CHAPTER – 1

INTRODUCTION

1.1 Definition
Council of Logistics Management defines “Logistics as a part of the supply

chain process that plans, implements, and controls efficient, effective flow and

storage of goods, services, and related information from the point of origin to the

point of consumption to meet customers' requirements.” (CLM, 1998). Magee et al.

(1985) defines logistics strategy as "the process of developing a more efficient

physical-distribution and supply-system." Whereas Chow et al. (1995) defines

logistics strategy as "a pattern of action plans designed for the purpose of achieving

logistics goals".

The term Logistics refers to the entire process of managing the resources Viz.,

acquired, stored, and transported to their final destination. Logistics management

involves identifying the potential distributors and suppliers and determining their

effectiveness and accessibility. Logistics managers are also called as logisticians.

Logistics is initially a military-based term used in reference to how military personnel

obtained, stored, and moved the equipment and supplies. The term is now used

widely in the business sector, particularly by companies in the manufacturing sectors,

to refer to how resources are handled and moved along the supply chain. Webster’s

dictionary explains that logistics management as the aspect of military science

dealing with the procurement, maintenance, and transportation of military materiel,

facilities, and personnel. The Council of Logistics Management or CLP where the

professional organization of logistics in United State implies that logistics

management means the part of supply chain system that has the planning process.
1
Logistics has been developed & emerging more and more towards customer service.

Logistics is also defined as a function for minimizing total logistics costs or for

maximizing profits, while achieving desired levels of service performance. But now

logistics is defined as maximizing internal and external flexibility aiming at, for

instance, customization. This infers that logistics is more focused on meeting

customer’s service requirements and is considered as a key source to company’s

competitive advantage (Mentzer et al. 2001; Sharma et al. 1995).

1.2 Statement of problems

Over the past half-century, the role of logistics in the business has increased

in both scope and strategic importance. Logistics strategies influence customer

selection, product design, partnership/alliance-building, vendor selection and other

core business processes (Caplice and Sheffi, 1995). Moreover, logistics has given a

strong urge in the organized systems developed by the supply chain in which logistics

is one of the fundamental elements.

Suppliers plays a major role in the development of the industry and new

opportunities emerged despite tough competition in the markets. Logistics

companies faces lot of challenges from suppliers of raw materials, spare parts and

their capability, quality, competitiveness, also from the wholesalers and final

products.

2
 It is clear that all the above-mentioned factors pose a series of threats for the

logistics companies and supply chain process. The goal of the managers in the

logistic company is to get high levels of proficiency, consistency, and minimum

cycle times (Coyle, Bardi & Langley, 2003). The logistics industry has reached heavy

growth because of deregulation, mergers, acquisitions, and alliances. (Cui &Hertz,

2011). There is a rapid growth among the Third-Party Logistics service company,

due to heavy demand for logistics service and also among logistics companies.

Minimum lead time, increase in customer demand, and outsourcing of activities are

one among them for their huge development. Firms from different sectors and

expertise have entered into the emerging logistics market arena and initiated the

competition within the firms, who source their services, especially warehouse and

transport. (Hertz & Alfredsson, 2003).

The old-fashioned logistics services including the supply chain activities has

not created huge demand among the public. But globalization, brings the uncalled

heavy competition among the related and unrelated industries. Logistics found its

place across countries almost around two decades back. There existed a group of

firms, who share the information they possess, ensure cooperation and create a

platform for good coordination among all the parties in activities to execute a smooth

flow of goods and services. The main aim of Logistics is involved in the movement

of materials and finished commodities from one place to another and the storage of

materials in warehouses and their mobility through supply chain channels and

processes (Waters, 2003).

3
 Logistics business achievement is noticeable from the high level of

performance in the services offered at a reasonable price and extraordinary services

as per the needs of the customers (Hughes, Ralf & Michels, 1999). If the company

intends to increase the value of the products and services it offers to the customers,

it must have the required form utility, place utility, time utility, and possession utility

(Coyle et al., 2003). The function of form utility is completed only when it reaches

the person who demands it. It adds value to the service when the product reaches the

market at the correct time (Toney, 2004).

