WHAT IS THIS LOGISTICS ALL ABOUT?: WHAT IS THIS LOGISTICS ALL ABOUT?

Slide 3: SUPPLIER 2 SUPPLIER 3 FINAL CONSUMER CUSTOMER 2 CUSTOMER 1 MATERIALS DISTRIBUTION PRODUCTION SUPPLY CHAIN MANAGEMENT SUPPLIER 1 Slide 4: MATERIALS PRODUCTION DISTRIBUTION IMMEDIATE SUPPLIER IMMEDIATE CUSTOMER SCOPE OF LOGISTICS MANAGEMENT Slide 5: MATERIALS PRODUCTION DISTRIBUTION IMMEDIATE SUPPLIER IMMEDIATE CUSTOMER LOGISTICS MANAGEMENT FLOW CHART IN - PLANT LOGISTICS OUT BOUND LOGISTICS IN - BOUND LOGISTICS FLOW OF INPUTS & OUTPUTS FLOW OF OUTPUTS FLOW OF INPUTS CUSTOMERS NEEDS : CUSTOMERS NEEDS WHAT HE WANTS? (PRODUCTS & PRICE) WHEN HE WANTS? (TIME) WHERE HE WANTS? (PLACE) WHY HE WANTS? (PURPOSE / FREQUENCY) HOW HE WANTS? (CONVENIENCE) EVERY CUSTOMER REQUIRES BEST PRODUCT (QUALITY) AT LOWEST PRICE (COST) FASTEST DELIVERY (TIME) Slide 7: 7 RIGHTS OF LOGISTICS MANAGEMENT CUSTOMER RIGHT SERVICE RIGHT PLACE RIGHT QUANTITY RIGHT RELATIONS RIGHT TIME RIGHT PRICE RIGHT QUALITY ORGANISATIONS NEEDS : ORGANISATIONS NEEDS HOW MUCH MONEY AN ORGNISATION WANTS TO MAKE OVER A PERIOD ? ( LONG TERM PROFITABILITY ) HOW LONG AN ORGANISATION WANTS TO REMAIN IN THE BUSINESS & WHAT ARE ITS OBJECTIVES? (ORGANISATIONS VISION) Slide 9: 3 CS IN LOGISTICS MANAGEMENT 1. COMPANY 3. COMPETITORS 2. CUSTOMER DEFINITION: DEFINITION BY COUNCIL OF LOGISTICS MANAGEMENT, USA LOGISTICS MANAGEMENT IS THE PROCESS OF PLANNING, IMPLEMENTING & CONTROLLING, THE FLOW & STORAGE OF GOODS, SERVICES & RELATED INFORMATION IN THE MOST EFFICIENT & EFFECTIVE WAY, FROM THE POINT OF ORIGIN TO THE POINT OF CONSUMPTION, AS PER THE CUSTOMERS REQUIREMENTS AT THE LOWEST POSSIBLE COST OPERATING OBJECTIVES : OPERATING OBJECTIVES RAPID & COMPLETE RESPONSE TO CUSTOMERS REQUIREMENTS REDUCTION IN LOGISTICS OPERATIONS COSTS CONTINUOUS IMPROVEMENT IN QUALITY OF SERVICES OFFERED LIFE-CYCLE SUPPORT NEED FOR LOGISTICS : NEED FOR LOGISTICS LOGISTICS SUPPORTS MARKETING ACTIVITIES IT BRINGS ALL ITEMS FOR SALE TOGETHER AT ONE PLACE IT PROVIDES A WIDE MIX OF PRODUCTS IT MAKES PRODUCTS AVAILABLE WHEN THEY ARE REQUIRED TODAY, SALES ARE

DETERMINED BY WHAT IS IN STOCKS & NOT BY WHAT PRODUCTS ARE PRODUCED & OFFERED BY AN ORGNISATION. Slide 13: 2. IT ADDS VALUE BY CREATING TIME & PLACE UTILITY FORM UTILITY ( RIGHT PRODUCT) : PRODUCTION DEPT. POSSESSION UTILITY ( RIGHT COMMUNICATION & PRICE) : MARKETING DEPT. TIME UTILITY ( RIGHT TIME) : WHEN IT IS REQUIRED PLACE UTILITY ( RIGHT PLACE) : WHERE IT IS REQUIRED WITHOUT OFFERING BOTH TIME & PLACE UTILITIES TO A CUSTOMER, HIS TOTAL REQUIREMENTS CANNOT BE FULFILLED. COMPETITIVE PRESSURES : COMPETITIVE PRESSURES GLOBAL LOGISTICS COST CONTROL INFORMATION TECHNOLOGY SHIFTING OF CHANNEL POWER FROM SELLERS TO BUYERS PROFIT LEVERAGE ( IMPACT OF LOGISTICS ON COST SAVINGS & GENERATING PROFITABILITY) INTEGRATED SYSTEM APPROACH: INTEGRATED SYSTEM APPROACH LOGISTICS , IN ITSELF, IS A SYSTEM. IT IS A NETWORK OF VARIOUS RELATED ACTIVITIES ALL THE ACTIVITIES NEED TO BE UNDERSTOOD IN TERMS OF HOW THEY AFFECT & ARE GETTING AFFECTED BY OTHER ACTIVITIES WITH WHICH THEY INTERACT THE OUTCOME OF SERIES OF ACTIVITIES IS GREATER THAN ITS INDIVIDUAL PARTS LOGISTICS PERFORMANCE CYCLE: PHYSICAL DISTRIBUTION PERFORMANCE CYCLE MANUFACTURING SUPPORT PERFORMANCE CYCLE PROCUREMENT SUPPORT PERFORMANCE CYCLE LOGISTICS PERFORMANCE CYCLE Slide 17: MATERIALS PRODUCTION DISTRIBUTION IMMEDIATE SUPPLIER IMMEDIATE CUSTOMER LOGISTICS PERFORMANCE CYCLE Materials Performance Cycle Production Performance Cycle Distribution Performance Cycle BARRIERS TO INTEGRATED APPROACH : BARRIERS TO INTEGRATED APPROACH ORGANIZATION STRUCTURE PERFORMANCE MEASUREMENT SYSTEM INVENTORY OWNERSHIP LACK OF ACCOUNTABILITY UNAWARE OF BUSINESS ENVIRONMENT TOTAL COST CONCEPT : TOTAL COST CONCEPT MAJOR LOGISTICS COSTS # CUSTOMER SERVICE COST ( COST OF A LOST SALES ) V / S # INVENTORY CARRYING COST # PROCUREMENT COST # TRANSPORTATION COST # WAREHOUSING COST # PACKAGING COST # ORDER PROCESSING COST # COMMUNICATION COST # INSURANCE COST ALL THE LOGISTICS DECISIONS ARE BASED ON TRADE- OFF BETWEEN COSTS & BENEFITS Slide 20: PROCUREMENT COST WAREHOUSING COST ORDER PROCESSING COST PACKAGING COST INVENTORY COST INFORMATION COST TRANSPORT COST INSURANCE COST CUSTOMER SERVICE COST TOTAL LOGISTICS COSTS MAJOR LOGISTICS ACTIVITIES (FUNCTIONS):

