Elements of Logistics

Logistics management consists of eight elements called wings of logistics. These are

Customer Order Processing

Flow of Actions

  • Filling up the order form
  • Deciding the specifications of the product
  • Deciding the quality check list of the product
  • Deciding the delivery schedule
  • Deciding the location of delivery

Important Factors

  • Cost of order processing
  • whether the company is capable of producing a component
  • Detailed list of specifications

Techniques

  • Electronic data Interchange (EDI)
  • E-ERP or CPFR
  • Web portal

Location Analysis

Flow of Actions

  • Cost of transportation of raw materials and finished goods
  • Proximity to suppliers
  • Proximity to customers
  • Availability and type of land
  • Availability of secondary resources
  • Availability of desired manpower at affordable cost
  • Communal harmony
  • Governmental regulation and taxation

Important Factors

  • Cost of operations as a percentage of sales
  • Shelf life of product

Inventory Control

Flow of Actions

  • On hand inventory analysis
  • Communicating the quantity, quality and timing of material with the supply points.
  • Getting the material of right quality, quantity and at right time

Important Factors

  • Inventory control at planning stage
  • Lead time
  • Cost vs. importance of raw material

Techniques

  • DRP and replenishment order control
  • Fixed order interval system
  • Economic order quantity with ROP system
  • Selective inventory control (ABC, VED, FSN analysis etc.)
  • Order forecasting using statistical tools

Material Handling

Flow of Actions

  • Type of material (Business significance like raw material, finished goods etc.)
  • Material handling requirements of the material (Fragile, inflammable)
  • Cost ratio of material handling to material cost.
  • Material default location, identification and traceability

Important Factors

  • Material breakage
  • Pilferage
  • Cost of material handling
  • Number of handlings

Techniques

  • Operational research
  • Material flow analysis
  • Computerized material retrieval system
  • ASRS (Advanced Storage & Retrieval System)

Packaging

Flow of Actions

  • Packaging requirement for the material (Refrigeration, Fragile etc.)
  • Primary packaging
  • Secondary packaging
  • Cost of packaging
  • Transportation requirement for packaging (Vibration proof, water or moisture tight)

Important Factors

  • Protection to product
  • Holding the product
  • Communicating the message to customers
  • Customer requirement for packaging
  • Reverse logistics for packaging
  • Recycling of packaging material
  • Cost of packaging

Techniques

  • Standardized box packaging
  • Containerization of packaging
  • Direct part marking
  • ISO 14001
  • Recycling of packaging materials
  • Reusable packaging materials
  • Eco-friendly packaging materials
  • Bar coding
  • Bumpy bar coding
  • GPS tracking system
  • RFID

Transportation

Flow of Actions

  • Mode of transportation
  • Cost of product
  • Speed of transportation
  • Ambience requirement of material (Refrigeration, Vacuum)
  • Cost of transportation
  • Urgency of the product to customers

Important Factors

  • Urgency of the product
  • Cost of product
  • Cost of transportation

Techniques

  • Containerized transportation
  • Cool Chain Transport (Refrigerated Vans/Containers)
  • Multi-modal Logistics
  • Milk Run Distribution systems
  • Cross Docking
  • Direct Shipment

Warehousing

Flow of Actions

  • Location of the warehouse
  • Inventory level at the warehouse
  • Storage requirement of the product
  • Packaging and repackaging requirement of the product
  • Shelf life of the product

Important Factors

  • Availability of space
  • Availability of proper material handling systems
  • Strategic location
  • Packing and Re-packing facilities
  • Information and allied services

Techniques

  • Third Party Logistics
  • Third party Warehousing

Customer Service

Flow of Actions

  • Contractual services offered to client
  • Type of customer service required for the product
  • Location of the service centre
  • Service level at the service centre
  • Cost of service vs. replacement

Important Factors

  • Contractual requirement of customer service
  • Service quality
  • Reverse logistics

Techniques

  • AMC (Annual Maintenance Contracts) and free replacements
  • Limited (free) trial period
  • Guarantee & warranty
  • User clubs
  • Help lines, toll free number, call centers
  • CRM

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