Module 1

Introduction to Logistics Management

Module 1 – Introduction to Logistics
Management – 7 Hours
Meaning of Logistics, Definition of Logistics,
Objectives of Logistics, Types of Logistics,
Need for Logistics Management, Evolution of
logistics toward Supply chain Management,
Logistics Industry in India. Logistical Activities,
Logistics Costs, Expected cost of stock outs.
Logistical Informational Requirements.
 Meaning of Logistics
• Logistics is the process of planning and
executing the efficient transportation and
storage of goods from the point of origin to
the point of consumption.
• The goal of logistics is to meet customer
requirements in a timely, cost-effective
manner.
• https://www.youtube.com/watch?v=4-
QU7WiVxh8
 Definition of Logistics
• Is the process of planning, implementing, and
controlling the efficient, effective flow and
storage of raw materials, in-process inventory,
finished goods, services, and related
information from point of origin to point of
consumption (including inbound, outbound,
informal and external movements) for the
purpose of conforming to customer
requirements.
• The main role of logistics in supply chain
management is primarily to increase the
overall value of each delivery,
• Identified by customer satisfaction.
• This means that the reduction and
optimization of labor resources must be tied in
with keeping up a certain level of quality
customer service.
 Objectives of Logistics
https://www.axestrack.com/logistics-management/

• Improve Supply Chain • Optimize delivery

Efficiency performance
• Inventory Management • Efficient Flow of
• Fulfill customer Information
requirements • Quality Assurance
• Mitigate product • Reduce Carbon
damage Footprint
• Reduce Operational
Cost
• Quick Response
 Evolution of logistics toward Supply chain
Management
• Origin of Logistics as a recognized discipline is
attributed to military and defense organizations.
• Defense departments make use of detailed and
extensive planning to gather supplies and move
men and materials to various locations and bases.
• The success of any military exercise depends upon
the ability of the establishment to be able to gather
information, analyze, assimilate and take
appropriate logistical measures to support their
units continuously.
• https://www.managementstudyguide.com/logistics-and-supply-chain-management.htm
• Similarly in any business organization, the
successful operations depend upon visibility
and control over the logistics process .
• Managed through and with excellent logistics
service provider backbone and network.
• Logistics is a sub-component and extension of
Supply Chain.
• Logistics planning would deal with the details
of procurement logistics, finished goods
distribution, sales order fulfillment, and
inventory management, etc.
• Logistics planning drives the strategic
direction.
• Logistics details out the mode of
transportation from the vendor, the
consignment planning, process for order
trigger, consolidation of shipments, detailing
transportation modes and vendors.
• Defines transit times, documentation process
and implements the plan.
• Controls and monitors the flow of goods from
point of origin up to the point of delivery to
the plant for production.
• Logistics deals with the entire gamut of designing
transportation network.
• Partnering with 3rd party logistics providers to
establish distribution centers and warehouses,
• Planning inventory management and operations
process including packing, promotional bundling,
etc.,
• Primary, secondary distribution network and
vendors and at the end the complete
documentation .
• Information process for the entire chain of
activities.
 Logistics Subsystems
• Procurement
• Production
• Distribution
 Procurement
• The acquisition of raw material and parts
from suppliers and their transportation to the
manufacturing plants.
 Production:
• The transformation of the raw materials into
finished products.
 Distribution:
• The transportation of finished products from
plants to a network of stocking locations
(warehouses) and from there to end users.
Logistics
Types of Logistics
 What Is Inbound Logistics?

• Inbound logistics is the way materials and

other goods are brought into a company.
• This process includes the steps to order,
receive, store, transport and manage
incoming supplies.
• Inbound logistics focuses on the supply part
of the supply-demand equation.
Inbound Logistics Activities

• Sourcing and procurement: Identifying and evaluating

potential suppliers, obtaining price quotes, negotiating
with and managing suppliers.
• Ordering/purchasing: Buying the goods and materials
the company needs so the right quantity arrives at the
right time.
• Transportation: Deciding whether to use a truck,
airplane, train or another method to move goods.
• This activity also involves selecting delivery speed for
incoming supplies, contracting with third-party carriers
and working with vendors on price and route.
Inbound Logistics Activities…

• Receiving: Handling the arrival of new

materials, unloading trucks and ensuring they
match the order.
• Material handling: Moving the received goods
short distances within the facility and staging
them for later use.
 Inbound Logistics Activities…
• Putaway: Moving goods from the receiving dock to storage. Staff
puts everything away in assigned locations.
• Storing and warehousing: Managing the materials before they
go to manufacturing or customer fulfillment.
• This department is responsible for making sure items are placed
in logical locations for fulfillment and the right storage conditions
are met.
• Inventory management: Deciding the type and amount of raw
materials/items you should store and where to locate them.
Read the inventory management guide to learn more.
• Expediting: Managing the progress of and schedule for materials
as they make their way to your facility.
 Inbound Logistics Activities…
• Distribution: Sending supplies to their destination
inside the business.
• Tracking: Checking on details about incoming orders,
such as their location and documents like receipts.
• Reverse logistics: Bringing goods back from customers
for reasons such as returns, defects, delivery problems,
repair and refurbishment.
• Recycling and salvage firms that work with used
materials obtain their supply through reverse logistics.
 What Is Outbound Logistics?

