Market Logistics Submitted by andip dey

 According to Council of logistics management:  “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 the customer requirement”  From the point of view of management, marketing logistics or physical distribution has been described as „planning, implementing and controlling the process of physical flows of materials and final products from the point of origin to the point of use in order to meet customer's needs at a profit. Introduction:

 Order processing  Warehousing  Inventory Management  Transportation Major logistics functions:

 (i)Demand forecasting  (ii) Distribution communication  (iii) Inventory Control  (iv)Material Handling  (v) Order Processing  (vi)Part & Service Support  (vii) Plant and Warehouse side selection  (viii)Procurement SCOPE OF THE MARKETING LOGISTICS

 (ix) Packaging  (x)Salvage & scrap disposal  (xi) Traffic & transportation  (xii)Warehousing & Storage  (xiii)Time & Place Utility  (xiv) Efficient Movement to Customer  (xv)Return goods handling  (xvi)Customers Service

Order can be made by mails, post or via sales person. It includes preparation of order invoices and order information. Order processing:

Inventory Management Inventory- Any idle resource that could be put to some future use. Inventory- A stock or store of goods inventory includes raw material, work-in-process, finished goods and stores and spares. Institute of Chartered Accountants of India defines inventory in AS2 as “Inventories as an assets held - For sale in the ordinary course of business - In the process of production for such sale - In the form of materials and supplies to be consumed in the production process or in rendering services.

Types of inventory 1.Seasonal Inventory 2.Pipe-line Inventory 3.Cyclic Inventory 4.Safety Stock Others  Raw Materials Inventory  Work in Progress Inventory  Finished Goods Inventory

Inventory Management and control Inventory Management involves the “Development and administration of polices, systems and procedures which will minimize total costs relative to inventory decisions and related functions such as customer service requirements,production scheduling, purchasing and traffic”.

Inventory control Techniques 1.Always better control (ABC) classification. 2.Vital, essential and desirable (VED) classification. 3.Fast moving, slow moving and non-moving (FSN). 4.Economic order quantity (EOQ).

Inventory Cost  Inventory costs includes ordering cost plus carrying costs. 1.Ordering Costs 2.Carrying Costs Capital Costs Storage Space Costs Inventory Service Costs Handling-equipment Costs Inventory Risk Costs 3.Out-of-stock Costs or Shortage Cost

Key Inventory Terms  Lead time: time interval between ordering and receiving the order  Holding (carrying) costs: cost to carry an item in inventory for a length of time, usually a year  Ordering costs: costs of ordering and receiving inventory  Shortage costs: costs when demand exceeds supply

“Warehousing and storage is an act of storing and assorting the finished goods so as to create maximum time utility at minimum cost” Now a days, many private firms are turning to distribution centers rather than constructing the Warehouses. WAREHOUSING:

Functions of a warehouse  Receiving the goods  Storing  Order Taking  Dispatch

While designing a warehouse, a manager ought to keep in mind these elements  Land and Building  Management and staff  Operating methods and Procedures  Equipment

Types of warehouses  General warehouse  Specific warehouse  Bulk storage warehouse  Refrigerated warehouse

Warehouse Location  Centralized warehouse  Decentralized warehouse

Centralized warehouse Benefits: 1.It improves operating efficiency and inventory control is felt easier and effective 2.There is no need to carry large stock and there are no dangers of stock outs resulting in low level inventories 3. Transport facilities are optimally used as routing and scheduling becomes handy.

4.The firm is better placed to meet the demand fluctuations from different market segments at relatively short notice. Drawbacks: 1.It results in loss of customer service due to spatial considerations and delays are caused. 2. The firm is deprived of its potential market share. 3.It results in heavy transport costs unless each delivery is sizeable as the carrier has to cover long distance.

