MODULE 1

INTRODUCTION TO LOGISTICS

Dr. Arun Vijay

Assistant Professor
MEANING AND DEFINITION TO
LOGISTICS
 The word logistics has originated from the Greek word
logistics and the Latin word logisticus, meaning the science of
computing and calculating.
 In ancient times it as used mostly in connection with the
movement of armies, and supplies of food and armaments to
the war front.
 Today, logistics has acquired a wider meaning and is used in
business for the movement of raw materials from the supplier
to the manufacturer and finally the finished goods to the
consumers.
 Logistics is the art and the science of managing and controlling
the flow of goods, energy, information and other resources.
DEFINITIONS
 According to Council of Logistics management(CLM),
“Logistics is the process of planning, implementing and
controlling the efficient, cost effective flow and storage of
raw material in process inventory, finished goods and related
information from point of origin to point of consumption for
the purpose of confirming customer requirements.
 According to Robert A. Novack “Logistics is an activity
involving the creation of time, place, form and possession of
utilities within and among firms and individuals through
strategic management with the goal of creating
product/services that satisfy customer through strategic
management with the goal of creating product/services that
satisfy customer through attainment of value.”
CONTD
 Logistics is the process of strategically managing the
procurement, movement and storage of materials, parts
and finished inventory through the organization and its
marketing channels in such a way that current and future
profitability are maximized through the cost effective
fulfillment of orders.
 It involves the integration of information, transportation,
inventory, warehousing, material handling and
packaging.
PHYSICAL DISTRIBUTION
 Physical distribution is a major part of logistics, refers to the
activities used to move products from producers to consumers
and other end users.
 Physical distribution means moving of finished products from
one end of a production line to customers.
 Physical distribution starts from the factory.

 It is the process of delivering the product to the marketing

channels and consumers.
 It encompasses the various activities involved in the physical
flow of the products from producers to the consumers.
PHYSICAL DISTRIBUTION
EVOLUTION OF LOGISTICS
 The evolution of logistics and supply chain management in
the 1990’s can be traced back to “physical distribution
management” in the 1970’s when there was no coordination
among the various functions of an organization, and each
has committed to attain its own goals.
 This myopic approach then transformed into “ integrated
logistics management” in the 1980s that called for the
integration of various functions to achieve a system wide
objective.
 Supply chain management further widens this scope by
including the suppliers and customers into the organizational
fold.
CONTD
 Logistics involves in getting, in the right way , the right
product, in the right quantity and right quality, in the
right place at the right time, for the right customer at the
right cost.
 The logistic network consists of the suppliers, the retailer
and the users.
 The purpose of an integrated logistic network in a supply
chain is to fulfill customer orders through providing
place utility to deliver products and services to end users.
CONTD
The place utility is achieved by managing a number
of key functions of a supply chain. These functions
include
1. Demand Management
2. Inventory Management
3. Transportation
4. Warehousing
5. Order Processing
6. Information Management
Logistics is a key enabler of supply chain
collaboration.
LOGISTICS MANAGEMENT
 The management process which integrates the movement
of goods, services, information and capital, right from
the sourcing of raw material, till it reaches its end
consumer is known as Logistics Management.
 The objectives behind this process is to provide the right
product with right quality at the right time in the right
place at the right price to the ultimate customer.
LOGISTICS MANAGEMENT
LOGISTIC ACTIVITIES
The logistics activities are mainly classified into two broader
categories they are:
 Inbound Logistics: The activities which are concerned with
procurement of material, handling ,storage and transportation
are known as inbound logistics.
 Outbound Logistics: The activities which are concerned with
the collection, maintenance and distribution or delivery to the
final consumers is known as outbound logistics.
Apart from these, other activities are warehousing,
protective packing, order fulfillment, stock control,
maintaining equilibrium between demand and supply,
stock management.
INBOUND AND OUTBOUND LOGISTICS
SUPPLY CHAIN MANAGEMENT
 Supply chain management is a series of interconnected
activities related to the transformation and movement of
raw materials to the finished goods till it reaches to the
end user.
 It is the outcome of multiple organizations that helped in
making this activities successful.
SUPPLY CHAIN MANAGEMENT

Material Information
Handling Technology
Supply Chain
Management

Industry Freight
Initiatives & And
Support Activities Transportation
CONTD
 Supply chain management has a multi-dimensional
approach which manages the flow of raw materials and
works in progress within the organization and the end
product outside the organization till it reaches the hands
of the final consumer with a complete emphasis on the
customer requirement.
 All the activities, associated with the sourcing,
procurement, conversion and logistics management,
comes under the supply chain management.
 Supply chain management, it is a broader term which
refers to the connection, right from the suppliers to the
end consumer
DIFFERENCE BETWEEN LOGISTICS AND
SUPPLY CHAIN MANAGEMENT
Basis for Logistics Management Supply Chain Management
Comparison
Meaning The process of integrating the The coordination and management
movement and maintenance of of the supply chain activities are
goods in and out the organization known as Supply chain
is Logistics management

