LOGISTICS MANAGEMENT

Logistics
Logistics is the art and science of strategically managing and controlling the flow of
goods, energy, information and other resources like products, services, and people, from
the source of production to the marketplace. It is difficult to accomplish any marketing or
manufacturing without logistical support. It involves the integration of information,
transportation, inventory, warehousing, material handling, and packaging. The operating
responsibility of logistics is the geographical repositioning of raw materials, work in
process, and finished inventories where required at the lowest cost possible.

The word of logistics is origin from the ancient Greek logos, what means “ratio, word,
calculation, reason, speech, oration”.

Logistics as a concept is considered to evolve from the military's need to supply them
selves 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 branch of 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".

Logistics as a business concept evolved only in the 1950s. This was mainly due to the
increasing complexity of supplying one's business with materials and shipping out
products in an increasingly globalize supply chain, calling for experts in the field who are
called Supply Chain Logisticians. This can be defined as having the right item in the
right quantity at the right time for the right price and is the science of process and
incorporates all industry sectors. The goal of logistic work is to manage the fruition of
project life cycles, supply chains and resultant efficiencies.

Logistics is the” process of planning, implementing, and controlling the efficient,

effective flow and storage of goods, services, and related information from point of
origin to point of consumption for the purpose of conforming to customer
requirements.“

Military logistics

In military logistics, experts manage how and when to move resources to the places they
are needed. In military science, maintaining one's supply lines while disrupting those of
the enemy is a crucial—some would say the most crucial—element of military strategy,
since an armed force without food, fuel and ammunition is defenseless.
 The Iraq war was a dramatic example of the importance of logistics. It had become very
necessary for the US and its allies to move huge amounts of men, materials and
equipment over great distances. Led by Lieutenant General William Pagonis, Logistics
was successfully used for this movement. The defeat of the British in the American War
of Independence, and the defeat of Rommel in World War II, have been largely attributed
to logistical failure. The historical leaders Hannibal Barca and Alexander the Great are
considered to have been logistical geniuses.

Business logistics

In business, logistics may have either internal focus (inbound logistics), or external focus
(outbound logistics) covering the flow and storage of materials from point of origin to
point of consumption (see supply chain management). The main functions of a logistics
manager include Inventory Management, purchasing, transport, warehousing, and the
organizing and planning of these activities. Logistics managers combine a general
knowledge of each of these functions so that there is a coordination of resources in an
organization. There are two fundamentally different forms of logistics. One optimizes a
steady flow of material through a network of transport links and storage nodes. The other
coordinates a sequence of resources to carry out some project. Logistics as a concept is
considered to evolve from the military's need to supply them selves 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.

Production logistics

The term is used for describing logistic processes within an industry. The purpose of
production logistics is to ensure that each machine and workstation is being fed with the
right product in the right quantity and quality at the right point in time.

The issue is not the transportation itself, but to streamline and control the flow through
the value adding processes and eliminate non-value adding ones. Production logistics can
be applied in existing as well as new plants. Manufacturing in an existing plant is a
constantly changing process. Machines are exchanged and new ones added, which gives
the opportunity to improve the production logistics system accordingly. Production
logistics provides the means to achieve customer response and capital efficiency.

Logistics Management

 Logistics management is the process of strategically managing the procurement,

movement and storage of materials, parts and finished inventory (and the related
information flows) through the organization and its marketing channels in such as way
that current and future profitability are maximized through the cost-effective fulfillment
of orders
 According to the Council of Logistics Management (CLM), logistics is the process of
planning, implementing, and controlling the efficient effective flow and storage of
 goods, services, and related information from point of origin to point of consumption
for the purpose of conforming to customer requirements.
 Logistic management is the management process which integrates the flow of supplies
into, through and out of organisation to achieve a level of service which ensures that the
right materials are available at the right place, at the right time, of the right quality at
the right cost.

Why is Logistics Important?

At the company level, logistics impacts:

• Cost -For many products, 20% to 40% of total product costs are controllable
logistics costs.
• Service -For many products, performance factors such as inventory availability
and speed of delivery are critical to customer satisfaction.

