisal
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 Develop Presentation
2. Implementation
Define Implementation plan
Schedule Implementation
Define acceptance Criteria
Implement

Bibliography
Internet sources:
Wikipedia
Google Search Engine
Logistics Reference Books

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