WIPRO – E PERIPHERALSWIPRO – E PERIPHERALSMYSOREMYSORE

PRESENTATION ON

LOGISTICS AND SUPPLY

CHAIN MANAGEMENT

PRESENTATION BY V.VENUGOPALPRESENTATION BY V.VENUGOPALB.A., D.Com., CAIIBB.A., D.Com., CAIIB, ,

PGDLSMPGDLSM

GRADUATE IN SHIPPING STUDIESGRADUATE IN SHIPPING STUDIES (VLADIVOSTOK, EARSTWHILE USSR)(VLADIVOSTOK, EARSTWHILE USSR)

(TRAINED BY USSR NAVY)(TRAINED BY USSR NAVY)

SPECIALIST IN LOGISTICS AND SHIPPINGSPECIALIST IN LOGISTICS AND SHIPPING

EXPERIENCE – 41 EVENTFULL YEARSEXPERIENCE – 41 EVENTFULL YEARS

DIRECTOR EDUCATION WINGDIRECTOR EDUCATION WING

RAIGAD CHAMBER OF COMMERCE AND RAIGAD CHAMBER OF COMMERCE AND INDUSTRYINDUSTRY

VISITING FACULTY

SIES COLLEGE OF MANAGEMENT STUDIES – NAVI MUMBAI

PILLAIS INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH – NAVI MUMBAI

MVIRDC WORLD TRADE CENTRE – MUMBAI SELTEL INC. – NAVI MUMBAI INTERNATIONAL INSTITUTE OF BUSINESS RESEARCH –

PUNE INSTITUTE OF LOGISTICS AND SHIPPING – NAVI

MUMBAI

SCOPE OF SUBJECTSCOPE OF SUBJECT

INTRODUCTION TO LOGISTICS LOGISTICS DEFINED OBJECTIVES OF LOGISTICS MANAGEMENT FUNCTIONAL AREAS OF LOGISTICS LOGISTICS OUTSOURCING THIRD PARTY LOGISTICS FOURTH PARTY LOGISTICS LOGISTICS VALUE CHAIN LOGISTICS PRIMARY ACTIVITIES SUPPORT ACTIVITIES LOGISTICS MISSION SUPPLY CHAIN MANAGEMENT SUPPLY CHAIN MANAGEMENT DEFINED SUPPLY CHAIN TYPES

SCOPE OF SUBJECT (CONTD)SCOPE OF SUBJECT (CONTD)

OBJECTIVES OF SUPPLY CHAIN MANAGEMENT SUPPLY CHAIN CONSTITUENTS SUPPLY CHAIN ACTIVITIES SUPPLY CHAIN IMPLEMENTATION WEB-CENTRIC SUPPLY CHAIN WAREHOUSE OPERATIONS TYPES OF WAREHOUSES PACKING AND PACKAGING MATERIAL HANDLING EQUIPMENTS MULTIMODAL TRANSPORTATION CONTAINERS INCOTERMS CONCLUSION

WHAT DO YOU UNDERSTAND BY WHAT DO YOU UNDERSTAND BY LOGISTICS MANAGEMENT?LOGISTICS MANAGEMENT?

It is mainly a matter of operation.It is mainly a matter of operation. Clubbed with Process & Procedures.Clubbed with Process & Procedures. Monitored by Regulatory Bodies.Monitored by Regulatory Bodies. Logistics deals with:Logistics deals with:

Supply.Supply. Storage.Storage. Service.Service.

While the fundamentals of Logistics remain same, the While the fundamentals of Logistics remain same, the actual application will differ from product to product.actual application will differ from product to product.

This is a vast result – oriented activity.This is a vast result – oriented activity. Lots of efforts needed for this subject.Lots of efforts needed for this subject.

LOGISTICS DEFINEDLOGISTICS DEFINED

The American Council of Logistics The American Council of Logistics Management defines logistics asManagement defines logistics as “the process “the process of planning, implementing & controlling the of planning, implementing & controlling the efficient, cost effective flow & storage of raw efficient, cost effective flow & storage of raw materials, in – process inventory, finished materials, in – process inventory, finished goods & related information from point of goods & related information from point of origin to the point of consumption for the origin to the point of consumption for the purpose of conforming to customers purpose of conforming to customers requirements.”requirements.”

OBJECTIVES OF OBJECTIVES OF LOGISTICS MANAGEMENT.LOGISTICS MANAGEMENT.

