Logistics in the information age
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Transcript of Logistics in the information age
Logistics in the Information Age
Presented By:
Jatin Kathuria
Ankit Narula
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
Manufacturing Firm
• A Manufacturing firm without taking help from a service provider.
Incoming product
Customer Warehouse
Manufacturing Plant
Importing Raw Materials
Custom Clearance
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
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
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
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
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.
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
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.
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
Sales Agent Model
Plant RDC
Dealer
Dealer
Customer
Customer
Route Optimization By Consolidation
Routing Before Consolidation Routing After Consolidation
Benefits: Scale Economy in Volume Scale Economy in Miles
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
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
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
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
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
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