Logistic and supply Chain Management

Report on

“ How the evolution of logistics and supply chain management

contributes to operational effectiveness and strategic
differentiation. ”

Submitted To : Submitted By:

Dr. Mohmd. Imran Khan Paritosh Mohanty

11601318

Sec- Q2E83

1
Introduction :-

Successful companies practice supply chain management and logistics management to reduce costs, increase
their competitiveness and enhance operational efficiency. The logistics in modern business conditions
coordinates and integrates the movement of materials and products from physical, organizational and
information aspect. The globalization process enables the sale of products for the same purpose from different
manufacturers and with different prices. The increased offer on the market has led to intensive competition
and some of the companies are faced with the problem of survival. The development of information
technology has led to increased flow of information around the world, which resulted in enhanced education
of producers and consumers. The only way for companies to survive on the market is constant lowering the
price of products and regular improvement of product characteristics. Hence, the continuous intensive
development of the company is crucial to its survival on domestic and global markets. Creating and sustaining
a competitive advantage of the company is a complex and sustained process that largely depends on the
flexibility and willingness of the company to carry out rapid changes in their processes and to make them
faster than their rivals. The continuous adjustment and improvement of the processes is the basis for the
company’s functioning in the current conditions, while at the same time is one of the key success factors.

In this context arises the need for application of modern management practices in all aspects of the operations
of the company, especially in the supply chain management, which contributes to increasing competitiveness.
One important element is the logistics which provides management with the total operations costs and
increases the efficiency of the company’s business activities. Collaboration among all the supply chain players
coupled with a responsive approach can enhance organizational competitiveness through reduced lead-time
facilitated by smooth flow of material from upstream towards the downstream end of supply chain. This
approach will ensure end customers get value for their money and also reduce the level of uncertainty in the
industry.

Supply chain management practices impact not only overall organizational performance, but also competitive
advantage of an organization. Supply chain management practices impact not only overall organizational
performance, but also competitive advantage of an organization. Hence, the logistics needs to respect the
process of planning, implementation and control of the procurement, storage, transport and information and
with the sole purpose to improve them. Every company should develop an appropriate mission and vision in
order to implement its business logistics. The mission of the business logistics is to ensure availability of the
right product in the right quantity, on the right place, at the right time and to the right buyer at the right price.
The vision of the business logistics is to ensure sustainable development, or to set logistics activities and
operations in order to get the final results with the least possible level of coordination, maximum synergy and
lowest costs in accordance with all environmental and consumer laws.

2
Logistics implicates to the process of planning, implementing, and controlling the efficient, effective flow and
storage of goods, services, and related information from point of origin to point of consumption for the purpose
of conforming to customer requirements. It comprises the management of raw materials flow to finished goods
through an organization. Logistics means planning and organizing activities that ensure that resources are in
place so that the process can be effectuated accordingly in efficient and effective manner.
The main functions of logistics managers involve organizing and planning of inventory, purchasing,
transportation, warehousing activities

Evolution in logistics and supply chain :-

The evolution of logistics and Supply Chain Management (SCM) in the 1990s can be traced back to “physical
distribution management” in the 1970s when there was no coordination among the various functions of an
organization, and each was committed to attain its own goal. This myopic approach then transformed into
“integrated logistic management” in the 1980s that called for the integration of various functions to achieve a
system-wide objective. Supply Chain Management (SCM) further widens this scope by including the suppliers
and customers into the organizational fold, and coordinating the flow of materials and information from the
procurement of raw materials to the consumption of finished goods.

The objectives of Supply Chain Management (SCM) are to eliminate redundancies, and reduce cycle time and
inventory so as to provide better customer service at lower cost. The focus has shifted from the “share of the
market” paradigm to the “share of the customer paradigm, wherein the goal is to create “customer value”
leading to increased corporate profitability, shareholder value, and sustained competitive advantage in the
long run.