MAJOR LOGISTICS ACTIVITIES (FUNCTIONS) 1. CUSTOMER SERVICE 2. DEMAND FORECASTING 3. ORDER PROCESSING 4. WAREHOUSING 5, TRANSPORTATION 6. MATERIAL HANDLING 7. INVENTORY MANAGEMENT 8. PACKAGING 9. SUPPLY MANAGEMENT 10. REVERSE LOGISTICS 11. PARTS & SERVICE SUPPORT 12. LOGISTICS COMMUNICATION CUSTOMER SERVICE: CUSTOMER SERVICE CUSTOMER SERVICE VS CUSTOMER SATISFACTION: CUSTOMER SERVICE VS CUSTOMER SATISFACTION CUSTOMER SERVICE IS A MEASURE OF PERFORMANCE OF THE LOGISTICS SYSTEM IN PROVIDING TIME & PLACE UTILITIES FOR PRODUCT OR SERVICE TO A CUSTOMER CUSTOMER SATISFACTION REPRESENTS THE CUSTOMERS OVERALL ASSESSMENT OF ALL ELEMENTS OF MARKETING MIX LIKE PRODUCT, PRICE, PROMOTION, DISTRIBUTION ETC. CUSTOMER SATISFACTION COVERS CUSTOMER SERVICE DEFINITION : DEFINITION THE CUSTOMER SERVICE IS THE PROCESS OF PROVIDING SIGNIFICANT VALUE- ADDED BENEFITS, IN TERMS OF EFFICIENCY & EFFECTIVENESS, TO THE CUSTOMER IN A MOST COST EFFECTIVE WAY. IN LOGISTICS CUSTOMER IS DEFINED AS ANY DELIVERY DESTINATION. OBJECTIVES OF CUSTOMER SERVICE : OBJECTIVES OF CUSTOMER SERVICE AN EDGE OVER COMPETITORS MAINTAINING CUSTOMER LOYALTY MAINTAINING LEVEL OF SATISFACTION (GETTING & KEEPING CUSTOMERS) RETAINED CUSTOMERS ARE MORE PROFITABLE THAN THE NEW CUSTOMERS RECEIVING REPEAT ORDERS FROM CUSTOMERS CUSTOMER CREATE SALES & MOST SUCCESSFUL ORGNS. ARE THOSE THAT WIN THE MOST CUSTOMERS & KEEP THEM OVER A LONGER TIME SCOPE OF CUSTOMER SERVICE : SCOPE OF CUSTOMER SERVICE WHAT PRODUCTS CUSTOMER WANTS & AT WHAT PRICE? WHEN HE WANTS IT? (TIME) WHERE HE WANTS IT? (PLACE) HOW HE WANTS IT? (CONVENIENCE / PACKAGING) WHY HE WANTS IT? (PURPOSE / USE) : ELEMENTS OF CUSTOMER SERVICE 1.PRE-TRANSACTION ELEMENTS : 1.PRE-TRANSACTION ELEMENTS WRITTEN STATEMENT OF CUSTOMER SERVICE POLICY CUSTOMERS PROVIDED WITH A WRITTEN STATEMENT STATING WHAT ORGANISATION CAN OFFER SYSTEM FLEXIBILITY IN CASE OF UNFORESEEN EVENTS SERVICES EXTENDED TO HELP CUSTOMERS IN DETERMINING THEIR NEEDS & OFFERING SOLUTIONS ESTABLISHING ORGANIZATION STRUCTURE TO FACILITATE INTERNAL & EXTERNAL COMMUNICATION OF POLICIES, PERFORMANCE AND CORRECTIVE ACTIONS, IF NEEDED 2. TRANSACTION ELEMENTS: 2. TRANSACTION ELEMENTS PRODUCT AVAILABILITY CORRECT ORDER STATUS INFORMATION CONSISTENCY IN ORDER CYCLE SPECIAL HANDLING / SHIPPING

ARRANGEMENTS IN CASE OF URGENCY CONVENIENCE OF PLACEMENT OF ORDERS OFFERING SUBSTITUTE PRODUCTS THE TRANSACTION ELEMENTS OF CUSTOMER SERVICE OFTEN RECEIVE MOST ATTENTION AS THEY ARE IMMEDIATE & APPARENT 3.POST-TRANSACTION ELEMENTS : 3.POST-TRANSACTION ELEMENTS INSTALLATION / WARRANTEE / REPAIRS / SERVICE PARTS AVAILABILITY PRODUCT TRACING FOR WITHDRAWAL ON ITS OWN IN CASE OF SOME QUALITY PROBLEMS IN SUPPLIED PRODUCTS ATTENDING CUSTOMER COMPLAINTS / CLAIMS / ACCEPTING RETURNED GOODS FROM CUSTOMER (REVERSE LOGISTICS) PRODUCT LOANING DURING SERVICE/ REPAIRS TO AVOID INCONVENIENCE TO CUSTOMER ESTABLISHING CUSTOMER SERVICE STRATEGY: ESTABLISHING CUSTOMER SERVICE STRATEGY COMPETITIVE BENCHMARKING PERFECT ORDER CONCEPT (ON TIME, IN FULL & ERROR FREE DOCUMENTATION) OBSERVING CUSTOMER REACTIONS TO STOCK OUTS COST REVENUE TRADE OFF ABC ANALYSIS ( FEW CUSTOMERS & PRODUCTS ARE MORE BENEFICIAL TO THE FIRM THAN OTHERS) CREATING CUSTOMER RELATIONSHIP (CRM ) CUSTOMER SERVICE AUDIT: CUSTOMER SERVICE AUDIT IT IS THE PROCESS OF DETERMINING WHAT CUSTOMER NEED IN TERMS OF SERVICE LEVEL & DELIVERING UPON THOSE NEEDS IN A MOST COST- EFFECTIVE AND EFFICIENT MANNER IDENTIFYING ELEMENTS INFLUENCING CUSTOMERS BUYING DECISIONS DETERMINING CUSTOMERS PERCEPTION OF THE SERVICES OFFERED BY THE ORGANISATION VIS--VIS COMPETITORS TOTAL LOGISTICS COSTS CAN BE VIEWED AS THE FIRMS EXPENDITURE ON CUSTOMER SERVICE. IT IS VERY EXPENSIVE TO WIN CUSTOMERS PROBLEMS IN PROVIDING EFFECTIVE CUSTOMER SERVICE : PROBLEMS IN PROVIDING EFFECTIVE CUSTOMER SERVICE FAILURE OF MANAGEMENT TO TARGET SPECIFIC MARKET UNREALISTIC COMMITMENT TO CUSTOMERS IN TERMS OF QUALITY OF PRODUCTS & DELIVERY TIME COMPETITIVE ENVIRONMENT & PERCEIVED TRADITIONAL PRACTICES (NOT RESPONDING TO CHANGED SCENARIO) LACK OF RESEARCH ON CUSTOMERS REQUIREMENTS Slide 35: I AM NOT HERE TO ROB THE BANK, ALL I WANT TO SAY THAT I DONT WANT ANY CREDIT CARD OR LOAN FROM YOUR BANK PLEASE.. PLEASE STOP CALLING ME OVERDOSE OF CUSTOMER SERVICE. ??? ACTIONS FOR IMPROVEMENT IN CUSTOMER SERVICE LEVELS : ACTIONS FOR IMPROVEMENT IN CUSTOMER SERVICE LEVELS RESEARCH ON CUSTOMER NEEDS (PROFITABLE FOR LONG TERM BUSINESS DEVELOPMENT) SETTING REALISTIC SERVICE LEVELS STANDARDS (TRADE OFF BETWEEN REVENUES & EXPENSES) MAKING USE OF LATEST TECHNOLOGY MEASURING & EVALUATING THE PERFORMANCE OF EACH OF THE LOGISTICAL ACTIVITIES MORE TIME TO BE SPENT IN THE MARKETS & WITH THE CUSTOMERS BY TOP OFFICIALS / DECISION MAKERS DEMAND FORECASTING: DEMAND FORECASTING

WHAT IS DEMAND FORECASTING ? : WHAT IS DEMAND FORECASTING ? DEMAND FORECAST IS A PROJECTION OR PREDICTION MADE ON THE BASIS OF RELEVANT LOGICAL ASSUMPTIONS OF THE VOLUMES LIKELY TO BE PRODUCED, TRANSPORTED & SOLD. THROUGH THE FORECAST,THE ORGANISATION ESTABLISHES COMMON VOLUME GOALS TO GUIDE THE ENTIRE LOGISTICS SYSTEM. THESE GOALS IDENTIFY THE WHAT/ WHERE / WHEN OF PRODUCT SALES. THE OBJECTIVE IS TO ASSIMILATE INFORMATION,ANALYSE IT & DEVELOP A FORECAST WITH DESIRED ACCURACY IN A TIMELY MANNER WHY DEMAND FORECASTING IS REQUIRED? : WHY DEMAND FORECASTING IS REQUIRED? MEETING CUSTOMERS NEEDS ON TIME MANAGING FASTER TRANSPORTATION OF GOODS REDUCING STOCK-OUTS FACILITATING PRODUCTION PLANNING BETTER SCOPE FOR NEGOTIATING WITH SUPPLIERS OF INPUTS MANAGING WITH OPTIMUM INVENTORY LEVELS OF FINISHED GOODS & INPUTS REDUCING PRODUCT OBSOLESCENCE FACILITATING OVERALL BUSINESS PLANNING FORECAST COMPONENTS : FORECAST COMPONENTS FORECASTING IS BOTH TIME & DATA INTENSIVE FORECASTED QUANTITY ( F ) = ( B X S X T X C X P ) + I B: BASE LEVEL DEMAND ( IT IS AN AVERAGE OVER AN EXTENDED TIME) S : SEASONAL FACTOR ( SEASONAL COMPONENT IS MOVEMENT IN THE DEMAND PATTERN OVER A SPECIFIC PERIOD OF TIME.) T : TRENDS IN MARKET ( IT IS A LONG RANGE GENERAL MOVEMENT IN PERIODIC SALES OVER AN EXTENDED PERIOD OF TIME ) Contd.. Slide 41: C : CYCLIC BUSINESS PROCESS (IT IS CHARACTERIZED BY SWING IN THE DEMAND PATTERN LASTING MORE THAN A YEAR) P : PROMOTIONAL FACTORS ( IT CHARACTERIZES DEMAND SWINGS INITIATED BY FIRMS MARKETING ACTIVITIES SUCH AS ADVERTISING, SALES PROMOTION ETC) I : IRREGULAR QUANTITY ( IT INCLUDES UNPREDICTABLE QUANTITY THAT DO NOT FIT WITHIN THE OTHER CATEGORIES BECAUSE OF ITS RANDOM NATURE- THIS COMPONENT IS IMPOSSIBLE TO PREDICT.) FORECAST APPROACHES : FORECAST APPROACHES TOP- DOWN APPROACH IT DEVELOPS A NATIONAL LEVEL FORECAST & SPREADS THE VOLUME ACROSS LOCATION ON THE BASIS OF PAST SALES PATTERN IT IS A CENTRALIZED APPROACH APPROPRIATE FOR STABLE DEMAND SITUATIONS OR WHEN DEMAND LEVELS ARE CHANGING UNIFORMLY THROUGHOUT THE MARKET TOP- DOWN APPROACH (BASED ON HISTORICAL DATA): TOP- DOWN APPROACH (BASED ON HISTORICAL DATA) PLANT DISTRIBUTION CENTER (10000 UNITS) FIELD DISTR. CENTER ( 4 ) 1000 Units FIELD DISTR. CENTER ( 3 ) 2000 Units FIELD DISTR. CENTER ( 2 ) 3000 Units FIELD DISTR. CENTER ( 1 ) 4000 Units B) BOTTOM-UP APPROACH IT IS A DECENTRALISED APPROACH AS FOR EACH DISTRIBUTION CENTRE FORECAST IS DEVELOPED INDEPENDENTLY. IT CAN MORE ACCURATELY TRACK & CONSIDER DEMAND FLUCTUATIONS WITH SPECIFIC MARKETS IT REQUIRES MORE DETAILED RECORD KEEPING MORE DIFFICULT TO INCORPORATE SYSTEMATIC DEMAND FACTORS SUCH AS IMPACT OF MAJOR PROMOTION:

B) BOTTOM-UP APPROACH IT IS A DECENTRALISED APPROACH AS FOR EACH DISTRIBUTION CENTRE FORECAST IS DEVELOPED INDEPENDENTLY. IT CAN MORE ACCURATELY TRACK & CONSIDER DEMAND FLUCTUATIONS WITH SPECIFIC MARKETS IT REQUIRES MORE DETAILED RECORD KEEPING MORE DIFFICULT TO INCORPORATE SYSTEMATIC DEMAND FACTORS SUCH AS IMPACT OF MAJOR PROMOTION BOTTOM-UP APPROACH (BASED ON CENTERWISE FORECAST): BOTTOM-UP APPROACH (BASED ON CENTERWISE FORECAST) PLANT DISTRIBUTION CENTER ( 10000 UNITS) FIELD DISTR. CENTER ( 4 ) 1000 Units FIELD DISTR. CENTER ( 3 ) 2000 Units FIELD DISTR. CENTER ( 2 ) 3000 Units FIELD DISTR. CENTER ( 1 ) 4000 Units FORECASTING PROCESS : FORECASTING PROCESS CREATING FORECAST DATABASE DEVELOPING INTEGRATED FORECAST SYSTEMS UNDERSTANDING USERS NEEDS ( WHAT ? / WHEN ? ) PROCEDURES TO INTEGRATE : a) FORECASTING TECHNIQUES b) FORECAST SUPPORT SYSTEM c) FORECAST ADMINISTRATION FORECASTING TECHNIQUES : FORECASTING TECHNIQUES IT IS A MATHEMATICAL / STATISTICAL COMPUTATION USED TO TRANSLATE MATHEMATICAL PARAMETERS, INCLUDING HISTORY, IN TO A FORECASTED QUANTITY A) QUALITATIVE TECHNIQUE QUALITATIVE FORECASTS ARE DEVELOPED USING SURVEYS RELY HEAVILY ON SPECIAL SKILLS, KNOWLEDGE & EXPERIENCE HIGHER COSTS OF COLLECTING & ANALYZING DATA TIME CONSUMING LITTLE HISTORICAL DATA & MORE MANAGERIAL JUDGEMENT B) TIME SERIES TECHNIQUE IT IS USED TO IDENTIFY VARIATIONS DUE TO SEASONABILITY / CYCLIC PATTERNS / TRENDS & GROWTH RATE ON THOSE TRENDS STATISTICAL METHOD USING HISTORICAL DATA & TRENDS ASSUMES FUTURE WILL BE SIMILAR TO PAST REASONABLY CORRECT OVER SHORT SPAN OF TIME NOT SENSITIVE TO TURNING POINTS (CHANGE IN CUSTOMER BEHAVIOUR) : B) TIME SERIES TECHNIQUE IT IS USED TO IDENTIFY VARIATIONS DUE TO SEASONABILITY / CYCLIC PATTERNS / TRENDS & GROWTH RATE ON THOSE TRENDS STATISTICAL METHOD USING HISTORICAL DATA & TRENDS ASSUMES FUTURE WILL BE SIMILAR TO PAST REASONABLY CORRECT OVER SHORT SPAN OF TIME NOT SENSITIVE TO TURNING POINTS (CHANGE IN CUSTOMER BEHAVIOUR) Slide 49: 1 ) MOVING AVERAGE METHOD AVERAGE OF MOST RECENT PERIOD DATA 2 ) EXPONENTIAL / EXTENDED SMOOTHING (ON TRENDS & SEASONS) ESTIMATE OF FUTURE BASED ON THE WEIGHTED AVERAGE OF PREVIOUS DEMAND & FORECAST LEVELS NEW FORECAST IS A FUNCTION OF OLD FORECAST CHANGED BY SOME FRACTION OF DIFFERENTIAL BETWEEN OLD FORECAST & ACTUAL PERFORMANCE Slide 50: C ) CAUSAL TECHNIQUE A CO- RELATION ASSUMES THAT THE FORECASTED SALES ARE PRECEDED BY SOME LEADING INDEPENDENT FACTORS. SALES IS BASED ON CAUSE EFFECT RELATIONSHIP (DEMAND FOR COFFEE & WEATHER) IF THE GOOD RELATIONSHIP CAN BE IDENTIFIED,THE INFORMATION CAN BE USED TO EFFECTIVELY PREDICT REQUIREMENTS. CRITERIA FOR SELECTION OF TECHNIQUE :

CRITERIA FOR SELECTION OF TECHNIQUE DESIRED ACCURACY FOR DECISION MAKING FORECASTING TIME HORIZON PURPOSE OF FORECASTING AVAILABILITY OF DATA TYPES OF THE DATA PATTERN EXPERIENCE OF THE FORECASTER SELECTION OF A TECHNIQUE IS MORE OF AN ART THAN SCIENCE FORECASTING ERRORS : FORECASTING ERRORS FORECAST ACCURACY REFERS TO THE DIFFERENCE BETWEEN CORRESPONDING FORECAST & ACTUAL PERFORMANCE DURING THE PERIOD UNDER REVIEW FORECAST ERROR IS ( ACTUAL + OR - FORECASTED DEMAND) FORECAST ERROR CAN BE CALCULATED FOR INDIVIDUAL LOCATION OR GROUP OF LOCATIONS OR NATIONALLY. ESTABLISHING APPROPRIATE FORECAST FEEDBACK LOOPS SO THAT THE PROCESS CAN BE IMPROVED FORECAST SUPPORT SYSTEM : FORECAST SUPPORT SYSTEM IT IS VERY IMPORTANT THAT AN EFFECTIVE FORECASTING PROCESS INCLUDE A SUPPORT SYSTEM TO FACILITATE THE MAINTENANCE, UPDATING & MANIPULATION OF PAST DATA BASE & FORECAST STEPS IN FORECASTING PROCESS : GATHER & ANALYSE DATA DEVELOP THE FORECAST COMMUNICATE THE FORECAST TO THE RELEVANT PERSONNEL & PLANNING SYSTEM FORECAST ADMINISTRATION : FORECAST ADMINISTRATION IT INCLUDES THE ORGANISATIONAL, PROCEDURAL, PERSONNEL AND MOTIVATIONAL ASPECTS OF FORECASTING FUNCTION & ITS INTEGRATION INTO FIRMS OTHER FUNCTIONS IT CONCERNS WITH INDIVIDUAL ROLES & RESPONSIBILITIES WHO IS RESPONSIBLE FOR DEVELOPING FORECAST ? HOW THE FORECAST ACCURACY & PERFORMANCE MEASURED ? HOW DOES FORECAST PERFORMANCE AFFECT PERFORMANCE EVALUATION OF AN INDIVIDUAL ? ORDER PROCESSING: ORDER PROCESSING Slide 56: ORDER PROCESSING ACTIVITY IS A NERVE CENTER OF INTEGRATED LOGISTICS MANAGEMENT SYSTEM IT IS A STARTING POINT OF ALL THE LOGISTICS ACTIVITIES THE SPEED AND QUALITY OF INFORMATION FLOW HAVE DIRECT IMPACT ON THE COST & EFFICIENCY OF THE ENTIRE OPERATION FLOW LOGISTICS INFORMATION FLOW: LOGISTICS INFORMATION FLOW Supplier Materials Dept. Production Dept. Distribution Dept. Customer INFORMATION INFORMATION ORDER PROCESSING SYSTEM LINKS CUSTOMERS, ORGANISATION & SUPPLIERS THROUGH EFFICIENT INFORMATION SYSTEM TOTAL ORDER CYCLE : CUSTOMERS PERSPECTIVE: TOTAL ORDER CYCLE : CUSTOMERS PERSPECTIVE 1 CUSTOMER PLACES ORDER 2 ORDER RECD. BY SUPPLIER 3 ORDER IS PROCESSED 4 ORDER IS PICKED AND PACKED 5 ORDER SHIPPED TO CUSTOMER 6 ORDER DELIVERED TO CUSTOMER TOTAL ORDER CYCLE TIME ( 1 6 ) : TOTAL ORDER CYCLE TIME ( 1 6 ) ORDER PREPARATION & TRANSMISSION TO SUPPLIER ORDER RECEIVED BY SUPPLIER & ENTERED IN TO SYSTEM STOCK CHECKING / CREDIT