Logistics involves intelligent trade-offs:

 Purchase discounts versus Raw Materials Inventory

 Production efficiency versus Finished Goods Inventory
 Freight discounts versus Finished Good Inventory
 Lower planned cost versus more stable costs

Traditional Logistics Functions

 Purchasing / Procurement
 Inventory Control
 Warehousing
 Materials Handling
 Order Processing
 Transportation
 Customer Service
 Facility Location / Network Design

Logistics management process

Michael Porter in his famous book "Competitive Advantage'' has spoken of the value
chain approach and emphasized logistics as one of the most important tools for
competitive advantage.

The various processes and elements that are part of logistics as a discipline are:

Inbound logistics: Purchasing, Inbound transportation, Inventory Management.

Manufacturing: Production planning systems, Machine scheduling system.

Outbound logistics: Order booking process, Distribution management, outbound

transportation, and Warehouse management systems.

As customers started demanding improved servicing standards, fast cycle time has
become the key factor for business success, whether it is custom made tailoring service in
Hong Kong or development of a new car in Detroit.

Before delving deep into logistics, a look at the current business scene will be great help.

DISPATCH (LOGISTICS)
Dispatch is a procedure for assigning employees (workers) or vehicles to customers.
Industries that dispatch include taxicabs, couriers, emergency services, as well as home
and commercial services such as maid services, plumbing, HVAC, pest control and
electricians.

With vehicle dispatching, clients are matched to vehicles according to the order in which
clients called and the proximity of vehicles to each client's pick-up location. Telephone
operators take calls from clients, then either enter the client's information into a computer
or write it down and give it to a dispatcher. In some cases, calls may be assigned a
priority by the call-taker. Priority calls may jump the queue of pending calls. In the first
scenario, a central computer then communicates with the mobile data terminal located in
each vehicle (see computer assisted dispatch); in the second, the dispatcher
communicates with the driver of each vehicle via two-way radio.

With home or commercial service dispatching, customers usually schedule services in

advance and the dispatching occurs the morning of the scheduled service. Depending on
the type of service, workers are dispatched individually or in teams of 2 or more.
Dispatchers have to coordinate worker availability, skill, travel time and availability of
parts. The skills required of a dispatcher are greatly enhanced with the use of computer
dispatching software.

Manual dispatch systems

The following are examples of manual systems used to track the status of resources in a
dispatched fleet.

Cards

Card systems employ a set of shelves with a slot for each unit in the dispatch fleet. Each
vehicle or resource has a slot in the shelving system. In it, a card, like a time card used to
track an employee's work hours, is stored. A time clock, similar to the one that stamps
work hours on a time card, is used to stamp event times on each card. At the beginning of
a work day, the resource's identifier or other information is handwritten on the card. Each
time the resource's status changes, the card is punched in the time clock and a new status
entry is handwritten on the card. The card collects a series of entries through the work
shift.

Punched tags

Punched tag systems employ a set of pegs with each peg holding tags for one unit in the
dispatch fleet. Each vehicle working the current shift has a peg with a tag describing the
unit's current status. A time clock, similar to the one that stamps work hours on a time
card, is used to stamp times on each tag. At the beginning of a work day, the resource's
identifier may be posted above the peg. The unit's start time is stamped and their status is
written on the tag. Each time the resource's status changes, a new tag is written and the
tag is time stamped in order to log the time the unit's status changed. The peg collects a
stack of tags through the work shift.

Plastic icons

In a plastic icon system, the a blank panel on the communications console or a nearby
wall is fitted with a sheet of Velcro. The material has vertical stripes painted on it, making
a column for each of several possible status conditions. The simplest system is two
columns: available and unavailable. Magnetized icons can be used in place of Velcro. The
icons can be colored or shaped to identify the type of unit or some other feature of the
resource.

Airline dispatch

In airline operations, dispatchers exert great authority over flights. A dispatcher shares
legal responsibility for a flight's safety with its pilot, and may delay, divert or cancel a
flight at any time. This checks and balances mechanism improves the safety of the
dispatch system. A dispatcher typically must be licensed by the aviation authority of a
country. The examination for the license requires the candidate to demonstrate extensive
knowledge in meteorology and aviation, to a level that is comparable to that of a holder
of an airline transport pilot license.

