copy of study on logistics and supply chain

8/6/2019 Copy of Study on Logistics and Supply Chain

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STUDY ON LOGISTICS AND SUPPLY CHAIN

MANAGEMENTARJUN N G

Student No: CLBA6060A4

GREAT EASTERN MANAGEMENT SCHOOLBangalore

2010_11


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STUDY ON LOGISTICS AND SUPPLY CHAIN

MANAGEMENT


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ACKNOWLEDGEMENT

I express my utmost gratitude to my project guide Prof. KANNANfaculty MBA program, who has enthusiastically imparted relevant

information and support in carrying out this project.I would also like to express my sincere gratitude to my friends for

being a constant source of support and encouragement.

Place: Bangalore ARJUN N G

Date:


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CONTENTS

CHAPTER 1_Consumer Behavior

1. INTRODUCTION

2. LOGISTICS ACTIVITIES AND DECIUSIONS3. INTEGRATED LOGISTICS MANAGEMENT

4. MODES OF TRANSPORTATION IN LOGISTICS

5. THIRD PARTY LOGISTICS6. FOURTH PARTY LOGISTICS

7. USE OF BALANCED SCORECARD SYSTEM IN LOGISTICS

8. LOGISTICS FOR CUSTOMER SATISFACTION9. THE VALUE OF LOGISTICS

10. PULL VS. PUSH SYSTEMS

11. DISTRIBUTION/WAREHOUSING/MANUFACTURING

12. SUPPLYCHAIN MANAGEMENT

13. DEVELOPMENTS IN SUPPLY CHAIN MANAGEMENT14. GLOBAL SUPPLY CHAIN MANAGEMENT

CONCLUSIUON

BIBLIOGRAPHY

ABSTRACT


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CHAPTER 1INTRODUCTION


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INTRODUCTION TO LOGISTICS

Logistics (according to CLM) is 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 from point of origin to point of consumption

for the purpose of conforming to customer requirements

The mission of logistics is to get the right goods or services to the

right place, at the right time and in the desired condition and

quantity in relation to customers order

Origins and definition

The term "logistics" originates from the ancient Greek""

("logos""ratio, word, calculation, reason, speech, oration").

Logistics is considered to have originated in the military's need to

supply themselves with arms, ammunition and rations as they

moved from their base to a forward position. In ancient Greek,

Roman and Byzantine empires, there were military officers with

the title Logistikas who were responsible for financial and supply

distribution matters.

The Oxford English dictionary defines logistics as: The branchof military science having to do with procuring, maintaining and

transporting material, personnel and facilities. Another dictionary

definition is: "The time-related positioning of resources." As such,

logistics is commonly seen as a branch of engineering which

creates "people systems" rather than"machine systems."
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Main logistics activities and decisions:

cooperate with marketing to set customer service levels,

facility location decisions

transportation activities (eg. transportation mode selection,

vehicle scheduling, carrier routing

),

inventory management (inventory short -term forecasting,

planning and control,

cooperate with production to calculate EOQ, sequence and

time production),

information collection and flows and order processing,

warehousing and materials handling,

packaging and packing,

INTEGRATED LOGISTICS MANAGEMENT:

The Integrated Logistics Management process encompasses the

support resources required to keep a system or item in an

operational ready status throughout all of its operational life.

Dalma Techs knows the effectiveness of an integrated logistics

support system requires strong management involvement, a

tailored integrated logistics system Management Team, and closecoordination among the Management Team members so that the

Integrated Logistics Management process is integrated throughout

the material course of any contract.


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Dalma Tech understands the purpose for Integrated Logistics

Management and has established benchmarks for success:

Identify and document functional and physical characteristics

of a configuration item Control changes to those characteristics

Record and report change processing and implementation

status

Verify compliance with specification and other related

requirements

With any successful process, consistency is sometimes the

measurement of any accomplishment. Dalma Techs experience

with Integrated Logistics Management processes, consistency

becomes the standard. The configuration identification process

must be incrementally established and maintained to create a

definitive basis for control and status accounting throughout the

life cycle of hardware and software.

In partnership with our customers, GE has developed a reputation

for excellent performance in its Integrated Logistics Management

(ILM) solutions. We support more than 1,800 aircraft underPerformance Based Logistics (PBL) programs, Integrated

Operational Support (IOS) or ILM contracts. Core to our ILM

delivery is our team of logistics engineering specialists. These

programs are tailored to meet the specific requirements of the

customer individually, whether civil or military, and involve a

close working relationship between GE and the customer.

Establishing an effective support plan for a customer requires a

detailed knowledge, not only of the systems, but also of the

customer's operation and needs. Our Logistics Support Group will

undertake a detailed planning exercise covering all aspects, such as

required inventory, IT systems, repairs, distribution,

documentation, configuration, engineering change control,


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reliability trend analysis, test equipment, and whether or not a GE

representative is recommended to be based on site.

Support programs such as these maximize aircraft availability for

the customer with guaranteed reliability of an item. This forms alink between equipment reliability and improved performance,

making it a more efficient operation for the customer for the future.

In the modern age of technology business is run at a very high

pace. There is not time to look around. Every market is full

packed, and thus there is tough competition. As result, businessesneed to be constantly developing and improving. In order to

expand or improve ones business one needs to know what is

wrong with the business at the moment. Lets make such a

comparison. Imagine that you have started building a house and

you failed to construct a decent basement. Will you continue

building such a house? If you do, this house is sure to collapse.

The same is with business. If you have small problems and decide

to expand your business, these problems will all of a sudden turnreally big. As known, big problems in business often lead to

bankruptcy.

Well, we hope you already understood that evaluation of business

performance is very important. Moreover, such an evaluation

should be carried out from time to time to track positive and

negative trends.

