LOGISTICS

AND
WAREHOUSIN
G
MANAGEMENT
 CHAPTER 1:
AN INTRODUCTION TO
LOGISTICS
MANAGEMENT
 • Describe the concept of logistics
management
• Explain the scope, objectives and
LEARNING
importance of logistics management
OBJECTIVES
• Describe the types and components of
logistics management
• Describe the logistics activities in the
manufacturing organisation
• Discuss the role of logistics in an economy

07/21/2024 S a m p l e F o o t e r Te x t 3
 • In today’s highly competitive global
business scenario, organisations are
compelled to find innovative ways to
deliver value to their customers
• Logistics management maximises profit
by integrating an organisation with
flow of materials, information and
funds
• The key to a successful logistics
management requires an efficient
1.1 collaboration of activities, cooperation,
INTRODUCTION coordination and information sharing
07/21/2024
throughout the organisation’s supply
S a m p l e F o o t e r Te x t 4
• The Council of Supply Chain Management Professionals defines
logistics management as that part of supply chain management that
plans, implements, and controls the efficient, effective forward and
reverse flow and storage of goods, services and related information
between the point of origin and the point of consumption to meet
customers’ requirements
• The CSCMP explains logistics management as the management
activities that include inbound and outbound transportation
management, fleet management, warehousing, materials handling,
order fulfilment, inventory management, demand and supply planning
and management of third-party logistics service providers

07/21/2024 S a m p l e F o o t e r Te x t 5
 THE FIVE Rs of Logistics are as follows:
• Right products
1.2 CONCEPT OF • Right place

LOGISTICS • Right time

• Right condition
MANAGEMENT • Right cost
Some of the elements related to logistics
management are as follows:
• It helps in choosing the right supplier for providing
transportation facilities
• It assists in choosing the most effective channel for
product distribution
• It measures the customer and market needs
• It helps in cutting down on inventory and storage
costs

07/21/2024
• It focusses on maximising organisational profits 6
 • According to Council of Logistics
1.3 Management, “Logistics is the process of
DEFINITION planning, implementing, and controlling
OF LOGISTICS the efficient, effective flow and storage
MANAGEMEN of goods, services, and related
T information from point of origin to point
of consumption for the purpose of
conforming to customer requirements.”

07/21/2024 S a m p l e F o o t e r Te x t 8
 • According to Phillip Kotler, Market logistics involves planning,
implementing and controlling physical flow of material and final
(finished) goods from the point of origin to the point of use to meet
customer requirements, at a profit.

• According to Kroon and Vrijens of Erasmus University,

Rotterdam, Logistics management and the activities involved in the
reduction, management and waste disposal and not disposed waste
(packaging and products). It implies that goods and services are
flowing in the opposite direction to normal logistic activities.

07/21/2024 S a m p l e F o o t e r Te x t 9
•According to Logistix Partners Oy, Helsinki, FI, Logistics is defined
as a business planning framework for the management of material,
service, information and capital flows. It includes an increasingly
complex information, communication and control systems required in
today’s business environment.​

•According to Canadian Association of Logistics

Management, Logistics is the process of planning, implementing, and
controlling the efficient, cost-effective flow and storage of raw
materials, in-process inventory, finished goods and related information
from the point of origin to the point of consumption for the purpose of
meeting customer requirements.​
 • The word ‘logistics’ has originated
from the Greek language, which
alluded to words such as ‘logos’
which refers to counting or reasons,
‘logistike’ referring to the art of
calculation
• In French, ‘logistique’ covers words
such as transport, accommodation
or supply of troops, whereas in
English context, ‘logistics’ was used
in the field of military
• The logistics swiftness and
reliability of products contribute
immensely to the growth of the
1.4 SCOPE OF nation’s internal and external trade

LOGISTICS
07/21/2024 S a m p l e F o o t e r Te x t 11
 • To ensure all the requirements of the customers are
met on time
1.5 OBJECTIVES • To coordinate with third-party logistics

OF LOGISTICS • To ensure timely despatch of the products

• To devise policies and procedures for successful
MANAGEMENT implementation of logistics system
• To synchronise business goals with logistics system
• To create and maintain customer support
• To have stable integration among the vendors,
service providers and transport carriers
• To provide a competitive edge to an organisation
through increased sales and better customer service
• To ensure cost reduction and maximise return from
products/services

07/21/2024 S a m p l e F o o t e r Te x t 12
 • Quality products: Robust logistics management
enables organisations to deliver quality products
1.6 IMPORTANCE and services to their customers

OF LOGISTICS • Increases transparency: Logistics management

enables organisations to get an insight into every
MANAGEMENT stage of the product
• Increases revenue: By the use of logistics
management, an organisation can identify the weak
links either during production phase or in the
finished product
• Enhances goodwill: When an organisation provides
a high-quality product, the customers’ first
preference will be that product
• Customer satisfaction: The key to higher revenue
and enhanced goodwill is to ensure customer
satisfaction

07/21/2024 S a m p l e F o o t e r Te x t 13
 • On-time delivery: Logistics management deals with making the
product reach the target market so as to meet the customers’
demand
• Communication: Logistics management also deals with
disseminating information not only about demand and supply,
but also volumes, inventory, prices and movements

