Module 2

Strategic Logistic Plan:

A strategic logistic plan is a comprehensive, long-term strategy for managing the flow of goods
from origin to customer, with the goal of achieving competitive advantage through increased
efficiency, cost reduction, and improved customer satisfaction.

Operating objectives of logistics planning

Operating objectives

 Rapid Response: The ability to satisfy customer requirements quickly. This can involve
executing orders on a shipment-to-shipment basis rather than relying solely on pre-stocked
goods.
 Minimum Variance: The ability to handle unexpected events that disrupt operations, such as
delays, manufacturing issues, or damaged goods.
 Minimum Inventory: Minimizing the costs associated with carrying inventory while still
ensuring products are available to meet demand.
 Movement Consolidation: Optimizing routes and combining shipments to reduce transportation
costs and improve efficiency.
 Quality: Ensuring that products are handled, stored, and delivered while maintaining high
standards and minimizing damage.
 Life-Cycle Support: Providing support for products throughout their entire lifecycle, including
potential returns or reverse logistics.

Flow of Logistics planning

The flow of logistics planning involves assessing current operations and defining objectives,
analyzing the supply chain network and integrating technology, forecasting demand to plan for
inventory and transportation, and developing and implementing a strategic plan for warehousing,
procurement, and order fulfillment. The process concludes with continuous monitoring and
improvement of the entire system.

[Link] and objective setting

Assess current logistics:
Evaluate existing operations to understand current strengths and weaknesses.
Define objectives:
Clarify goals, such as reducing costs, improving delivery times, or increasing efficiency.
 2. Analysis and strategy development
Analyze the supply chain network: Determine the optimal number, size, and location of
facilities, and decide which products to stock where.
Integrate technology: Plan for technology integration to improve efficiency and visibility.
Forecast demand: Predict customer needs to inform inventory and production planning.
Develop a strategic plan: Create a comprehensive plan that outlines how the company will
manage all aspects of the logistics flow.

3. Operational planning
Plan for procurement and partnerships: Select reliable suppliers and partners to ensure a
steady flow of materials.
Create a warehouse and inventory strategy:
Develop a plan for efficient storage and management of inventory to ensure optimal stock
levels.
Develop a transportation plan:
Evaluate transportation modes based on cost, speed, and reliability to create the most efficient
routes and choose carriers.
Plan for order processing:
Detail the steps for receiving, picking, packing, and dispatching orders.
Establish reverse logistics:
Plan for the return of goods for reasons like repairs, recycling, or resale.

4. Implementation and monitoring

Implement the plan: Put the strategic and operational plans into action.
Monitor and improve: Continuously track performance metrics and make adjustments to
improve efficiency and meet objectives.

Developing logistic activity:

Developing logistical activity requires a systematic approach, involving careful planning,

execution, monitoring, and continuous improvement of key logistics functions: procurement,
storage, inventory management, transportation, and order fulfillment. The goal is to ensure the
right product reaches the right customer at the right time and cost.