CHECKING PRODUCT PICKING & PACKING & SHIPPING TRANSIT TIME CUSTOMER ACCEPTING PRODUCT & ACKNOWLEDGEMENT IMPORTENCE OF COMMUNICATION IN ORDER PROCESSING: IMPORTENCE OF COMMUNICATION IN ORDER PROCESSING ORDER PROCESSING & INFORMATION SYSTEM IS THE FOUNDATION OF AN EFFICIENT LOGISTICS MANAGEMENT SYSTEM, WHICH FACILITATE QUICK RESPONSE TO THE CUSTOMERS NEEDS, THROUGH : SHORTER LEAD TIME INCREASE IN BUSINESS / CUSTOMERS / GOODWILL AT THE MARKET PLACE LOWER TRANSPORTATION COST LOWER INVENTORY COST ENABLES OVERALL PRODUCTION / PROCUREMENT PLANNING ADVANCED ORDER PROCESSING SYSTEM : ADVANCED ORDER PROCESSING SYSTEM NO COMPONENT OF LOGISTICS FUNCTION HAS BENEFITED MORE FROM COMPUTER & INFORMATION TECHNOLOGY THAN ORDER ENTRY / PROCESSING & EXECUTION SOME ADVANCED SYSTEMS ARE SO SOPHISTICATED THAT THE ORDERS ARE AUTOMATICALLY GENERATED WHEN THE STOCK REACHES THE PRE-FIXED RE-ORDER POINT THE SYSTEM ENABLES FIRM TO MAINTAIN CONTACT WITH EXISTING SMALL AS WELL AS LARGE & PROFITABLE CUSTOMERS EFFICIENTLY EXPLORES NEW LOCAL / GLOBAL MARKET OPPORTUNITIES HELP OF ELECTRONIC DATA INTERCHANGE (EDI) : HELP OF ELECTRONIC DATA INTERCHANGE (EDI) ELECTRONIC DATA INTERCHANGE (EDI) IS THE PROCESS OF TRANSFERRING STANDARD BUSINESS INFORMATION / DOCUMENTS ELECTRONICALLY FROM ONE COMPUTER TO ANOTHER WITHIN AND BETWEEN ORGANIZATIONS THROUGH NETWORK SYSTEM THE KEY POINTS THE TRANSFER OF INFORMATION FROM COMPUTER TO COMPUTER THE TRANSMISSION IS OF STANDARD BUSINESS DOCUMENTS EDI STANDARDS REQUIREMENT OF COMPUTER LANGUAGE COMPATIBILITY USERS MUST HAVE A COMMON COMMUNICATION STANDARDS USERS MUST SHARE THE COMMON LANGUAGE ADVANTAGES OF EDI : ADVANTAGES OF EDI 1. GREATER ACCURACY 2. LOWER COST 3. FASTER SPEED 4. HIGHER VISIBILITY 5. EASY ACCESIBILITY / AVAILABILITY 6. CORRECT UNDERSTANDING OF CUSTOMER NEEDS 7. HIGHER PRODUCTIVITY WAREHOUSING: WAREHOUSING WHAT IS A WAREHOUSE ?: WHAT IS A WAREHOUSE ? DEFINITION WAREHOUSE IS A LOCATION PROVIDED WITH ADEQUATE FACILITIES, WHERE BULK SHIPMENTS ARE RECEIVED FROM PRODUCTION CENTERS, WHICH ARE THEN BROKEN DOWN IN TO A PARTICULAR ORDER SIZE FOR SHIPPING TO THE CUSTOMERS AS PER THEIR REQUIREMENTS WAREHOUSING IS AN INTEGRAL PART OF ANY LOGISTICS SYSTEM WAREHOUSE VS DISTRIBUTION CENTER : WAREHOUSE VS DISTRIBUTION CENTER WAREHOUSE BELONGS TO AN ORGANISATION DISTRIBUTION CENTER IS A SEPARATE ENTITY WAREHOUSE STORES ALL PRODUCTS DISTRIBUTION CENTER KEEPS MINIMUM INVENTORY OF HIGH DEMAND ITEMS WAREHOUSE HANDLES PRODUCTS IN 4 STAGES OF RECEIVE, STORE, PICK & SHIP DISTRIBUTION CENTER IN 2 STAGES OF RECEIVES & SHIP WAREHOUSE PERFORM

MINIMUM VALUE ADDED ACTIVITIES DISTRIBUTION CENTER PERFORMS HIGH PERCENTAGE OF VALUE ADDED ACTIVITIES WAREHOUSE FOCUSES ON REDUCING OPERATING COSTS DISTRIBUTION CENTER FOCUSES ON MAXIMIZING THE PROFIT Slide 67: PLANT A (X) PLANT B (Y) PLANT C (Z) WAREHOUSE (X+Y+Z) CUSTOMER 3 (X,Y) CUSTOMER 2 (Y,Z) CUSTOMER 1 ( X,Y,Z) 1. PRODUCT MIXING USES OF WAREHOUSES PLANTS A / B / C ARE FOCUSSED FACTORIES Slide 68: PLANT A (X) PLANT B (X) PLANT C(X) WAREHOUSE ( X ) CUSTOMER 3 (X) CUSTOMER 2 (X) CUSTOMER 1 (X) 2. CONSOLIDATION Slide 69: PLANT A (X) WAREHOUSE (X) CUSTOMER 3 (X) CUSTOMER 2 (X) CUSTOMER 1(X) 3. BREAK BULK NEED FOR WAREHOUSING : NEED FOR WAREHOUSING TO FULFILL EXPECTED CUSTOMER SERVICE LEVEL TO ACHIEVE TRANSPORTATION ECONOMIES BY MOVING HIGHER VOLUMES OF FINISHED GOODS TO ACHIEVE ECONOMIES OF SCALE IN PRODUCTION BY ACCOMMODATING ADDITIONAL QUANTITIES PRODUCED TO MAINTAIN STEADY SOURCE OF SUPPLIES BY BALANCING SUPPLY OF & DEMAND FOR PRODUCTS TO MEET CHANGING MARKET CONDITIONS TO PROVIDE MIXED-PRODUCTS OPTION TO CUSTOMERS TO PROVIDE TEMPORARY STORAGE OF MATERIALS TO BE DISPOSED-OFF / SALVAGED (REVERSE LOGISTICS) A) CONVENTIONAL APPROACH PRODUCE TO STOCK : A) CONVENTIONAL APPROACH PRODUCE TO STOCK PUSH CONCEPT PROTECTION AGAINST FLUCTUATIONS IN LEAD TIME & DEMAND FROM CUSTOMERS PROTECTION AGAINST DELAYS & UNCERTAINTY IN TRANSPORTATION OF PRODUCTS TO PROVIDE ADJUSTMENT BETWEEN THE TIME REQUIRED FOR PRODUCTION & DEMAND / USE OF THE PRODUCT TO SERVE AS A RESERVOIR OF GOODS B) MODERN APPROACH: PRODUCE TO SELL : B) MODERN APPROACH: PRODUCE TO SELL PULL CONCEPT WAREHOUSE ADDS TO THE COST OF DISTRIBUTION IN-TRANSIT ( TEMPORARY) STORAGE OF PRODUCTS FOR ONWARD DESPATCH THROUGHOUT THE SUPPLY CHAIN SYSTEM WAREHOUSE SHOULD SERVE BASICALLY AS A PRODUCT MIXING / CONSOLIDATION / BREAK BULK CENTER PRODUCTS RECEIVED FROM PRODUCTION ARE SENT TO THE CUSTOMERS, AT SHORTEST POSSIBLE TIME THE PRODUCTS ENTER THE WAREHOUSE ONLY WHEN THEY ARE NOT REQUIRED FOR IMMEDIATE SHIPMENT MAIN FUNCTIONS OF WAREHOUSING: MAIN FUNCTIONS OF WAREHOUSING RECEIVING FINISHED GOODS FROM PRODUCTION CENTERS PERFORMING QUALITY & QUANTITY CHECKS STORING / STACKING THE GOODS AT SPECIFIC LOCATIONS PICKING, CHECKING AND PACKING THE PRODUCT FOR EXECUTING CUSTOMERS ORDERS 5. SHIPPING THE GOODS BY SELECTED MODE OF TRANSPORT 6. GENERATING RELEVANT DOCUMENTS 7. INFORMATION TRANSFER TO MANAGEMENT

