Ans1) Logistics and supply chain management are some prevailing terms used in the modern

business world and other areas involving multiple activities, including military operations,
among others. Apparently, it has become difficult for people to indicate whether one is
conducting logistical management or supply chain management, even using the two terms
interchangeably, leading some professionals. However, there are a significant number of
differences that are important for one to understand between logistics and supply chain
management.

Logistics: Logistics is a term used to describe the process of handling goods within a specific
department while maintaining the status and whereabouts of different inventories in an inventory
document. Logistics can also be defined as the process of planning, executing and controlling
goods movement and other related activities.

Supply Chain Management: Supply chain management is a term used to describe all activities
including the purchase of raw materials, the receipt of raw materials, the manufacture and
manufacture of goods, and the delivery to their respective customers or destinations of the
desired goods.

Differences between Logistics and Supply Chain:

 Goals and Aims of Logistics and Supply Chain Management: One of the major
differences within an organization between logistics and supply chain management is
their intended goals and objectives. Within an organizational department, the logistics
goals and objectives are to ensure that customers achieve maximum satisfaction while
interacting with the organization. Logistics officers ensure that everything customers
need is easily accessed and acquired in the right quality and quantity. On the other hand,
supply chain management has the goal and objective of ensuring that the company
achieves a competitive and comparative advantage through efficiency and effectiveness.
More importantly, supply chain management ensures that, while selling finished goods at
the highest possible prices, the company procures law materials at lower prices.

 Organizations Involved Logistics and Supply Chain: Another aspect which can be
used to highlight the difference between logistics and supply chain management is the
number of organizations involved. Logistics is involved in a single organization because
when one company interacts with the other company, no logistical activities are required.
Logistic operations are confined to an individual organization and customers willing to
work with the team. On the other hand, the management of the supply chain involves
multiple agencies that interact daily with the company. It is important to emphasize that
the management of the supply chain must interact with organizations supplying raw
materials, companies supplying or transporting finished goods and companies buying
their finished products.

 Evolution and Development of Logistics and Supply Chain: One of the fundamental
differences between the two terms is the evolution and development of logistics and
supply chain management. Logistical management has existed for a long time, according
to historians, and has passed the time test since it currently exists despite technological
 development. Historians point out that logistics has been widely used for military
operations in traditional empires, involving, among others, the transportation of firearms
and military personnel. Supply chain management, on the other hand, is a modern aspect
emerging in the 19th century. The aspect has grown to the point that all business
organizations and government departments are currently incorporating it. In addition,
supply chain management is a stand-alone company department and a course in various
learning institutions around the world.

 Departments and Sections of Logistics and Supply Chain: The number of departments
and sections involved in the management of logistics and supply chain shows a number
of significant differences between the two practices. It should be noted that the number of
supply chain management sections is higher than in the logistics department because
supply chain management is involved and interacts with multiple organizations. Some of
the logistics management sections include inventory, warehousing, and transport. Supply
chain management has a significant number of sections, including product development
and testing, customer service and satisfaction, integration and information sharing,
logistics, performance measurement, and, among others, procurement and manufacturing.

 Relationship with One Another: Logistical management and supply chain management
have a significant relationship. While many people believe they are different departments
with each entitled to handle their activities, the logistics department is a supply chain
management section that handles specific tasks. It is important to emphasize that the
logistics department of the supply chain can handle activities without interfering with or
reducing the quality of the services that this administration provides. This explains why
some organizations do not have an operational, logistical department but have a
department for operational supply chain management that handles logistical issues.

