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