ADDITIONAL VALUE ADDED SERVICES: ADDITIONAL VALUE ADDED SERVICES PACKAGING: CUSTOMISED PACKAGING CHANGING PACKAGE CHARACTERISTICS (BREAK- BULK PACKS) TO COMPLETE PRODUCTION ACTIVITIES ( RE-ASSEMBLING / FINISHING / POLISHING) 4. ACCLIMATISING / MATUARING THE PRODUCTS 5. TO MAINTAIN MARKET CONFIDENTIALITY (RELABELING / RE-CODING) 6. MEETING LABELING / MARKING REQUIREMENTS OF FOREIGN MARKETS 7. PROVIDING SECONDARY (TRANSPORT) PACKAGING WAREHOUSING DECISIONS: WAREHOUSING DECISIONS Slide 76: 1. OWNERSHIP : PRIVATE / PUBLIC OR CONTRACT ? 2. LOCATION : WHERE ? 3. WHAT SIZE : BIG OR SMALL ? 4. LAYOUT : HOW TO DESIGN ? 5. NUMBERS : HOW MANY ? 1.OWNERSHIP TYPES OF WAREHOUSES: 1.OWNERSHIP TYPES OF WAREHOUSES A) PRIVATE WAREHOUSES : A) PRIVATE WAREHOUSES THESE ARE THE WAREHOUSES OWNED BY THE COMPANY FOR THEIR EXCLUSIVE USE FOR STORING THE GOODS MANUFACTURED / TRADED BY THEM FOR ONWARD SELLING IN THE MARKET COST INVOLVED FIXED CAPITAL EXPENSES IN BUILDING, LAND ETC COST OF MATERIAL HANDLING EQUIPMENT COST OF MANPOWER / OFFICE & OTHER FACILITIES MAINTENANCE / REPAIR / INSURANCE PREMIUM COSTS Slide 79: ADVANTAGES BETTER CONTROL OVER STORAGE & MOVEMENT OF GOODS LESS CHANCE OF ERRORS IN HANDLING THE GOODS CUSTOMISED DESIGNING AND FLEXIBILITY IN OPERATIONS COST EFFECTIVE & ECONOMIC ON LONGER SPAN OF TIME GIVES CUSTOMER SENSE OF PERMANENCE & CONTINUITY DISADVANTAGES LACK OF GEOGRAPHICAL FLEXIBILITY REQUIRES STABLE DEMAND & HIGH PRODUCT THROUGHPUT INITIAL LARGE FINANCIAL REQUIREMENTS PERMANENT LIABILITY B) PUBLIC WAREHOUSES : B) PUBLIC WAREHOUSES THESE ARE THE WAREHOUSES HIRED FROM OTHER AGENCIES (GOVERNMENT OR PRIVATE PARTIES) FOR STORING THE GOODS FOR A SPECIFIC PERIOD OF TIME BY PAYING THE AGREED RENT COSTS INVOLVED RENT OF THE SPACE HIRED PAYMENT TOWARDS USE OF OTHER FACILITIES Slide 81: ADVANTAGES NOT MUCH INITIAL CAPITAL REQUIRED GENERALLY STRATEGICALLY LOCATED NEAR PORTS / MARKET PLACE 3. FIXED PERIODIC OPERATING COST 4. ADJUSTMENT FOR SEASONALITY POSSIBLE 5. GREATER FLEXIBILITY IN LOCATION CHANGE OVER 6. NO PERMANENT LIABILITY DISADVANTAGES LACK OF FLEXIBILITY IN OPERATIONS UNSUITABLE FOR SPECIALIZED SERVICES C) CONTRACT WAREHOUSES : C) CONTRACT WAREHOUSES IT IS A SPECIALISED FORM OF PUBLIC WAREHOUSE MANAGED BY THIRD PARTY LOGISTICS ORGANIZATION FOR PROVIDING TOTAL WAREHOUSING SERVICES BY PAYING THE AGREED CHARGES ADVANTAGES SUITABLE

FOR MEETING SEASONAL REQUIREMENT EXTENSIVE GEOGRAPHIC COVERAGE AVAILABILITY OF EXPERT MANPOWER & DEDICATED RESOURCES NO PERMANENT LIABILITY DISADVANTAGES LESS CONTROL ON OPERATIONS IMPERSONAL CUSTOMER SERVICE PERFORMANCE OF ORGANIZATION DIRECTLY DEPENDS ON PERFORMANCE OF 3RD PARTY 2. LOCATION OF WAREHOUSE : 2. LOCATION OF WAREHOUSE LOCATION OF A WAREHOUSE HAS CONSIDERABLE INFLUENCE ON CUSTOMER SERVICE LEVEL BY PROVIDING EDGE OVER COMPETITORS REDUCTION IN COST OF DISTRIBUTION CONSIDERATIONS FOR SELECTING A WAREHOUSE LOCATION : CONSIDERATIONS FOR SELECTING A WAREHOUSE LOCATION MARKET ORIENTED (CLOSER TO MARKET / CUSTOMERS) PRODUCTION ORIENTED (CLOSER TO PLANT) COST OF THE WAREHOUSE ORDER CYCLE TIME DESIRED CUSTOMER SERVICE LEVEL NATURE OF THE PRODUCTS (SEASONAL / PERISHABLE) MARKET SERVICE AREA & COST OF DISTRIBUTION AVAILABILITY OF TRANSPORT FACILITIES & COST THEREOF Contd.. Slide 85: 9. LOCATION OF COMPETITORS WAREHOUSES 10. AVAILABILITY OF BASIC INFRASTRUCTURE FACILITIES LABOUR SUPPLY SITUATION & WAGE STRUCTURE GOVERNMENT RULES & REGULATIONS ON ENVIRONMENT, TAXES, LEVIES ETC 13. POTENTIAL FOR FURTHER EXPANSION OF WAREHOUSE 14. RE-SALE VALUE IN FUTURE 15. FLEXIBILITY OF CHANGE IN THE FACILITIES IN FUTURE 16. GEOGRAPHICAL HAZARDS LIKE FLOODS, EARTHQUAKES ETC. 3. AREA OF WAREHOUSE : 3. AREA OF WAREHOUSE AREA OF A WAREHOUSE HAS CONSIDERABLE INFLUENCE ON CUSTOMER SERVICE LEVEL BY PROVIDING INVENTORY SUPPORT FOR MEETING CUSTOMER REQUIREMENTS ON TIME 2. REDUCTION IN THE COST OF LOST SALES FACTORS DETERMINING AREA OF WAREHOUSE : FACTORS DETERMINING AREA OF WAREHOUSE NUMBER / NATURE OF ACTIVITIES TO BE PERFORMED IN THE WAREHOUSE 2. DESIRED CUSTOMER SERVICE LEVEL 3. SIZE / POPULATION OF MARKET TO BE SERVED NUMBERS AND VOLUME OF PRODUCTS TO BE HANDLED FLUCTUATION IN DEMAND NATURE OF THE PRODUCTS TO BE STORED AND THEIR STORAGE REQUIREMENTS Contd Slide 88: 7. MATERIAL HANDLING SYSTEM ( MANUAL / MECHANISED ) TO BE USED 8. FUTURE BUSINESS PLANS ( EXPANSION / DIVERSIFICATION ) 9. PRODUCTION LEAD TIME 10. ORGANISATIONS INVENTORY POLICY 11. STOCK LAYOUT ARRANGEMENTS & PROVISION OF AISLE & GANGWAYS REQUIRED FOR MOVEMENT OF GOODS 12. TOTAL AREA REQUIREMENT FOR OFFICE,CANTEEN, PARKING & OTHER AMENITIES 4. LAYOUT OF WAREHOUSE : 4. LAYOUT OF WAREHOUSE SYSTEMETIC LAYOUT OF A WAREHOUSE HAS CONSIDERABLE INFLUENCE ON CUSTOMER SERVICE LEVEL BY PROVIDING 1. REDUCTION IN ORDER PROCESSING CYCLE TIME THROUGH EFFICIENT PICKING / PACKING & SHIPPING OF THE PRODUCTS 2. REDUCTION IN THE COST OF PRODUCT DAMAGES / OBSOLESCENCE

