Logistic Project

A PROJECT REPORT ON EMERGENCE OF LOGISTICS BUSINESS IN THE RECENT PAST AND ITS POTENTIAL

SUBMITTED TO:

Prepared by :

Prof. A.B.Raju

Hardik Choksi Ankita Goyal

1|P a g e

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Acknowledgement:-

We would like to take this opportunity to express our deep gratitude to all those who have offered their valuable help and time to help us complete the project. We would like to thank Prof. A.B.Raju (Project Guide) for providing us the support and guidance in the project, for providing us the necessary information and motivation to go about the project and sparing his valuable time to share his knowledge about the topic in depth. We would also like to thank IIPM Ahmedabad, who gave us this opportunity to prove our talent and provided a platform for development.















Abstract In the competitive world of manufacturing, companies are often searching for new ways to improve their process, customer satisfaction and stay ahead in the game with their competitors. Logistics has been considered a strategy to bring these things to life for the past decade or so. This project work tries to shed some light on the basics of log istics and how logistics can be used as a management strategy. This paper points out the fundamentals of logistics and looks into what kind of decisions today‘s logistics managers have to take on a daily basis for the

improvement of their logistics model. A growing concern has been developing to control rising global pollution, this paper also brings out some of the effects of logistics decisions on the environment and vice versa. The project starts out by compiling the works of researchers and logistics experts in the field of logistics in the theoretical background section. Through a survey conducted in a few logistics firms, a small picture of the extent to which logistics has penetrated the manufacturing world has been drawn.

Keywords: Logistics, , Logistics activities, Returns.















Sr.no 1

Content

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INTRODUCTION

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1.1 BACKGROUND BACKGROU ND

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1.2.1 AIM

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1.2.2 PROBLEM DEFINATION

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1.2.3 PROBLEM DELIMITATION

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METHODOLOGY

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2.O SECONDARY RESEARCH

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3

LOGISTIC MANAGEMENT INTRODUCTION

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4

LOGISTIC INDUSTRY – SNAP SHOT

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5

INDIAN LOGISTIC SECTOR

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GLOBAL LOGISTIC SCENARIO

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LOGISTIC COMPANY IN INDIA

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8

SURVEY

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9

FINDING

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CONCLUSION

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11

SUGGESTION

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LIMITATION OF STUDY

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BIBLOGRAPHY

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14.

ANNEXURE

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Introduction This section of the paper will give the reader an idea of the fundamentals of the project. The reader will be able to get a fair idea of what this Project is all about. In the following subsections one can understand the objectives and obstacles for this project.

1.1 Background Competition can be seen in every field these days, and the manufacturing world is now different. Companies are always looking for newer and newer opportunities and defects in the system so they can be tackled. Logistics plays an important role in any manufacturing firm, as it involves the optimal use of man, machine and material. Logistics is a small part of the company. Logistics deals with the handling of the goods that are being returned to the manufacturer by the customer. It covers all the activities that determine the fate o f these returned goods. This project tries to understand the basic concepts of logistics. It tries to give an idea of how various researchers and logistics experts have defined logistics and how they have made out of it the ―Operational Excellencies‖. It also covers some basic logistics activities and how these

activities affect the decisions that managers have to make o n a regular basis in their company. The ever growing manufacturing world and the advent of automation has resulted in mass production and increased the number of products released into the market. This exponential growth has resulted in the overuse of the natural resources thus increasing the amount of industrial waste. This project also sheds some light on what activities in the logistics help companies to move towards the Operational Operat ional Excellencies in the market.

1.2 Project Specifications















This project gives me the opportunity to put together a study on the concept of Logistics. It also gives me the opportunity to show my skills as a Masters student, and showcase the skills that we have learnt over the past two years. This project mainly focuses on the concept of logistics and what role it plays in the manufacturing world today to bring out the excellence in business

1.2.1 Aim The aim of this project is to understand the concept of Logistics and its potential in the various industries. It also focuses on learning different aspects of the logistics and how these aspects affect the decisions made by various firms and try tr y to get good returns through it.

1.2.2 Problem Definition Logistics companies tried to focus on its effects on the managerial decisions but some time it fail in the operational excellence. Researchers have found that logistics can play an important role in improving the operational part. The main focus of this thesis would be to answer the following following questions: quest ions:

The literature review in this paper gives a clear c lear picture about the concept of logistics. logistics. Further the questionnaire also has been formulated so as to get clear and well defined answers. Through the literature study, interview and survey conducted with logistics and supply chain personnel at a few companies, this thesis tries to understand and analyze the concept of reverse logistics.

















