LOGISTICS

Course Instructor
Ms. Parvica Gupta
Assistant Professor
Department of Management &
Commerce
BBA 4th Sem (Unit 3)
RBMI, Bareilly
 LOGISTICS
• When the word "logistics" was first used, it meant how the military
got, stored, and moved equipment and supplies. This phrase is now
often used in business, especially by manufacturers, to discuss how
resources are handled and moved along the supply chain. Logistics
derived from French word “Logger”.
• Theorigin of logistics can be traced back to Mesopotamia,
Egypt, China and Rome.
• Planning, implementing, and controlling the efficient, effective
forward and reverse flow and storage of goods, services, and
associated information between the point of origin and the point of
consumption in order to satisfy customer needs is the responsibility
of logistics management.
Logistics
• Logistics is the part of supply chain management that deals with the efficient
forward and reverse flow of goods, services, and related information from the
point of origin to the point of consumption according to the needs of
customers.

• According to the Council of Supply Chain Management Professionals,

“logistics is the process of planning, implementing and controlling procedures
for the efficient and effective transportation and storage of goods including
services and related information from the point of origin to the point of
consumption for the purpose of conforming to customer requirements and
includes inbound, outbound, internal and external movements”.
Difference between logistics and
supply chain management
• Logisticsand supply chain management are closely related processes.
But they are not entirely alike. They each make up a separate part of the
commercial process.
• Picture of supply chain management as the broader canvas. It
encompasses an extensive network of functionaries that execute the
movement of merchandise(goods that are for sale) from producer to
consumer. That means everyone from vendors to warehouses and
transportation services.
• Pictureof logistics as a process painted within the supply chain canvas.
It can be carried out in house by a single company or by outsourcing to
third-party logistics providers. It is concerned with optimizing every
process along the supply chain to lower prices, improve services, and
boost profits.
Logistics Management
• Logistics management is part of the supply chain. It involves
planning, implementing, and overseeing the effective storage of
goods and their transportation from the point of origin until the
final destination.
• Logistics managers have to move products from their point of
origin to their point of sale under optimum conditions. That means
managing inventory, equipment, locations, distributors and costs.
• Good logistics has the power to minimize costs, increase profits
and drive international imports and exports. Logistics is a
precision process that relies on targeted planning and resource
management for its success.
Logistics Companies
1) Blue Dart
2) FedEx
3) Delhivery
4) Ekart Logistics
5) Ecom Express
6) Shadowfax
7) XpressBees
Types of Logistics In SCM
1. Inbound logistics is one of the primary processes of logistics
concentrating on purchasing and arranging the inbound movement of
materials, parts, or unfinished inventory from suppliers to manufacturing
or assembly plants. Inbound logistics is mainly concerned with the
movement of resources from suppliers to production.
• Transferring the raw materials to the appropriate departments or
manufacturers for additional processing is the responsibility of inbound
logistics. Transporting these unprocessed raw materials typically
involves using large vehicles.
• Tomove goods safely and affordably, logistics companies have a broad
network and trucks. To prevent impeding the subsequent operations,
improving process flow at this stage of the logistics value chain is
crucial. For a hassle-free logistics service, pick the best logistics
provider.
For example,
1. Imagine a company that makes furniture. They need wood to
make their tables and chairs. The process of getting this wood to
the company is part of inbound logistics.
Process of inbound logistics works:
• The company orders the wood and it’s shipped to them.
• When the wood arrives, they check it to make sure it’s good quality and
then put it in their warehouse.
• When it’s time to make the furniture, the wood is taken from the
warehouse to the factory floor.
2. If your factory produces auto parts, you must ship them to
customers or recipients like manufacturers to use them on the
finished goods.
Process flow of inbound
logistics: How does it work?
Identifying the material requirements of the organization and forecasting demand
which is based on historical data and needs of individuals.
• Orders can be placed with the suppliers after material needs are known as they
are based on the principles of just-in-time methodology.
• Important decisions regarding transportation and route selection are made by
maintaining cost efficiency.
• Goods are received at organizational facilities and properly checked for
documenting all the necessary aspects.
• Materials are stored and then the production process takes place after which
goods are distributed to the customers.
• It requires a feedback loop to achieve better fluency in the process flow of
inbound logistics and enhance its overall effectiveness.
2. Outbound logistics
• Outbound logistics is the process related to the storage and
movement of the final product and the related information flows
from the end of the production line to the end user.
• Outbound logistics refers to delivering the right product at the
right time to customers at the best possible minimum cost. It
focuses on the demand side of the supply-demand calculation.
• Customer satisfaction is the main objective of outbound logistics.
It is concerned with delivering the product from the distribution
center to the customer. It involves procedures such as order
processing, packaging, and shipping to the destination.
• Example of outbound logistics
A customer orders for a handbag on an eCommerce platform. The payment is
processed and order is confirmed. An order ID is assigned to it: E.g.,
ORD00123007622
• Inventory is checked, the product identified, and picked from the shelf
• Handbag is checked for quality, and if ‘OK’ then sent for packaging and labelling
• Handbag is packed using bubble wraps and other recommended packaging material, and
labelled with the order details (E.g., Customer name, shipping address, QR code,
sender details etc.)
• Invoice is generated with the required QR code, Parcel is sealed and ready for shipping.
• Now, in most cases, if this is a single order, a courier company can deliver the parcel.
However, if this is one among many orders, then the orders are usually moved from the
warehouses to the distribution centers. 3PLs or 4PLs can be used for this.
• Once the parcels arrive at the distribution center, they are sorted, and based on pin codes
or special delivery instructions (e.g., expedited shipping), delivery partners are assigned.
• The delivery partner will pick up the parcel and deliver it to the customer. Relevant updates
and notifications will be sent to the customer to keep them informed. In most cases, an
online feedback form is shared to the customer to collect feedback on the overall delivery
experience.
Inbound logistics Outbound logistics