FACTORS DETERMINING WAREHOUSE LAYOUT (DESIGN) : FACTORS DETERMINING WAREHOUSE LAYOUT (DESIGN) NUMBER / NATURE OF ACTIVITIES TO BE PERFORMED NATURE & STORAGE REQUIREMENT OF PRODUCTS TO BE STORED DEMAND FOR THE PRODUCT (FREQUENCY OF MOVEMENT) TOTAL SPACE AVAILABILITY STORAGE & HANDLING EQUIPMENT TO BE USED WAREHOUSE OPERATING METHODS & PROCEDURES GOVERNMENT / STATUTORY REQUIREMENTS REQUIREMENT OF SAFETY & SECURITY OF PEOPLE & PRODUCTS. TYPES OF STORAGE SYSTEMS: TYPES OF STORAGE SYSTEMS 1. DEDICATED STORAGE SYSTEM ( FIXED SLOT LOCATION ) THE PRODUCTS ARE STORED IN A SPECIFIC EARMARKED LOCATION LESS TIME FOR PICKING / PACKING / SHIPPING PRODUCTS 2. RANDOMIZED STORAGE (VARIABLE SLOT LOCATION) IT PLACES PRODUCTS AT THE CLOSEST AVAILABLE SLOTS THE PRODUCTS ARE RETRIEVED ON FIFO BASIS THIS APPROACH MAXIMIZE SPACE UTILIZATION IT EMPLOYEES ASRS WHICH MINIMIZES LABOUR & HANDLING COST ADVANTAGES OF PROPER WAREHOUSING LAYOUT : ADVANTAGES OF PROPER WAREHOUSING LAYOUT HIGH PRODUCTIVITY REDUCED ORDER PROCESSING CYCLE TIME IMPROVEMENT IN CUSTOMER SERVICE LEVEL REDUCED COST OF OPERATIONS PROVIDE BETTER WORKING CONDITIONS BETTER WAREHOUSE CAPACITY UTILIZATION BETTER PROTECTION / PRESERVATION OF THE PRODUCTS REDUCED DAMAGES / WASTEGES OF THE PRODUCTS ADDS FLEXIBILITY IN WAREHOUSING OPERATIONS. WAREHOUSING STORAGE PRINCIPLES: WAREHOUSING STORAGE PRINCIPLES COMPATIBILITY OF THE PRODUCTS COMPLIMENTARILITY OF THE PRODUCTS (STORING FUNCTIONALLY RELATED PRODUCTS TOGETHER) 3. PHYSICAL SIMILARITY OF THE PRODUCTS REQUIRING SAME TYPE OF PROTECTION & PRESERVATION 4. POPULARITY ( FREQUENCY OF MOVEMENT) 5. USAGE REQUIREMENTS (KEEPING WORKING STOCKS & BUFFER STOCKS SEPARATELY) 6. PRODUCTS FOR REVERSE LOGISTICS KEPT SEPARATELY 5. NUMBER OF WAREHOUSES : 5. NUMBER OF WAREHOUSES DECISION ON NUMBER OF WAREHOUSES HAS CONSIDERABLE INFLUENCE ON CUSTOMER SERVICE LEVEL BY PROVIDING INVENTORY SUPPORT FOR MEETING CUSTOMERS NEEDS OF PRODUCTS ON DESIRED TIME & AT THE PLACE. FACTORS DETERMINING NUMBER OF WAREHOUSES: FACTORS DETERMINING NUMBER OF WAREHOUSES DESIRED LEVEL OF CUSTOMER SERVICE NUMBER OF CUSTOMERS, THEIR LOCATIONS & BUYING HABITS 3. TOTAL OPERATING COST OF THE WAREHOUSE 4. SIZE OF THE MARKET 5. NATURE OF THE PRODUCTS 6. INTENSITY OF COMPETITION 7. CURRENT & POTENTIAL DEMAND. LOGISTICS COSTS RELATED TO NUMBER OF WAREHOUSES: LOGISTICS COSTS RELATED TO NUMBER OF WAREHOUSES EFFECT OF NUMBER OF WAREHOUSES ON TOTAL LOGISTICS COST : EFFECT OF NUMBER OF WAREHOUSES ON TOTAL LOGISTICS COST AS THE NUMBER OF WAREHOUSES INCREASES : CUSTOMER SERVICE LEVEL INCREASES & COST OF LOST

SALES DECREASES BUT INVENTORY & INVENTORY CARRYING COST INCREASES WAREHOUSING COST INCREASES TRANSPORTATION COST INITIALLY DECREASES BUT LATER ON INCREASES SQUARE ROOT LAW (SRL) : SQUARE ROOT LAW (SRL) X2 = X1 ( N2 / N1) N1: NUMBER OF EXISTING STOCK POINTS N2: NUMBER OF FUTURE STOCK POINT X1: TOTAL INVENTORY IN EXISTING STOCK POINTS X2: TOTAL INVENTORY IN FUTURE STOCK POINTS ASSUMPTIONS INVENTORY TRANSFER BETWEEN STOCK POINTS IS NOT A COMMON PRACTICE LEAD TIME FOR SUPPLY OF GOODS IS CONSTANT CUSTOMER SERVICE LEVEL IS CONSTANT DEMAND FOR THE PRODUCTS IS ALSO CONSTANT WAREHOUSE SECURITY : WAREHOUSE SECURITY PROTECTION FROM THEFT & PILFERAGES FIRE, FLOOD OR ANY NATURAL CALAMITY RIOTS & CIVIL COMMOTION INSECTS, RODENTS ETC CLIMATIC FACTORS SUCH AS RAINS, HEAT, COLD, MOISTURE PREVENTIVE MEASURES SECURITY FROM EXTERNAL ELEMENTS BY CONSTRUCTING HIGHER WALLS, FENCING, CHECK POSTS PROVIDING WATCH & WARD SYSTEM INSTALLING FIRE FIGHTING EQUIPMENT & TRAINING TO WORKMEN ON FIRE FIGHTING CONSTRUCTING WAREHOUSE ABOVE LAND LEVEL CARRYING OUT PERPETUAL PEST CONTROL COSTS OF WAREHOUSING: COSTS OF WAREHOUSING COST OF HIRING OR CONSTRUCTING WAREHOUSES TOTAL INVENTORY CARRYING COST ( STORAGE / INSURANCE / OBSOLESCENCE / PRODUCT LOSS OR DAMAGE / SAFETY COST) WAREHOUSING OPERATING COST (ADMINISTRATION / MANPOWER / EQUIPMENT COST ) TRANSPORTATION COST ( FROM PLANTS -WAREHOUSE -- WAREHOUSE) 5. COST OF LOST SALES. FACTORS AFFECTING WAREHOUSING COSTS : FACTORS AFFECTING WAREHOUSING COSTS SALES THROUGHPUT (VOLUME) TO BE HANDLED NUMBER OF PRODUCTS TO BE STORED SIZE / WEIGHT / NATURE OF INDIVIDUAL PRODUCT ORGANISATIONS INVENTORY POLICY SPACE UTILIZATION OF WAREHOUSE STORAGE & STACKING METHODS MATERIAL HANDLING TECHNIQUES & METHODS. WAREHOUSE PERFORMANCE MEASUREMENT : WAREHOUSE PERFORMANCE MEASUREMENT A) INTERNAL PERFORMANCE MEASUREMENT COST INCURRED TO ACHIEVE SPECIFIC OBJECTIVES CUSTOMER SERVICE PERFORMANCE IN TERMS OF ORDER FILLING, STOCK-OUTS, SHIPPING ERRORS, ON-TIME DELIVERY 3. SPACE UTILIZATION 4. ASSET MANAGEMENT: INVENTORY TURNOVER B) EXTERNALPERFORMANCE MEASUREMENT CUSTOMER PERCEPTION ON CUSTOMER SERVICE ATTAINED COMPARING WITH BEST INDUSTRY PRACTICES (BENCHMARKING) REASONS FOR WAREHOUSING INEFFICIENCIES : REASONS FOR WAREHOUSING INEFFICIENCIES WRONG DEMAND FORECASTING POOR UTILIZATION OF SPACE USE OF REDUNDANT HANDLING SYSTEMS / METHODS EXCESSIVE MAINTENANCE COSTS 5. HAPHAZARD WAY OF WORKING 6. LACK OF NECESSARY INFRA STRUCTURE FACILITIES 7. LACK OF TRAINED MANPOWER 8. ABSENCE OF COORDINATION BETWEEN RELATED FUNCTIONS.