Industries are channeling their focus mainly on the production and a negligible

importance is given when it comes to the mobility of the goods (Tseng, Yue, &

Taylor, 2005; Waters, 2003). In the present scenario, logistics managers have grasped

the significance and need for the logistics service. Logistics Company’s management

has recognized that the cost associated with the logistics are highly needed and

movement of goods is a part of the business (Waters, 2003). Until 1962, logistics is

not given much spotlight, but it is portrayed as a promising and prospective business

in future. From 1920’s logistics in finished goods received a considerable amount of

attention. Logistics surveys done in 1970s and 1980s brings light the fact that

logistics service expenses absorb nearly 15-20 percent of the revenues; leaving the

firms to a difficult position. If proper attention is given to it these expenses can be

reduced to considerable portion without compromising on the quality of services

(Waters, 2003). Logistics services are highly necessary for all the firms, including

those companies which supply

4
intangible services. It also has to play a strategic role to maintain and continue the

quality services to their consumers.

To achieve the industrial objectives, coordination is highly expected among

all the value-added services provided by the organization. In most of the countries,

firms face heavy competition because of the lacunae in maintaining and managing

their integrated value-added services in their systems. Logistics firm which stuck to

the old-fashioned inward-looking measures has severe service-gaps which gives way

to the competitors to enter into the market, and captured the market and consumers.

Managers should understand the value-adding ability of the firms, which are

originated from the processes and activities of the firm. The research department of

the firms involved in collecting the information regarding consumers’ requirements

to find the value-added services expected by the customers. The value-added services

will surely attract and retain the customers in future and make the businesses as a

successful one. Value-added services provided by the logistics company with respect

to purchase of raw material and sending the final product to the market for the

creation of utilities such as place, time, and possession utilities (Fawcett & Fawcett,

1995).

Despite the significance and the development it has reached, full attention is

not given to the logistics industries (Cui &Hertz, 2011). Research studies on logistics

services focused on the services rendered, skills of the employees, integration of

services, and relationships between customers and providers (Cui and Hertz, 2011;

Andersson, 1997).

5
 Faber Costes, Jahre, and Roussat (2008) predicts that there is high significance

relationship between firm and shipper. In this research, attention is not given to the

areas where the TPL provider operates in the supply chain process. In this context it

is decided to undertake a study on Logistic services management.

1.3 Key issues in Logistics Management

1.3.1 Logistics Integration and Coordination

The important issues in the logistics management are the way of integrating

the supply chain with Logistics. Integration refers to internal and with suppliers and

distributors and customers. Here the word collaboration refers to joint working and

action with reference to planning, development, exchange of information and so on.

1.3.2 Facility Location and Network Design

The firm must balance the costs of opening new warehouses with the

advantages of being close to the customer. Warehouse location decisions are crucial

determinants of whether the supply chain is an efficient channel for the distribution

of the products.

1.3.3 Transportation and Vehicle Routing

The important issues in the SCM are maintaining and coordinating the

materials between the places. The challenging job is sending the product from a

central place to all over the markets. The movement of the material or product is

controllers by the fleet of vehicles, sometimes it may not happen. Companies must

take of care of the selecting the model of transportation, route, schedule and

shipment.

6
1.3.4 Warehouse Management and Distribution Strategies
In the logistics systems warehouse plays a major role and there must be good

relation between the inventory management and customer services. The adaptation

of inventory management system is acceptable by all the industries. This warehouse

is a part of supply chain process stores the material/products and sends to the

customers place and gives information to the management about the balance of

products in store. Its maxims the flexibility and minimizes the handling of store

unnecessarily.

1.3.5 Inventory Management

Maintaining an optimum inventory is highly needs for the logistics

companies. The complexities in the inventory management arises because of the

uncertain demand in the market. A better inventory management system minimizes

the cost, there must be a good coordination between the Logistics services

management and inventory management.

1.3.6 Product Design

Product is an important element is the supply chain process and logistics

coordination. Warehouses, transportation of products, handling of raw materials,

ordering activities are the main attributes in the logistics management. Packaging and

storages are highly essential in the process. Also, the need for short lead times and

the increased demand from customers for unique and personalized products put

pressure on efficient product design, production and distribution. Movement of a

product within a warehouse is a no value-added activity but it incurs a cost. But

handling of materials and picking of materials of finished stock within a plant or

warehouse is highly essential is the logistics distributions. These activities are cost

absorbing and therefore need attention from the managers. Packaging is valuable

7
for storage from a logistical perspective. Packaging can ease movements and storage

by being properly designed for the warehouse configuration and material handling

equipment.