If often happens that problems occur in logistics department.Nowadays many customers wish to receive purchased products at

home. So, this job of logistics managers to send the product or

cargos. But the most important task is to minimize costs for

shipping.


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Evaluation of transportation indicators helps in measuring business

performance

Use transportation indicators to measure performance of logisticscenter

Evaluation of logistics department is a must for all big companies.

It is very interesting to know much your logistics managers spend

to send one item. If shipping costs exceed cost of a product, then

you are certainly in a trouble.

But with the help of Balanced Scorecard system you will be able to

evaluate performance of a logistics department. Moreover, it willbe possible to see what causes problems. Thus you will deal with

the root of the problem but not with its consequences.


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Balanced Scorecard system evaluates KPIs which are known as

key performance indicators. These values represent performance of

a company. Moreover, it is possible to measure different aspects inwork of a logistics department. The point is that many KPIs are

interrelated. For instance, increased shipping time increase freight

cost per unit. Low customer satisfaction will result in decreased

numbers of orders, and so on.

Balanced Scorecard system offers information on company

performance based on current performance values. If you want to

evaluate performance of a logistic department you need to measure

such KPIs as freight cost per unit, transit time, load capacity,

losses, truck turnaround time and others.

MODES OF TRANSPORTATION IN LOGISTICS:

In order to transport material from one place to another Logistics

Managers are using Rail, Road, Air, Water & Pipe Line as the

modes of Transportation. A logistics expert needs to understand

these modes based on priorities, product type lead time etc. todecide the appropriate mode of Transportation.

Rail: Used for delivery of a wide range of goods including coal,

iron ore, cement, food grains, fertilizers, steel, petroleum products

and other heavy goods.

Road: Used by suppliers to deliver goods in a cost effective

manner and best suited for short distances. Many transport

companies have expertise for fast delivery, packaging etc. for

making scheduled delivery.

Air: Used mostly for delivery of high value and tow volume goods

from distant suppliers, usually not connected by any other mode of


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Transportation. It is also suitable for emergent item to be imported

for some specific requirement.

Water: Used by firms for delivery of goods from distant suppliers,

mostly conducted in containers of varied size. This mode is idealfor transportation of heavy and bulky goods and suitable for

products with long lead times.

Pipe Line: Used by oil sector companies for mass movement of

Petroleum products including gases. Due to quite low operating

cost it is one of the preferred mode of transportation.

THIRD PARTY LOGISTICS :

Third Party Logistics (3PL) provider handles all or most of freight

of the organizations including the management of information by

the third party, freeing the company from day to day interaction

with carriers, and having to oversee hundreds or thousands of

shipment. New and cheaper information flow resulting from

internet enabled solutions, will lead not only achieving immediate

cost reductions in operations but also to enormous productivitygains over the next few years.

The tracking and control of movement of goods drive freight

optimization and asset utilization. The options are: increased trailer

utilisation, combining full truckload shipments, consolidation, and

aggregation of smaller buyers. Purchase asset based transportation

is becoming increasingly a commodity.

To put simply, 3PL refers to the outsourcing of a logistics function.It could be the use of a transportation carrier, a warehouse, or a

third party freight manager to perform all or part of a companys

production distribution functions.

The principle reasons of for this function are as under:


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Globalization of sourcing, manufacturing and distribution leading

to an increase in the complexity of material movement.

Competition that has forced companies towards more

responsiveness and a reduction in inventories. An increased needfor small but frequent shipments with 100 percent reliability,

requiring core competence in logistics management.

Resource constraints that require companies to concentrate only

on their core manufacturing or new product development activities.

FOURTH PARTY LOGISTICS :

Fourth Party Logistics (4PL) provider is a supply chain integrator

that assembles and manages the resources, capabilities and

technology of its own organization with those of complementary

service provider to deliver a comprehensive supply chain solution.

4PL is emerging as a path to achieve more than the one time

operating cost reductions and asset transfers of a traditional

outsourcing arrangement. Through alliances between best-of-breedthird party service providers, technology providers and

management consultants.

4PL organizations can create unique and comprehensive supply

chain solutions that cannot be achieved by any single provider.

According to John Gaftorna, White oufsourcing third party

logistics is now a accepted business practice, Fourth Party

Logistics is emerging as a breakthrough solution to modern supplychain challenges... to provide maximum overall benefits.

4PL can be described as the complete outsourcing of the logistics

function including procurement of service providers. 4 PL

companies are suppliers which have the expertise to manage


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resources, value delivery processes and technology for their clients

in order to allow their clients to totally outsource their logistics

management activity. The 4PLs do not compete with 3PLs as they

have superior expertise in their respective fields by virtue of their

investment and specialization.

4PL providers do not own assets for transportation or warehousing,

but rather leverage the solutions created by 3PL.providers, in order

to identify and provide best in class services to their clients.

There are many variations of the 4PL model that are practiced.

Three different models are summarized as under;

A) Lead logistics provider: The 4PL provider acts as an in house

freight management company, it might or might not have a role in

the selection of 3 PL partners. It takes care of transport invoicing

and the monitoring of the performance of the 3 PLs.

B) Solution Integrator: In this variant of the model, the 4PL acts as

the integrator of various 3PLS and as a single window for freight

negotiations, 3PI selection and freight management on behalf of itsclient.

C) Industry Innovator: Under this model the 4PL uses its expertise

and resources to create a solution not for any single client, but for

offering 4PL services to a number of clients in an industry.

The services provided by a 4PL provider are:

Freight Negotiations with 3PLs Freight Contract Management

Transport Billing

Continuous Improvement Programs

Management of Service Providers

IT Solutions


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Risk Management and Insurance

Cash-flow Management.

RESERVE LOGISTICS:

Increasingly, as a strategy, to compete on services, companies offer

repair and replacement services for their products under the

warranty periods. The defective products are often shipped across

international borders to common repair centers to be refurbished

and returned to the originating station. Logistics service providers

who offer these services have to tackle issues pertaining to duty

payment on refurbished products, customs documentation and the

establishment of collection points for repair for the customers.