Logistics involves getting, in the right way, the right product, in the right quantity and right quality, in the
right place at the right time, for the right customer at the right cost. The logistic network consists of the
suppliers, the retailer and the users. The purpose of an integrated logistic network in a supply chain is to fulfill
customer orders through providing place utility to deliver products and services to end users. The place utility
is achieved by managing a number of key functions of a supply chain. The functions include:

• Demand management
• Inventory management
• Transportation
• Warehousing
• Order processing
• Information Management

3
Logistics is a key enabler of supply chain collaboration. Improving performance in this field allows supply
chains to increase their efficiency significantly and help to create innovations in different areas. In this context,
an important task is to find structures and approaches which enable all types of performance management in
logistics and supply chains for a better fulfillment of customer needs.

Supply chain management is a cross-function approach including managing the movement of raw materials
into an organization, certain aspects of the internal processing of materials into finished goods, and the
movement of finished goods out of the organization and toward the end-consumer. As organizations strive to
focus on core competencies and becoming more flexible, they reduce their ownership of raw materials sources
and distribution channels. These functions are increasingly being outsourced to other entities that can perform
the activities better or more cost effectively. The effect is to increase the number of organizations involved in
satisfying customer demand, while reducing management control of daily logistics operations. Less control
and more supply chain partners led to the creation of supply chain management concepts. The purpose of
supply chain management is to improve trust and collaboration among supply chain partners, thus improving
inventory visibility and the velocity of inventory movement. There are four major decision areas in supply
chain management:

• Location
• Production
• Inventory
• Transportation (distribution)

History of Supply Chain Management

Over the last 100 plus years of the history of supply chain management has evolved from an initial focus on
improving relatively simple, but very labor-intensive processes to the present day engineering and managing
of extraordinarily complex global networks. We will take you through the last 60 plus years below and end
the post with an amazing infographic.

History of Supply Chain Management: Roots

Both industrial engineering and operations research have their roots in logistics. Fredrick Taylor, who
wrote The Principles of Scientific Management in 1911 and is considered the father of industrial engineering,
focused his early research on how to improve manual loading processes. Operations Research began when
scientists demonstrated the value of analytics in the study of military logistics problems in the 1940s as a result
of the complex requirements of World War II. While Industrial Engineering and Operations Research have
each tried to maintain separate identities, many of their biggest successes have occurred when used in an

4
integrated framework to address supply chain and logistics issues. Increasingly this is referred to by industry
as “Supply Chain Engineering.”

History of Supply Chain Management: The Early Years

In the 1940s and 1950s, the focus of logistics research was on how to use mechanization (e.g., pallets and
pallet lifts) to improve the very labor intensive processes of material handling and how to take better advantage
of space using racking and better warehouse design and layout. The “unit load” concept gained popularity and
the use of pallets became widespread. In the mid 1950s, this concept was extended to transportation
management with the development of intermodal containers together with ships, trains, and trucks to handle
these containers. This was a prerequisite for the supply chain globalization that was to come much later.
Although the terms “warehousing” and “materials handling” were used to describe many of these efforts, this
work could be viewed as fundamental applications of industrial engineering rather than as a discipline of it
own.

History of Supply Chain Management: Logistics Comes of Age

The 1980s marked the beginning of a sea-change in logistics in the history of supply chain management. The
emergence of personal computers in the early 1980s provided tremendously better computer access to planners
and a new graphical environment for planning. This spawned a flood of new technology including flexible
spreadsheets and map-based interfaces which enabled huge improvements in logistics planning and execution
technology. The Production and Distribution Research Center was the early innovation leader in combining
map interfaces with optimization models for supply chain design and distribution planning. The Material
Handling Research Center provided leadership in developing new control technology for material handling
automation. The Computational Optimization Center developed new large scale optimization algorithms that
enabled solution of previously intractable airline scheduling problems. Much of the methodology developed
in these centers rapidly began to find its way into commercial technology.

Perhaps the most important trend for logistics in the 1980s was that it had begun to get tremendous recognition
in industry as being very expensive, very important, and very complex. Company executives became aware
of logistics as an area where they had the opportunity to significantly improve the bottom line if they were
willing to invest in trained professionals and new technology. In 1985, the National Council of Physical
Distribution Management changed its name to the Council of Logistics Management (CLM). The reason
given for the name change by the new CLM was “to reflect the evolving discipline that included the integration
of inbound, outbound and reverse flows of products, services, and related information.” Prior to this, logistics
was a term that had been used almost exclusively to describe the support of military movements.