07/21/2024 S a m p l e F o o t e r Te x t 14
 • Procurement logistics: It refers to the type of
logistics that includes activities such as planning
requirements, conducting market research,
evaluating purchase decisions, managing suppliers
and placing orders
1.7 TYPES OF
• Production logistics: It refers to the type of
LOGISTICS logistics that includes production of goods
• Distribution logistics: It refers to the type of
logistics that delivers the finished products to the
customer

07/21/2024 S a m p l e F o o t e r Te x t 15
 • Disposal logistics: It removes and recycles the waste
produced during the operation of a business
• Reverse logistics: It refers to the type of logistics that
helps in reusing products and materials
• Global logistics: This type of logistics governs the
logistic flow of products across countries
• Domestic logistics: It deals primarily with the flow
of goods within one country, but may extend across
multiple states
• Storage, warehousing and material handling: These
elements are important for a retail enterprise
• Packaging: It involves transportation of merchandise,
and reduces the possibility of damage caused during
transit
• Inventory: It refers to the stock of materials in retail
organisations

07/21/2024 S a m p l e F o o t e r Te x t 16
 • Transportation: An effective transportation system
ensures timely delivery of merchandises from
suppliers to the warehouses, from warehouses to the
distribution centres and from distribution centres to
the retail stores
• Information and control: These are the most
important elements in logistics

07/21/2024 S a m p l e F o o t e r Te x t 17
 COMPONENTS OF LOGISTICS MANAGEMENT
• Storage, warehousing and material handling: These elements are important for a retail enterprise. The
merchandises are required to be stored, warehoused and handled in a proper manner. Some of the important
aspects of these elements are warehouse location, storage type and material handling equipment.
• Packaging: It involves transportation of merchandise, and reduces the possibility of damage caused during
transit. For example, if items, such as processed foods are not properly packed, these can perish in transit.
• Inventory: It refers to the stock of materials in retail organisations. Retail organisations maintain inventory
levels on the basis of sales and demand forecasts.
• Transportation: An effective transportation system ensures timely delivery of merchandises from suppliers to
the warehouses, from warehouses to the distribution centres and from distribution centres to the retail stores.
• Information and control: These are the most important elements in logistics. Retail enterprises need to have
access to the real-time information and control over their logistics operations. Large retail enterprises, such as
Walmart uses specialised software to keep track of their operations.
•
¦ Order processing: In large organisations, order processing refers to handling voluminous products to make them reach
the desired destination. Order processing operations or facilities are generally known as distribution centres. Order
processing comprises verifying the order received and checking whether the facility has the required amount of goods
Order processing is a perpetual process which consists of the following:
• Picking: It entails taking and collecting products in specified quantity prior to shipping the orders for customers.
• Sorting: It refers to the process of separating goods as per their destination. It is crucial for sorting products as it eases
the shipment of products. If sorting is not done in correct manner, then it will create a mess for shipment team and the
order will not reach the target customers.
• Package formation: It is an important part of order processing as it includes weight, label and pack products. The outer
packaging should include weight, usage and specification of the product to inform the customer how to use the product.
The packaging should explicitly mention the date of manufacturing, batch number, expiry date or best before date, price
of product, organisation producing the product, etc.
• Consolidation: It consists of accumulating packed products to loading bays to be transported. At the loading bays, the
goods will be gathered where bill of landing and various documents will be prepared. The packaging of goods will also
be inspected whether the outer packaging is sturdy enough to bear the loading and unloading of goods. The packaging
should also be efficient enough to prevent products from pilferage and spoilage.
1. 9 L OGIS T IC S • Order taking: Order
ACTIVIT IE S IN T HE taking is fundamental to
any transaction between
MANUFAC T UR ING the manufacturing
ORGANIS ATION organisation and supplier
• Inventory: Proper
inventory management
ensures seamless supply
of products but also cuts
down on storing costs

07/21/2024 S a m p l e F o o t e r Te x t 20
 • Warehouse: A warehouse can be deduced as a spinal cord of manufacturing
• Transportation: Transport is the single most important aspect of logistics
activities in manufacturing organisations
• Material handling: Material handling is also an important logistics activity for
manufacturing organisations which need to be meticulously looked after
• Packaging: Packaging is a logistic activity that is a must for every
manufacturing organisation
• Information sharing: Logistics helps in exchange of information throughout
the organisation and is of great importance to deliver quality service to
customers

07/21/2024 S a m p l e F o o t e r Te x t 21
 • It ensures high customer
service levels
1.1O ROLES OF • It maintains high-quality
product delivery
LOGISTICS IN
• It facilitates to have flexibility
AN ECONOMY
and swiftness in changing
market environment
• It assists to maintain a balance
between the quality of service
and low costs
07/21/2024 S a m p l e F o o t e r Te x t 22
 1.11 SUMMARY • Logistics management maximises profit by
integrating organisations flow of materials,
information and funds
• The key to successful logistics management requires
efficient collaboration of activities, cooperation,
coordination and information sharing throughout the
organisations supply chain
• Logistics management plays a crucial role in solving
perplex logistics problems and to manage the entire
supply chain as a single entity
• The genesis of the term ‘logistics’ was military-
based, that encompasses how military personnel
procured, stored and moved army equipments and
supplies
• Efficient logistics would serve to reduce the costs for
the organisation and increase the customer service,
thus increasing profitability