Mobile dispatch

In a mobile system, wireless technology is provided for efficient job planning,

assignment and efficient job planning through the use of mobile dispatch systems sent out
through a mobile network on to a mobile device such as PDA. This allows for more
flexible management of the workers out in the field as a job can be dispatched to multiple
users to accept or reject the job. The benefits of a mobile system as it can then be
integrated back into the other software systems used by an organization such as asset
management, rostering, and other financial systems
 INVENTORY MANAGEMENT DECISIONS

Successful inventory management consists of the following:

1. Increasing Inventory Turnover without sacrificing your level of service.

2. Having an efficient inventory system in place that helps you make good business
decisions based on what is truly happening;
3. Adherence to basic procedures for inventory replenishment;
4. Knowing when to purchase the proper variety of goods in quantities that maintain
inventory levels consistent with business requirements;
5. Knowing how much to buy and what to buy to get the most out of working capital;
6. Reducing unneeded inventories quickly, so that money made available from
getting rid of overstocks can be reinvested in merchandise with a greater market
potential;
7. Maintaining correct, understandable and current records;

LOGISTICS AUDIT

To analyze your logistics requirements, this logistics audit can be used as a pure
assessment tool for benchmarking, for identifying opportunities for further improvement
of the logistics processes or as a supporting tool to (re)design manufacturing and logistics
strategies. To encourage companies to compare their activities with others and help them
to strive for excellence.

WAREHOUSE
A warehouse is a commercial building for storage of goods. Warehouses are used by
manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc.
They are usually large plain buildings in industrial areas of cities and towns. They come
equipped with loading docks to load and unload trucks; or sometimes are loaded directly
from railways, airports, or seaports. They also often have cranes and forklifts for moving
goods, which are usually placed on ISO standard pallets loaded into pallet racks.

Some warehouses are completely automated, with no workers working inside. The pallets
and product are moved with a system of automated conveyors and automated storage and
retrieval machines coordinated by programmable logic controllers and computers running
logistics automation software. These systems are often installed in refrigerated
warehouses where temperatures are kept very cold to keep the product from spoiling, and
also where land is expensive, as automated storage systems can use vertical space
efficiently. These high-bay storage areas are often more than 10 meters high, with some
over 20 meters high.
The direction and tracking of materials in the warehouse is coordinated by the WMS, or
Warehouse Management System, a database driven computer program. The WMS is used
by logistics personnel to improve the efficiency of the warehouse by directing putaways
and to maintain accurate inventory by recording warehouse transactions.

Traditional warehousing has been declining since the last decades of the 20th century
with the gradual introduction of Just In Time (JIT) techniques designed to improve the
return on investment of a business by reducing in-process inventory. The JIT system
promotes the delivery of product directly from the factory to the retail merchant or from
parts manufacturers directly to a large scale factory such as an automobile assembly
plant, without the use of warehouses. However, with the gradual implementation of
offshore outsourcing and off shoring 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 many domains, necessitating at least one warehouse per country or per
region in any typical supply chain for a given range of products.

Recent developments in marketing have also led to the development of warehouse-style

retail stores with extremely high ceilings where decorative shelving is replaced by tall
heavy duty industrial racks, with the items ready for sale being placed in the bottom parts
of the racks and the crated or palletized and wrapped inventory items being usually
placed in the top parts. In this way the same building is used both as a retail store and a
warehouse.

WAREHOUSE AUTOMATION

Implicit in the choice of an automated system is the assumption that your products,
package size and place of doing business will not change significantly in the near future.

Characteristics of an automated distribution system.

1. Expensive to implement, with a long payback period.

2. Difficult to move, remove or modify.

2. Designed to eliminate manual handling and worker judgment – and frequently is

accompanied by reductions in labor costs, theft and errors.

4. Contains high mechanical and/or software complexity, which often makes

implementation and thorough "debugging" difficult.

5. When a significant part of the system fails, the whole system usually "goes down" due
to a high degree of integration and lack of feasible backup systems. (The ATM system is
a good everyday example).