Objective Customer Satisfaction Competitive Advantage

Evolution The concepts of logistics has been Supply chain management is a

evolved earlier modern concept

How many organizations Single Multiple

are involved

One in another Logistics management is a fraction Supply chain management is new

of Supply chain management version of logistics management
NATURE OF LOGISTICS
The nature of logistics in marketing operations
are discussed below:
1. Smooth flow of goods
2. Movement of goods
3. Integrated Action
4. Fulfilling Customer Expectations
5. Customer Service
6. Storage of Goods
7. Productivity and Profitability
OBJECTIVES OF LOGISTICS
Logistics management has following objectives
1. Improving Customer Service
2. Rapid Response
3. Reduce Total Distribution Costs
4. Reliable and consistent delivery performance
5. Minimum product damages
6. Generating additional sales
7. Creating time and place utilities
8. Price Stabilization
9. Quality Improvement
10. Inventory Reduction
7 RS OF LOGISTICS
COMPONENTS OF LOGISTICS
The logistics has the following components
which are known as logistical activities also
discussed as below.
1. Procurement/ Purchasing

2. Transporting

3. Warehousing

4. Managing Inventory

5. Material Handling

6. Order-Sizing

7. Order Processing

8. Recycling, Returns and water Disposal

9. Customer Service
COMPONENTS OF LOGISTICS
1. Procurement/Purchasing: Procurement is the
process of buying goods and services for the
user department, based on order specifications
given by the department. Procurement begins
with sending the purchase order to the supplier.
2. Transporting : The five basic transportation
modes are rail, highway, water, pipeline and
air. The relative importance can be measured in
terms of system mileage, traffic volume,
revenue and the nature of traffic composition.
CONTD
3. Warehousing: It refers to the design and operation of
facilities for starting and moving goods, is another important
physical distribution function.
4. Managing Inventory: It will be obvious that without effective
management of finished product inventory, it is impossible to
run any business efficiently and profitably.
5.Matierial Handling: It is the movement, protection, storage
and control of materials and products throughout
manufacturing, warehousing, distribution, consumption and
disposal. Its application helps in forecasting, resource
allocation, production planning, flow and process management,
inventory management and control, customer delivery, after
sales support and service
CONTD
6. Order-Sizing: Orders of less quantity will increase the cost of
handling because the handling process will be done entirely by
hand instead of machines. It will increase costs and consumer
more time.
7.Order Processing: It is the receipt and transmission of sales
order information. Efficient order processing facilitates product
flow. Order processing directly affects the firm’s ability to
meet its customer service standards.
CONTD.
8. Recycling, Return and Waste Disposal: This function
combines the reverse logistics process. This may
happens in four situations.
I. When goods comprise material or parts of material
that can be recycled to produce the same material.
(paper, glass etc.)
II. When the products are defective.

III. Returned due to sending fresh batch of products

IV. Waste generated from the product has to be effectively

disposed of by the manufacturer or a third party firm
to prevent it from causing harm to the environment.
CONTD
9.Customer Service: Customer service standard refers to
different customers requiring different levels of service.
Service needs vary from buyer to buyer and sellers need
to analyses and adapt to customer preferences.
IMPORTANCE OF LOGISTICS
1. Form Utility: It is the process of creating goods or
service, or putting in the proper form for the customer
to use. It is the value of an item which has been
assembled from its various components.
2. Possession Utility: It is the value added to product r
service because the customer is able to take actual
possession. This is made possible by credit
arrangements, loans etc.
CONTD.
3 .Time Utility: It is the value added by having an item when it is
needed. This could occur within the organization, as in having
all the materials and parts that are needed for manufacturing,
so that the production line does not have to shut down.
4. Place Utility: It means having an item or service available
where it is needed. If a product desired by consumers is in
transit, in a warehouse, or in another store, it does not create
any place utility for them.
FUNCTIONS OF LOGISTICS MANAGEMENT