1.3.7 Logistics of Production and Scheduling

The relationship between Production and Logistics Management (LM) is

enormous, since manufactures wants raw materials to produce a product, and it must

distribute as per the schedule of the customers. Coordination between the above said

areas is important for an efficient supply chain.

1.3.8 Information Systems and Decision Support System (DSS)

Computerization along with latest information technology has been essential

to support performance of the logistics services. IT is a key factor that are essential

of the growth and functioning of logistics, and plays an important role in the decision-

making process. The decision support systems, simulation and meta heuristics

systems will be applied directly to support decision making within modern

businesses and particularly in Logistics Management. E-commerce and E-logistics.

In e-commerce, trade partners and customers connected via Internet or other

electronic communication systems to contribute in trading. Companies are looking

for DSS, such as the one relating to e-commerce and e-business that help them to

make the best decisions in an uncertain and rapidly changing world.

1.3.9 Customer Service

Now a days Customers and its services are taken seriously. The fulfilment of

customer needs and wants is an important task in Logistics Management, and it

decides the level of profits. Customer service starts from product availability, after-

sales services. Customer service can be seen as the output of all logistics activities.

8
1.4 Objectives

 To study the factors of logistics service management

 To study the levels of logistics service management

 To analyze the mean differences among logistics service management on

personal variables and job-related factors.

 To study the mean differences among levels of logistics service management on

personal variables and job-related factors.

 To find the significant difference among the statements in factors of logistics

service management using Post Hoc test.

1.5 Limitation of the study

1. All the samples are collected from the small and medium enterprises, there is a

possibility of bias creeping in. Further, even though best efforts were made to

collect an adequate sample from the small and medium enterprises, it may not

have been sufficient enough to represent the whole country. Owing to these

limitations, further research needs to be conducted with larger samples across

India to bring in newer insights. The future studies can also be on specific

industries to generalize the phenomenon of social sustainability. For example, the

food and beverages, chemicals, pharmaceuticals, poultry and meat, automobiles,

and IT manufacturing industries can be taken up. In addition, the future studies

can carry out inter-industry comparisons to bring in various perspectives to social

sustainability.

2. This study is focused on the factors of logistics service management. So, the

future studies can explore on supply chain and the social sustainability. This

research is just the first step in the study of Logistics in the supply chain process.
9
 Similar researches on cross-cultural and intercontinental perspectives can bring

in more interesting insights as the logistics and their supply chains extend across

the continents.

3. The research findings suggest a good fit for all the tested parameters, two

important aspects need to be kept in mind. First, in a reasonably good sample

size, a good fitting model is sometimes rejected merely due to the small

differences between the observed and the predicted covariance matrix. On the

other hand, ill-fitting models may be accepted as having an adequate fit in a

relatively smaller sample size (Bentler and Bonnett 1980). Hence, more studies

need to be conducted in the future by using this instrument with different sample

sizes, in order to generalize the findings across industries. Secondly, since the

scale was developed in the Indian context, this instrument can further be tested in

other developing countries.

4. Female staff has not shown interest to fill the questionnaire of this study. They

had submitted the questionnaire without filling all the questions. When they

contacted second time also they had not shown interest to involve in this study.

10
1.6 Chaptalization of the study
The first chapter comprises of background of the study, objectives, tools used and

limitation of the study

The Second chapter deals with the Research methodology

The Third chapter covers the entire Review of literatures and theoretical

background of Logistics.

The fourth chapter comprises of entire analysis and interpretation based on the

statistical test.

The fifth chapters point out the findings, suggestion and conclusion.

1.7 Conclusion
Logistics services are a part of supply chain management Logistics

management plays a significant role in the success of any company’s operations and

it has impact on the services to the customers. More importantly, logistics processes

play a big part in satisfying the customer which is highly more important than the

low product costs. Logistics professionals think themselves as a customer- facing

portion of the company and strive every day to add value for their customer.

11