6. Since manual labor is reduced, the business can operate on three shifts with low
incremental labor expense.
Benefits of automating a warehouse

Automated warehousing applied to part or all of a distribution centre operation can

provide a wide range of benefits including:

 Space savings

 Lower building costs

 Improved productivity

 More efficient material flow

 Less people, safer operations

 Reductions in inventory

 Increased reliability, reduced running costs

 Lowest lifecycle cost.

Automated warehousing systems provide the maximum possible usage of available floor
space and building height. In some cases, this enables companies to increase storage
capacity by up to 400% compared to conventional forklift operations. Where space is
limited, switching to an automated warehousing solution can free up additional space for
other activities, such as manufacturing.

And because automated warehousing solutions make the most effective use of space,
building costs can be kept to a minimum. Significant cost savings are possible through
the need for less land and a smaller building. Because automated warehousing systems do
not require special floors or expensive in aisle guidance systems, further savings can be
achieved. Automated storage and retrieval machines also weigh a lot less than
comparable narrow aisle trucks further reducing construction requirements.

Improved Productivity

Automated warehousing systems also offer tremendous performance in terms of

productivity. Not only do they work faster than forklifts and narrow aisle trucks, they can
also operate 24 hours a day, 7 days a week, keeping product on the move. With
automated storage and retrieval machines, there are none of the delays associated with
putting away or retrieving pallets from high locations. Every pallet is picked up and
deposited at the same speed regardless of where it is located within the system.

Automated warehousing systems can also enhance the efficient flow of materials through
a manufacturing facility or distribution centre. By integrating the system with production
materials handling systems, raw materials, tools, parts, work-in-process, and finished
goods can all be efficiently delivered to where they are required just-in-time.
The systems can also be set up to provide a buffer storage function on assembly lines, and
can service multi-floor applications. By using automated storage and retrieval machines
the need for drivers/operators is eliminated. Compared with conventional methods, and
calculated over the life of the machine, savings can be substantial and the ROI can be
highly attractive. The machines operate within fixed aisles protected by safety fences so
the risk of people being injured in a collision is minimized. The need for operators to
physically lift heavy products, or even heavy empty pallets, is also eliminated.

Reductions in Inventory

With integrated location and inventory control software combined with faster throughput,
it is possible to reduce stockholdings. Inventory can be accurately tracked at all stages,
maximizing stock availability. Stock control can also be improved, with the software
enabling goods to be automatically picked on a First In First Out basis, or by ‘use-by’
date etc. Intelligent location control ensures goods are located in the most appropriate
zone depending on their usage within the Automated Warehouse. Once the automated
warehouse has been set up, ongoing operating costs are minimized. Typical warehousing
costs involving refueling or recharging of batteries, regular mechanical and electrical
maintenance, and staffing, lighting are also minimized.

An automatic warehouse has a plurality of stock units. One stock unit has one
replenishing rack and one picking rack arranged so as to oppose each other with their
sides, leaving a corridor between. Each rack has a plurality of shelves in both heights and
length and each shelf has a size which accommodates only one article. Shifting
mechanisms are provided for shifting articles to be shifted from shelves in the
replenishing rack onto shelves in the picking rack. Replenishing mechanisms are
provided for shifting articles to be stocked onto the replenishing rack and picking
mechanisms are provided for picking articles to be picked up from the picking rack.
Transfer devices are provided for transferring articles from the warehousing berth to the
replenishing mechanism and from the picking mechanism to the delivery berth. A
controller is provided for controlling the transfer means, replenishing mechanism,
shifting mechanism and picking mechanism in such a way that the present location of any
article and therewith detailed information about origin, destination, type, age or the like
can be recalled and changed at any time.

DISTRIBUTION CENTER

A distribution center for a set of products is a warehouse or other specialized building

with refrigeration or air conditioning which is stocked with products to be re-distributed
to retailers or wholesalers.