Use of Balanced Scorecard system in logistics:

For big, middle sized and small businesses we are merely

customers who got used to get products shipped to our houses. We

like to make online purchases and we like to get products on time.

When two companies have business together, one of the companiesis a customer while the other is a contractor that needs to make

sure that products/goods are delivered on time. There is a separate

department that assumes responsibility for shipment of products.

This is logistics department. There are even separate logistics

companies that offer their services to different companies. These

days logistic managers are using special software to evaluate

business performance.

Customer satisfaction pretty much depends on timely delivery of

products. If you ordered something on the Internet you expect the

product to arrive on time. Logistic managers are the people who

are in charge of this. But of course, they have more other tasks

other than making sure you receive your products.


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Logistics is about 100% use of transport and warehouse facilities.

A logistic manager needs to contact producers (to ask when the

new batch of produce will arrive), end customers which may be

huge companies that accept no delays (to negotiate delivery terms),

warehouse managers (to negotiate storage capacities) anddrivers/airlines (to negotiate shipment terms). One delay may

destroy the entire delivery chain.

Logistics is also about saving money. It may be not profitable to

deliver goods from town A to town B, using trucks. But if the

trucks take some products on board on the way back, your logistic

department can have big profits. It is not profitable to have trucks

and drivers wait too long for new batches of produce as this costsmoney. Logistics is about making sure that all elements of delivery

chain are efficiently used.

In order to evaluate logistic department of your company you

should not look only at revenue. There are numerous factors that

influence the work of a logistic company. These factors are

commonly called KPIs key performance indicators. Every

business has its own indicators. Logistic is using Supply Chain

Balanced Scorecard which includes 4 elements: financial issues,customer matters, internal business and training. Balanced

Scorecard system evaluates KPIs which are parts of the

abovementioned 4 groups. In order to evaluate performance of

logistic department one needs to asses the following KPIs.

1. Customer order cycle time. This is a figure represented by

difference between creation date of the order and delivery date.

Cycle time can be promised and actual. If the values have only

slight differences then your logistic company is doing OK.

2. Line count fill rate. This is amount of order lines delivered on

the shipment versus the number of lines which have been ordered.


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3. Inventory carrying rate. This figure includes costs for

storage, handling, damage, administrative costs, costs related to

loss of shipment.

4. On time shipment is calculated as a ratio of orders delivered

on time and all line orders delivered. In simple words, this

indicator shows how fast your logistic department is working and

if you can live up to delivery terms.

5. Perfect order measurement. An order is undergoing many

stages in its cycle. Thus, if you calculate how many orders have

passed all stages without any mistakes you will have a clear

understanding of how logistic department works. When an error

occurs a corrective credit is issued. There should be a reason

code, or simply a reason for error. You can group these reasons to

see what the most common causes of problems are. Isnt it the

best way to evaluate performance of a logistics company?

6. Transportation KPIs

a) Freight cost per unit. The program divides all costs related to

shipment by total number of units. It is also possible to group costs

by means of transportation (truck, train airplane).

b) Transit time. This is the time calculated from the moment a

product leaved facility of a logistic department to the time it

arrives to customers location.

c) Losses. These are expenses related to damage or loss of units.If this figure is too high take urgent measures.

d) Load capacity. This is a very interesting indicator. Imagine

that your trucks can deliver 50,000 lbs of product, but yesterday


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they carried only 40,000 lbs. By dividing these figures you get

utilization percentage. The higher the percentage, the more

efficiently your logistics company works. However, it needs

saying, that 100% remain a dream!

e) Truck turnaround time. This is the time a truck spends at

warehouse facility before departure. This is an indication of how

your warehouse personnel work.

Logistics Management A Charismatic Field:

Nowadays, logistics management is amongst the most action-

packed fields all over the world. One of the unbelievable aspectsoflogistics management is that it is over and over again known as

a science of planning, organization, and implementation. It comes

into view when any industry wants to deliver the mandatory

products or services to the obligatory party on the dot at the right

location. These days it has made its importance documented due to

its individuality and worth worldwide. Adding to that, it can lend a

hand you to improve your military operations considerably.

In fact, military logistics management will engross the militarygroups to map, regulate, innovate, assign, and maintain resources

for their military operations prolifically. In addition, it will

harmonize all the actions and presentations of business employees

professionally. Subsequently arrangements of military groups and

bludgeon measures for accomplishing military operations are

documented and determined by comprehensive logistics

management.

Most importantly, logistics management in the commercial sector

makes use of advanced technology for safety, assessment, case

study, forecasting, asset tracking, development and

implementation. Therefore art of logistics would play an essential

role in organizing plentiful companies with others for carrying out
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distinct goals and objectives productively. Accounting, short-term

analyses, performance judgment, transportation of products and

services, and distribution of resources are indisputably come in

collective logistics management. Consequently it will represent an

insight to boost measures for matching the commercial operationsand efficacy efficiently. Perfect strategy, means & possessions,

ways and carters for transportation at a cut rate will be

professionally determined by extensive logistics management.

Commercial operational procedures are acknowledged for

organizing different activities of the business sector proficiently.

Market surveys to weigh up the buyer needs also come under top

logistics management. Defense options in business and militarygroup are enclosed to make available friendly settings for

enhanced performance. Unprejudiced and money-spinning supply

chain in trade can be determined by a precious service of

outsourcing, transport, distribution, and property organization.

Logistics management would then show a single-minded

performance knack that can be accomplished by a thriving

contribution.

In short, logistics management is mandatory for a boomingoperational procedure of order processing, manufacturing,

delivery, financial planning, allocation, distribution of

resources, and judicious consignment of obligatory wares

and services at the right location. Thus a flourishing

logistics and supply chain management can provide plentiful

benefits to the business sector for example enhanced

delivery process, increased sales volumes, instant revenue

generation, customer & employee satisfaction, and businessidentity development.