History of Supply Chain Management: The Technology Revolution

5
The logistics boom was fuelled further in the 1990s by the emergence of Enterprise Resource Planning (ERP)
systems. These systems were motivated in part by the successes achieved by Material Requirements Planning
systems developed in the 1970s and 1980s, in part by the desire to integrate the multiple databases that existed
in almost all companies and seldom talked to each other, and in part by concerns that existing systems might
have catastrophic failures as a result of not being able to handle the year 2000 date. In spite of some significant
problems in getting the ERP systems installed and working, by 2000 most large companies had installed ERP
systems. The result of this change to ERP systems was a tremendous improvement in data availability and
accuracy. The new ERP software also dramatically increased recognition of the need for better planning and
integration among logistics components. The result was a new generation of “Advanced Planning and
Scheduling (APS)” software.

History of Supply Chain Management: Globalization and Supply Chains

The widespread recognition of the term “supply chain” has come primarily as a result of the globalization of
manufacturing since the mid 1990s, particularly the growth of manufacturing in China. U.S. imports from
China grew from about $45 billion per year in 1995 to more than $280 billion per year in 2006. The focus on
globalization accented the need for logistics strategies to deal with complex networks including multiple
entities spanning multiple countries with diverse control. There has been an increasing trend to use the term
supply chain management to refer to strategic issues and logistics to refer to tactical and operational issues.
This growing association of supply chain management with strategy is reflected in the Council of Logistics
Management’s changing its name to the Council of Supply Chain Management Professionals in 2005. They
make the distinction that “Logistics is that part of the supply chain process 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 customers’ requirements” while
“Supply Chain Management is the systemic, strategic coordination of the traditional business functions and
the tactics across these business functions within a particular company and across businesses within the supply
chain for the purposes of improving the long-term performance of the individual companies and the supply
chain as a whole.”

History of Supply Chain Management: The Future of Supply Chain and Logistics

Since the 1980s, computer technology has advanced at such a phenomenal rate that it is currently far ahead of
the ability of the supply and logistics field to adequately utilize the new technologies. Given the extent of
Internet usage today, it is hard to believe that Microsoft’s Internet Explorer 1.0 was released in 1995. The
communication capabilities have fundamentally changed the way we think about communications and
information sharing. However, supply chain and logistics planning is still primarily based on the distributed
models that came as the result of personal computers. There is no question that academic research can enable
a new generation of supply chain and logistics planning technology based on centralized planning with
6
distributed collaboration. These technology advances can provide tremendous value in addressing traditional
supply chain and logistics areas such as warehousing and distribution, transportation, and manufacturing
logistics. However, there are also many non-traditional areas such as health care logistics and humanitarian
logistics which can get great value from building on the concepts and technologies that have already proven
successful in the traditional supply chain and logistics areas. Finally, there are extremely valuable insights to
be gained by systematically studying the supply chain and logistics performance of companies across multiple
industries and countries.

why logistics is important in today’s economy :-

Logistics plays a huge role within today’s economy. For example- It is estimated that the UK Logistics &
Posts Sector is worth 55 billion to the economy and comprises 5% of the UK GDP. The industry also employs
1.7m people. Just imagine a world where nothing was delivered or transported between places. Not only is
logistics vitally important to the distribution industry, it has made distribution prompt and efficient. In
fact, according to the FTA (Freight Transport Association), in 2014, 139 billion tonne km of goods were
moved by HGV. In this very competitive market, it is extremely useful that companies no longer have to wait
for what they need.

Many companies rely on transport and logistics to keep their business strong. Today, companies have good
infrastructure and record keeping, which continues to improve through advancements in technology. As time
has progressed, so has the importance of logistics, in fact this rise has brought factors such as warehousing
and other facilities closer to large towns and cities. Logistics is affecting businesses within towns and cities,
bringing more jobs into these locations. Logistics is an important part of the supply chain. It controls the
effective forward and reverse flow of goods and services origin to recipient. This means that logistics has an
impact on the shipment of goods and how quickly they can get to the consumer, again adding a competitive
edge to other businesses.