Inventory Reduction.Inventory Reduction. Reliable & Consistent Delivery Reliable & Consistent Delivery

Performance.Performance. Freight Economy.Freight Economy. Minimum Product Damages.Minimum Product Damages. Quick Response.Quick Response. Reverse Logistics.Reverse Logistics.

LOGISTICS FUNCTIONAL AREASLOGISTICS FUNCTIONAL AREAS

Facility Location and Network Design.Facility Location and Network Design. Information Management.Information Management. Transportation Management.Transportation Management. Inventory Management.Inventory Management. Warehouse Management.Warehouse Management. Materials Handling.Materials Handling. Packaging.Packaging. Reverse Logistics.Reverse Logistics.

7 R’s – DEFINITIONS OF LOGISTICS7 R’s – DEFINITIONS OF LOGISTICS

Right Product.Right Product. Right Customer.Right Customer. Right QuantityRight Quantity Right ConditionRight Condition Right PlaceRight Place Right TimeRight Time Right CostRight Cost

These indicates the following role for Logistics.These indicates the following role for Logistics.

ROLE OF LOGISTICSROLE OF LOGISTICS Accurate interpretation of customer orders Accurate interpretation of customer orders

and / or marketing strategy.and / or marketing strategy. Accurate interpretation of customer Accurate interpretation of customer

requirements or orders and / or marketing requirements or orders and / or marketing strategy as also providing manufacturing strategy as also providing manufacturing support.support.

Precise execution of the process of the product Precise execution of the process of the product from point of origin to the point of from point of origin to the point of requirement / consumption.requirement / consumption.

Suitable care of product from the point of Suitable care of product from the point of origin to the point of consumption.origin to the point of consumption.

Efficiency to ensure the lowest cost during Efficiency to ensure the lowest cost during execution.execution.

ROLE OF 3 PL & 4 PLROLE OF 3 PL & 4 PL 3 PL means 3 PL means 33rdrd PARTY LOGISTICS PARTY LOGISTICS. 4 PL means . 4 PL means 44thth

PARTY LOGISTICS.PARTY LOGISTICS.

What is 3 PL??What is 3 PL?? The trend which developed during 1990s, companies started The trend which developed during 1990s, companies started

focusing on the core competencies & outsourced their focusing on the core competencies & outsourced their business support activities. This is nothing but a BPO business support activities. This is nothing but a BPO activity.activity.

What is 4 PL??What is 4 PL?? 4 PL is nothing but an extension of 3 PL for further 4 PL is nothing but an extension of 3 PL for further

specializing in the BPO activity.specializing in the BPO activity.

Parent companies are directly contracted with 3 PL Parent companies are directly contracted with 3 PL companies but 4 PL agreements are not with parent companies but 4 PL agreements are not with parent companies but with 3 PL service provider.companies but with 3 PL service provider.

THIRD PARTY LOGISTICSTHIRD PARTY LOGISTICS

The Evolution Logistics Outsourcing is explained here under:

Future 4 PL Early ’00 3 PL Late 90’s Complex Logistics

System Mid 90’s Warehousing

transportation Related services Early 90’s Transportation Services

Logistics Outsourcing

VALUE CHAIN ACTIVITIES BY PORTER (1985)VALUE CHAIN ACTIVITIES BY PORTER (1985)

The value chain of Porter (1985) is composed of value activities and a The value chain of Porter (1985) is composed of value activities and a margin, which is achieved by these activities. Value activities can be margin, which is achieved by these activities. Value activities can be divided into physically & technically different groups of activities. Porter divided into physically & technically different groups of activities. Porter differentiates between primary activities and support activities. Primary differentiates between primary activities and support activities. Primary activities are those which are directed at the physical transformation & activities are those which are directed at the physical transformation & handling of the final products, which the company delivers to its handling of the final products, which the company delivers to its customers. Support activities enable & support the primary activities. customers. Support activities enable & support the primary activities. They can be directed at supporting one of the primary activities as well as They can be directed at supporting one of the primary activities as well as supporting the whole primary process.supporting the whole primary process.

Porter differentiates between 5 generic categories of primary activities:Porter differentiates between 5 generic categories of primary activities: 1.1. Inbound Logistics Inbound Logistics 2.2. Operation Operation 3.3. Outbound Logistics Outbound Logistics 4.4. Marketing & Sales & Marketing & Sales & 5. 5. Services. Services.

Support Activities are grouped into 4 categories:Support Activities are grouped into 4 categories: 1.1. Procurement Procurement 2.2. Technology Development Technology Development 3.3. Human Resource Management & Human Resource Management & 4.4. Firm Infrastructure. Firm Infrastructure.