07/21/2024 S a m p l e F o o t e r Te x t 23
 • The logistics swiftness and reliability of products
contribute immensely to the growth of the nation’s
1.11 SUMMARY internal and external trade
• An effective transportation system ensures timely
delivery of merchandises from suppliers to the
warehouses, from warehouses to the distribution
centres and from distribution centres to the retail
stores
• The packaging of goods will also be inspected
whether the outer packaging is sturdy enough to
bear the loading and unloading of goods
• The primary objective of logistics management is
to maintain a smooth flow of materials in a supply
chain effectively so as to fulfil the customers’
desired level of satisfaction

07/21/2024 S a m p l e F o o t e r Te x t 24
 • It is the responsibility of the logistics
department to monitor and control
1.11 SUMMARY unethical practices while transporting
valuable goods
• It is crucial for every organisation to
have a strong knowledge of logistics
systems for yielding high profits and be
able to deliver customers the most
positive experience of the product
• When a customer is satisfied, he will be
inclined to buy the product of that
particular organisation and if the
organisation is able to maintain the
quality of the product, it can retain the
07/21/2024
customer for a longer time period
 • Logistic management also forms as a link
between various departments that work in tandem
1.11 SUMMARY to create the product
• Domestic logistics deals primarily with the flow
of goods within one country, but may extend
across multiple states
• Logistics infuses lifeline in manufacturing
organisation, it galvanises the entire machinery of
manufacturing organisation to ensure smooth
running of operations
• Streamlined logistics activities even cut down
operational costs, bolsters relationship and
satisfaction of customers
• A warehouse should be located near a point of
consumption and should be able to store
sufficient products in case of unforeseen demand
07/21/2024
for products 26
 • Logistics form an important cog in the
wheel for manufacturing organisations
without which it would be tough for them
to tread
• Information sharing tools are constantly
used by organisations to identify access,
store, scrutinise and archive important
data which can help organisations foresee
demand
• In the modern context, trend of third-
party logistics is also gaining momentum
• Logistics has created a plethora of
employment opportunities for
transporters, warehouse facility owners,
brokers for freight, etc
1.11 SUMMARY
07/21/2024 S a m p l e F o o t e r Te x t 27
 1.12 KEY WORDS
• Logistics management: It involves planning, controlling and
implementing the smooth movement and storage of goods
and services from the point of origin to the ultimate
customer
• Procurement logistics: It refers to the type of logistics that
includes activities such as planning requirements, conducting
market research, evaluating purchase decisions, managing
suppliers or placing orders
• After-sales logistics: It deals with reverse delivery of
damaged products from customers to the retailers, delivery
of spare parts to the customers and delivery of products
after repair
• Inventory: It refers to the stock of materials in retail
organisations
• Packaging: It involves transportation of merchandise and
reduces
07/21/2024
the possibility of damage caused during transit S a m p l e F o o t e r Te x t 28
 • Logistics is one of the fundamental factors for
success of a retail organisation. Nowadays, spike in
CASE STUDY: the level of competition among retailer
organisations has waged a price war in the
LOGISTICS AT industry. As a result, a majority of retail
organisations are constantly trying to reduce
WALMART operational costs and providing finished goods at
low prices to customers. Therefore, many retail
organisations are sourcing materials from different
global sources from which these materials are
available at cheap rates. Established retail
organisations such, as Walmart, ship agricultural
products from India, China and Brazil. Managing a
global logistical network is a highly intricate task. It
involves managing thousands of suppliers from
wide geographical locations along with managing
the logistics networks, warehouses, storage
facilities, transport systems, etc.
• For example, a retail organisation like Walmart owns
about 3,000 long-haul trucks and 12,000 trailers for the
transportation of materials. On the other hand, Walmart’s
competitors depend on outsourcing the transportation of
materials. Walmart efficiently utilises information
technology in increasing the effectiveness of its logistics
activities. A number of distribution centres of
retail organisations are linked via advanced information
technology tools to ensure viable coordination.
• A highly effective logistical system of Walmart has
enabled it to source materials globally. It has helped
Walmart keep the operational costs low and deliver
its promise of making finished goods available at low
prices. Highly efficient logistics is the prime reason behind
the highly satisfied customers of Walmart.
 QUESTIONS

1. How has logistics helped Walmart?

2. What is the importance of logistics in achieving customer satisfaction?

3. What is the reason behind price war among retail organisations?

4. Where does Walmart procure its materials from?

5. How is Walmart so efficient in its logistic function?

 EXERCISE

1. Describe the concept of logistics management.

2. What are the objectives and importance of logistics management?
3. What is the scope of logistics?
4. Discuss the role of logistics in the economy.
5. Describe various types of logistics.