Key Steps for Developing Logistical Activity

1. Define Objectives and Scope: Clearly outline what you aim to achieve (e.g., reduce costs,
improve delivery times, enhance customer satisfaction) and align these goals with your overall
business strategy.
2. Analyze Current Operations: Conduct a thorough assessment of existing logistics processes,
infrastructure, strengths, and weaknesses. Identify bottlenecks and areas for improvement.
3. Develop a Comprehensive Plan: Create a detailed plan that covers all logistics functions:
Procurement: Establish efficient processes for sourcing and acquiring necessary materials and
goods.
Warehousing and Storage: Design an optimal warehouse layout and storage system to
maximize space and efficiency. This may involve using vertical storage or strategically placing
high-demand items near loading bays.
Inventory Management: Implement strategies like Just-In-Time (JIT) or ABC analysis to
maintain optimal stock levels, avoiding both overstocking and stockouts.
Transportation: Select the most cost-effective and reliable transportation modes (road, rail, air,
sea) and optimize routes to minimize fuel consumption and delivery times.
Order Fulfillment: Streamline the picking, packing, and dispatching processes to ensure
accurate and timely order delivery.
Reverse Logistics: Plan for managing product returns efficiently, which impacts customer
satisfaction and environmental sustainability.
[Link] Strong Relationships: Foster clear communication and strong, collaborative
relationships with suppliers, carriers, 3PL providers, and internal stakeholders to ensure seamless
integration across the supply chain.
[Link] and Execute the Plan: Roll out the logistics plan, ensuring all staff are trained and
understand their roles. This stage requires careful management and coordination to avoid
disruptions.
[Link] and Control Performance: Continuously track performance against Key
Performance Indicators (KPIs) such as on-time delivery rates, order accuracy, and cost per unit.
Use this data to identify deviations and take corrective actions.
[Link] Flexibility and Risk Management: Develop contingency plans for potential
disruptions (e.g., natural disasters, supplier failures, fuel price increases). The ability to adapt to
changing market conditions and unforeseen events is crucial.
[Link] Continuous Improvement: Regularly review the entire logistics operation, gather
feedback, and implement changes to enhance efficiency, reduce costs, and improve customer
service on an ongoing basis.

Logistic system design and administration

Logistic system design and administration involves analyzing and designing a system to optimize
the flow of goods, information, and resources, and then administering and managing its day-to-
day operations to ensure efficiency, reduce costs, and meet customer needs.

Logistic system design and administration involves

 Analyzing and designing a system to optimize the flow of goods, information, and resources,
and then

Administering and managing its day-to-day operations to ensure efficiency, reduce costs, and
meet customer needs.

Logistics Environment Assessment:

A logistics environment assessment evaluates the environmental and social impacts of a

company's logistics operations, often using methods like Life Cycle Assessment (LCA).

Key components of a logistics environment assessment

 Energy and fuel consumption:
Analyzes direct and indirect energy use, including fuel for vehicles (diesel, gasoline, natural gas)
and electricity for equipment within distribution centers (forklifts, cranes, processing
equipment).
 Emissions and pollutants:
Quantifies various emissions, such as carbon dioxide, other harmful gases, and fine particles
from transportation and warehouse operations.
 Waste and packaging:
Assesses waste generated, including packaging materials. This can be reduced by using full
cartons or pallets instead of individual pieces, implementing eco-friendly packaging, or using
reusable containers.
 Social impacts:
Considers the social effects of logistics, which can include labor practices, community impact,
and the trade-off between consumer demand for fast delivery and environmental sustainability.

Pricing in Logistics

Pricing in logistics refers to the rates charged for moving and storing goods, which can be
influenced by factors like distance, demand, fuel costs, and service level

Types of Pricing

 Zone Pricing: A simplified strategy where shipping costs are determined by predefined
geographic zones rather than the exact distance. Costs are fixed for each zone, making it a
predictable model for both providers and customers.
 Dynamic Pricing: Rates change in real time based on supply, demand, fuel prices, and other
market factors. This approach allows for flexible and agile responses to volatile conditions,
especially in freight and transportation.
 Long-term Contracts: Predetermined rates agreed upon for an extended period, often providing
price stability for shippers and guaranteed business for providers.
 Spot Cargo Pricing: Prices are set on a per-shipment basis and are often more volatile,
influenced by current market availability and demand.

Warehouse:
Warehousing is the process of storing physical inventory for sale or distribution. Warehouses are
used by all different types of businesses that need to temporarily store products in bulk before
either shipping them to other locations or individually to end consumers.