v
It is mainly focused on the transfer of Outbound logistics emphasizes delivering
materials into a particular facility. the finished products to the customers.

Processes included are sourcing, Processes included are order confirmation,

warehouse receiving, inventory storage packaging, shipping, delivery, customer
etc. service.

Products are transported from suppliers,

Products and transported from companies,
manufacturers etc. and delivered to
businesses and retailers to end customers.
companies, retailers and third parties.
 Challenges in outbound
logistics systems
• Increasing cost of transportation – India’s logistics costs is among the highest worldwide.
The cost of logistics per unit and logistics cost analysis has been rising over the years, making
it necessary for businesses to identify affordable solutions for the movement of goods.
• Lack of supply chain visibility – Lack of thorough visibility across supply chain operations
lead to reduced efficiency and revenue. There are several processes involved in outbound
logistics and visibility across the multiple processes can lead to delays, inefficiencies,
customer complaints, expenditures. This is more when businesses work with 3PL, 4PL or any
external transporter with limited control over the movement of their fleet.
• Inefficient delivery systems – In many cases poor delivery systems can also impact
overall logistics operations. From mapping optimized routes to finalizing delivery vehicles,
getting the right invoices, permits and documents, there are several processes that work
collectively to ensure timely and optimal delivery.
• Meeting customer expectations – Logistics is a competitive field, and meeting customer
expectations is one of the key strategies to gain competitive edge. From packaging to timely
delivery and damages, the last-mile delivery (both for B2C and B2B delivery) is crucial.
 How to improve outbound logistics value chain