The trend of third party logistics (3PL) is on the rise. Globally, the logistics industry has seen an immense
growth over the past decade, with 40% of organisations now using 3PL and the industry being said to be worth
$750 billion globally, and $174 billion in Europe. This shows an increase in jobs for transporters, warehouse
facility owners, and brokers in freight-related jobs. Technology is making logistics more efficient.A huge part
of the economy that is benefiting from an increase in logistics is technology. A good logistics company will
integrate all of the supply chain functions into a digital strategy. They will track orders, vehicles and pallets
to gain greater visibility and improve their methods. This better visibility helps companies to optimise their
flow of goods, reduce wait times and manage their costs. Technology is an essential part of logistics and its
use is benefiting today’s economy.

7
Six Key Trends Changing the Supply Chain Management Today

An inefficient and poorly functioning supply chain can negatively impact every aspect of an organization.
Here are six trends that will help you re-evaluate current processes and performance. As companies
increasingly use their supply chain to compete and gain market share, spending and activity in this area are
notably on the up-swing. Technology and process upgrades at forward-thinking companies clearly show that
supply chain excellence is more widely accepted as an element of overall business strategy, and that increasing
value to customers is not just management's, but everyone's, business. the shift in how companies view their
supply chain is taking hold

Trend 1 — Demand Planning Begins at the End of the Cycle

As sources and capacities for manufacturing have increased, more companies have moved away from focusing
efforts on plant-level production planning and are adopting more of a demand-driven focus of trying to
influence and manage demand more efficiently. Rationalizing what your company is best at selling, making
and delivering, and aligning the sales force with that mindset, is critical to adopting a demand-driven model.
The demand driven approach can help a company create a more customer-focused mindset, without sacrificing
operational efficiency. Ultimately, a demand-focused approach to planning can significantly improve demand
planning and management efforts and help overall costs and customer service efforts.

Advanced demand planning systems and proper strategies can also help uncover data and identify trends
buried in a company's information systems. Companies should conduct an enterprise-wide internal Demand
Review to gather information from all aspects of the organization. Goals are then set to gain consensus on
what will be sold each month for each product line or category and the resulting revenue. Of course, the driver
of the Demand Review process is continuous improvement of forecast accuracy.

Critical to the success of any Demand Plan is having all stakeholders, including sales, marketing, finance,
product development and supply chain agree upon a consensus Demand Plan. It's important for all participants
to discuss factors affecting customer demand patterns (such as new or deleted products, competitors or market
conditions), the aggregate demand plans and associated revenue plans. Once all demand for products and
services has been recognized, the information is consolidated into one Demand Plan.

Demand planning is a key input to the larger sales and operations planning (S&OP) process and can have a
significant positive impact on new product introductions, inventory planning and management, customer
service, supply planning efficiency and sourcing strategies. Demand planning success is often tied to
organizational structure. Companies with dedicated resources focused around demand planning and
8
forecasting yield stronger results and drive more value to their company. Organizations that focus part-time
on demand planning and forecasting efforts, however, often yield sub-standard results. With the strategic
importance of demand planning, companies need to be committed to this from both a resource and technology
perspective.

Trend 2 — Globalization

The business landscape is rapidly becoming more global. Largely due to improvements in communications,
globalization is dramatically impacting the way business is managed and transacted, even on the most local
levels. No area of a business is more affected by the trend to a global business environment than the supply
chain. Manufacturing, distribution, sourcing of materials, invoicing and returns have all been significantly
impacted by the increased integration of a global customer and supplier base, and many companies find that
existing processes and technology are not flexible enough for this new business environment.

For example, historically, many companies have brought in container shipments from Asia Pacific through
the ports in southern California. As the volume of container shipments has increased, all of these ports have
experienced capacity issues relating to customs clearance and transshipping. As a result some companies are
contemplating rerouting these inbound shipments to alternate ports. This change may seem subtle, but a shift
in logistics of this magnitude has far-reaching effects on the overall cost and efficiency of the supply chain
network. Dynamically repositioning the point of entry for inbound container shipments can have a positive
impact on customs clearance times and access to increased transportation capacity, however, there can be a
negative impact as well. Better understanding the total landed cost and service implications of alternate ports
of entry can help improve supply chain costs and performance.