The food distribution system of the United States is dominated by distribution centers,
which have helped to cut the cost of supplying food in the United States, and make food
only a small part of the cost of living there.
Distribution centers are foundation of a retailing network. They allow a retail location to
stock vast numbers of products without incurring an explosion in transportation costs.
The way a typical distribution network operates is to have centers setup throughout a
commercial market. Each center will then service a number of stores. Large distributions
centers for companies such as Wal-Mart service 50-125 stores. Suppliers will ship
truckloads of products to the distribution center. The distribution center will then store the
product until needed by the retail location and ship the proper quantity.

Because a large retailer might sell tens of thousands of products from thousands of
vendors, it would be impossibly inefficient to try to ship each product directly from each
vendor to each store. Many retailers own and run their distribution networks, while
smaller retailers may outsource this function to dedicated logistics firms that coordinated
the distribution of products for a number of companies.

AUTOMATED MATERIAL HANDLING SYSTEM

A variety of automated material handling system are available in the market for handling
a wide range of materials and for many other wide applications successfully nurturing the
needs of it's buyers. It helps in achieving maximum productivity and efficiency and thus
helps in adding profits to the company. It also helps in reducing the cycle time and some
automated material handling systems is very portable to use and so require less storage
capacity. If the automated material handling system is used in the correct manner they are
said to give a competitive edge to the company.

MATERIAL HANDLING SYSTEMS

Material Handling systems are designed to improve productivity and decrease the
amount of physical floor space storage and retrieval systems require. Utilizing the
vertical space in facilities with Automated Storage and Retrieval Systems, one could use
vertical carousels and vertical lift modules. Vertical Carousels and Vertical Lift Modules
can be interfaced to 3rd party software systems or operated with our own software
solution. Another system utilized in material handling is pallet racking. Fixed pallet
racking systems however require large aisle turnarounds for forklifts and require large
warehouses. Utilizing compact shelving can reduce warehouse footprints in half with
Heavy Duty compact shelving systems for pallet racking eliminating the need for fixed
aisles. Plastic corrugated bin boxes used for small parts storage are custom configured for
automated storage and retrieval system applications.

Automated Storage and Retrieval Systems (ASRS)

Automated Storage and Retrieval Systems (ASRS) increase filing and storage efficiency
and have the highest productivity rates per hour compared with other storage alternatives.
Vertical Carousels, Vertical Lift Modules and Horizontal Carousels only require one
operator to retrieve files or materials as opposed to other filing systems. Carousels and
Vertical Lift Modules also can be custom configured to store different types of items such
as tools & dies, benchstock, tooling, electronic parts and many other applications.
Vertical Storage Systems are space saving, productive and have extremely high return on
investments. Take advantage of your vertical space or industrial warehouse with a vertical
carousel, horizontal carousel, or vertical lift module ASRS system custom designed to
meet your filing & storage needs.

Horizontal Carousels: Automated Storage & Retrieval Systems

Automated Storage and Retrieval Systems (ASRS) increase filing efficiency and have the
greatest filing actions per hour compared with other filing alternatives. Vertical Carousels
and Horizontal Carousels only require one file operator to retrieve file as opposed to
other filing systems. Carousels also can be custom configured to store different types of
items. Carousels are space saving, productive, and cost efficient. Take advantage of your
vertical space or industrial warehouse with a vertical carousel, horizontal carousel, or
vertical lift module ASRS system custom designed to meet your filing needs. Horizontal
Carousels offer the highest productivity rate of any filing and storage system available.

Vertical Carousels Automated Storage & Retrieval Systems

Vertical Carousels have the 2nd highest filing actions per hour than other filing systems
aside from the horizontal carousel. Vertical Carousels do not require the large footprint
compact moveable shelving or other shelving storage systems require, instead capturing
the vertical height in facilities and givng you back valuable floor space. Vertical
Carousels only require one file operator to retrieve file as opposed to other filing systems.
Vertical Carousels are space saving, productive, and cost efficient. Take advantage of
your vertical space or industrial warehouse with a vertical carousel custom designed to
meet your storage and filing needs.

