MODULE - 3

Strategic Logistic plan

Strategic Logistic plan, Operating objectives of logistics

planning, Flow of logistics planning, Developing Logistic
strategy, Logistics System Design and Administration,
logistic environment assessment, Pricing in logistics,
Warehousing – scope, primary functions. Efficient
Warehouse Management System, Types of Warehouses.

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 Strategic Logistic plan

Definition

The LOGISTICS STRATEGY of an organisation

consists of all the strategic decisions, policies, plans
and culture relating to the management of its supply
chains.

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 Focus of the logistics strategy
Organisations can only survive by supplying products that
customers view as somehow better than those from competitors.

1. Cost
2. Customer service
3. Timing
4. Quality
5. Product flexibility
6. Volume flexibility
7. Technology
8. Location

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 OPERATING OBJECTIVES OF LOGISTICS
PLANNING

1. Rapid Response
2. Minimum Variance
3. Minimum Inventory
4. Movement Consolidation
5. Quality Improvement
6. Life-Cycle Support

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 Flow of logistics planning
Digging deeper, logistics planning relies on a three-part approach that
addresses the entire system.

1. Long-term goals set up the organization for success by satisfying

consumers and meeting customer demand through a stable, adaptable
supply chain. Goals must have quantifiable factors and rely on data to
assess successes.

2. Means refers to the ability to deliver a positive customer experience,

provide value, and work toward long-term goals.

3. The process addresses the strategies for achieving all business objectives.

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 TYPES OF LOGISTICS MANAGEMENT

1. Inventory Management
2. Production
3. Distribution
4. Returns

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 Designing A Logistics Strategy

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 Logistics Management Systems

▪Logistics management systems are software tools that

automate and optimise the transportation, distribution and
storage of goods.

▪The supply chain is the journey a product takes from the

point of production through to the consumer and a logistics
management system controls the movement of information,
goods and services.

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 Types of logistics systems

1. Warehouse management system (WMS)

2. Transport management system (TMS)
3. Reverse logistics system

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 Logistic environment assessment

▪Green logistics, also known as environmental logistics, refers

to the sustainable policies and measures focusing on lowering the
impact logistics has on the environment.

▪ This includes the configuration of processes, structures, systems,

and equipment used in the transportation, distribution, and
warehousing of goods.

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 Ways to reduce the environmental impact of
logistics

1. Optimizing routes
2. Tracking empty miles
3. Increasing the efficiency of transportation
4. Using more sustainable transportation options
5. Warehouse management
6. Implementing green logistics practices
7. Collaborating with suppliers and customers

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 Pricing in logistics
A logistical cost refers to any expense incurred by a business to
manage its logistics.

Knowing how to reduce them is key to being more competitive.

Logistics costs include expenses related to resource acquisition,

product distribution, and other expenses that make up a company
chain of production, sales, and delivery.

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 Pricing in logistics
▪Pricing strategies in logistics have been less mature than in
other sectors. Fragmentation and a historically low degree
of digitization have been challenges in developing more
complex approaches.

▪However, recent investments in data infrastructure have

now opened a window for more comprehensive pricing
transformation.

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 Warehousing
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.

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Part of firms logistics system that stores products at and
between point of origin and point of consumption.

Term “Warehousing” is referred as transportation at

zero miles per hour

Warehousing provides time and place utility for raw

materials, industrial goods, and finished products,
allowing firms to use customer service as a dynamic
value-adding competitive tool.

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 THE ROLE OF THE WAREHOUSE IN THE
LOGISTICS SYSTEM

The warehouse is where the supply chain

holds or stores goods.
Functions of warehousing include
◦ Transportation consolidation
◦ Product mixing
◦ Docking
◦ Service
◦ Protection against contingencies

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 TYPE OF WAREHOUSING
• Public Warehousing

• Private Warehousing

• Contract Warehousing

• Multi-client Warehousing

• Bonded Warehousing
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 DESIGN CONSIDERATION

Ideal Facility for Pure Supplier Consolidation (Full

Pallet Movement) Warehouse Space
Requirements
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 PRINCIPLES OF WAREHOUSE LAYOUT
DESIGN

Use one-story
facilities

Move goods in a
straight line

Use efficient
materials-handling
equipment

Use an effective
storage plan

Minimize aisle
space

Use maximum
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height of the
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 RECEIVING
INP •Schedule Carrier
UT •Unload Vehicle
•Inspect for damage

WAREHOUSE PROCESS
Storage
Put-away
•Equipment
•Identify Product
•Stock Location
•Identify Product Location
– Popularity
•Move Products
– Unit Size
•Update Records
– Cube

Shipping Preparation Order Picking

•Packing •Information
•Labeling •Walk & Pick
•Stacking •Batch Picking

Shipping
•Schedule Carrier
OUTP
•Load Vehicle
UT
•Bill of Loading
•Record Update
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 OBJECTIVES OF EFFICIENT WAREHOUSE
OPERATIONS
• Provide timely customer service.
• Keep track of items so they can be found readily
& correctly.
• Minimize the total physical effort & thus the cost
of moving goods into & out of storage.
• Provide communication links with customers

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Benefits of Warehouse Management
◦ Provide a place to store & protect inventory
◦ Reduce transportation costs
◦ Improve customer service levels

Complexity of warehouse operation depends on

the number of SKUs handled & the number of
orders received & filled.

