UNIT ONE

CHAPTER 2

ROLE OF LOGISTICS IN SUPPLY CHAIN

Logistics basically connects the source of supply with the source of demands.

Logistics fills the gap between supply and demand.

…..an integrated system.….. Logistics is an information-based activity of moving goods from one place to another.

Supply chain management integrates thesupplier, distributor and customer logisticsrequirements into one cohesive processto include demand planning, forecasting,materials requisition, order processing,inventory allocation, order fulfilment,invoicing and bills payment.

Logistics refers to the movement of materialswithin a production facility, the shipment of incoming materials from suppliers and shipmentof outgoing products to customers

SCM is the process of integration to bridge the gapbetween supply and demand.

SCM may be viewed as a logical extension of logistics management.

Till last class (11.02.2013)…

Beginning of class (12.02.2013)…

Logistics typically refers to activities that occur within the boundaries of a single organization andsupply chains refer to networks of companies that work together and coordinate their actions to deliver a product to market.

Also traditional logistics focuses its attention on activities such as procurement, distribution,maintenance, and inventory management. Supply chain management acknowledges all of traditional logistics and also includes activities such asmarketing, new product development, finance, and customer service.

DEFINING LOGISTICS…

…LOGISTICS IS USED IN BUSINESS FOR MOVEMENT OF INVRNTORY FROM VENDORS TO THE MANUFAURERS AND FINALLY THE FINISHED PRODUCTS TO THE CONSUMERS.

American Council of Logistics Mgt.: The process of planning, implementing and controlling the efficient, cost effective flow and storage of raw materials, in-process inventory, finished goods and related information frompoint of origin to point of consumption for thepurpose of conforming to customers’ requirement.

Philip Kotler:

Planning, implementing, and controlling the physical flows of materials and finished goods from point of origin to point of use to meet the customer’s need at a profit.

Martin Christopher:Logistics is essentially a planning and aninformation based activity.

Philip Scary:The corporate traffic cop that directs flow of material from source through production anddistribution to the final customer.

The function of logistics ultimately supports corporate goals by delivering products to theconsumer at a time and place of his choice, atan affordable cost.

The need of logistics management arises because of:i.) competitive pressuresii.) information technologyiii.) channel poweriv.) profit leverage

COMPONENTS OF SCM:WAREHOUSING NETWORKTRANSPORTATION NETWORKINVENTORY CONTROL SYSTEMSUPPORTING INFORMATION SYSTEM

……. Objective: delivering the right product at the right place at the right time at the least cost.

The logistics system has to strike balancebetween the two polemic objectives of customer service and cost.

Logistics makes it possible to deliver products to the customer anywhereirrespective of its manufacturing location.

The success of the supply chain depends to agreat extent on logistics.For logistics and supply chain to be successful, the following need to be planned and managed properly:I. Close coordination with the suppliersII. Reduction of inventory levelsIII. Speed, reliability and consistency in inventory movementiv. Faster replenishment cyclev. Shorter performance cyclevi. flexible manufacturing cyclevii. Asset utilization and productivityviii. Innovation for value additions in customer service offerings