• Build customer trust by prioritizing shipment schedules, and deliveries

on time and in proper condition
• Find the best routes and delivery partners to limit complaints caused
by inefficiencies and/or poor performance
• Use tools (e.g., EDI) for order management, inventory management,
customer feedback etc. to streamline processes and get the right insights
• Provide value-added services and features (e.g., the option to schedule
delivery slots based on customer availability, order status tracking etc.) to
enhance the customer experience
• Keep communications regular and transparent
• Improve warehousing and storage facilities, e.g., work with micro-
fulfilment centers, adopt tools for real-time updates, etc.
3. Reverse logistics
• Reverse logistics has been neglected for many years, but because
E-Commerce brands focus on enhancing customer experience,
reverse logistics is becoming a crucial part of the supply chain.
• Reverse logistics is the process connected with managing product
returns and refunds. It is the movement of the product from
customers back to the seller or manufacturer. The products returned
may be received late or not required by the customer, damaged in
the delivery process or eligible for repair, refurbishing, or recycling.
• Reverse logistics helps organizations properly dispose of products
that can minimize penalties for noncompliance with environmental
regulations.
 3PLs or 4PLs
• When dealing with numerous orders, businesses often move goods from
warehouses to distribution centers, and they can leverage 3PLs (Third-
Party Logistics) or 4PLs (Fourth-Party Logistics) to handle this process,
with 3PLs focusing on operational execution and 4PLs providing
strategic oversight and management of the entire supply chain.
• Warehouses vs. Distribution Centers:
• Warehouses: Primarily used for storing goods, often in bulk, before they
are needed.
• Distribution
Centers: Focus on receiving, sorting, and shipping goods to
customers or other locations, often in smaller quantities.
4. Third Party Logistics (3PL
Logistics)
• Third-party logistics (or 3PL) is known as outsourcing
operational or eCommerce logistics to a third-party logics
company who then handles everything from inventory
management to delivery of the products. This enables
business owners to focus on their business while the order
fulfillment operations are handled smoothly by a 3PL
provider.
•A 3PL specialist company provides a wide range of services
that supports the logistics of the supply chain. The services
include transportation, warehousing, inventory management,
picking & packing, and reverse logistics/returns.
• The Role of 3PLs and 4PLs:
• 3PLs (Third-Party Logistics):
Focus on providing specific logistics services like warehousing,
transportation, and order fulfillment.
• 4PLs (Fourth-Party Logistics):
Act as supply chain integrators, managing multiple 3PLs and optimizing
end-to-end logistics processes with strategic oversight and technology
integration.
The choice between 3PL and 4PL depends on the complexity of your
supply chain and the level of control you need.
Examples of 3PLs:
• FedEx Supply Chain (formerly GENCO): A major provider of
warehousing, distribution, and fulfillment services.
• DHL: While known for its global express delivery, DHL also
offers 3PL services like warehousing and transportation.
• UPS Supply Chain Solutions: Provides a range of logistics
services, including warehousing, distribution, and
transportation.
• Amazon: As a large e-commerce company, Amazon operates
its own 3PL and 4PL services.
• Kuehne + Nagel: A global logistics provider offering a wide
range of 3PL services
• XPO Logistics: Provides a variety of logistics services,
including warehousing, transportation, and freight forwarding
 5. Fourth Party Logistics (4PL)
• 4PL or fourth-party logistics is used by companies to outsource all of
their logistics operations to a single logistics partner. The logistics
provider would be responsible for managing the entire supply chain
including assessing, designing, building, running and tracking supply
chain solutions for the client. This is why a 4PL logistics partner
represents a higher level of supply chain management for the client.
• A 4PL logistics provider is a company that specializes in managing the
entire supply chain process. They are responsible for coordinating and
optimizing all of the activities and resources involved in delivering
products from the point of origin to the customer’s destination.
• By providing comprehensive services that go beyond traditional 3PL
logistics services, 4PLs can maximize efficiency, reduce costs, and
increase customer satisfaction.
 Examples of 4PLs:
• DHL Lead Logistics Partner: Offers comprehensive supply chain management
services, including 3PL coordination.
• Kuehne + Nagel: While also a 3PL, Kuehne + Nagel also offers 4PL services for
strategic supply chain management.
• Maersk 4PL Logistics Services: Provides 4PL services to manage and optimize
the entire supply chain.
• XPO Logistics Key-PL: Offers 4PL solutions for managing complex supply chains.
• DSV Lead Logistics: A 4PL provider offering strategic supply chain management
services.
• UPS Supply Chain Solutions, Inc: Offers 4PL services to manage and optimize
the entire supply chain
• Geodis: A 4PL provider offering strategic supply chain management services
• Gefco Group: A 4PL provider offering strategic supply chain management
services
 Main components of logistics
• Logisticscomprises five essential components. Logistics companies are
responsible for executing each one of these components to the highest
degree of accuracy. Here are the five key components of any logistician’s
job.
1. Demand planning
• To guarantee customer order fulfilment, demand planning is an essential
logistics function. By ordering merchandise in the correct quantities and at
the right price and mobilizing suitable transport, customer demand is met
and profits protected.
2. Storage and materials
• Because demand is unpredictable, it’s important to have surplus goods on
standby until consumers demand them. Warehouses are responsible for the
storage, care, retrieval, packaging, and unitization of merchandise.
Warehouse Management Systems (WMS) optimize storage capacities,
equipment retrieval speeds, and warehousing processes.
3. Inventory management
• Inventory management controls the flow of goods in and out of a warehouse. It
dictates how much stock to hold and where to locate it using targeted data to
predict consumer demand.
4. Transportation management
• Logistics involves mobilizing different modes of transport to move merchandise
from one stage of the supply chain to the next. Merchandise might need to
travel via road vehicles, freight trains, shipping, or even air travel for long-
distance supply chains using transportation management software.
• Consolidation is the process by which shipping companies or carriers combine
multiple smaller shipments in one. This speeds up deliveries and keeps costs
low.
5. Control
• Logistics is a complex operational procedure that requires a lot of precise
information to be effective. Forecasting demand, transportation times, and
inventory are crucial to keeping the operations to a tight timescale.
The Role Of Logistics In
Supply Chain Management