Most activity in a warehouse is material handling.

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 COSTS OF OPERATING A
WAREHOUSE

• Capital costs
— Costs of space & materials handling
equipment
• Operating costs
— Cost of labor
— Measure of labor productivity is the number
of units that an operator can move in a day
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 WAREHOUSE ACTIVITIES
• Receive goods

• Identify the goods

• Dispatch goods to storage

• Hold goods

Pick goods

Marshal shipment

Dispatch shipment

Operate an information system

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 Receive
• Accepts goods from goods
‒ Outside transportation or attached factory &
accepts responsibility
• Check the goods against an order & the bill of
loading
• Check the quantities
• Check for damage & fill out damage reports if
necessary
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Identify the
‒ items are
goods identified with the appropriate
stock-keeping unit (SKU) number (part number) & the
quantity received recorded

Dispatch goods to
storage
‒ goods are sorted & put away

Hold
goodare kept in storage & under proper protection
‒ goods
s
until needed
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 Pick
‒ items
goorequired from stock must be selected from
ds & brought to a marshalling area
storage

Marshal the
shipment
‒ goods making up a single order are brought together
& checked for omissions or errors; order records are
updated

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Dispatch the
shipment
‒ orders are packaged, shipping documents are
prepared, & goods loaded on the vehicle

Operate an
information system
‒ a record must be maintained for each item in stock
showing the quantity on hand, quantity received,
quantity issued, & location in the warehouse

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 Maximize productivity & minimize cost,
warehouse management must work with the
following

• Maximize use of space

– space is the largest capital cost
• Effective use of labor & equipment
– labor is the largest operating cost
– material handling equipment is the second
largest capital cost
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FACTORS INFLUENCING EFFECTIVE USE OF
WAREHOUSES

• Cube utilization and accessibility

• Stock location
• Order picking and assembly
• Physical Control & Security - Elements

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 Cube utilization and
accessibility

‒ Goods stored not just on the floor, but in the

cubic space of the warehouse; warehouse
capacity depends on how high goods can be
stored
‒ Accessibility means being able to get at the
goods wanted with a minimum amount of work
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 Cube utilization and accessibility
continued…

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 Stock Location
• Objectives
– To provide the required customer service
– To keep track of where items are stored
– To minimize effort to receive, put away, and
retrieve items
• Basic Stock Locating Systems
– Group functionally related items together
– Group fast-moving items together
– Group physically similar items together
– Locate working stock and reserve stock
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 Stock Location
continued…

• Fixed Location
– SKU assigned a permanent location, & no other items are
stored there
– Fixed-location systems usually have poor cube utilization
– Usually used in small warehouses; throughput is small, &
there are few SKUs
• Floating (Random) Location
– Goods stored wherever there is appropriate space
– Advantage is improved cube utilization
– It requires accurate and up-to-date information
– Warehouses using floating-location systems are usually
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 Stock Location
continued…
• Two other systems sometimes used are
– Point-of-use storage
• Inventory stored close to where it will be
needed
• Used in repetitive manufacturing & JIT systems
– Central storage
• Contains all inventory in one central location

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 Stock Location
continued…

• Advantages of Point-of-use Storage

– Materials are readily accessible to users

– Material handling is reduced or eliminated

– Central storage costs are reduced

– Material is accessible all the time

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 Stock Location
continued…

• Advantages of Central Storage

– Ease of control

– Inventory record accuracy is easier to maintain

– Specialized storage can be used

– Reduced safety stock, since users do not need to

carry their own safety stock

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 Order Picking and
Assembly

• When an order is received, items must be

obtained from the warehouse, grouped, &
prepared for shipment, systems used
– Area system
– Zone system
– Multi-order system
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 Order Picking and Assembly
continued…
◦ Area system

– Order picker circulates throughout warehouse

selecting items on an order -- order is ready to ship
when order picker is finished
◦ Zone system

– Warehouse is divided into zones, & each picker

works only in an assigned zone -- order is divided
by zone, & the items from each zone are sent to the
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 Order Picking and Assembly
continued…

◦ Multi-order system
– Same as the zone system, except that each
picker collects items for a number of orders
at the same time

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 PHYSICAL CONTROL & SECURITY - ELEMENTS
◦ Good part numbering system

◦ Simple, well-documented transaction system

– Identify the item

– Verify the quantity
– Record the transaction
– Physically execute the transaction
◦ Limited access

– Inventory must be kept in a safe, secure

(locked) place with limited general access
◦ Well-trained workforce
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 Thank
you

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