 Relationship with Other Departments: Similar to their interactions with other

organizations where supply chain management can interact with multiple businesses,
supply chain management seems to have an edge when it comes to cooperation within the
organization with other departments. Logistical administration has no active roles in
different departments, while supply chain management is highly likely to be involved in
other agencies ' affairs through research, marketing, and manufacturing department
ordering of raw materials.
 Table Showing Differences between Logistics and Supply Chain Management:

Ans2) Physical distribution is the group of activities related to the supply of finished product to
consumers from the production line. Physical distribution takes into account many channels of sales
distribution, such as wholesale and retail, and includes critical decision areas such as customer
service, inventory, materials, packaging, order processing, and transport and logistics. These
processes are often referred to as distribution, which is used to describe product marketing and
movement.
The physical distribution process, which accounts for almost half of the entire product marketing
budget, typically garnishes a lot of attention from business managers and owners. As a result,
many companies often focus these activities on process improvement and cost-saving initiatives.

Physical distribution network covers a wide array of functions. There are 7 functional areas of
physical distribution:

 Network Design: For a manufacturer of electrical goods, network design is one of the
prime responsibilities of physical distribution management. It is essential to determine the
number and location of all types of facilities required to perform physical distribution
task. The selection of a superior location can provide the first step towards competitive
advantage. Physical distribution efficiency directly depends on the proper design of
network and infrastructure.

 Information Technology: Modern physical distribution is experience greater use of

information technology for better planning and execution. There are two areas namely
sales forecasting and order management that demand use of effective information
technology. Sales forecasting is done to estimate the future requirement of physical
distribution. It helps inventory management to satisfy anticipated customer requirements.
Customer’s order is very important in physical distribution. External customers are those
who consume the products or services as also any trading partner who purchases products
or services for resale. The more efficient the design of a company’s physical distribution
system, the more sensitive it is to information accuracy. Incorrect information and delays
in order processing can cripple the performance of physical distribution elements.
 Transportation Management: Transport as a physical distribution component is
concerned with moving goods from the warehouse to the destination of the customer. It
includes loading and unloading goods from one place to another and their movement. It
provides the usefulness of time and place in doing so. Transport accounts for a significant
portion of the cost of distribution and the product's total price.
Marketers need to take a keen interest in transportation decision as it will help to reduce
costs and increase customer satisfaction. Correct mode of transport is very important as it
affects the product's price directly. Proper choice facilitates the timely and in good
condition smooth movement of goods. Therefore, the mode of transportation must be
adequate, regular and reliable.
There are various modes of transportation such as road transportation, railways, airways,
water transportation and pipeline from which to make a choice. Everyone has their own
share of merits and demerits. A combination of different mode is normally selected and
integrated in a sequential order to move the product more quickly and economically.

Choosing a particular mode of transport depends on various factors such as transport cost,
mode of transport availability, speed, reliability, frequency, safety and product mode
suitability.

 Warehousing: Storage means making proper arrangements for retaining the goods in
proper condition till they are demanded by customers. There are many products which are
seasonally produced but are used throughout the year, they can be stored and later
released. Similarly, products are produced throughout the year but used seasonally such
as umbrella, fans, heaters, and so on. Storage also plays an important role here. Storage
reduces the need for hard and expensive instant transportation.
The storage function is provided by warehousing. Places are known as warehouses where
the goods are stored. Goods are stored in warehouses in order to be released on demand.
Warehouses perform other functions as well as storing function, such as marketing and
assembling the goods.
There are two types of warehouses there-warehouses for storage and warehouses for
distribution. Warehouse storage helps to store the good over a long and medium period of
time to ensure that supply and demand match. Warehouses for distribution facilitate
assembly and redistribution of the product within a short period of time.