The right supply chain design is critical to managing the changes brought about by rapid globalization. A well
thought-out supply chain network design can optimize the supply chain network and the flow of materials
through the network. In doing so, network design captures the costs of the supply chain with a "total landed
cost" perspective and applies advanced mathematical technology to determine optimal answers to both
strategic and tactical questions.

The following are strategic questions answered by a well thought-out network design:

• Where should facilities be located?

• How many facilities should I have, and what capabilities should they have?
• What kind of capacity should they have?
• What products and services should they handle?
• Whose manufacturing and distribution orbit should they source?
• Which contract packers or contract manufacturers should I use?

9
 • How can I achieve operations synergies through integrating acquisitions?

Trend 3 — Increased Competition and Price Pressures

Historically, price, product features and brand recognition were enough to differentiate many products in the
marketplace. With the continued commoditization of many products, companies need better ways to
distinguish themselves. In one case, a large global consumer goods manufacturer saw prices around some of
its commodity products drop as much as 60 to 80 percent. Product innovation and brand equity no longer
allowed them to command a higher price in the market. In order to continue to compete with that
commoditized product the firm made significant cost improvements with supply chain redesign and
technology.

Companies are looking to their supply chains in two ways to help offset this trend. First, they are looking at
ways to reduce cost and are creating a more efficient value chain to remain cost competitive. Second,
companies are looking at ways they can provide value-added services to meet the demands of more
sophisticated customers.

Cost improvements around inventory management, logistics operations, material management and
manufacturing costs, including raw material and component acquisition can be found with:

• sales and operations planning

• transportation/distribution management
• improved product lifecycle management
• improved strategic sourcing and procurement

There are a number of ways suppliers can differentiate themselves and provide value and additional services
and capabilities to their customers, such as:

• vendor managed inventory (VMI)

• radio frequency identification (RFID)
• labeling, packaging
• drop shipping
• collaboration

Companies should not only look to their supply chain to drive cost improvement, but should increase
capabilities as a means for staying competitive. Streamlining processes with better design, better collaboration
across networks and new services will help your company stay competitive and strengthen relationships with
your customers.

10
Trend 4 — Outsourcing

As many companies step back and examine their core competencies some realize that outsourcing parts or all
of a supply chain can be advantageous. With marketplace improvements around

(1) information mediums and systems .

(2) cost and quality of global manufacturing and distribution and

(3) product design capabilities companies are gaining additional synergies by outsourcing all or parts of their
supply chain.

There can be significant economic benefits from outsourcing all or part of your supply chain operation, but
without the right systems, processes or organizational management structure the risk to success can increase
to frightening levels. In an outsource-heavy environment, companies need to put more controls and systems
in place to compensate for the fact that the supply chain capabilities no longer reside onsite. In an outsourced
supply chain environment the need for information, controls and excellence from the information worker
becomes a high priority.

The optimally outsourced supply chain, either in its entirety or just a component, relies heavily on:

• superior supply chain network design

• inclusion of that outsource partner in the information chain
• establishment of control mechanisms to proactively monitor the various components of the supply
chain
• information systems to connect and coordinate the supply chain as seamlessly as possible

A failure to excel at any one of these components can result in breakdowns affecting the entire supply chain.

Trend 5 — Shortened and More Complex Product Life Cycles

Today many companies are under pressure to develop innovative products and bring them to market more
rapidly while minimizing cannibalization of existing products, which are still in high demand. In order to meet
the needs of both customers and consumers, companies need more efficient product lifecycle management
processes. This includes heavy emphasis on managing new product introduction, product discontinuation,
design for manufacturability and leveraging across their entire product and infrastructure characteristics.

One chief benefit of product lifecycle management (PLM) processes and technology is helping companies
design products that can share common operations, components or materials with other products, thereby

11
reducing risks of obsolescence write offs, increasing cost leverage on the purchasing of key materials and
ensuring that infrastructure investments are optimally utilized. Additionally, getting this right will help to
improve your time to market. By focusing product lifecycle management efforts in these areas, a company
can buffer itself against the risk of an unplanned cost increase, a poor new product launch, an unplanned
obsolescence write off and can enhance the overall customer perception of the company as an effective
innovator.