LOGISTICS FOR CUSTOMER SATISFACTION:

Introduction
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The term logistics is often misinterpreted to mean transportation.

In fact, the scope of logistics goes well beyond transportation.

Logistics forms the system that ensures the delivery of the product

in the entire supply pipeline. This includes transportation,

packaging, storage and handling methods, and information flow.The impact of logistics in the ability of a company to satisfy its

customers cannot be overstated. All other efforts at modernization

within a company would not bear fruit until the logistics system is

carefully designed to facilitate the smooth and efficient flow of

goods in the system.

The topic of logistics is relatively new in India. There have been

some companies that have done work in this area, but a largenumber of companies are only now beginning to realize the

benefits of designing and managing the entire supply chain. With

India joining the global marketplace, the role of logistics assumes

greater importance.

The industrial policies in India have prompted manufacturers to

build plants in remote, backward areas due to inexpensive land and

tax benefits. This poses some serious logistical problems. Apartfrom a poor road and transportation network, the existing

communications system in India leaves a lot to be desired by any

international standard. It is in this context that logistics has to be

considered in India.

The value of logisticsMaterial handling and storage are typically labelled as "non-value

adding" activities. While one can appreciate the motivation behind

such labeling as one directed towards waste reduction, it can lead

to is an erroneous assumption that all material handling and storage

can be avoided. While manufacturing processes provide "form

utility", logistics related activities provide "time and place" utility

to a product. The challenge is to provide the time and place utility

at a competitive cost. If a company can achieve this goal, it will


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gain a significant competitive advantage in the marketplace.

Pull vs. Push Systems:

There are two basic approaches of bringing the product to its final

destination, i.e., the customer. In a Push system products are

pushed from the manufacturing plants to distribution points based

on a sales forecast. The second approach is the Pull system which

requires that the product be pulled from the plants based on actual

demand.

In a Push system, since all the product is deployed based on thesales forecast for each region, an inaccurate sales forecast incurs

several severe penalties which include:

Increased safety stock

Larger Distribution Centers/Godowns

Higher stock transfer rates

The pre-order deployment of product increases safety stock. Sincethere is greater uncertainty associated with forecasts, which are

often little better than educated guesses, the system must provide

for variations in the demand in a particular region serviced by the

particular godown. In addition the system must provide for errors

in the overall forecast for the country as a whole. These concerns

lead to the carrying of larger safety stocks, which necessitate larger

godowns.

The irony in the concept of safety stocks is that although sufficient

stocks may exist in the system, the product mix demanded in a

particular region may not exist in the regional godown. This

necessitates inter-godown transfer of goods. The result is an

increase in the transportation costs system-wide, in addition to


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handling and shipping costs, information costs, product loss and

damage, and poor customer service. The more points of

distribution in the system, the greater the penalties incurred for

unpredictable order fluctuations.

The goal of any logistics system is to maintain or improve

customer service. In the Push mode of operation, the penalties of

higher safety stock, larger godowns, and inter-godown transfer are

not the only penalties. Stock rotation becomes more difficult to

maintain. Handling of all products at each godown involves

unloading, staging, storing, picking, staging and loading for

shipment. All these activities involve an element of cost. In

addition, there is a potential for product damage each time aproduct is handled.

There are some positive aspects of a Push system as well. These

are:

Small plant warehouses

Potential for higher customer service

Lower transportation costs

Since the majority of the product is stored at the godowns, the

plant needs to maintain a low inventory of finished goods. This

allows the plant to utilize its space for production and eliminate the

need for a full warehouse staff. If the forecast is accurate, the Push

system provides the potential for higher customer service by

having the product ready for delivery directly to the

customer/retailer. Finally, by having the products deployed in the

godowns, the plants have the capability of shipping full truckloadsand thereby reducing the system-wide transportation costs.

A Push system works best when sales are consistent, the product

variety is small, and there are a few regional distribution points.


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Tracking in virtual space

In virtual space technology, a tracking system is generally

a system capable of rendering virtual space to a humanobserver while tracking the observer's body coordinates. For

instance, in dynamic virtual auditory space simulations, a real-time

head tracker provides feedback to the central processor, allowing

for selection of appropriate head-related transfer functions at the

estimated current position of the observer relative to the

environment.

Tracking in real world

Within the real world, there are a variety of technologies employedwithin asset tracking systems. Some are 'lag time' indicators, that

is, the data is collected after an item has passed a point for example

abar code or choke point or gate. Others are 'real-time' or 'near

real-time' like Global Positioning Systems depending on how often

the data is refreshed. There are bar-code systems which require a

person to scan items and automatic identification (RFID auto-id).

For the most part, the tracking worlds are composed of discrete

hardware and software systems for different applications. That is,bar-code systems are separate from Electronic Product Code (EPC)

systems, GPS systems are separate from active real time locating

systems orRTLS for example, a passive RFID system would be

used in a warehouse to scan the boxes as they are loaded on a truck

- then the truck itself is tracked on a different system using GPS

with its own features and software. The major technology silos

in the supply chain are:

Distribution/Warehousing/ManufacturingIndoors assets are tracked repetitively reading e.g. a barcode, any

passive and active RFID and feeding read data into Work in

Progress models (WIP) or Warehouse Management Systems

(WMS) or ERP software. The readers required per choke point are

meshed auto-ID or hand-held ID applications.
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However tracking could also be capable to provide monitoring data

without binding to fixed location by using a cooperative tracking

capability, e.g. an RTLS.

Yard management

Outdoors mobile assets of high value are tracked by choke point,

802.11, Received Signal Strength Indication (RSSI), Time Delay

on Arrival (TDOA), active RFID or GPS Yard Management;

feeding into either third party yard management software from the

provider or to an existing system.

