CHAPTER 26

Distribution Logistics and Supply Chain Management

Chapter 26: Distribution Logistics and Supply Chain Management

At the end of this chapter, you should be able to:

Appreciate that like Product, Distribution also is a Tool for Providing Value Understand the Component Functions of Distribution Logistics
Transportation

Warehousing Inventory Management

Comprehend How a Distribution Logistics System can be Designed Appreciate Why Distribution Logistics Needs a Systems Approach Capture the New Trends in Outsourcing Distribution Logistics

Chapter 26: Distribution Logistics and Supply Chain Management

Like Product, Distribution also is a Tool for Providing Value

Distribution Logistics Plays a Pivotal Role in Value Delivery

Confers place utility and time utility on the product

Where the market is distanced from production location, distribution logistics becomes more challenging Exhibit 26.1 Dabbawallas Deliver Great Value Through Efficient Distribution (Page 492)

Helps build clientele A promising area for cost reduction

India spends over 12% of its GDP on logistics; It comes to $ 120 billion every year

Chart 26.1 Distribution Logistics Plays a Pivotal Role in Value Delivery (Page 492)

Chapter 26: Distribution Logistics and Supply Chain Management

Component Functions of Distribution Logistics

The Three Major Functions are:

Transportation

Warehousing
Inventory Management

Chart 26.2

Chapter 26: Distribution Logistics and Supply Chain Management

Designing a Distribution Logistics System

Articulating Distribution Objectives and Prescribing the Service Level in Product Delivery Finding Out What the Customers and Channels Want in Product Delivery Finding Out What the Competitors do Optimising the Costs and Tackling the Cost-Service Tussle Providing for Flexibility in the System

Chapter 26: Distribution Logistics and Supply Chain Management

Transportation

Main tasks in Transportation Management Choosing the mix of transport modes

Optimisation is the aim

Routing Operational plans Control of transportation costs

Tata motors plans regional assembling of Nano Grasim and L&T plan cross branding

Chapter 26: Distribution Logistics and Supply Chain Management

Warehousing

Role and Importance of Warehousing Chart 26.5 Role and Importance Warehousing (Page 497) Designing a Warehousing System Determining the Location and Size of the Warehouses Choosing the size Improving warehousing effectiveness

of

Inventory Management

Elements of Inventory Costs Chart 26.6 Elements Inventory costs keep rising (Page 498) Steps in Managing Inventory Deciding the optimum inventory, the crux

of Inventory Costs

Optimum inventory is a compromise between cost and service

Minimum inventory/safety stock, another relevant Idea Ordering time Order quantity

Chapter 26: Distribution Logistics and Supply Chain Management

Inventory Management

Economic order quantity (EOQ)

Fig26.1 Fixing Economic Order Quantity

Inventory Management is Largely a balancing act

Distribution Logistics Needs a Systems Approach

Being Interrelated, Logistics Functions Need Integrated Handling

Outsourcing of Distribution Logistics

Volvo-GM outsources logistics from FedEx GEMS outsources from DHL

Exhibit 26.2 Volvo-GM (Pg 501) Exhibit 26.3 GEMS (Pg 501)

Advent of Total Logistics Service Providers

Exhibits 26.4 to 26.6 Logistics Service Providers: AFL, Elbee, Blue Dart (Pg 502)