 Inventory Control: Inventory control refers to goods stored in warehouses being

effectively controlled. It is very important to maintain an adequate level of inventory for
smooth business flow. Inventory serves as a bridge between customer orders and
production. In anticipation of sales, they are the reservoir of the goods held. It must
therefore be properly managed and controlled. It is not necessary to maintain either a
small or too large inventory. Correct product demand anticipation is necessary to
maintain the correct inventory level. Properly estimated demand helps business firms
with regard to inventory costs, timely supply to the customer and the schedule of
production.
  Order Processing: Processing of orders is the starting point for any activity of
distribution. Order processing includes activities such as order receipt, order processing,
credit granting, invoicing, dispatching, bill collection, etc. Each customer expects the
order placed by him to be executed promptly and in accordance with the order
specifications.
The processing of orders thus becomes very important. Marketer should make an effort to
maintain the time of the order cycle, i.e. the time between the time the customer places an
order and the time the goods arrive at their destination. Standard procedure for order
processing should be established.
 Material Handling: Material handling includes all the activities associated with moving
products when leaving the manufacturing plant but before being loaded onto the
transportation. This activity has existed for a very long time and has now evolved as a
system.
It involves moving the goods in transport modes from the plant to the warehouses and
from the warehouses to the loading place. Proper material handling management helps
prevent unnecessary movement of goods, prevent damage to the goods, facilitate order
processing and efficient movement of goods.
Material handling is the sub-part of the overall physical distribution system and helps to
reduce costs and improve consumer service. Effective material handling system
management leads to the efficiency and cost-effectiveness of the total physical
distribution system.

Ans3b) In many practical situations, the demand is not fixed in most cases, nor is the lead time,
i.e. the time interval between ordering and final replenishment. In other words, the demand for
the store item and the lead time is rarely constant over a year's duration from month to month. To
face these uncertainties, as and when they arise, an extra stock is maintained to meet the demand.

The extra stock so kept is referred to as buffer or stock of safety. Therefore, the inventory of
production consists of two things: inventory of work and safety stock. There is little or no
turnover in the safety stock. It is, therefore, committed for a long time in the nature of fixed
assets as the investment tied in it.

The need for safety stock arises from the combination of two factors resulting in uncertainty
about consumption rate and delivery time that may lead to stock exhaustion before a
replenishment stock arrives. Therefore, the only way to avoid such stock-outs is to keep
additional stock in hand that can be drawn up in emergency situations in some cases. In
determining when to place an order for replenishment, safety stocks should not be counted.

If the rate of consumption remains constant, the delivery time of the suppliers does not vary,
there is no rejection during the inspection, ordering would have been a simple matter whenever
stock on hand reaches the quantity equal to lead time use.
In such circumstances, an efficient service level of hundred percent can be easily achieved if
there is no opportunity for stock-outs as new supplies will always arrive before the existing stock
expires.

The inventory of safety stocks is more than just a "good thing to have" it is a necessity. The top
four reasons that influence the calculation safety stocks:

 Protection against unforeseen variation in supply: For example, if your supplier is

unexpectedly closed for a week or if your order is disrupted in transit, you will not waste
time fulfilling safety stock orders to your customers. Supply chains are more globalized
and longer, with more disruptive forces than ever before.

 To compensate for forecast inaccuracies: You may have a consistent demand for a
certain item, but one month you sell more than you forecasted, you don't sacrifice your
customer service level while replenishing with the safety stock inventory in place.

 Prevent disruptions in manufacturing or deliveries: Safety stock is intended to ensure

that your level of customer service remains high – and that your supply chain runs
smoothly. With safety stock in place, your employees don't always try to locate and
reorder parts they fulfill your customers orders.

 Avoid stock outs to keep customer service and satisfaction levels high: The real safety
stock goal? Maintaining happy customers. While safety stock also helps keep your
warehouse and supply chain running smoothly, the ultimate goal is to ensure that your
customers are satisfied and continue to return. But it's important to remember that safety
stock requires more than just a "one size fits all" approach, like the rest of your inventory.
The safety stock inventory determinations are relatively static with rule-based approaches
and are not linked to other important factors such as service level, accuracy forecast and
variability in lead time.
Rule-based approaches in determining optimal inventory levels for many operations are
proven to be less effective. Plus a sound mathematical approach to calculating safety
stock will not only justify the required inventory levels for business leaders, but will also
balance the conflicting goals of maximizing customer service and minimizing inventory
costs.