Fleet management

Fleet management is applied as a tracking application using GPS

and composing tracks from subsequent vehicle's positions. Eachvehicle to be tracked is equipped with a GPS receiver and relays

the obtained coordinates via cellular or satellite networks to a

home station. Fleet management is required by:

Large fleet operators, (vehicle/railcars/trucking/shipping)

Forwarding operators (containers, machines, heavy cargo,

valuable shippings)

Operators who have high equipment and/or cargo/productcosts

Operators who have a dynamic workload

Mobile phone services

Location-based services or LBS is a term that is derived from the

telematics and telecom world. The combination of A-GPS, newer

GPS and cellular locating technology is what has enabled the latest

LBS for handsets and PDAs. Line of sight is not necessarily

required for a location fix. This is a significant advantage in certain

applications since a GPS signal can still be lost indoors. As such,

A-GPS enabled cell phones and PDAs can be located indoors and

the handset may be tracked more precisely. This enables non-

vehicle centric applications and can bridge the indoor location gap,
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typically the domain of RFID and RTLS systems, with an off the

shelf cellular device.

Currently, A-GPS enabled handsets are still highly dependent on

the Location-Based Service (LBS) carrier system, so handset

device choice and application requirements are still not apparent.

Enterprise system integrators need the skills and knowledge to

correctly choose the pieces that will fit the application and

geography.

Operational Requirements

Regardless of the tracking technology, for the most part the end-

user just wants to locate himselves or wants to find any things of

interested. The reality is that there is no "one size fits all" solutionwith locating technology for all conditions and applications.

Application of tracking is a substantial basis forvehicle tracking in

fleet management, asset management, individual navigation, social

networking, asset management, or mobile resource management

and more. Company, group or individual interests can benefit from

more than one of the offered technologies depending on the

context.

GPS applications

GPS has global coverage but can be hindered by line-of-sight

issues caused by buildings and urban canyons. RFID is excellent

and reliable indoors or in situations where close proximity to tag

readers is feasible, but has limited range and still requires costly

readers.

Real-time Locating Systems (RTLS)

RTLS are enabled by Wireless LAN systems (according to IEEE802.11) or otherwireless systems (according to IEEE 802.15)

with multilateration. Such equipment is suitable for certain

confined areas, such as campuses and office buildings. RTLS

require system-level deployments and server functions to be

effective. RTLS systems are affordable and accurate for industrial
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and yard applications. RTLS systems are not appropriate for all

indoor applications, there fuzzy locating

systems with unilateration may apply more economically.

A warehouse is a commercialbuilding for storage ofgoods.

Warehouses are used

by manufacturers, importers, exporters, wholesalers,transport busin

esses, customs, etc. They are usually large plain buildings in

industrial areas of cities and towns. They usually have loading

docks to load and unload goods from trucks. Sometimes

warehouses load and unload goods directly from railways, airports,

orseaports. They often have cranes and forklifts for moving goods,

which are usually placed on ISO standardpallets loaded intopallet

racks.

Nature of goods stored

Stored goods can include any raw materials, components, or

finished goods associated with agriculture, manufacturing, or

commerce.

Types of warehouse storage systems

19th century warehouses in Gloucesterdocks in the United

Kingdom, originally used to store imported corn

So-called Sust, a Middle Ages type of warehouse,

in Horgen, Switzerland

Some of the most common warehouse storage systems are:
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Pallet rackincluding selective, drive-in, drive-thru, double-

deep, pushback, and gravity flow

Mezzanine including structural, roll formed, rack supported,

and shelf supported

CantileverRack including structural and roll formed

Industrial Shelving including metal, steel, wire, and catwalk

Automated Storage and Retrieval System (ASRS) including

vertical carousels, vertical lift modules, horizontal carousels,

robotics, mini loads, and compact 3D

Temporary warehousing is possible with use of a fabric

structure[1]

Processes and IT

Major warehousing processes include:

Receiving

Put away

Order preparation / picking

Shipping

Inventory management (cycle counting, addressing...)

Warehouses frequently provide services, such as:

Co-packing

Kitting

Material direction and tracking in a warehouse can be coordinated

by a Warehouse Management System (WMS), a database driven

computer program. Logistics personnel use the WMS to improve

warehouse efficiency by directing putaways and to maintainaccurate inventory by recording warehouse transactions.
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Automation and optimization

Automatic storage warehouse for small parts

Some warehouses are completely automated, and require noworkers inside. Pallets and product move on a system of

automated conveyors,cranes and automated storage and retrieval

systems coordinated byprogrammable logic

controllers and computers running logistics automationsoftware.

These systems are often installed in refrigerated warehouses where

temperatures are kept very cold to keep product from spoiling, and

also where land is expensive, as automated storage systems can use

vertical space efficiently. These high-bay storage areas are oftenmore than 10 meters (33 feet) high, with some over 20 meters (65

feet) high.

For a warehouse to function efficiently, the facility must be

properly slotted. Slotting addresses which storage medium a

product is picked from (pallet rackorcarton flow), and how they

are picked (pick-to-light,pick-to-voice, or pick-to-paper). With a

proper slotting plan, a warehouse can improve its inventory

rotation requirementssuch as first in, first out (FIFO) and last in,first out (LIFO)control labor costs and increase productivity. (1)

Modern trends

Aisle with pallets on storage racks

Traditional warehousing has declined since the last decades of the

20th century, with the gradual introduction ofJust In Time (JIT)

techniques. The JIT system promotes product delivery directly
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from suppliers to consumer without the use of warehouses.

However, with the gradual implementation ofoffshore

outsourcing and offshoring in about the same time period, the

distance between the manufacturer and the retailer (or the parts

manufacturer and the industrial plant) grew considerably in manydomains, necessitating at least one warehouse per country or per

region in any typical supply chain for a given range of products.