Vertical Lift Modules Automated Storage & Retrieval Systems

Vertical Lift Modules (VLM) are an enclosed system of vertically arranged trays able to
hold various heights and weights of items brought to an end user by an extraction
platform. The extraction platform can be designed to travel at various speeds depending
on the desired retrieval speed of the requested item. Vertical Lift Modules, like vertical
carousels use vertical space in a facility, eliminating the need for aisles and excessive
floor space. The main difference between the Vertical Lift Module and the carousel is that
the carousel moves all items when retrieving while the vertical lift module only retrieves
the desired item, not affecting the rest of the payload. Vertical Lift Modules also have the
ability to grow in height after purchasing or to decrease in height depending on facility
heights and storage requirements.

GROWTH IN LOGISTICS
Logistics call for an understanding of the total supply chain, the elements of which
include inventories, packing, forwarding, freight, storage and handling. Logistics is
responsible for all the movement that takes place within the organization whether it is
inbound logistics of incoming, raw materials or movement within the company or the
physical distribution of finished goods, logistics encompasses all of these.
Typical logistics framework mainly consists of Physical Supply, Internal Operations and
Physical Distribution of Goods and Services. To put it more simply, the material supply
logistics starts from the base level of “generation of the demand”, through the “process of
purchase” and “supply of material from the vendor” right through to “final acceptance”
and “payments to the supplier” and “issue to the indenter” and has to be considered as a
“one whole activity” with each stage having an impact on price/cost of material supply.
Logistics is, in itself, a system; it is a network of related activities with the purpose of
managing the orderly flow of material and personnel within the logistics channel.

Definition:
The simplest way to describe logistics is to say that it is all about ways and means of
meeting the demand for materials i.e. satisfying the customer with what he wants, when
he wants, where he wants etc.
Definition includes outbound, inbound, internal and external movements and returns of
material for environmental purposes. The logistics concentrate on dynamic processes,
related to the flow of materials and the relationship between the materials and their use at
different facilities.
The most wide spread definition from council of Logistics Management says that
“Logistics is the part of the supply chain process and plans, implements and controls the
efficient, effective flow and storage of goods, services and related information from the
point of origin to the point of consumption in order to meet customers requirements.”

Scope:
Logistics is not confined to manufacturing operation alone. It is relevant to all
enterprises, including Govt. institutions such as Hospitals and schools and service
organization such as retailers, banks and financial service organizations. The study of
logistics is especially important for bulk raw materials, where substantial outflow of
freight is involved. Management of Logistics is an art which is extremely difficult to
perfect in India, JIT ends up being SHIT - some how in time.
The study of logistics is important to establish a lean supply chain which would give an
advantage of quick product change over, capability, excellent short and long term forecast
visibility and JIT capability.

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
need to understand these modes based on priorities, product type, lead time etc. to decide
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 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 ideal for 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 modes 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
productivity gains over the next few years.

The tracking and control of movement of goods drive freight optimization and asset
utilization. The options are: increased trailer utilization, combining full truckload
shipments, consolidation, 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 company’s production distribution functions.

The principle reasons of for this function are as under:

• 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 need for 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.

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.

PACKAGING AND LABELING

Packaging is the science, art, and technology of enclosing or protecting products for
distribution, storage, sale, and use. Packaging also refers to the process of design,
evaluation, and production of packages. Package labelling or labeling is any written,
electronic, or graphic communications on the packaging or on a separate but associated
label.

Packaging is heavily integrated into our daily lives, we see it all around us, on everyday
items such as chocolate bars and potato chip (crisp) packets- As explained below, the
main use for packaging is protection of the goods inside, but packaging also provides us
with a recognizable logo, or packaging, we instantly know what the goods are inside

The purposes of packaging and package labels

Packaging and package labelling have several objectives:

• Physical Protection - The objects enclosed in the package may require protection
from, among other things, shock, vibration, compression, temperature, etc.
• Barrier Protection - A barrier from oxygen, water vapor, dust, etc., is often required.
Package permeability is a critical factor in design. Some packages contain desiccants
or Oxygen absorbers to help extend shelf life. Modified atmospheres or controlled
atmospheres are also maintained in some food packages. Keeping the contents clean,
fresh, and safe for the intended shelf life is a primary function.
• Containment or Agglomeration - Small objects are typically grouped together in
one package for reasons of efficiency. For example, a single box of 1000 pencils
requires less physical handling than 1000 single pencils. Liquids, powders, and
flowables need containment.
• Information transmission - Information on how to use, transport, recycle, or dispose
of the package or product is often contained on the package or label. With
pharmaceutical, food, medical, and chemical products, some types of information are
required by governments.
 • Marketing - The packaging and labels can be used by marketers to encourage
potential buyers to purchase the product. Package design has been an important and
constantly evolving phenomenon for dozens of years. Marketing communications and
graphic design are applied to the surface of the package and (in many cases) the point
of sale display.
• Security - Packaging can play an important role in reducing the security risks of
shipment. Packages can be made with improved tamper resistance to deter tampering
and also can have tamper-evident features to help indicate tampering. Packages can
be engineered to help reduce the risks of package pilferage: Some package
constructions are more resistant to pilferage and some have pilfer indicating seals.
Packages may include authentication seals to help indicate that the package and
contents are not counterfeit. Packages also can include anti-theft devices, such as dye-
packs, RFID tags, or electronic article surveillance tags, that can be activated or
detected by devices at exit points and require specialized tools to deactivate. Using
packaging in this way is a means of loss prevention.
• Convenience - Packages can have features which add convenience in distribution,
handling, display, sale, opening, reclosing, use, and reuse.
• Portion Control - Single serving or single dosage packaging has a precise amount of
contents to control usage. Bulk commodities (such as salt) can be divided into
packages that are a more suitable size for individual households. It is also aids the
control of inventory: selling sealed one-liter-bottles of milk, rather than having people
bring their own bottles to fill themselves.

Packaging types
Packaging may be looked at as several different types. For example a transport package
or distribution package is the package form used to ship, store, and handle the product
or inner packages. Some identify a consumer package as one which is directed toward a
consumer or household.

It is sometimes convenient to categorize packages by layer or function: "primary",

"secondary", etc.

• Primary packaging is the material that first envelops the product and holds it. This
usually is the smallest unit of distribution or use and is the package which is in direct
contact with the contents.
• Secondary packaging is outside the primary packaging – perhaps used to group primary
packages together.
• Tertiary packaging is used for bulk handling and shipping.
 MULTI-MODAL TRANSPORTATION

Meaning:

A set of transport modes offering connections between origins and destinations. Multi-
modal transportation is defined as the carriage of goods by at least two different modes of
transport on the basis of a multi-modal transport contract from a place in one country at
which the goods are taken in charge by a multi-modal transport operator to a place
designated for delivery situated in a different country.

 Inter modal transportation describes a shipment that takes several different means of
transportation- road, rail, ocean, air- from its departure (exporter or seller) to its point of
destination (buyer or importer).
 In most instances today, goods shipped on an inter modal bill of lading are
containerized.

 In multi-modal transport, one transport document, one rate and through liability are
used.
 Multi-modal transport is a term used to describe the linking of transport
responsibilities, documentation and liability in the movement of the goods ( by land, sea
and air) using the existing infrastructure.
 This linking results in improved transport efficiency and provides the user with a
single point of responsibility and greater cost transparency.

 The ultimate aim of the multi-modalizm is to make the movement of goods from seller
to buyer more efficient through faster transit at reduced costs.
 Multi-modal transport brings benefits by enabling exports to be placed in the market
places of the world at a reduced cost and so ‘be more competitive’.
 Likewise, costs associated with imports will be reduced, thus, leading to reduced
foreign exchange outflow and cheaper imported goods.

PIPE LINE TRANSPOTATION

Introduction on Pipeline

Pipeline is primarily used for the transportation of crude petroleum, refined petroleum
products and natural gas. Pipeline are also utilized for transport of manufacturing
chemicals, dry bulk materials such as cement, sewage and water within cities and
municipalities Countries that make use of pipeline are USA, India and all other nations.

Advantage of Pipeline System

•The basic nature of pipeline is unique in comparison to all other modes of transportation.
• Pipelines operate on a 24x7 hour basis.
•There is no empty container or vehicle that gets returned.
• Pipeline are having lowest variable cost because its not labor intensive, cost extremely
low once the pipeline have been constructed

Disadvantages of Pipeline System

•Pipelines are not flexible.