1. Sourcing of Goods

• Logistics plays a crucial role in the strategic sourcing of goods.

Primarily sourcing goods means finding and who can supply goods at
the best value. Still, it also includes calculating backorder delays,
extraneous fees, shipment costs, and warehousing costs which
logistics plays a big role in managing. Finding the right raw material
source demands a good understanding of all these contributing
factors, and logistics help streamline all of them.
2. Order Fulfillment
• Order fulfilment is the process of accepting orders from customers,
processing them, and delivering them to the customers. This is where the
efficiency of a logistics system is tested. The role of logistics in order
fulfilment is picking orders from the warehouse, rightly packaging and
labeling them, and then shipping them to the customers. This role gets
more crucial as the consumer demands their order faster, within the same
day. Nowadays, order processing is more technology-driven than manual,
but the last-mile delivery is still completed manually, which needs an
efficient logistics infrastructure.
3. Packaging
• During handling and transportation, the product is prone to any damage
that it could get while shipping from point A to B. Therefore, good
packaging is important to ensure the safety of products. Moreover,
customers also judge brands over the packaging of the products they
order.
4. Transportation

• Transportation functions of the logistics industry.

Transportation in a supply chain refers to the movement of products
from one location to another, which begins at the start of the supply
chain as materials make their way to the warehouse and continues all
the way to the end user with the customer's order delivered at the
doorstep.

• Transportation management focuses on planning, optimizing and

executing the use of vehicles to move goods between warehouses, retail
locations and customers. The transportation is multimodal and can
include ocean, air, rail and roads.
5. Warehouse Management
• Warehouse management and logistics operations as one to
enable last-mile delivery. The inventory in warehouses is scheduled
and placed according to the logistics requirement. For example,
goods that are ordered frequently or need to be transported are
placed at the front of warehouses for easy commuting. Whereas
products that are low in demand are placed at the back of
warehouses relatively, and perishable products are rotated
frequently, so those old items are shipped out first.
6. Return Management
• Managing returns is equally important as order fulfilment
for eCommerce businesses to cut unnecessary waste. Like logistics
plays a role in delivering goods to customers, it also plays a crucial
role in getting them back from the customers if they request.
 Exam Readiness
1. The word ‘logistics’ is derived from the French word ……..
a) Logic b) Logger c) Longer d) Logos
2. Logistics is typically considered as a subject of ………..
a) Marketing b) SCM c) HRM d) None of these.
3. Integrated logistics systems included……..
a) Material management b) Materials flow systems
c) Physical distribution supported by IT d) All of these
4. The objective of logistics is ……
a) Rapid response b) Consolidated movement
c) Create visibility d) All of these
5. Reverse logistics is required because
a) goods are defective c) goods are unsold
b) the customer simply change their minds d) all of the above.
6. Which of the following is not a component of 4 PL?
a) control room c) information
b) resource providers. d) recycling
7. Which is a system-wide management of entire logistics chain as single entity a
a) Green logistics b) integrated c)logistics
d)EDI
8. Which is not a part of the 3Cs of logistics?
a) Competitor b) Cost c)Company d)Customer
9. Activities associated with storing and physically distributing the products to
the buyers are included in which logistics
a) inbound b) outbound c)3PL d)4PL
10. The objective of logistics is …...
a) Rapid response b) Consolidated movement
c) Create visibility d) all of the above
11. --------is referred as professional working in the field of logistics
management
a) Manager b) Warehouse man c) Logistician
d) None of the above
12. Expand SPC
a) Standard Process Control b) Statistical Performance
control
c) Standard Production Control d) Statistical
Production control