SCLM Unit-2
SCLM Unit-2
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Discovering the most competent delivery method
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Using software and IT resources to proficiently handle
related processes.
In logistics management, unwise decisions create
multiple issues. For example, deliveries that fail or are
delayed lead to buyer dissatisfaction. Damage of goods
due to careless transportation is another potential issue.
Poor logistics planning gradually increases expenses, and
issues may arise from the implementation of ineffective
logistics software. Most of these problems occur due to
improper decisions related to outsourcing, such as
selecting the wrong vendor or carrying out delivery tasks
without sufficient resources.
To resolve these issues, organizations should implement
best logistic management practices. Companies should
focus on collaboration rather than competition. Good
collaboration among transportation providers, buyers and
vendors helps reduce expenses. An efficient and safe
transportation provider is also vital to business success.
Logistics management may be defined as follows:
Logistics management consists of the process of planning,
implementing and controlling the efficient flow of raw-materials, work-
in-progress and finished goods and related information-from point of
origin to point of consumption; with a view to providing satisfaction to
the customer.
According to Phillip Kotler, “Market logistics involve
planning, implementing and controlling physical flow of
material and final (finished) goods from the point of origin
to the point of use to meet customer requirements, at a
profit.”
Classification of Logistical Activities:
Logistics (or Logistical Activities) may be Broadly Classified into Two
Categories:
Inventory control
Inventory management is to keep enough inventories to meet customer
requirements, and simultaneously its carrying cost should be lowest.
Information
Logistics is basically an information-based activity of inventory movement across a
supply chain. Hence, an information system plays a vital role in delivering a
superior service to the customers.
Use of IT tools for information identification, access, storage, analysis, retrieval and
decision support which is vital among the functions of logistics is helping business
firms to enhance their competitiveness.
DISTRIBUTION RELATED ISSUES
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The top challenges facing the industry.
1. Fuel Costs. One of the highest costs contributing to the ‘cutting transportation
cost’concern is fuel prices. Higher fuel prices are likely to increase transportation
costs for US shippers this year by pushing up fuel surcharges. Rising US diesel fuel
prices are escalating surcharges added to freight rates, which is reversing a two-
year trend that cut into the revenue and earnings of truckers as fuel prices
plummeted.
2.Business Process Improvement. Not withstanding the need for new
technology, which we discuss in number eight on this list, it has become an
increasing challenge for the logistics industry to stay on top of new advances in
business processes. Taking advantage of these new opportunities sounds
enticing but adoption and onboarding can be overwhelming.
3.Improved Customer Service. Customers want full transparency into where
their delivery is at all times. These days, the location of a package is as
interconnected as your social network. In fact, as customer expectations have
increased, their willingness to pay for fast shipping has decreased with just about
64 percent of consumers unwilling to pay anything extra for less than two-day
shipping.
4.Economy. With high fuel prices comes a greater credit crisis and rising
inflationary demands that take a greater toll on the US economy. This industry is
then pressured by increasing compliance regulations, declining demand, additional
capacity with additional increases in key cost centers.
5.Driver Shortage & Retention. Hiring and retention remain an issue despite the
lower demand mentioned above.
6.Government Regulations. Carriers face significant compliance regulations
imposed by federal, state and local authorities.
7.Environmental Issues. The anti-idling and other emission reduction regulations
brought about by state and local governments has created concern that the compliance
costs could exceed benefits.
8.Technology Strategy & Implementation. While the industry understands and
supports many of the benefits of these technologies, some questions remain as to how
they will pay for it and who will help implement the improvements.
GAINING COMPETITIVE ADVANTAGE THROUGH LOGISTICS
Logistics management has the potential to assist the firm in the achievement of
both a cost/productivity advantage and a value advantage. The under lying
philosophy behind the logistics concept is that of planning and coordinating the
materials flow from source to user as an integrated system rather than, as was
so often the case in the past, managing the goods flow as a series of
independent activities. Thus under a logistics management regime the goal is to
link the marketplace, the distribution network, the manufacturing process and the
procurement activity in such a way that customers are service at higher levels
and yet at lower cost.
Businesses are always searching for a competitive advantage that will set them
apart from others offering a similar product or service. The competitive
advantage is gained by offering a customer services of greater value, lower
pricing or greater benefits. Without a distinguishing advantage, what is the
lure for a potential customer to select one provider over the other? Businesses
without a competitive advantage will have a harder time maintaining their
relevance in the market.
In today’s global economy, being adaptive and flexible is the key to staying
relevant. Changes to the logistics industry have been driven by reasons
such as the price of oil, labor costs, security, trade regulations, labor
stoppages, vessel capacity and technology. Having the personnel, practices
and tools to proactively adapt to these changes will give a company the
competitive advantage.
Here are a number of solutions that if used will help a company gain the
competitive advantage:
1.Shipper Associations / Consortiums: By being a part of a shippers association,
a business can benefit from lower transportation rates due to the competitive
negotiations and economies of scale.
2.Transportation Management Systems (TMS): Such platforms allow a business
to manage their data flow more efficiently and allows for visibility of performance
and cost. Keeping an eye on costs, transit times, delivery performance, freight
claims, and compliance will allow for strategic thinking and put a company a step in
front of its competitors.
3.Auto-Tender Functionality: This feature allows freight to be tendered directly to
carriers, greatly reducing the time spent scheduling a shipment. When set up
using a least cost carrier, the savings combined with the efficiency gain provide a
great advantage.
4.Advanced Tracking: Visibility and transparency are becoming more and more
important in business. Advanced tracking features have been adopted to give
customers real-time information on where their goods are.