• The process involves storing and moving

goods to the customer or end user.
• The steps include order fulfillment, packing,
shipping, delivery and customer service
related to delivery.
 Outbound Logistics Activities

• Warehouse and Storage Management: A company keeps a

certain quantity of goods on hand to meet demand.
• Outbound logistics processes store these goods securely in
the right conditions and organize them.
• Inbound and outbound logistics overlap in warehouse
management.
• Outbound logistics deals with outgoing finished products.
• For companies that sell finished products they receive from
suppliers, inbound logistics concentrates on product
acquisition and
• Outbound logistics fulfills orders sent straight to customers
and distributes the products to retail outlets.
Outbound Logistics Activities…

• Inventory Management: A process that

determines the best place to store goods in
the warehouse for fast order fulfillment and
the order picking and packing operation.
• Inventory management goals include
inventory and order accuracy as well as
maintaining product quality by preventing
damage, theft, obsolescence or spoilage.
Outbound Logistics Activities…

• Transportation: The modes and methods of

shipping products vary depending on the type of
goods.
• For example, huge items like heavy machinery may
ship in small order quantities by truck.
• Perishable items like fresh flowers may need to be
transported by plane in refrigerated containers.
• Delivery: On-time delivery is critical to success.
• The customer’s order must have the correct items
and quantities, and the package can’t get lost or
damaged in transit
 Outbound Logistics…
• Distribution channels.
• Last-mile delivery
• Delivery optimization
• https://www.netsuite.com/portal/resource/articles/inventory-management/inbound-outbound-logistics.shtml#:~:text=Inbound%20logistics%20brings%20supplies%20or,while
%20outbound%20focuses%20on%20delivery.
Benefits of Inbound Logistics

• Predictable raw material costs

• Higher product quality
• On-time deliveries
• Steady production rates
• Lower costs for shipping and receiving
• Better inventory management
• Ability to spot supply chain problems
• Foundation for sales success
• Stronger vendor relationships
Benefits of Outbound Logistics

• Faster deliveries
• Fewer order cancellations
• More on-time deliveries
• Reduced delivery failures or mistakes
• Less damage and loss in transit
• Lower costs for your company and the customer
• Decreased returns
• Higher customer satisfaction and loyalty
• Stronger company reputation
• Better business planning
 Mahindra cases
• https://mahindralogistics.com/case-studies/
 Need for Logistics Management
• Boost Business • Improve Warehouse
Profitability Management
• Improve Customer • Enhance Visibility
Experience • Intelligent Route
• Reduce Operational Planning
Cost • Risk Management
• Ensure Seamless • Scalability
Delivery
• Success of Supply Chain
 Scania case
• https://www.youtube.com/watch?
v=o595JM3UPUw
Evolution of logistics toward Supply chain
Management
• The past two decades have been marked by
rapid advancements in technology and
globalization, resulting in transformative
changes in the field of logistics and supply
chain management.
• The once conventional and static supply chain
processes have evolved into highly efficient,
agile, and customer-centric systems.
Evolution of logistics toward Supply chain
Management…
Technology Revolution:
• The advent of technology has been the driving
force behind the transformation of logistics and
supply chain management. Over the past two
decades,
– The integration of advanced software,
– Big data analytics,
– Internet of things (IOT),
– Artificial intelligence (AI),
– Blockchain has revolutionized the way supply chains
operate.
 E-Commerce Boom
• Customers now expect faster, reliable, and
cost-effective delivery options, prompting
retailers and logistics providers to innovate
their distribution networks.
 E-Commerce Boom…
• Last-Mile Delivery Innovations
• Warehousing and Fulfillment Centers
• Globalization and Supply Chain Complexity:
• Multi-National Sourcing
• Risk Management
 Sustainability and Green Initiatives