THE MISSION OF LOGISTICSTHE MISSION OF LOGISTICS

YOU ARE NOW AWARE OF THE FACT THAT A FIRM ACHIEVES COMPETITIVE ADVANTAGE OVER ITS COMPETITORS BY FULFILLING CUSTOMER REQUIREMENTS (VALUE ADVANTAGE OR EFFECTIVENESS) THE LOWEST COST (PRODUCTIVITY ADVANTAGES OR EFFECIENCY). STRATEGICALLY, LOGISTICS AIMS TOWARDS ACHEIVING A PREVIOUSLY AGREED UPON QUALITY OF CUSTOMER SERVICE THROUGH EFFICIENT OPERATIONS. THUS, INTEGRATED LOGISTICAL SYSTEMS AIM TO FULFILL THE SERVICE AT THE LEVEL REQUIRED BY THE CUSTOMER BY PERFORMING THE NECESSARY OPERATIONS AT THE LOWEST POSSIBLE TOTAL COST.

WHAT IS SUPPLY CHAINWHAT IS SUPPLY CHAIN

A supply chain includes all the process that add customer desired value to material and bring it to the customer. This value gets added at various stages of the journey that material takes till it reaches the customer. Supply chain encompasses all these value adding stages.

SCM DEFINED- CiscoSCM aims to increase sales, reduce costs, & make full use of asset by streamlining the interaction & communication of all participants along the supply chain. SCM solutions use networking technology to link suppliers, distributors & business partners to better satisfy the end customer, while feeding real time data about customer demand into the partner’s production & distribution process.

S.C.M & LOGISTICS INTEGRATEDS.C.M & LOGISTICS INTEGRATEDSUPPLY CHAIN MANAGEMENT –SUPPLY CHAIN MANAGEMENT –

A system through which the supply is moving. A system through which the supply is moving. LOGISTICS – LOGISTICS –

A concept / operation through which the goods are A concept / operation through which the goods are moved.moved.In the whole operation, S.C.M cannot deliver without the In the whole operation, S.C.M cannot deliver without the help of Logistics but not vice versa.help of Logistics but not vice versa.

SCMSCM LOGISTICSLOGISTICS

SUPPLY CHAIN TYPESSUPPLY CHAIN TYPES

1. Raw Supply Chain2. Ripe Supply Chain3. Internal Supply Chain4. Extended Supply Chain5. Self Monitored Supply Chain6. Outsourced Supply Chain7. Production Oriented Supply Chain8. Financial Oriented Supply Chain9. Market Oriented Supply Chain10. Value Chains (Complete Supply Chains)

OBJECTIVES OF SCMOBJECTIVES OF SCM

The most important objective is unification of all the functions & activities that are required throughout the product life cycle from lust to dust. This unification or integration allows a smooth passage of information & products throughout the system. Managing the complete product life cycle includes managing the design, source, make & delivery. The principal objectives are

To reduce the physical supply chain links To define supply chain responsibilities to a specific core

service competency. To decrease the time & cost of getting end user products in

volume to markets worldwide.

SCM CONSTITUENTSSCM CONSTITUENTS

Information Supply Production Distribution Supply Stock (Inventory)

SCM ACTIVITIESSCM ACTIVITIES

Plan Source Make Deliver Return

SCM IMPLEMENTATIONSCM IMPLEMENTATION

Supply Chain is a function of how each product travels from its origin to destination & this is completely product specific, supply chain also has to be accordingly designed & implemented. The integration process composed of materials, services, information & cash within a company as well within the network of companies or organisations that manufacture & deliver the products & services from initial sources to end users.The challenge is for firms to internalise the approach throughout their firms & their trading partners in end to end total supply chains. The move is from ENTERPRISE to IMMEDIATE EXTENDED to TOTAL END TO END Supply chain thinking.Successful supply chain implementation projects reveals the following 4 commonalities:

1. Crafting Project Vision2. 2. Managing Organisational Change3. Right Implementation Approach 4. Managing Technical Challenges

WEB-CENTRIC SUPPLY CHAINWEB-CENTRIC SUPPLY CHAIN

The internet enabled e-business applications have integrated internet with all branches of supply chain & emerged as the most cost effective means of supply chain operations.

