Strategic Logistics Management While looking at logistics management

strategically, it is essential to examine the classic approach to formulating a logistics strategy that begins with the firm’s overall strategy and then defining the logistics strategy that will enable the firm to reach its overall objectives.

It is a subset of the overall corporate strategy that deals with the management of the flow of materials/product in downward approach.

Step of Strategic Logistics

1) Corporate Visioning2) Strategic Logistics Analysis3) Logistics planning and evolution

Corporate Visioning It start with definition of the corporate

vision about objectives behind the potential use of logistics for gaining differential advantage and long term performance of the firm.

It reflect corporate mindset about logistics in term of planning process, identification of potential, alternative logistics approach.

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Key element of corporate vision towards strategic logistics management.

1. Recognition of service requirement for different market segment.

2. Understanding of key external environmental forces along with their impact.

Strategic logistics analysis There are three key function of the step

are as follow.

1. Development of various strategic alternatives2. Evaluation and review of each developed

alternatives for their capabilities for attainment of corporate vision, risk involved and additional resources required.

3. Final selection of the best alternatives and formulation of detailed logistics plan.

Logistics planning and evalution Logistics Planning is blueprint of total

logistics systems in term of:

Functional goals to achieve. Programme and procedures for implementation

of new logistics system. Time for framework. Authorities and responsibility Continuous evaluation and measurement of

performance for further improvement.

Distribution System

Distribution System

It is a physical route through which product move from point of production to point of consumption.

To make the product available at the right place and at the right time with less cost is the key objective of any distribution system.

Types of distribution system

Direct distribution system(Field force, own retail outlet, direct

mailing, personal selling, telemarketing, website)

Indirect distribution system(Marketing intermediaries such as C & F,

stockist, retailer)

Distribution System for Pharma industries.

Manufacturer

C & F OR

Super stockiest

Stickiest OR

Distributor

ChemistOR

RetailersConsumer

Carry n Forward Agent (C & F)

C & F agent is distribution agency which manage all distribution function of company.

Its work virtually like a company distribution office.

It is appointed by the company on mutually acceptable agreement.

Function of C & F agent

To store company goods safely as specified in various schedule of drugs.

To execute order to company. To follow up documentation

procedure. To provide all detail about sales to

company.

Cont….

To dispatch the company’s promotional material to company’s field force.

To submit sales tax and other returns to respective authority.

To provide all feedback regarding all matters concerning the business.

Why C & F agent

1) To manage distribution system2) To provide better service to all

channel member.3) To reduce cost of distribution and

company cost because No sales transaction taking place To avoid trade margin Wages are very less of staff Warehouse rent

Stockist

Stickist is main channel partner of company which is appointed for a specific area to resell company product to chemist or retailer.

Function of stockist

Maintenance of adequate stocks of the company product, at all time, to prevent stock out.

To provide proper storage facilities in term of maintaining the specific temperature.

To resell company product among retailers, nursing homes and hospital.

Cont….

To provide details regarding sales and stocks held by them at the end of every month

To collect the returned goods from retailers and other parties.

To provide feedback regarding consumer reactions to company.

Retailer Retailers in the Indian pharmaceutical

industry is also known as the chemists. Retailer who dispenses the prescription of a

medical practitioner and sell medicines to a patient.

Retailers is very important source of information regarding the prescribing behaviors of doctors and competitor activities.

Function of retailer

To hold ready stocks of various important and essential medicines needed to cater to the prescription of doctors.

To provides supplementary information required by patient regarding the dosage and side effect.

Expectation of channel partner

Strategic Factor

Extend full assurance for best ROI. Commitment for long run association. Efforts for continuous improvement in

quality if service.

Cont…

Logistical factor

Availability of goods as per requirement No stock-out situation Fixed and smaller order Offering zero defect delivery Point to point information sharing

Cont…

Value Added Factors

Financial support to its channel member. Flexibility in credit policy Organisation of training programmes

from time to time for channel partners. Assignment of certain power to channel

partners for settlement of warranty claim on the spot.

Changing Face of distribution system

1) Distribution system in E-commerce

Reducing transactional cost through sales Opportunity to enter in new market. Elimination of physical limitation. Fast interaction. Fast promotional communication at least cost.

E-commerce for consumer

Wider product portfolio Product information Conscious about purchase decision Utilisation of time.

2) Cash & carry system

Transportation Management

Transportation Management It is used for better movement of goods

from one location to another location.

Objective of logistics and supply chain management is to make available the right quantity of right product at the right time and place at least cost.

Share of transportation cost is 40% of total logistics cost.

Cont… In era of rapid innovation of in the field

of information and communication technologies, their has been a phenomenal growth in E-commerce and online selling which need more specific and value-added transportation services like tracking of shipment, in order to meet delivery commitment.

Mode of Transport

1) Airways2) Seaways3) Railways4) Roadways

Airways

Goods are transported by air. Quick delivery of product. Prefer for perishable goods or for

emergency services. Cost is very high.

Seaways

Goods are transported through the water medium by ship.

This mode has acquired for cheapest, having a larger capacity and flexibility.

Railways

To efficiently transport large quantities of goods over long distance

Tariff of railways is very low, which encourage large shipment for longer distance, product like fertiliser, cement, food grains and petroleum product.

Roadways The reliability and economy of this mode is

gradually increasing due to continuous improvement in the quality of motor vehicles and the condition of road.

These facilitate in the achievement of logistics objective like lower transit time, lower total logistical cost and improved customer service.

Functional requirement and transportation

Functional Req. Location Preferred mode

Production scheduling

Vendor to plant Rail / Road

Replenishing stock Plant to warehouse Rail / Road

Balancing stock Warehouse to warehouse

Road

Distribution service Warehouse to customer

Road

Export / import Country to country Sea / Air

Emergency service Plant to customer Air

Selection of transportation mode

The strengths and weakness of the firm in term of financial and production resources.

Market information including the competitive scenario, geographical structure.

Product features and suitability to various modes of transportation such as Weight, size, shape.

Cont…

Quantity to be transported each time. Distance to be covered. Total transportation cost of various

mode of transportation. Carrier performance in term of speed,

availability, flexibility, frequency, reliability, safety and logistics service capabilities.

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