• Green Logistics
• Circular Supply Chains
• Omnichannel Retailing:
– consumers interact with brands through various channels like
online, offline, mobile, and social media, has necessitated
flexible and integrated supply chains.
• Inventory Visibility: Seamless inventory management
across all channels became crucial to ensure products are
available when and where customers demand them.
• Supply Chain Flexibility: The ability to adapt to shifting
consumer preferences and handle fluctuating demand
between online and offline channels became essential for
businesses to thrive.
 Logistics Industry in India
• Logistics Industry includes all activities of the
supply chain such as transportation, customer
service, inventory management, the flow of
information, and order processing.
 Logistics Industry in India…
• The Indian logistics sector is valued at USD$ 150 billion, contributing 14.4
% of the country’s GDP.
• With the easing of FDI norms, the proposed implementation of GST,
increasing globalization, growth of e-commerce, positive changes in the
regulatory policies, and government initiatives such as “Sagarmala”,
“Make in India”, the sector is expected to touch $200 billion by 2020.
• In the World Bank’s Logistics performance ranking 2016, India’s ranks
have improved from 54 in 2014 to 35 in 2016, jumping 19 places.
• Out of this USD 150 billion logistics cost, almost 99% is accounted for by
the unorganized sector (such as owners of less than 5 trucks, affiliated to
a broker or a transport company, small warehouse operators, customs
brokers, freight forwarders, etc.), and slightly more than 1%, i.e.
approximately USD 1.5 billion, is contributed by the organized sector.
 DEMAND-SUPPLY GAP OF SKILLED
MANPOWER IN LOGISTICS SECTOR
• Logistics Sector employs about 22 million as of 2016. Of 22 million 42.14 % are
employed in passenger roadways segment, 38% in road fright while remaining are
in passenger railways, freight forwarding, warehousing, packaging, and other
services.
• As per the National Sample Survey, the distribution of employees is mainly in
Mumbai, Kolkata, Hyderabad, and Ahmedabad Districts whereas emerging
clusters include Bangalore, Surat, and Indore.
• There has been no formal training in the country to address the skill gap in the
logistics sector.
• Thrust on infrastructure projects such as the dedicated Freight & Industrial
Corridors like DMIC, expansion of Port Terminals, and construction of greenfield
Port projects under Sagarmala project and Bharatmala project will create fresh
employment opportunities.
• Increasing income levels and rapid growth in organized retail, e-commerce, QSR,
etc. will create new opportunities for the youth.
• With 100 percent FDI through automatic route permitted, and the implementation
of GST FMCG is expected to grow at over 12 percent CAGR during 2010- 2020
 SCOPE FOR SKILL DEVELOPMENT IN THE
LOGISTICS SECTOR
• Creation of Kaushal Kendras for every sub-sector addressing
the demand
• Engage with the Logistic Companies to invest in skill
development as their CSR activity
• Review and update the existing QP/NOS as per the sector
requirement.
• Synthesise the various training programs and educational
courses and align them to the job roles in the logistics sector
that would allow for career progression and lateral mobility
• Bring in transnational equivalence of the QP/NOS which
would permit placement of LSC certified candidates abroad
 Logistical Activities
https://www.marketing91.com/logistics-activities/

• Order processing
 Logistical Activities…
• Materials handling
 Logistical Activities…
• Warehousing
 Logistical Activities…
• Inventory control
 Logistical Activities…
• Transportation
 Logistical Activities…
• Packaging
 Logistics costs
• Warehousing costs: Incoming goods
• Warehousing costs: Storage
• Fulfillment costs: Pick & pack
• Shipping costs: Delivery
• Other logistics Costs: Returns
 Expected cost of stock outs
• Loss of sales revenue
• Damage to customer relationships
• Increased costs
 How to Calculate Stockout Costs
Step 1: Determine the Cost of Goods Sold
Step 2: Calculate the Cost of Lost Sales
Step 3: Add Up the Additional Costs
Step 4: Calculate the Total stockout Costs
 5 ways to minimize and avoid stockout
costs
• Optimize inventory management
• Use data analytics and forecasting tools
• Establish relationships with multiple suppliers
• Develop a backup plan
• Invest in AI-Powered Analytics
Logistical Informational Requirements
• Logistics information systems (LIS) are digital
programs that are implemented to facilitate
decision-making and the management of
operations such as procurement, storage,
order picking, and the shipment and
transportation of goods.
• Depending on which tasks in the warehouse are
automated, different types of logistics
information systems can be used.
• For example, a transportation management
system (TMS) plans and organizes delivery
routes, while an enterprise resource planning
(ERP) system syncs processes and data between
departments in a company ― including the
logistics division.
• a warehouse management system (WMS) is
the information system that acts as the brain of
the facility.
 Benefits of implementing logistics
information systems
• Process automation: logistics management programs do away
with manual data entry. They also automate the generation of the
necessary documentation for logistics operations, minimizing the
risk of error in processes such as inventory control and order
fulfillment.
• Automated information flows: logistics software extracts
information from operations to coordinate warehouse processes
and the different levels of the supply chain with each other. The
most cutting-edge programs analyze logistics activity to obtain
information in real time on the throughput of the facility.
• Improved logistics planning: information systems make it possible
to monitor a product across the supply chain and collect data,
equipping logistics managers with all the information they need to
carry out logistics planning.
• Transportation management system (TMS): logistics
information software charged with optimising the
planning of order distribution routes to increase
efficiency in shipping and eliminate the risk of error.
• Manufacturing execution system (MES): digital
solution deployed in warehouses and production
centres to organize, control, and monitor
manufacturing processes on production lines.
• Distributed order management (DOM) software:
logistics information system specializing in order
fulfillment. The program coordinates the operations
that take place from the time a customer places an
order until it is distributed.