Scope / Objectives of Warehousing

The place where raw material and/or finished goods are stored is referred to as warehouse or
store. Generally, warehouse is structure or building design keeping in mind raw material and
finished goods it is going to store. Therefore, warehouse management should be able to:
Receive the purchase goods and entered upon the stock register.
Inventory Accounting of raw material, work-in-progress or finished goods.
Preservation of the inventory
Ability to access goods whenever called upon.
Appropriate record keeping through coding as to preserve goods and reduce obsolescence.
Proper stocking of goods as ensure smooth handling.
A smooth flow of production
Appropriate layout management to reduce material handling and equipment handling

Primary Functions of Warehouse:

1. Storage
The primary function of warehousing is to provide storage facilities for surplus commodities that
are not needed now. They can be provided as and when demanded by the customers.

2. Price Stabilization
The second function of the warehouse is price stabilization. Warehouses play an essential role in
the method of price stabilization. Warehouse decreases drastic fluctuations in costs by storing
goods when their supply outpaces demand.

3. Risk bearing
When goods are preserved in a warehouse they are exposed to various uncertainties in the form
of fire, deterioration, and stealing, etc. Warehouses are created in such a method that they
decrease these risks. A warehouse owner has to take sensible care of the goods and safeguard
them from several risks. For any loss or provided by goods, the warehouse keeper shall be
responsible to the owner of the goods.
4. Financing
The fourth function of the warehouse is financing. Loans can be raised from the financial
institutions or from the warehouse keeper against the goods stored by the owner. Goods work as
a protection for the warehouse keeper or for protection. In this way, warehousing serves as a
cause of finance for the businessmen for meeting business operations.

5. Grading and packing

Nowadays warehouses give the facilities of packing, processing, and grading of goods can be
packed in suitable dimensions as per the guidance of the owner.

6. Transportation
Nowadays warehouses give transport services to most clients. It stores goods from the point of
production and also sends goods to the point of delivery at the call of the owner.

7. Time and place utility

The seventh function of the warehouse is that its creation time and place utility warehouse.
produce time utility by storing goods till they are demanded. It also produced place utility by
producing the goods at the place where they are needed.

8. Processing
Several commodities are not used in the form they are produced. processing is needed to create
them consumable. e.g. fruit is ripened, paddy is polished, etc.

Efficient Warehouse Management

1. Maximise and optimise all available space. Rather than expand the footprint of your
warehouse, consider better use of vertical space. Adding taller storage units and the right
equipment to pick and store material can help you keep more in the same square footage, rather
than adding expansion costs. In addition, think about the type and variety of shelving used.
Storing small items on pallet racks wastes space, and makes it easy to misplace items. Rather
than using the same racks throughout your warehouse, you may need various types of shelving
for different materials. Also, try using standardised bins to help keep shelves neat and orderly.

2. Lean Inventory. Adopting lean inventory for your warehouse is just as important as it is in
manufacturing. The basic premise of lean is only what you need, and nothing more. Possibly
reduce or eliminate safety stocks, and try to get suppliers to deliver smaller quantities more
frequently.

3. Adopt enabling technology. A warehouse management system (WMS) or an ERP system

with a strong WMS module can improve efficiency by suggesting the best routes and methods
for picking or put-away. 4. Organise workstations. Organising workstations improves
productivity because workers do not have to search for tools or equipment. Use the “5S” method
from lean manufacturing to ensure your workstations are as organised as possible. It consists of:
Sort; Set in order; Shine; Standardize; and sustain — all techniques designed to keep clutter at
bay, reduce errors, and improve safety and organisation.
5. Optimise labour efficiency. If your WMS doesn’t have the ability to generate efficient
picking plans, create them manually. Analyse your material usage patterns, and store high-
volume items together near the front of the warehouse to eliminate travel time. Also, store items
that are frequently sold together near one another. Basically, you will streamline operations if
you try to keep the items you pick most often in the most accessible locations to eliminate
picking delays.

6. Use Bin Locations and Labelling. To make it easier to find what is needed, the use of bin
locations for certain items will be crucial. Barcode labelling is essential, too. These techniques
will help to ensure that you know exactly where all of the items are supposed to be, making it
faster and easier for your employees to pick the times and fulfil customer orders.