1. Maintaining competitive advantage

2. Building Good Customer Relations
3. Creating Finished Product
4. Ensuring organization’s plans and goals stay on
track
5. Promotional Strategy
6. Relieves the customers for holding excessive
inventories.
7. Basis of trade
8. Provide better customer service.
LOGISTICS INTERFACE IN MARKETING
Logistic interface with marketing logistics often
referred to as the other half of marketing and
plays on important rule through the physical
movement and storage of goods in selling a
product. Logistics interfaces in marketing are
described in terms of the following
1. Price
2. Product
3. Promotion
4. Place
RETAIL LOGISTICS
 Retail logistics is the organized process of managing the
flow of managing the flow merchandise from the source
of the supplier to the customer
 Large retailers deal in a wide variety of products. This
has created a need for a systematic planning of
movement of numerous goods until they are delivered to
the customer.
 Retail logistics ensures that everything is in place to
offer better delivery and service at lower prices by way
of efficient logistics and added value.
RETAIL LOGISTICS
FUNCTIONS OF RETAIL LOGISTICS
SYSTEM
1. The increased product variety in stores has forced the
retailer to follow an effective logistics system.
2. The system satisfies the customer by taking the right
product to the right customer, at the right place at right
time.
3. Profitability of the present and future are maximized by
logistics system by means of fulfillment of orders in a
cost effective way.
4. It ensures the availability of infrastructure such as
warehousing, transport, inventory and administration.
CONTD
5. Retail logistics system strives to add value for the
customer. For this purpose cost elements in the supply
chain are brought under the direct control of the
retailer.
6.The functions incorporated in the retail logistics are
summarized
I. The physical movement of goods
II. The holding of stocks in stock holding points.

III. The holding of goods in quantities required to meet

demand from the customers.
IV. The management and administration of the process in
modern complex distribution systems.
COMPONENTS OF RETAIL LOGISTICS
1. Storage Facilities
2. Inventory
3. Transportation
4. Unitization and Packaging
5. Communications
EMERGING CONCEPTS IN LOGISTICS
1. Logistics Information System: Logistics information
system are firms total information system, and is
directed to the particular problems of logistics decision
making. Interconnected hardware and software systems
design to support logistics elements such as
coordination of logistics activities, material flow and
inventory control. There are three distinct elements that
make up this system: the input, the database and its
associated manipulations and the output.
LOGISTICS INFORMATION SYSTEM
IMPORTANCE OF LOGISTICS
INFORMATION SYSTEM
 Information system facilitates planning and control of the
logistics activities.
 It makes the firm more competitive, by making better
strategic decision for the benefit of the firm and its
customer.
 Helps in providing customers information regarding
product availability, order status and delivery schedule etc.
 It reduces the requirements of inventory and human
resources
 The use of information technology in information system
has enabled quick responses to demand making forecasting
 It promotes the operations of the firm such as
manufacturing and distribution of goods
 2. E-LOGISTICS
 E-logistics can be defined as the application of internet
based technologies to traditional logistics processes or
web based applications and services dealing with the
efficient transport, distribution and storage of products
along the supply and demand chain
Advantages of E-Logistics
 It reduces the risk in the relationship between the seller
and the consumer
 It allow us to make transaction without any needs on
stores, infrastructure investment and other common
things.
CONTD.
 Comparison of prices among a number of providers is
possible.
 It helps in sourcing multiple orders items from multiple
supplies and consolidation.
 Web based technology gives In-transit information
exception notification
E- LOGISTICS
 3. REVERSE LOGISTICS
 Reverse logistics means flow of surplus or unwanted
material, goods or back to the firm through its logistics
chain, for reuse, recycling or disposal.
 It is for all operations related to the reuse of products and
materials.
 Reverse logistics may be defined as a process of moving
goods from their place of use, back to their place of use,
back to their place of manufacture for re-processing, re-
filling, repairs or recycling/waste disposal
REVERSE LOGISTICS
 IMPORTANCE OF REVERSE LOGISTICS
1. Decreased cost and increased asset utilization
2. Better Customer Satisfaction and retention
3. Less environment impact
 4. GLOBAL LOGISTICS
 Global logistics is the design and management of a
system that controls the forward and reverse flow of
materials, service and information into, through and out
of international corporation.
 It refers to the flow of resources and information
between a business or source and the customer.
GLOBAL LOGISTICS
ROLE OF GLOBAL LOGISTICS
I. Globalization helped in doing business beyond
national boundary.
II. The world has become global village in real sense
III. Internet has made easy to do business across the globe.
IV. Speed and efficiency in the movement of goods is
focused more.
V. Global operations of business increase the complexity
of logistics.
 5.GREEN LOGISTICS
 Green logistics attempts to measure and minimize the
ecological impacts of logistics activities.
 It is the process of minimizing the damage to the
environment due to the logistics operation of an
organization.
 The term “green logistics” is defined as supply chain
management practices and strategies that reduce the
environmental and energy footprint of freight
distribution, which focuses on material handling, waste
management, packaging and transport.
 Examples are refurbishing, recycling, reuse etc.
GREEN LOGISTICS
GREEN SUPPLY CHAIN
 CHARACTERISTICS AND SCOPE
 Green logistics is considered compatible and beneficial
to the environment.
 It helps in an environmental friendly and efficient
transport and distribution system.
 It helps in material handling, waste management,
packaging and transport.
 Better utilization of natural resources.
THANK YOU