5.Sustainability Comprehensive electronic tracking that aggregates loads and
routes is a planning solution that reduces fuel consumption and cost. It facilitates up-
to-the-minute route and load scheduling to take account of everything from weather
conditions to just-in-time shipment adjustments. An intelligent supply chain will use
cutting-edge electronic systems to improve both fuel efficiency and cost
effectiveness, by eliminating guesswork and backtracking to find misplaced
shipments. It affords maximum flexibility in route and load planning so that delivery
problems and energy consumption are minimized, saving fuel, resources and time
6.PAPERLESS PROCESSING THE AVAILABILITY OF INFORMATION ONLINE
AND IN REAL TIME CAN LARGELY ELIMINATE THE NEED TO PRINT OUT
PAPER REPORTS AND FORMS THAT CREATE INEFFICIENCY, DELAY AND
WASTE.
Major objectives of logistics planning
On-time delivery.
Effectively meets emergency needs.
Careful handling of merchandise.
Willingness to take back defective goods and resupply them quickly
Quick Response
Minimum Product Damage
Freight Economy
Relaible and consisitent delivery performance
Transportation Management
Transportation happens to be the most fundamental part of logistic management. Transport
costs include all costs associated with movement of products from one location to another.
The average transport costs ranges from 5 to 6% of the recommended retail price of the
product.
Transportation is the movement of products, materials and services from one area to
another, both inbound and outbound.
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A transportation management system (TMS) is a subset of supply chain
management (SCM) that deals with the planning, execution and optimization of
the physical movements of goods. In simpler terms, it's a logistics platform that
enables users to manage and optimize the daily operations of their
transportation fleets.
TMS is offered as a module within enterprise resource planning (ERP) and SCM
suites and helps organizations move inbound -- procurement -- and outbound --
shipment -- freight using tools such as route planning and optimization, load
building, operations execution, freight audit and payment, yard management,
order visibility, and carrier management. The ultimate goals of using a TMS are to
improve shipment efficiency, reduce costs, gain real-time supply chain visibility
and enhance customer service.
Typically, TMS serves both shippers and logistics service providers. Manufacturers,
distributors, e-commerce organizations, wholesalers, retailers and third-party
logistics (3PL) companies are some of the major users of TMS software.
SELECTION OF TRANSPORT
Benefits of TMS
A fully deployed transportation management system can benefit organizations in
the following ways:
1.Transportation order planning and execution. TMS integrates well with enterprise
order management, warehouse management and purchasing systems, customer
relationship management (CRM), supplier relationship management (SRM), and other
systems for managing transport demand. It enables users to plan and manage both
international and domestic shipments and determines the cheapest and most efficient
carrier and mode using better route planning, load optimization, carrier mix and mode
selection.
2.Supply chain visibility and better control of inventory management. TMS
enables users to track and monitor the lifecycle of orders and shipments in real time
and get status updates on each. This offers users an accurate forecast for the
inventory and improves the visibility and accountability of the supply chain network.
3.Reduce invoice errors. By automating the freight payment and audit processes,
users can reduce errors that may arise from manual procedures.
4.Transport intelligence. Most TMS software offers users extensive insights and
reporting capabilities that provide them with detailed visibility into freight data and
metrics to help pinpoint any discrepancies. With this data, users can make the
necessary changes to improve service delivery and reduce cost, and they can also
create reports.
Transportation Management
Mode of transports
Method of selection
Transportation costs
Fleet sizing and configuration
Routing and scheduling
Futuristic direction in transportation
Mode of transports
Given below are the various mode of transports
1.By Road
2.By Railways
3.Water ways
4.Airways
5.Pipeline
6.Multimodal
Advantages and disadvantages of five modes of
transportation
Method of selection
The selection procedure for the transport mode could vary from
the simple decision either to identify one feasible method of
distribution.
With inflation transport costs also rise because the major components
are the workforce, fuel, spare parts and overall operating costs.
Transportation costs
Transport is vital to the overall gambit (strategy / scheme) of
SCM operation and therefore cannot be considered in isolation. The
entire transportation process is to be monitored, in order to gauge the
exact location and state of the materials being transported.
Operational factors
Environmental factors
Characteristics of alternate transport modes
Combination approach / multi-modal transport
Fleet sizing and configuration
Fleet management is the function that oversees, coordinates and
facilitates various transport and transport related activities. For the
purpose of this document it will cover vehicles involved in the
movement of goods; the management of light vehicle fleets used in the
transportation of people and light cargo; possibly motorbikes and other
equipment such as generators and warehouse handling equipment.
Fleet management underpins and supports transport related activities
through the management of the assets that are used.
On the other hand, larger vehicles also directly translate into lower frequency, and
lower frequency means longer waiting times. Therefore, the costs of these two
effects need to be measured in specific conditions when selecting an optimal
vehicle size.
Routing and scheduling
ROUTING is the process of mapping out the unique ways that one or more vehicles
will take while they deliver or collect stock from each of their stop points. This
involves considering the sequence of stops, and the ways that will be taken by each
vehicle to successfully achieve this outcome.
SCHEDULING is the process of calculating and assigning an arrival time for each
stop, with drivers being assigned shifts that adhere to working hours.
Delay in delivery due to routing problems increase costs of goods manifold.
Therefore, to tide over this the company has to plan these activities well in
advance with detailed coordination and judicious and realistic planning.
Companies have to gear itself to such changing scenarios and terrain since
the very inception.
If you outsource your warehouse and shipping, you can talk to your 3PL
provider about implementing cross docking in your business.
Pros of Cross Docking
Greater Efficiency
Cross docking is made to be a quick and speedy process for distributing your goods.
The only way to make cross docking work is by simplifying and streamlining your
loading and unloading systems to swiftly move goods from one truck to another,
which results in faster shipments to your customers – a powerful edge over your
competition.