IMPROVING WAREHOUSE PERFORMANCE : IMPROVING WAREHOUSE PERFORMANCE IMPROVING FORECASTING EFFICIENCY USE OF NEW TECHNOLOGY / AUTOMATED MATERIAL HANDLING EQUIPMENT / COMMUNICATION DEVICES / ASRS ETC 3. REDUCTION IN UNNECESSARY PRODUCT HANDLING 4. IMPROVING / STANDARDIZING PRODUCT PACKAGING 5. PERPETUAL MONITORING & INVENTORY COUNTING 6. INCREASING SIZE OF THE UNITS TO BE HANDLED Contd.. Slide 105: 7. CONSTANTLY SEEKING ROUND TRIP OPPORTUNITIES 8. IMPROVING CUBE UTILIZATION OF WAREHOUSE 9. SMOOTHING OUT VARIANCE IN PRODUCT FLOW IN / OUT OF WAREHOUSE 10. EMPLOYEE TRAINING, MANAGEMENT DEVELOPMENT PROGRAMS, PERFORMANCE INCENTIVE SYSTEM & AWARD RECOGNITION 11. INSTALLING & IMPLEMENTING EDI FOR HANDLING VARIOUS WAREHOUSING FUNCTIONS. TRANSPORTATION: TRANSPORTATION NEED FOR TRANSPORTATION : NEED FOR TRANSPORTATION TRANSPORTATION IS ONE OF THE MOST IMPORTANT LOGISTICS ACTIVITIES IN MEETING CUSTOMER REQUIREMENTS IN OFFERING THE PRODUCTS ON TIME & AT PLACE WHERE THEY ARE REQUIRED IT IS ALSO THE COSTLIEST LOGISTICS ACTIVITY IT ACCOUNTS FOR SIGNIFICANT PORTION OF THE PRODUCT SELLING PRICE IN MAJOR PROJECTS, THE COST OF TRANSPORTATION ACCOUNTS FOR 25% - 30% OF TOTAL CAPITAL COST DELAYS IN GETTING INPUTS / PLANT & MACHINERY ON TIME, NOT ONLY DELAYS THE PROJECT IMPLEMENTATION BUT ALSO INCREASES IN THE COST OF PROJECT Slide 108: WAREHOUSES CONSUMERS DEALERS DISTRIBUTORS PLANTS STORES SUPPLIERS TRANSPORTATION : LINKS TO INTEGRATED LOGISTICAL ACTIVITIES IN-BOUND OUTBOUND MAJOR TRANSPORTATION FUNCTIONS : MAJOR TRANSPORTATION FUNCTIONS PRODUCT MOVEMENT ( FROM POINTS OF ORIGIN TO POINTS OF CONSUMPTION) 2. IN-TRANSIT PRODUCT STORAGE PRINCIPLES OF TRANSPORT OPERATIONS : PRINCIPLES OF TRANSPORT OPERATIONS A) ECONOMIES OF SCALE TRANSPORT COST PER UNIT TRANSPORTED DECREASES WHEN THE VOLUME / WEIGHT OF THE SHIPMENT INCREASES B) ECONOMIES OF DISTANCE THE TRANSPORT COST PER UNIT OF DISTANCE DECREASES AS THE DISTANCE COVERED INCREASES THESE ARE THE IMPORTANT CONSIDERATIONS FOR SELECTING ALTERNATE TRANSPORT STRATEGIES THE OBJECTIVE IS TO MAXIMISE THE SIZE OF THE LOAD SHIPPED & THE DISTANCE THAT IS MOVED WHILE MEETING CUSTOMER SERVICE EXPECTATIONS PARTICIPANTS IN TRANSPORTATION DECISIONS : PARTICIPANTS IN TRANSPORTATION DECISIONS SHIPPER / CONSIGNOR WHO SENDS THE PRODUCTS 2. CONSIGNEE / CUSTOMER WHO RECEIVES THE PRODUCTS 3. CARRIER /

TRANSPORTER WHO HANDLES THE PRODUCT MOVEMENTS GOVERNMENT AGENCIES WHO REGULATES THE ACTIVITIES MODES OF TRANSPORTATION: MODES OF TRANSPORTATION 1..ROAD TRANSPORT : 1..ROAD TRANSPORT TRANSPORTATION BY ROADS ( PRIMARY MODE ) IN INDIA ACCOUNTS FOR 50- 60 % OF TOTAL TRANSPORT MOVEMENT BY VOLUME PROBLEMS FACED BY ROAD TRANSPORT PATHETIC ROAD CONDITIONS SHORTAGE OF QUALITY FUELS (ADULTERATION PROBLEM) MORE WAITING PERIOD (WASTAGE OF TIME AT OCTROI CHECK POST IN DOING FORMALITIES) TRANS-SHIPMENTS ON ACCOUNT OF MOVEMENT RULES AND RESTRICTIONS Contd.. Slide 114: 5. REQUIREMENT OF VARIOUS PERMITS FROM DIFFERENT AUTHORITIES 6. TRADE IS IN THE HANDS OF SMALL & UN-ORGANISED TRANSPORTERS 7. MOST OF THE ACTIVITIES ARE OPERATED MANUALLY 8. NON-AVAILABILITY OF PROFESSIONAL PEOPLE 9. LESS IMPORTANCE GIVEN TO THIS ACTIVITY BY BUSINESS ORGANIZATION Slide 115: ADVANTAGES THROUGH MOVEMENT : POINT TO POINT DELIVERY FLEXIBILITY IN OPERATIONS : DIRECT ACCESS TO SHIPPERS & FINAL CUSTOMERS AT ANY TIME 3 BROAD GEOGRAPHICAL COVERAGE 4. HANDLING OF DIFFERENT TYPES OF PRODUCTS POSSIBLE 5. FAST TURN AROUND OF VEHICLES (MOVE-STOP-MOVE) Slide 116: DISADVANTAGES 1. DELAYS IN TRANSIT TIME DUE TO ROAD CONDITIONS & CLIMATIC HAZARDS 2. UNSUITABLE FOR VERY HEAVY & LARGE SIZE / VOLUME LOADS 3. UNSUITABLE FOR VERY LONG DISTANCE PARTICULARLY OUTSIDE COUNTRYS BORDERS (EXPORT- IMPORT CONSIGNMENTS) 4. MORE RISKS OF ACCIDENTS & DAMAGES TO THE GOODS 5 GOVT.S WEIGHT / VOLUME RESTRICTIONS & LEGAL LIMITS ON OPERATING AREAS FLEET PERFORMANCE : FLEET PERFORMANCE A) FLEET UTILIZATION CONTINUOUSLY RUNNING THE VEHICLES AND MOVING THE GOODS WHICH REDUCES IDLE TIME & OPERATING COST B) CAPACITY UTILISATION EFFECTIVE USE OF AVAILABLE VEHICLE / EQUIPMENT AND MANPOWER CAPACITIES IMPROVING FLEET PERFORMANCE : IMPROVING FLEET PERFORMANCE REDUCING WAITING PERIOD CARRYING ONLY ECONOMIC LOADS / CONSOLIDATION OF CARGO 3. SPREADING DELIVERIES THROUGHOUT THE DAY MINIMISATION OF OPERATING DELAYS IN LOADING / STORING / STACKING / UNLOADING / DOCUMENTATION 5. MAXIMISATION OF RETURNED TRIP LOADS LOAD PLANNING : LOAD PLANNING DEFINATION LOAD PLANNING IS THE PROCESS OF MEETING CUSTOMERS REQUIREMENT BY PLANNING & PROVIDING VEHICLES / EQUIPMENT & MANPOWER AND DETERMINING THE TRANSPORT ROUTES & SCHEDULES ACCORDINGLY

FACTORS TO BE CONSIDERED FOR LOAD PLANNING AVAILABILITY OF VEHICLES & MANPOWER CUSTOMERS REQUIREMENT IN TERMS OF TIME & PLACE FACTORS LIKE ROAD CONDITION, CLIMATE, LEGAL & STATUTORY REQUIREMENTS 4. METHODS TO BE ADOPTED FOR ROUTING & SCHEDULING LOAD PLANNING METHODS : LOAD PLANNING METHODS A) FIXED ROUTE SYSTEM THE VEHICLE HAS FIXED / REGULAR DELIVERY ROUTE FOR EACH DAY / WEEK / MONTH FOR DISTRIBUTION OF PRODUCTS FOR MEETING CUSTOMER NEEDS B) VARIABLE ROUTE SYSTEM IT IS A PLANNING OF THE VEHICLE ROUTES ACCORDING TO CUSTOMERS ORDER PATTERN / PRIORITIES IN TERMS OF DESIRED DELIVERY TIME Slide 121: C) COST SAVING METHOD (CLARKE & BO = a + b + X DISTANCE SAVING = 1- 2 = (2a + 2b) - ( a + b + X) = a +b - X THE SAME FORMULA CAN BE USED FOR MULTI-POINT DELIVERIES AB BO = b + b OA + OB = 2a + 2b O B b 2ND ALTERNATIVE OA AO = a + a OB WRIGHT METHOD) A TWO POINT DELIVERY: 1ST ALTERNATIVE a X OA & DISTANCE & COST SAVED BY CHOOSING MOST ECONOMIC ROUTES CAN BE FOUND OUT 2..RAIL TRANSPORT : 2..RAIL TRANSPORT THIS MODE OF TRANSPORT CARRIES APPROX. 25 - 30% OF TOTAL FREIGHT TRAFFIC IN TERMS OF VOLUME RAILWAYS HAVE INTRODUCED MANY SCHEMES LIKE FREIGHT FORWARDERS SCHEME (FFS), DOOR- TO- DOOR DELIVERY ETC FOR SPEEDY & LOW COST SERVICES. IT MAINLY CARRIES ESSENTIAL COMMODITIES MAINLY IN BULK LIKE OILS, MILK,FOOD GRAINS,STEEL ITEMS,DEFENCE REQUIREMENTS ETC. Slide 123: ADVANTAGES 1. COMPARATIVELY CHEAPEST & FASTEST MODE FOR BULK CARGO OVER LONG DISTANCE 2. DOOR DELIVERIES FOR CERTAIN COMMODITIES 3. FASTER CLAIMS SETTLEMENT 4. COMPARATIVELY SECURE MODE OF TRANSPORT DISADVANTAGES 1. MOVES ONLY ON SPECIFIC ROUTES 2. NOT IDEAL FOR VERY SMALL PARCELS 3. SECONDARY TRANSPORT NEEDED FOR DELIVERY AT FINAL DESTINATION 3...AIR TRANSPORT : 3...AIR TRANSPORT IT IS THE FASTEST MODE AVAILABLE TO DATE FOR MOVEMENT OF GOODS FROM ONE PLACE TO ANOTHER IT IS COMPARATIVELY COSTLIEST MODE , IT HELPS IN ACHIEVING HIGHER LEVEL OF CUSTOMER SERVICE BY EFFECTING FASTEST DELIVERY SAVES MANY OTHER LOGISTICAL OPERATING COSTS SUCH AS ADDITIONAL PACKAGING,INSURANCE, INVENTORY CARRYING COST ETC. THIS MODE ENABLES ORGANISATIONS TO HAVE AN EDGE OVER COMPETITORS Slide 125: ADVANTAGES MEETS REQUIREMENTS OF NATIONAL / INTERNATIONAL BUSINESS MEETS SEASONAL DEMAND / EMERGENCIES AT FASTEST RATE IDEAL FOR TRANSPORTING PERISHABLE GOODS / HIGH VALUE ITEMS REQUIRE MINIMUM HANDLING & CHANCES OF LESS DAMAGES / LOSSES LOW INSURANCE PREMIUM DUE TO LESS TRANSIT RISKS DISADVANTAGES COMPARATIVELY COSTLY MODE OF TRANSPORT REQUIRES SECONDARY TRANSPORT MODE CERTAIN CATEGORIES OF ITEMS ARE NOT ALLOWED REQUIRE SPECIFIC INFRA STRUCTURE FACILITIES LIMITATION ON SHIPPING SPACE (IDEAL ONLY FOR SMALL VOLUME SHIPMENTS & PACKAGED COMMODITIES