7. Ensure Safety. The safety of your employees should always be of the utmost importance.
They need to understand all of the safety protocols that you have in place, and they need to
follow the rules. They also need to know how to safely utilize all of the equipment that they will
be using for picking items, such as forklifts, dollies, ladders, etc.

8. Train the Staff Properly. In addition to training the staff on safety protocols and how to use
equipment safely, they also need to be trained on how to pick properly. They need to know how
to use their scanners, how to complete orders, and how to work as efficiently as possible. Human
error is one of the most common problems in warehouse inventory management, and the only
way to reduce these errors is with proper training.

9. Reduce Inventory that Doesn’t Sell. You might find that you have some shelves of inventory
that never seem to diminish. It is not because you are restocking a popular item. Instead, it is
because the item on those shelves never sells. These slow-selling items are taking up valuable
real estate in your warehouse. You must understand which items are not selling, so you can then
remove them from your stock. Your company might want to run a sale on them to reduce
inventory or find another means of disposing of them.

Types of Warehouses:
1. Public Warehouse:
Definition: Public warehouses are owned and operated by third-party companies that offer
storage and handling services to multiple businesses.

Public warehouses are cost-effective for businesses with variable storage requirements.

2. Private Warehouse:
Definition: Private warehouses are owned and operated by a single company to exclusively
meet its own storage and distribution needs.

These warehouses are dedicated to a specific company.

Companies with consistent and large storage requirements often opt for private warehouses.
3. Contract Warehouse:
Definition: Contract warehouses are operated by third-party providers under contractual
agreements with specific businesses.

These warehouses offer customized services based on contractual agreements.

Contract warehouses are suitable for businesses with varying storage needs but who also want
specific services tailored to their requirements.

4. Automated Warehouse:
Definition: Automated warehouses use advanced technologies such as robotics and conveyor
systems to automate various aspects of the storage and retrieval process.

Common automated features include robotic picking systems, automated storage and retrieval
systems (AS/RS), and conveyor belts.

Automated warehouses are suitable for high-volume and repetitive tasks.

5. Climate-Controlled Warehouse:
Definition: Climate-controlled warehouses maintain specific temperature and humidity levels
to protect sensitive goods from environmental conditions.

Suitable for products like pharmaceuticals, perishable goods, electronics, and certain
chemicals.

Climate control helps prevent damage from temperature fluctuations and humidity.

These warehouses are essential for industries where product integrity is critical.

6. Distribution Center:
Definition: Distribution centers are specialized warehouses designed to efficiently manage the
distribution of goods to retailers, wholesalers, or directly to consumers.

Often strategically located near major transportation hubs for efficient distribution.

Utilizes advanced technology for order processing and shipment coordination.

Each type of warehouse serves specific business needs and preferences, allowing companies to
choose the one that aligns with their storage and distribution requirements.
 Methods and tools facilitating international Logistics and challenges:

 Multimodal transportation:Combining different transport modes (air, sea, road, rail) for optimal
speed and cost.
 Freight Consolidation: Combining smaller shipments into one to reduce costs.
 Customs & Compliance: Expertise in diverse regulations, permits, and documentation.
 Inventory & Warehouse Management: Optimizing stock levels and locations globally using
local distribution centers.
 Risk Management: Mitigating political, economic, and security risks.
 Reverse Logistics: Managing returns and recycling efficiently.
 Supplier Relationship Management: Building strong partnerships for reliability.
 Blockchain: Enhances transparency, security, and traceability in transactions.
 GPS & Tracking Systems: Real-time location updates and estimated arrival times (ETAs).
 Visibility Platforms: Provide end-to-end supply chain visibility.

Challenges
 Visibility: IoT sensors, real-time tracking on TMS/WMS platforms, Blockchain for chain of
custody.
 Compliance: AI-driven automation for customs, cloud platforms for regulatory updates.
 Efficiency: TMS for route optimization, WMS for inventory, automation for speed.
 Risk: Data analytics for forecasting, diverse sourcing, contingency planning.

******************************************************************************