Logistics in the information age

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Logistics in the Information Age Presented By: Jatin Kathuria Ankit Narula

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Transcript of Logistics in the information age

Page 1: Logistics in the information age

Logistics in the Information Age

Presented By:

Jatin Kathuria

Ankit Narula

Page 2: Logistics in the information age

Logistics Sector

Global Logistic Sector Indian Logistic Sector

Global logistic cost is lower in countries like U.S. and Europe

The average logistics cost in India is around 13% of GDP

China got the 26th rank in the World Bank International Logistics Performance Index

Ranked as low as 46th among 155 countries in the World Bank International Logistics Performance Index

Turnaround time from ports 7-10 hrs. (Hong Kong)

Indians Port 4.67 days (major ports in 2010-11)

• Logistic is defined as business function that deals in transfer and its supporting activities of goods and services

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Manufacturing Firm

• A Manufacturing firm without taking help from a service provider.

Incoming product

Customer Warehouse

Manufacturing Plant

Importing Raw Materials

Custom Clearance

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THIRD PARTY LOGISTICS

• A Logistic Service provider will work provide customized services to a client including Warehousing, product delivery, fleet management etc.

Foreign Supplier

Bulk Warehouse

OUTSOURCED

Indian Customer Facility

Final Product

Single Site Warehouse

Activities1. Labor and Supervision 2. Receiving Storage 3. Value added Services 4. Inspection sorting

Benefits 1. Lower Cost (Variable and fixed) 2. Focus

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COMPLEX TPL SERVICE

Outsourced Different Location

Custom Clearance

Bonded Warehous

e

Supplier1

Supplier 2

Supplier 2

Point of Use /

Customer

Incoming Materials

Supplier Hub

Activities 1. Same as single site

warehouse 2. Custom clearance 3. Fleet management 4. Freight consolidation

Benefits 1. Delayed Payment duties and

taxes 2. Pay on production sale 3. Data on Product availability 4. Faster custom clearance

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INTERNATIONAL DIRECT SHIPMENT

• Many semiconductors suppliers have hired express delivery companies to perform international direct shipment of Integrated circuits from their factories to customers in US & Europe.

• Activities performed by LSP LSP will pick outbound product from the factory Transportation to destined market Custom Clearance Deconsolidate the consignment & deliver it to customer

• Benefits Shorter cycle time Elimination of inventory stocking points Postponement of final packaging Smoother new product introduction, discontinuance

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PARTS BANK

• Many manufacturing companies are using small express delivery companies for both warehousing and delivery of spare parts known as “partsbank”.

• Activities performed by LSP Warehousing Transportation Cross-docking Tracking & tracing VAS-returns, sorting

• Benefits Reduced cycle time Decreased inventory levels Lower transportation cost Improved visibility of inventory Smoother new product ramp, discontinuance

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TRANSPORTATION VS INFORMATION TECHNOLOGY

• IT is not only a substitute for, but also a complement to, transportation. Lets understand this through an example.

CASE:-

• Mr. Park living in San Francisco wants to send a bouquet to his daughter Sandra in Boston on her Birthday.

• Three possible options are:-

1st option- To purchase a bouquet in San Francisco, pack it, and mail it to Boston.

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TRANSPORTATION vs INFORMATION TECHNOLOGY

• 2nd option:- • 3rd option:- DROP SHIP MODEL

Order at a local Florists shop in SF

SF Florist will forward the order to Florist in Boston

Boston Florist will deliver the bouquet to Sandra

Mr Park will place order with C & C for bouquet

C & C will bypass the order to the flower farm

Flower Farm will mail flower directly to the Boston

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MERGE IN TRANSIT

Monitors

CPU

LSPMerge Centre

Point of Sale

coordinate multiple products when the components are sourced from different manufacturing and/or warehousing locations.

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CROSS DOCKING

Cross-Dock operations were first pioneered in the US trucking industry in the 1930s, and have been in continuous use in LTL (less than truckload) operations ever since.

Wal-Mart began utilizing cross-docking in the retail sector in the late 1980s

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Sales Agent Model

Plant RDC

Dealer

Dealer

Customer

Customer

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Route Optimization By Consolidation

Routing Before Consolidation Routing After Consolidation

Benefits: Scale Economy in Volume Scale Economy in Miles

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Economics of Logistics

Transportation economics and pricing are driven by multiple factors that influence rates. The primary factors are distance, weight, and density.

Distance Weight Density

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Efficient Transportation Infrastructure Investment

Increased transportation capacity, efficiency, reliability and level of service

Transportation cost saving Transit time savings

Increased Productivity

Increased Competitiveness

Increased Economic Growth

Business Expansion

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Freight mode share

CHINA U.S.A INDIA0

20

40

60

80

100

120

2237

57

47

4836

3014 61 1 1

ROAD RAIL WATER AIR

Renders the economy less efficient and competitive

Source: Wef

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The Indian logistics sector

• The logistics sector in India has evolved over the past two decades from being a pure transportation / warehousing functional service to provision of more value added offerings like customs clearance, domestic / international freight forwarding, cross-docking, reverse logistics, freight consolidation, warehousing of modern standards etc.

• India estimated to spend 13 per cent of its GDP on logistics creating an industry size of around Rs. 4,068 billion

• The sector has been witnessing double digit y-o-y growth rate since 2002 and is expected to be more than USD 120 billion (approx Rs.5,400 billion) by 2015

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Growth Drivers

Growth of the Economy

projected at 9-10%

Big retail boom

Emergence of a global

manufacturing hub

Development of SEZs

Logistics management as a strategic

tool

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FUTURE OF LOGISTICS

4 P LOrder to deliver supply chain services

Transition & support servicesProvider managed services

3 PL Services

Distribution Operations and

Carrier services

Transportation routing and scheduling

Freight pay and audit

Forwarder services

Transportation execution

Trade management

Brokerage services

Warehouse management

Others

The 4PL will serve as the single point of contact for customers, managing a comprehensive set of supply chain and logistics services that are executed by other providers