What is Logistics?
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 right from the point of origin to the point of consumption (including inbound, outbound, internal and external movements) in order to satisfy customer's requirements.
LOGISTICS is also defined as time related positioning of resources. The whole concept of Logistics is based on 7 R's which are:
- Right Place
- Right Time
- Right Quantity
- Right Quality
- Right Price
- Right Condition
- Right Customer
What is third party logistics?
Third party logistics is the activity of outsourcing activities related to Logistics and Distribution. The 3PL industry includes Logistics Solution Providers (LSPs) and the shippers whose business processes they support. Companies opt for Third Party Logistics for the following reasons:
- Focus on core competence
- Resource constraints
- Cost saving / cost optimization
- For large and global coverage
- For more professional and scientific approach to logistical problems
- For improvement in service levels with improved response time
- Efficient management of inventory resulting in better utilization of working capital
What is fourth party logistics (4PL)?
Fourth party logistics provider is a supply chain integrator that assembles and manages the resources, capabilities, and technology of its own organization with those of complementary service providers to deliver a comprehensive supply chain solution to the client. A standard 4PL supply chain solution involves four distinct steps:
Step I : Reinvention
At this level, the overall business strategy is aligned with supply chain strategy to reengineer the supply chain of the participants.
Step II : Transformation
Here the focus is on coordinating specific supply chain functions such as sales and operations planning, distribution management, procurement strategy, customer support and supply chain technology, with the aid of process and organizational changes, T&D, information technology, etc. as applicable.
Step III: Implementation
The implementation is done on the basis of recommendations made at the earlier two levels and the transition is put across to the 4PL delivery team, taking special care to consider the dimension of human resources and organizational change.
Step IV: Execution
A 4PL provider's scope of responsibility also includes operational responsibility for numerous supply chain functions, besides the traditional transportation management and warehousing operations logistics outsourcing.
How is logistics different from transportation?
Transportation is physical movement of goods (inbound and outbound) as well as picking up of products as per customers order and delivering it to the ultimate user whereas Logistics encompasses several activities related to supply chain management such as planning, implementing and controlling the efficient, effective flow and storage of raw materials, in-process inventory, finished goods, services and related information, in which transportation is a major element in the entire chain.
What is supply chain?
In simple language at the material level, supply chain may be defined as "Flow of materials through procurement, manufacture, distribution, sales and disposal" while at the human level the chain is an "entity of people organized as structures and systems for delivering the desired value and goods".
Supply Chain Management may also be defined as "the integrated management of all linkages and value added activities from the supplier's supplier to customer's customer in such a way that enhanced customer value is achieved at lower costs.
What are the objectives of supply chain management?
A well designed supply chain is expected to support the strategic objectives of:
- Reduced Costs
- Shorter Lead Time
- Best of Quality
- Enhanced Service
- Better Product Availability
- Better Product Reliability
The best configuration of the chain will vary from individual chain to chain and individual organization to organization. But, in all the cases the architecture of the chain would include the following three elements - System, Technology, Relations.
How is logistics different from supply chain management?
Logistics forms an important element of supply chain management whereas supply chain management is an interplay of all the functions and integrates marketing, planning, distribution and purchases with the entire manufacturing process.
Can a transporter provide logistics solutions?
Yes, provided the transporter has a wide network, fleet, material handling, human infrastructure and strong IT support.
What is the pre-requisite infrastructure required to provide logistics solutions?
The pre-requisite infrastructure required to provide logistics solutions are:
- Land and Building (Warehouse)
- Trained Manpower
- Material Handling Equipments
- Hardware and Software
- Transport Network
What does Logistics activities comprise of:
Logistics activities, as a part of Supply Chain Management comprises of the following:
- Purchase and Supply
- Material Handling
- Production Planning
- Production Control
- Product Management
- Installation and Servicing
- Strategic Management
What is the significance of logistics in manufacturing industry?
In a manufacturing industry, Logistics plays a key role in Supply Chain Management as there is a strong inter-play of activities starting from raw materials until the finished goods. In all the activities there is a flow of goods whether it is raw materials or WIP or semi-finished goods or finished goods. Logistics plays a significant role in the management of the entire supply chain.
How does logistics solutions help to reduce the inventory cost?
One of the important elements of supply chain management is the management of warehouse and inventory levels. Efficient management of inventory helps to keep a tab on:
- Replenishment level
- ABC analysis of stocks
- FSN stocks
- Helps customer to concentrate more on fast moving stocks
What are the legal issues involved?
The legal issues involved are:
- Conforming and non-conforming areas
- Excise Duty
- Local Taxes
- Labour Acts
- Pollution Act
- Industry Act
- Fire Act
- Sanctions from appropriate bodies
What is Warehousing?
A warehouse is a point in the logistics system where a firm stores or holds raw materials, semi-finished goods, or finished goods for varying periods of time. In the macroeconomic sense, warehousing performs a vital function. It creates time utility for raw materials, industrial goods and finished products. The proximity of market-oriented warehousing to the customer allows a firm to serve the customer with shorter lead times. This warehousing function continues to be increasingly important as companies and industries use customer services as a dynamic, value-adding competitive tool.
What is Material Handling?
Material Handling can be defined as "efficient short-distance movement of goods that usually takes place within the confines of a building such as a plant or a warehouse or between a building and a transportation agency." Material Handling has four dimensions:
Material Handling improves efficiency by making the logistics system respond quickly and effectively to plant and customer requirements. For efficient movement of goods into the warehouse, locating stock, accurately filling orders, and rapidly preparing orders for shipment to customers, materials handling is very important to outbound logistics. In inbound logistics terms, materials handling serves company plants in the same way. Firms need to integrate materials handling requirements not only for the company's departmental needs, but also for meeting their customers' needs.