Decentralized warehouse Benefits: 1. The firm serves the customers better positioning the inventory in their proximity. This is the result of maximum time utility created by it. 2. The firm is likely to effect savings in freight charges because of bulk handling 3. It facilitates product movement by block rates

transportation

Transportation: Meaning and Definition “The process of moving an item from point A to point B.” “Safe, efficient, reliable, and sustainable movement of persons and goods over time and space”

Transportation in Logistics:  The operation of transportation determines the efficiency of moving products  The progress in techniques and management principles improves the moving load, delivery speed, service quality, operation costs, the usage of facilities and energy saving.  Therefore, transportation is the base of efficiency and economy in business logistics and expands other functions of logistics system

Importance of Transportation: Without well-developed transportation systems, logistics could not bring its advantages into full play. A good transport system in logistics activities could provide better logistics efficiency, reduce operation cost, and promote service quality. A well-operated logistics system could increase both the competitiveness of the government and enterprises. Transport system is the most important economic activity among the components of business logistics systems

Types of Transportation

Rail Transport: Advantages of Rail transport: It is a convenient mode of transport for travelling long distances. It is relatively faster than road transport. It is suitable for carrying heavy goods in large quantities over long distances. Its operation is less affected by adverse weathers conditions like rain, floods, fog, etc. Limitations of Railway transport: It is relatively expensive for carrying goods and passengers over short distances. It is not available in remote parts of the country. It provides service according to fixed time schedule and is not flexible for loading or unloading of goods at any place. It involves heavy losses of life as well as goods in case of accident.

Road Transport  Advantages It is a relatively cheaper mode of transport as compared to other modes. Perishable goods can be transported at a faster speed by road carriers over a short distance. It is a flexible mode of transport as loading and unloading is possible at any destination. It provides door-to-door service. It helps people to travel and carry goods from one place to another, in places which are not connected by other means of transport like hilly areas.  Limitations of Road transport Due to limited carrying capacity road transport is not economical for long distance transportation of goods. Transportation of heavy goods or goods in bulk by road involves high cost.

Water Transport  Advantages: It is a relatively economical mode of transport for bulky and heavy goods. It is a safe mode of transport with respect to occurrence of accidents. The cost of maintaining and constructing routes is very low most of them are naturally made. It promotes international trade.  Disadvantages: The depth and navigability of rivers and canals vary and thus, affect operations of different transport vessels. It is a slow moving mode of transport and therefore not suitable for transport of perishable goods. It is adversely affected by weather conditions. Sea transport requires large investment on ships and their maintenance.

Air Transport:  Advantages: It is the fastest mode of transport. It is very useful in transporting goods and passengers to the area, which are not accessible by any other means. It is the most convenient mode of transport during natural calamities. It provides vital support to the national security and defence  Disadvantages: It is relatively more expensive mode of transport. It is not suitable for transporting heavy and bulky goods. It is affected by adverse weather conditions. It is not suitable for short distance travel. In case of accidents, it results in heavy losses of goods, property and life.

 Transportation and logistics systems have interdependent relationships that logistics management needs transportation to perform its activities and meanwhile, a successful logistics system could help to improve traffic environment and transportation development.  Since transportation contributes the highest cost among the related elements in logistics systems, the improvement of transport efficiency could change the overall performance of a logistics system.  Transportation plays an important role in logistics system and its activities appear in various sections of logistics processes.  Without the linking of transportation, a powerful logistics strategy cannot bring its capacity into full play

Case study on Wrightbus

 Wrightbus is the UK’s leading independent supplier of accessible buses for public transportation systems. Earning a reputation for producing vehicles which are stylish, durable, high in quality and packed with innovative features Wrightbus has significantly expanded since its foundation in The company originated in Ballymena, Northern Ireland, and was the location for the company’s factory and aftermarket distribution centre (DC). With the ever-increasing number of Wrightbus vehicle’s operating on mainland United Kingdom roads the company’s aftermarket subsidiary, Custom care, sought an innovative logistics solution to increase availability of servicing and maintenance parts to minimise vehicle downtime and whole life costs.

 Challenges:  Customcare’s supply chain required re-designing to providethe level of service their customers desired. The two main issues requiring resolution were  the difficulty providing consistent levels of service from the Northern Ireland DC to  the increasing number of mainland UK customers, and .the associated operating costs from holding high levels of inventory.  Historically Customcare used a motor manufacturer’s UK dealership network infrastructure to store and distribute parts however the solution did not provide the level of flexibility, visibility or service

 Solutions:  Due to the geographical footprint of Wrightbus the solution involved relocating the main distribution centre from Ballymena to mainland Great Britain. The Automotiveshared-user warehouse at Halewood, Liverpool, was identified as having available storage capacity ( sq ft) whilst providing a strong fit with the distribution footprint.  From analysing distribution data it became clear that a dedicated transport operation would not suit Customcare. The fragmented nature of demand and geographical locations of delivery points meant an alternative solution guaranteeing ‘Next Day’ service was required.