Recent retailing trends have led to the development of warehouse-

style retail stores. These high-ceiling buildings display retail goods

on tall, heavy duty industrial racks rather than conventional retail

shelving. Typically, items ready for sale are on the bottom of the

racks, and crated or palletized inventory is in the upper rack.

Essentially, the same building serves as both warehouse and retailstore.

Large exporters/manufacturers use warehouses as distribution

points for developing retail outlets in a particular region or

country. This concept reduces end cost to the consumer and

enhances the production sale ratio.

Internet impact

19th century warehouse in Frankfort,Kentucky, United States usedto agebourbon whiskeycasks, seen closely through the warehouse

windows

The internet has had an influence on warehouses. Internet-based

stores do not require physical retail space, but still require

warehouses to store goods. This kind of warehouse fills many
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small orders directly from end customers rather than fewer orders

of many items from stores.

Having a large and complex supply chain containing many

warehouse can be costly. It may be beneficial for a company to

have one large warehouse per continent, typically located centrally

to transportation. At these continental hubs, goods may be

customized for different countries. For example, goods get a price

ticket in the language of the destination country. Small, in-

warehouse adjustments to goods are calledvalue added services.

Supply chain management

Organizations increasingly find that they must rely on effective

supply chains, or networks, to compete in the global market and

networked economy.[6] In Peter Drucker's (1998) new management

paradigms, this concept of business relationships extends beyond

traditional enterprise boundaries and seeks to organize entire

business processes throughout a value chain of multiple

companies.

During the past decades, globalization, outsourcing

and information technology have enabled many organizations,

such as Dell and Hewlett Packard, to successfully operate solid

collaborative supply networks in which each specialized business

partner focuses on only a few key strategic activities (Scott, 1993).

This inter-organizational supply network can be acknowledged as a

new form of organization. However, with the complicated

interactions among the players, the network structure fits neither

"market" nor "hierarchy" categories (Powell, 1990). It is not clear

what kind of performance impacts different supply networkstructures could have on firms, and little is known about the

coordination conditions and trade-offs that may exist among the

players. From a systems perspective, a complex network structure

can be decomposed into individual component firms (Zhang and

Dilts, 2004). Traditionally, companies in a supply network
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concentrate on the inputs and outputs of the processes, with little

concern for the internal management working of other individual

players. Therefore, the choice of an internal management control

structure is known to impact local firm performance (Mintzberg,

1979).

In the 21st century, changes in the business environment have

contributed to the development of supply chain networks. First, as

an outcome of globalization and the proliferation of multinational

companies, joint ventures, strategic alliances and business

partnerships, significant success factors were identified,

complementing the earlier "Just-In-Time", "Lean Manufacturing"

and "Agile Manufacturing" practices.[7] Second, technological

changes, particularly the dramatic fall in informationcommunication costs, which are a significant component of

transaction costs, have led to changes in coordination among the

members of the supply chain network (Coase, 1998).

Many researchers have recognized these kinds of supply network

structures as a new organization form, using terms such as

"Keiretsu", "Extended Enterprise", "Virtual Corporation", "Global

Production Network", and "Next Generation Manufacturing

System".[8] In general, such a structure can be defined as "a groupof semi-independent organizations, each with their capabilities,

which collaborate in ever-changing constellations to serve one or

more markets in order to achieve some business goal specific to

that collaboration" (Akkermans, 2001).

The security management system for supply chains is described in

ISO/IEC 28000 and ISO/IEC 28001 and related standards

published jointly by ISO and IEC.

Developments in Supply Chain Management

Six major movements can be observed in the evolution of supply

chain management studies: Creation, Integration, and

Globalization (Lavassani et al., 2008a), Specialization Phases One

and Two, and SCM 2.0.
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1. Creation Era

The term supply chain management was first coined by a U.S.

industry consultant in the early 1980s. However, the concept of a

supply chain in management was of great importance long before,

in the early 20th century, especially with the creation of the

assembly line. The characteristics of this era of supply chain

management include the need for large-scale changes, re-

engineering, downsizing driven by cost reduction programs, and

widespread attention to the Japanese practice of management.

2. Integration Era

This era of supply chain management studies was highlighted with

the development of Electronic Data Interchange (EDI) systems inthe 1960s and developed through the 1990s by the introduction of

Enterprise Resource Planning (ERP) systems. This era has

continued to develop into the 21st century with the expansion of

internet-based collaborative systems. This era of supply chain

evolution is characterized by both increasing value-adding and cost

reductions through integration.

3. Globalization Era

The third movement of supply chain management development,the globalization era, can be characterized by the attention given to

global systems of supplier relationships and the expansion of

supply chains over national boundaries and into other continents.

Although the use of global sources in the supply chain of

organizations can be traced back several decades (e.g., in the oil

industry), it was not until the late 1980s that a considerable number

of organizations started to integrate global sources into their core

business. This era is characterized by the globalization of supplychain management in organizations with the goal of increasing

their competitive advantage, value-adding, and reducing costs

through global sourcing.

4. Specialization EraPhase One: Outsourced Manufacturing and

Distribution


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In the 1990s industries began to focus on core competencies and

adopted a specialization model. Companies abandoned vertical

integration, sold off non-core operations, and outsourced those

functions to other companies. This changed management

requirements by extending the supply chain well beyond companywalls and distributing management across specialized supply chain

partnerships.

This transition also re-focused the fundamental perspectives of

each respective organization. OEMs became brand owners that

needed deep visibility into their supply base. They had to control

the entire supply chain from above instead of from within.

Contract manufacturers had to manage bills of material with

different part numbering schemes from multiple OEMs andsupport customer requests for work -in-process visibility and

vendor-managed inventory (VMI).