Typically when companies begin the process of introducing new products to market, they coordinate
marketing, engineering, sales and procurement and develop sales forecasts to plan products in the pipeline.
Without a formalized product lifecycle process the end result isn't always predictable. Recently, a U.S.-based
major appliance manufacturer, struggling with sky-rocketing product development costs and a cumbersome,
manual development process, was looking to implement a PLM initiative to help reduce the cycle time
between development and entry to market. While implementing a new PLM environment the company
designed innovative, common product development processes and selected a PLM solution to control
engineering document management, online mark-up and Web-based collaboration with suppliers and contract
manufacturers.

As a result the company increased parts re-use, improved document retrieval time, reduced design cycle time
and ultimately reduced new product development cost by 15 percent. These improvements helped the
company grow revenue by 25 percent, mainly from an increased rate of product introductions.

As the economy becomes more global, labeling and compliance to packaging requirements and regulations
have become critical to success. Without adherence to local packaging and labeling regulations a product may
violate local requirements, preventing it from being distributed and sold in that market. Product lifecycle
management technology processes can help ensure that products being produced and targeted for specific
markets are well-managed and are compliant. Product lifecycle management tools and processes have helped
consumer goods companies with their efforts to try to continually drive demand through packaging and
labeling innovation and design. Implementation of an optimal PLM process and technology can allow a
consumer goods company to effectively produce and distribute products that are only targeted for regional
promotions or consumer preferences.

Trend 6 — Collaboration Between Stakeholders in the Extended Supply Chain

As supply chains continue to develop and mature there has been a move toward more intense collaboration
between customers and suppliers. The level of collaboration goes beyond linking information systems to fully
integrating business processes and organization structures across companies that comprise the full value chain.
The ultimate goal of collaboration is to increase visibility throughout the value chain in an effort to make
better management decisions and to ultimately decrease value chain costs. With the right tools, processes and
12
organizational structure in place collaboration provides key people throughout the value chain with the
information needed to make business-critical decisions with the best available information.

Great recent examples of collaboration have been seen in the expansion of sales and operations planning
processes that include upstream and downstream value chain partners as regular participants. S&OP processes
help maintain a well-coordinated and valid, current operating plan in support of customer demand, a business
plan and a strategy. The improved resulting operating plan provides the management of each partner with a
complete picture of forecasted demand, supply capacity, corresponding financial information with financial
implications and allows them to make informed, critical decisions.

Companies that expand the usage of sales and operations planning have greater visibility across their owner
enterprise and respective value chain, gain the agility necessary to improve the PLM process, improve
promotional planning, minimize unnecessary buildups of inventory, increase revenue predictability and
execute customer service expectations.

The S&OP activity enables information systems to connect the value chain participants around key demand
information, such as customer forecasts, and around key supply information, such as supplier inventories and
capacities.

Another recent example of collaboration is seen in the increased focus around RFID. Value chain leaders are
looking at functional areas to better integrate the supply chains of their partners with themselves and RFID
can serve as a means to quickly and efficiently ensure that critical product information is communicated as
products flow thru the value chain and ultimately to the consumer.

Recent estimates show that major retailers can lose 3 to 4 percent of revenue per year due to shelf stock-outs,
while inventory is available somewhere in the value chain. Better coordination of store-level product
availability would have a significant impact to the entire value chain for these retailers. Additionally, better
visibility of retailer product availability can reduce overall logistics costs as products move through the value
chain to fulfill safe stock levels and ultimately consumer demand.

The Role of Technology in Supporting these Trends

As supply chain networks have become more complex the need for greater and improved supply chain
technology solutions has become critical. Enterprise resource planning (ERP) and best-of-breed supply chain
management (SCM) solution providers have made significant investments in developing solutions to address
the needs of manufacturing and distribution companies in areas, such as:

• Network and Inventory Optimization

• Product Lifecycle Management
13
 • Sales and Operations Planning
• Manufacturing Optimization
• Logistics Optimization
• RFID
• Procurement
• Business Intelligence

These technologies have enabled the supply chain information worker to innovate, drive cost reductions,
improve service and meet customer expectations better than ever. In order to have sustainable improvement
in supply chain performance a business must have the right balance of investments in organization, processes
and technology. Lack of investment and focus in any one of these areas will reduce a company's ability to
achieve fundamental, sustainable improvement.