E-BUSINESS APPLICATIONS E-Commerce E-Procurement E-Collaboration

WAREHOUSE OPERATIONSWAREHOUSE OPERATIONS

GODOWN

A mere conventional storage place

WAREHOUSE A strategic inventory storage space Part of a SCM Hub of logistics activity Software based (IT) regular operation to serve the SCM

partners & end users Reports to management through MIS

TYPES OF WAREHOUSESTYPES OF WAREHOUSES

Public Warehouse Private Warehouse Bonded Warehouse

Mostly conducted by 3PL Operators.

PROTECTIVE PACKAGINGPROTECTIVE PACKAGING

CONCEPT

PACKING – Is nothing but wrapping

PACKAGING – The material used for wrapping.

PACKAGE – The wrapped merchandise.

TYPES OF PACKING Industrial Commercial

PROTECTIVE PACKAGINGPROTECTIVE PACKAGING

LOGISTICAL FUNCTIONS

CONTAINMENT – Keeping together – space related. PROTECTION – Product characteristics + logistical

hazard = package protection UTILIZATION – Productivity + Efficiency of Total

Logistics System = Loading, Stacking, etc COMMUNICATION – Bar coding/Handling Symbols, etc

MATERIAL HANDLING EQUIPMENTSMATERIAL HANDLING EQUIPMENTS

Handling equipments are built under global specifications. Some of the equipments are:

Pallet Trolley Fork Lift Grabbers Cranes / Lifts Port Equipments – Quay Cranes – Rail Mounted

Gantry Cranes – Rail & TyreStraddle Carriers (Stakers)

MULTIMODAL TRANSPORTATIONMULTIMODAL TRANSPORTATION

MODES OF TRANSPORTS Road Rail Air Sea PipelineMultimodal Transportation of Goods Act, 1993 On 16th Oct. 1992, President of India promulgated the

MTG Ordinance, 1992 The Ordinance received the status of an Act on 2nd April

1993 This made the movement of goods much easy under single

documentation.

CONTAINERISATIONCONTAINERISATION

Container is nothing but a box to stack the merchandise & it is available in different sizes.

a. 20 ft x 8 ft x 8 ft

b. 20 ft x 8 ft x 8.5 ft

c. 40 ft x 8 ft x 8ft

d. 40 ft x 8ft x 8.5ft

e. 40 ft x 8 ft x 9.5 ft known as HIGH CUBE

UNIT LOAD

A 20 ft container is considered as 1 TEU in shipping.

A 40 ft container is considered as 1 FEU i.e. 2 TEU’s.

TYPES OF CONTAINERSTYPES OF CONTAINERS General Cargo Container – Packed Cargo Reefer Container – Perishable – Flowers, etc Insulated Containers – Vegetables, etc – Dry Ice Ventilated Containers – Apertures on sides – fruits, roots, onions, etc Bulk Container Tank Container Open Top Container Side Open Containers Flat Racks Car Containers Pen Container (for livestock)

INCOTERMSINCOTERMS INTERNATIONAL COMMERCIAL TERMINOLGIES WITH

INTERNATIONAL MEANINGS & IMPLICATIONS

CLASSIFICATIONGROUP C – MAIN CARRIAGE PAIDCFR – Cost & FreightCIF – Cost, Insurance & FreightCPT – Carriage Paid ToCIP – Carriage & Insurance Paid To

GROUP D – ARRIVALDAF - Delivered at FrontierDES – Delivered Ex ShipDEQ – Delivered Ex QuayDDU – Delivered Duty UnpaidDDP – Delivered Duty Paid

INCOTERMSINCOTERMS

GROUP E – DEPARTURE

EXW – Ex Works

GROUP F – MAIN CARRIAGE UNPAID

FCA – Free Carrier

FAS – Free Alongside Ship

FOB – Free on Board

THANK YOUTHANK YOU

CONCLUSIONCONCLUSION

Participants may please note that the foregoings are only a part introduction of this vast operational subject. Each topic has to be studied in depth to acquire professional knowledge to become an effective member of your logistics team. INSTITUTE OF LOGISTICS AND SHIPPING (MYSORE)DIPLOMA IN LOGISTICS & SHIPPING is the appropriate preliminary study one should undergo to get accustomed with this subject which is now available in Mysore conducted by ILS (Mysore) in association with Raigad Chamber of Commerce & Industry which is Government of India, Ministry of Commerce & Industry, Director General Foreign Trade approved Chamber of Commerce operating in Navi Mumbai, Maharashtra. Interested may contact Mr. M. N. SURESH, DIRECTOR, ILS (MYSORE). Tel. No. 6452645 Mob: 9448455870