•It is having highest fixed cost because of construction and requirements for control
stations and pumping capacity
•Pipelines can be used where there is large and stable flow of items.
LOGISTICS AUTOMATION

Logistics automation is the application of computer software and / or automated

machinery to improve the efficiency of logistics operations. Typically this refers to
operations within a warehouse or distribution center, with broader tasks undertaken by
supply chain management systems and enterprise resource planning systems.

Logistics automation systems can powerfully complement the facilities provided by these
higher level computer systems. The focus on an individual node within a wider logistics
network allows systems to be highly tailored to the requirements of that node.

Benefits of logistics automation

A typical warehouse or distribution center will receive stock of a variety of products from
suppliers and store these until the receipt of orders from customers, whether individual
buyers (e.g. mail order), retail branches (e.g. chain stores), or other companies (e.g.
wholesalers). A logistics automation system may provide the following:

• Automated goods in processes: Incoming goods can be marked with barcodes and the
automation system notified of the expected stock. On arrival, the goods can be
scanned and thereby identified, and taken via conveyors, sortation systems, and
automated cranes into an automatically assigned storage location.
• Automated Goods Retrieval for Orders: On receipt of orders, the automation system
is able to immediately locate goods and retrieve them to a pickface location.
• Automated despatch processing: Combining knowledge of all orders placed at the
warehouse the automation system can assign picked goods into despatch units and
then into outbound loads. Sortation systems and conveyors can then move these onto
the outgoing trailers.

A complete warehouse automation system can drastically reduce the workforce required
to run a facility, with human input required only for a few tasks, such as picking units of
product from a bulk packed case. Even here, assistance can be provided with equipment
such as pick-to-light units. Smaller systems may only be required to handle part of the
process. Examples include automated storage and retrieval systems, which simply use
cranes to store and retrieve identified cases or pallets, typically into a high bay storage
system which would be unfeasible to access using fork-lift trucks or any other means

The Malcolm Baldrige National Quality Award is given by the United States National
Institute of Standards and Technology. Through the actions of the National Productivity
Advisory Committee chaired by Jack Grayson, it was established by the Malcolm
Baldrige National Quality Improvement Act of 1987 - Public Law 100-107 and named
for Malcolm Baldrige, who served as United States Secretary of Commerce during the
Reagan administration from 1981 until his 1987 death in a rodeo accident. APQC, [1],
organized the first White House Conference on Productivity, spearheading the creation
and design of the Malcolm Baldrige National Quality Award in 1987, and jointly
administering the award for its first three years. The program recognizes quality service
in the business, health care, education, and nonprofit sectors and was inspired by the
ideas of Total Quality Management or TQM. This is the only quality award that is
actually awarded by the President of the United States. This award and the Ron Brown
Award are the two U.S. presidential awards given to corporations.

The original stated purposes of the award were to:

• promote quality awareness

• recognize quality achievements of the US companies
• publicize successful quality strategies

The current award criteria are stated to have three important roles in strengthening US
competitiveness:

• To help improve organizational performance practices, capabilities and results

• To facilitate communication and sharing of the best practice information among
US organizations of all types
• To serve as a working tool for understanding and managing performance and for
guiding planning and opportunities for learning

The criteria are designed to help organizations use an aligned approach to organizational
performance management that results in:

• Delivery of ever-improving value to customers, contributing to market success

• Improvement in overall organizational effectiveness and capabilities
• Organizational and personal learning

The seven categories of the criteria are:

1. Leadership
2. Strategic Planning
3. Customer & Market Focus
4. Measurement, Analysis and Knowledge Management
5. Workforce Focus
6. Process Management
7. Results

The Deming prize, established in December 1950 in honor of W. Edwards

Deming, was originally designed to reward Japanese companies for major
advances in quality improvement. Over the years it has grown, under the guidance
of Japanese Union of Scientists and Engineers (JUSE) to where it is now also
available to non-Japanese companies, albeit usually operating in Japan, and also
to individuals recognized as having made major contributions to the advancement
of quality. The awards ceremony is broadcast every year in Japan on national
television.

Two categories of awards are made annually, the Deming Prize for Individuals
and the Deming Application Prize.