4..SEA TRANSPORT: 4..SEA TRANSPORT THIS MODE IS MAINLY USED FOR SHIPPING EXPORT & IMPORT CARGO. 80 % OF TOTAL EXPORTS BY VOLUME IS CATERED BY THIS MODE MAINLY ON ACCOUNT OF LARGE CAPACITY & LOWER FREIGHT RATES COMPARED TO AIR FREIGHT IN SPITE OF HUGE COASTAL LINE THE COUNTRY HAS, THIS OLDEST MODE OF TRANSPORT HAS REMAINED IN ITS INFANCY FOR TRANSPORTING COMMERCIAL GOODS WITHIN THE COUNTRY NOT MUCH EFFORTS HAVE BEEN PUT EITHER BY THE GOVERNMENT OR THE INDUSTRY HOUSES TO EXPLORE THIS MODE FOR TRANSPORTING THE COMMERCIAL GOODS EXCEPT FOR VERY FEW SELECTED TYPE OF COMMODITIES LIKE IRON ORE,COAL,AGRO PRODUCTS ETC Slide 127: ADVANTAGES MEETS REQUIREMENT OF INTERNATIONAL BUSINESS COMPARATIVELY LOWER TRANSPORT RATES AVAILABILITY OF LARGE SHIPPING SPACE FLEXIBILITY IN HANDLING VARIETY OF PRODUCTS (SMALL TO BULK) 5. WIDE GEOGRAPHICAL COVERAGE DISADVANTAGES REQUIRE SPECIFIC INFRA STRUCTURE FACILITIES REQUIRE SUPPORT FROM SECONDARY TRANSPORT FOR DELIVERY TO FINAL CUSTOMER 5..PIPELINE MOVEMENT: 5..PIPELINE MOVEMENT THIS MODE IS MOST COST EFFECTIVE FOR TRANSPORTING LIQUIDS & GASES IT IS COMPARATIVELY CHEAPEST MODE OF TRANSPORT IT COST BARELY RS.1.30 PER KM. TO MOVE EVERY TONNE OF OIL PRODUCTS BY PIPELINE WHILE RAIL TRANSPORT COST RS.2.20 PER TONNE PER KM & BY ROAD IT COSTS RS.3.00 PER TONNE PER KM. OVER THE NEXT 6 YEARS,OUR COUNTRY WILL BE ADDING 1,70,000 KM OF PIPELINE INFRA STRUCTURE NETWORK TO CATER TO INCREASING OUTPUT OF OIL & NATURAL GAS ( INDIA-IRAN VIA PAKISTAN PIPELINE FOR TRANSPORTING CRUDE ) Slide 129: ADVANTAGES RELIABLE & CONTINUOUS MODE FOR MOVEMENT OF LIQUID PRODUCTS & GASES 2. ALL SEASONS, ALL WHETHER MODE OF TRANSPORT 3. LOWER OPERATING & MAINTENANCE COST 4. UNDER GROUND, HENCE NO ADDITIONAL SPACE REQUIRED 5. CAN REACH TO REMOTEST & DISTANT PLACES 6. TRANSIT LOSSES ARE MINIMUM 7. CHEAPEST MODE FOR LARGE QUANTITIES OVER LONG DISTANCE Slide 130: DISADVANTAGES IDEAL ONLY FOR CONTINUOUS OPERATIONS OF SPECIFIC TYPES OF PRODUCTS (GAS , LIQUIDS) 2. INITIAL CAPITAL REQUIREMENT IS VERY HEAVY. 3. MOVEMENT RESTRICTED BY FIXED ROUTES 4. CONTINUOUS VIGILANCE IS REQUIRED FOR SAFETY PURPOSE 6..ROPEWAY TRANSPORT : 6..ROPEWAY TRANSPORT THIS MODE OF TRANSPORT IS IDEAL FOR TRANSPORTING THE GOODS TO HILLY & REMOTE PLACES WERE ROADS ARE NOT AVAILABLE ( MOVEMENT FROM MINES TO CEMENT, COAL PLANTS ) ADVANTAGES TRANSPORTS BULK MATERIAL OVER SHORT DISTANCE LOWER CAPITAL COSTS IDEAL ONLY FOR HILLY AREAS DISADVANTAGES LIMITED SCOPE OF OPERATIONS SLOWEST MODE OF TRANSPORT INTER-MODAL TRANSPORTATION : INTER-MODAL TRANSPORTATION A) PIGGYBACK (TOFC/ COFC ) IN PIGGYBACK SERVICE, A MOTOR CARRIER TRAILER OR A CONTAINER IS PLACED ON A RAIL FLATCAR &

TRANSPORTED FROM ONE TERMINAL TO ANOTHER B) FISHY-BACK THERE ARE TWO TYPES 1) TRAIN-SHIP & 2) CONTAINER-SHIP THEY UTILIZE WATERWAYS FOR TRANSPORTING CARGO. C) BIRDY-BACK IT IS A COMBINATION OF AIR & TRUCK MOVEMENT INTER-MODAL DISTRIBUTION SYSTEM: INTER-MODAL DISTRIBUTION SYSTEM 1. LAND BRIDGES IT IS A SERVICE IN WHICH FOREIGN CARGO CROSSES A COUNTRY ENROUTE TO ANOTHER COUNTRY 2. MINI-LAND BRIDGES MINI-LAND BRIDGE IS A SPECIAL CASE OF LAND BRIDGE WHERE FOREIGN CARGO ORIGINATES OR TERMINATES AT A POINT WITHIN THE SAME COUNTRY 3. MICRO BRIDGE IT IS A RELATIVELY NEW SERVICE BEING PROVIDED BY PORTS ON DOOR TO DOOR RATHER THAN PORT TO PORT BASIS Slide 134: AIR AIR INTER-MODAL DISTRIBUTION SYSTEM ROAD AIR AIR ROAD ROAD MICRO BRIDGE MINI-LAND BRIDGE LAND BRIDGE SELECTING MODE OF TRANSPORT: SELECTING MODE OF TRANSPORT CRITERIA FOR SELECTING MODE OF TRANSPORT : CRITERIA FOR SELECTING MODE OF TRANSPORT NATURE OF THE GOODS TO BE TRANSPORTED DEPENDABILITY : CONSISTENCY IN PROVIDING SERVICES & SECURITY OF GOODS 3 SPEED OF DELIVERY (TRANSIT TIME ) 4. COST OF HIRING THE MODE OF TRANSPORT 5. AVAILABILITY OF SERVICES AT ANY DESIRED LOCATION 6. CAPABILITY OF HANDLING VARIETY OF PRODUCTS Contd Slide 137: 7. LOSS & DAMAGE PERFORMANCE 8. ABILITY TO PROVIDE DOOR TO DOOR DELIVERY 9. CONTINUITY OF SCHEDULED MOVEMENT 10.GOVERNMENT RULES & REGULATIONS.