The specialization model creates manufacturing and distribution

networks composed of multiple, individual supply chains specific

to products, suppliers, and customers, who work together to

design, manufacture, distribute, market, sell, and service a product.

The set of partners may change according to a given market,

region, or channel, resulting in a proliferation of trading partnerenvironments, each with its own unique characteristics and

demands.

5. Specialization EraPhase Two: Supply Chain Management as a

Service

Specialization within the supply chain began in the 1980s with the

inception of transportation brokerages, warehouse management,

and non-asset-based carriers and has matured beyondtransportation and logistics into aspects of supply planning,

collaboration, execution and performance management.

At any given moment, market forces could demand changes from

suppliers, logistics providers, locations and customers, and from

any number of these specialized participants as components of


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supply chain networks. This variability has significant effects on

the supply chain infrastructure, from the foundation layers of

establishing and managing the electronic communication between

the trading partners to more complex requirements including the

configuration of the processes and work flows that are essential tothe management of the network itself.

Supply chain specialization enables companies to improve their

overall competencies in the same way that outsourced

manufacturing and distribution has done; it allows them to focus

on their core competencies and assemble networks of specific,

best-in-class partners to contribute to the overall value chain itself,

thereby increasing overall performance and efficiency. The ability

to quickly obtain and deploy this domain-specific supply chainexpertise without developing and maintaining an entirely unique

and complex competency in house is the leading reason why

supply chain specialization is gaining popularity.

Outsourced technology hosting for supply chain solutions debuted

in the late 1990s and has taken root primarily in transportation and

collaboration categories. This has progressed from the Application

Service Provider (ASP) model from approximately 1998 through

2003 to the On-Demand model from approximately 2003-2006 tothe Software as a Service (SaaS) model currently in focus today.

6. Supply Chain Management 2.0 (SCM 2.0)

Building on globalization and specialization, the term SCM 2.0 has

been coined to describe both the changes within the supply chain

itself as well as the evolution of the processes, methods and tools

that manage it in this new "era".

Web 2.0 is defined as a trend in the use of the World Wide Webthat is meant to increase creativity, information sharing, and

collaboration among users. At its core, the common attribute that

Web 2.0 brings is to help navigate the vast amount of information

available on the Web in order to find what is being sought. It is the

notion of a usable pathway. SCM 2.0 follows this notion into


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supply chain operations. It is the pathway to SCM results, a

combination of the processes, methodologies, tools and delivery

options to guide companies to their results quickly as the

complexity and speed of the supply chain increase due to the

effects of global competition, rapid price fluctuations, surging oilprices, short product life cycles, expanded specialization, near-/far-

and off-shoring, and talent scarcity.

Global supply chain management

Global supply chains pose challenges regarding both quantity and

value:

Supply and Value Chain Trends

Globalization

Increased cross border sourcing

Collaboration for parts of value chain with low-cost

providers

Shared service centers for logistical and administrative

functions

Increasingly global operations, which requireincreasingly global coordination and planning to achieve

global optimums

Complex problems involve also midsized companies to

an increasing degree,

These trends have many benefits for manufacturers because they

make possible larger lot sizes, lower taxes, and better

environments (culture, infrastructure, special tax zones,sophisticated OEM) for their products. Meanwhile, on top of the

problems recognized in supply chain management, there will be

many more challenges when the scope of supply chains is global.

This is because with a supply chain of a larger scope, the lead time

is much longer. Furthermore, there are more issues involved such


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as multi-currencies, different policies and different laws. The

consequent problems include:

1. Different currencies and valuations in different countries;

2. Different tax laws (Tax Efficient Supply Chain Management);3. Different trading protocols;

4. Lack of transparency of cost and profit.

Idea

More common and accepted definitions of Supply Chain

Management are:

Supply Chain Management is the systemic, strategic

coordination of the traditional business functions and the tactics

across these business functions within a particular company and

across businesses within the supply chain, for the purposes of

improving the long-term performance of the individual

companies and the supply chain as a whole (Mentzer et al,

2001).[2]

Global Supply Chain Forum - Supply Chain Management is

the integration of key business processes across the supply chain

for the purpose of adding value for customers and stakeholders

(Lambert, 2008)[3].

According to the Council of Supply Chain Management

Professionals (CSCMP), Supply chain management

encompasses the planning and management of all activities

involved insourcing,procurement, conversion, and logisticsmanagement. It also includes the crucial components of

coordination and collaboration with channel partners, which can

be suppliers, intermediaries, third-party service providers,

and customers. In essence, supply chain management

integrates supply and demand management within and across
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companies. More recently, the loosely coupled, self-organizing

network of businesses that cooperate to provide product and

service offerings has been called the Extended Enterprise.

A supply chain, as opposed to supply chain management, is a set oforganizations directly linked by one or more of the upstream and

downstream flows of products, services, finances, and information

from a source to a customer. Managing a supply chain is 'supply

chain management' (Mentzer et al., 2001).[4]

Supply chain management software includes tools or modules used

to execute supply chain transactions, manage supplier relationships

and control associated business processes.

Supply chain event management (abbreviated as SCEM) is aconsideration of all possible events and factors that can disrupt a

supply chain. With SCEM possible scenarios can be created and

solutions devised.

Supply chain management problems

Supply chain management must address the following problems:

Distribution Network Configuration: number, location andnetwork missions of suppliers, production facilities, distribution

centers, warehouses, cross-docks and customers.