How Logistics and Supply Chain Management affects the operational efficiency :-

As logistics and transportation expenses take a larger bite out of every sales dollar, companies continually
analyse this expense relationship to their overall cost of doing business. Logistical expenses typically make
up 8–10 percent of total costs for a firm, so most organisations try to tame the complex operations by deploying
technology tools. With an automated, cost-effective logistics system, a company can implement major
strategic changes and improve operational efficiency. It also improves scalability, reduces manual errors, and
provides a proactive approach to customer satisfaction. The emergence of SaaS providers for logistics
automation has made this considerably more affordable and easier than ever before. Corporate managers
traditionally have viewed logistics as a mandatory cost bucket. However, top-performing companies like
Amazon now recognise that mastering supply chain operations can be more than that it can be the source of
competitive advantage.

Factors to be considered to save cost and time:

Customer satisfaction:
Customer loyalty becomes critical, as it costs five times more on an average to acquire a customer than to
retain one. Keeping customers happy requires the per-order cost of logistics to be low. By maintaining
customer satisfaction, companies can keep business up and therefore, spread out the cost of logistics support
over a greater number of orders/customers. Because of this direct correlation between customer satisfaction
and overall cost reduction, customer service should be factored into any measurement of changes in logistics
costs accordingly. When the appropriate tools to manage complexity are in place, organisations have greater
opportunities to continuously create operational efficiencies and keep customers happy.

14
Labour costs:
Every project should be seen through the prism of labour costs and attrition rates. Incentive programmes for
field executives, if well structured, really work in reducing both. Automation platforms which provide end-
to-end performance measurements in terms of distance travelled, number of tasks completed, time on road
and transaction time can help in creating the much needed incentive programmes for employees.

Going green:
Today, companies need to look at how they can cut costs by going greener. For logistics, this is possible by
reducing fuel consumption and the overall fuel costs by streamlining routes and changing bad driver habits
(like long idles), which is again linked to the performance of the drivers.
Faster processing and delivery: This leads to more satisfied customers and lower inventory carrying cost.
Response time is an increasingly important strategic weapon in the arena of competition. Leading companies
seek to respond to orders in minimum time as delay costs directly affect prices, operating policies, sales, and
the firm’s profits in a competitive environment. These time-based strategies can be dealt with through the use
of technological innovations. In an era of free shipping, one-hour delivery, and drone drops, customers have
high expectations about efficient product delivery. Amazon reported a 51-percent increase in Prime
memberships in 2016.

Failed deliveries:
This increases the costs for retailers, both in redelivery fees and the administrative burden of rescheduling
deliveries and finding accurate addresses. It also results in unhappy customers who are unlikely to return to
your site, and who can hurt your brand's reputation. First-time delivery rates can be as low as 80 percent,
which can be a massive waste of time and money for the retailer, as well as a hassle for the customer. A strong
geocoder contributes to increased business and operational efficiencies. It also helps keep package delivery
costs down by reducing the fees that many postal operators charge for failed deliveries.

In 2005, Walmart committed to a momentous goal: doubling the efficiency of their fleet by the end of 2015.
By working with their associates to establish more efficient techniques for loading, routing, and driving, as
well as through collaboration with manufacturers on new technologies, they achieved this goal. With new
efficiencies, their year-end results were a 102.2 percent improvement over the 2005 baseline, with associated
savings of nearly $1 billion annually. This is the power of technology. The most effective strategy combines
process, analytics, and technology to simplify logistics networks, mitigate risk, and optimise the associated
costs. The selection of technology must be driven by the tool's potential to: Simplify processes (reduce hand-
offs and automate process steps) Expedite exception handling (take action on exceptions through alerts)
Reduce systems complexity (for better workflows) When companies take full advantage of the opportunities
provided by these trends to invest in digital tools that drive progress, investment capital is no longer the key

15
differentiator in gaining a competitive advantage. That’s why data-driven startups are disrupting decades-old
industries and shaking up logistics management like never before.

Things to be done for logistics operational effective :

1. Improve communication.
2. Invest More in training.
3. understanding the operation chain in dept of the organisation.
4. Recognizing the fact that it is a service industry.
5. Removing barriers to success.
6. Continually setting up the benchmark in the market.

16