Distribution Strategy: questions of operating control

(centralized, decentralized or shared); delivery scheme,

e.g., direct shipment, pool point shipping, cross docking, DSD

(direct store delivery), closed loop shipping; mode of

transportation, e.g., motor carrier, including

truckload, LTL,parcel; railroad; intermodal transport, including

TOFC (trailer on flatcar) and COFC (container on flatcar);

ocean freight; airfreight; replenishment strategy (e.g., pull, push

or hybrid); and transportation control (e.g., owner-

operated,private carrier, common carrier, contract carrier,

or3PL).
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Trade-Offs in Logistical Activities: The above activities must

be well coordinated in order to achieve the lowest total logistics

cost. Trade-offs may increase the total cost if only one of the

activities is optimized. For example, full truckload (FTL) rates

are more economical on a cost per pallet basis than less thantruckload (LTL) shipments. If, however, a full truckload of a

product is ordered to reduce transportation costs, there will be

an increase in inventory holding costs which may increase total

logistics costs. It is therefore imperative to take a systems

approach when planning logistical activities. These trade-offs

are key to developing the most efficient and effective Logistics

and SCM strategy.

Information: Integration of processes through the supplychain to share valuable information, including demand signals,

forecasts, inventory, transportation, potential collaboration, etc.

Inventory Management: Quantity and location of inventory,

including raw materials, work-in-progress (WIP) and finished

goods.

Cash-Flow: Arranging the payment terms and methodologies

for exchanging funds across entities within the supply chain.

Supply chain execution means managing and coordinating the

movement of materials, information and funds across the supply

chain. The flow is bi-directional.

Activities/functions

Supply chain management is a cross-function approach including

managing the movement of raw materials into an organization,

certain aspects of the internal processing of materials into finished

goods, and the movement of finished goods out of the organizationand toward the end-consumer. As organizations strive to focus on

core competencies and becoming more flexible, they reduce their

ownership of raw materials sources and distribution channels.

These functions are increasingly being outsourced to other entities

that can perform the activities better or more cost effectively. The


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effect is to increase the number of organizations involved in

satisfying customer demand, while reducing management control

of daily logistics operations. Less control and more supply chain

partners led to the creation of supply chain management concepts.

The purpose of supply chain management is to improve trust andcollaboration among supply chain partners, thus improving

inventory visibility and the velocity of inventory movement.

Several models have been proposed for understanding the activities

required to manage material movements across organizational and

functional boundaries. SCORis a supply chain management model

promoted by the Supply Chain Council. Another model is the SCM

Model proposed by the Global Supply Chain Forum (GSCF).

Supply chain activities can be grouped into strategic, tactical, andoperational levels. The CSCMP has adopted The American

Productivity & Quality Center (APQC) Process Classification

Framework a high-level, industry-neutral enterprise process model

that allows organizations to see their business processes from a

cross-industry viewpoint.

Strategic

Strategic network optimization, including the number,location, and size of warehousing, distribution centers, and

facilities.

Strategic partnerships with suppliers, distributors, and

customers, creating communication channels for critical

information and operational improvements such as cross

docking, direct shipping, and third-party logistics.

Product life cycle management, so that new and existing

products can be optimally integrated into the supply chain andcapacity management activities.

Information technology chain operations.

Where-to-make and what-to-make-or-buy decisions.

Aligning overall organizational strategy with supply strategy.

It is for long term and needs resource comittement.
http://en.wikipedia.org/wiki/SCORhttp://en.wikipedia.org/wiki/Distribution_centerhttp://en.wikipedia.org/w/index.php?title=Strategic_partnerships&action=edit&redlink=1http://en.wikipedia.org/wiki/Cross_dockinghttp://en.wikipedia.org/wiki/Cross_dockinghttp://en.wikipedia.org/wiki/Third-party_logisticshttp://en.wikipedia.org/wiki/Product_life_cycle_managementhttp://en.wikipedia.org/wiki/Information_technologyhttp://en.wikipedia.org/wiki/SCORhttp://en.wikipedia.org/wiki/Distribution_centerhttp://en.wikipedia.org/w/index.php?title=Strategic_partnerships&action=edit&redlink=1http://en.wikipedia.org/wiki/Cross_dockinghttp://en.wikipedia.org/wiki/Cross_dockinghttp://en.wikipedia.org/wiki/Third-party_logisticshttp://en.wikipedia.org/wiki/Product_life_cycle_managementhttp://en.wikipedia.org/wiki/Information_technology


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Tactical

Sourcing contracts and other purchasing decisions.

Production decisions, including contracting, scheduling, and

planning process definition. Inventory decisions, including quantity, location, and quality

of inventory.

Transportation strategy, including frequency, routes, and

contracting.

Benchmarking of all operations against competitors and

implementation ofbest practices throughout the enterprise.

Milestone payments.

Focus on customer demand.

Operational

Daily production and distribution planning, including all

nodes in the supply chain.

Production scheduling for each manufacturing facility in the

supply chain (minute by minute).

Demand planning and forecasting, coordinating the demand

forecast of all customers and sharing the forecast with all

suppliers.

Sourcing planning, including current inventory and forecast

demand, in collaboration with all suppliers.

Inbound operations, including transportation from suppliers

and receiving inventory.

Production operations, including the consumption of

materials and flow of finished goods.

Outbound operations, including all fulfillment activities,warehousing and transportation to customers.

Order promising, accounting for all constraints in the supply

chain, including all suppliers, manufacturing facilities,

distribution centers, and other customers.
http://en.wikipedia.org/wiki/Benchmarkinghttp://en.wikipedia.org/wiki/Best_practicehttp://en.wikipedia.org/wiki/Benchmarkinghttp://en.wikipedia.org/wiki/Best_practice


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CONCLUSION:

Logistics is one of the area of the supply chain i.e. growing at a

tremendous case as the Internet and E-Commerce is drastically

changing the range, delivery time and the speed of information as

well as ordering and payment process. Due to the big boon of

information technology, greatly influencing and enhancing the

effectiveness of logistics, the time is not far when 5 PLs and 6 PLs

may emerge which will probably we doing part of the

manufacturing and marketing for the organizations.


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BIBLIOGRAPHY

Websites : www.wikipedika.com

www.Investopedia

copy of study on logistics and supply chain

Documents