1.2.3 Problem Delimitation Logistics has been found to play an important role in almost any manufacturing firm, regardless of size, product and geographical reach of the firm. The focus initially conduct the survey and/interviews in various firms After which a quick decision was made to change the target group to the manufacturing firms in India. And by the time this decision was made there was very little time for choosing the companies and conducting survey and/or interviews. Somehow we managed to get few people from different companies to respond to the questionnaire. Also some sort of an interview was conducted through telephone calls and chatting over the internet to get a better understanding of the responses given by the m. As mentioned in the problem definition this thesis will focus on understanding the knowledge of the participants with respect to logistics, and to what extent they have implemented logistics concepts within their companies and how this t his affects their decisions. decisions.

















2. Methodology The methodology followed to achieve the set objectives of this project is in three parts: Secondary research, survey and interview.

2.0 Secondary Research

Secondary research was conducted through various means like internet, various articles, journals, periodicals and also the Mckinsey and KPMG reports.

2.1 The survey A thorough literature literature study on the topic topic of this paper: Several articles were found on the topic over the internet. After getting somewhat of a fair idea about logistics, a preliminary set of questions were formulated for the survey. Companies were contacted by me us over the telephone and through email. Most of the respondents had filled the survey questions quest ions completely. completely.

2.2 Interview After receiving the responses to the survey for this project, interviews were conducted with the respondents to better understand their responses and also to get a better idea of their

















and give the respondents an opportunity to throw light on their thoughts on supply chain and logistics. Thus the results and analysis sections are based on both the survey and interviews.

















LOGISTICS MANAGEMENT - INTRODUC I NTRODUCTION TION Logistics management is that part of the supply chain which plans, implements and controls the efficient, effective, forward and backward (reverse) flow and storage of goods, services and information between the point of origin and the point of consumption in order to meet customers' requirements rather to the customers‘ delight. A professional working in the field of logistics management is called a logistician. logistician.

Logistics, as a business concept, evolved only o nly in the 1950s. This was mainly due to the increasing complexity of supplying one's business with materials, and shipping out products in an increasingly globalized supply chain, calling for experts in the field who are called Supply Chain Logisticians. This can be defined as having the right item in the right quantity at the right time at the right place for the right price and to the right target customers (consumer); and it is the science of process having its presence in all sectors of the industry. The goal of logistics work is to manage the fruition of project life cycles, supply chains and resultant efficiencies. Logistics is concerned with getting (or transmitting) the products and services where they are needed or when they are desired. It is difficult to accomplish any marketing or manufacturing without logistical support. It involves the integration of information, transportation, inventory, warehousing, material handling, and packaging. The operating responsibility of logistics is the geographical repositioning of raw materials, work in process, and finished inventories where required at the lowest cost possible

Origin and Definition of Logistics:

The term "logistics" originates from the ancient Greek "λόγος" ("logos" — "ratio, word,

Calculation, reason, speech, oration"). Logistics is considered to have originated in the

















The Oxford English dictionary defines logistics as: ―The branch of military science having to do with procuring, maintaining and transporting material, personnel and facilities.‖

The American Council of Logistics Management defines logistics as―the process of planning, implementing and controlling the efficient and effective flow, and storage of goods, services and related information from the point of origin to the point of consumption for the purpose of conformi co nforming ng to customer requirem requ irements.‖ ents.‖

c. Objective of Logistics Management: The primary objective of logistics management is to effectively and e fficiently move move the t he supply chain so as to extend the desired level of customer service at the least cost. Thus, logistics management starts with ascertaining customers‘ needs till their fulfilment through product

supplies. However, there are some definite objectives to be achieved through a proper logistics system. These can be described as follows: follows:

1. Improving customer service: An important objective of all marketing efforts, including the physical distribution activities, is to improve the customer service. An efficient management of physical distribution can help in improving the level of customer service by develop ing an effective system of warehousing, quick qu ick and economic transportation, andmaintaining optimum level of inventory.

2. Rapid Response:

Rapid response is concerned with a firm's ability to satisfy customer service requirements in a timely manner. Information technology has increased the capability to postpone logistical operations to the latest possible time and then accomplish rapid delivery o f required inventory.



















warehousing and inventory maintenance, and any reduction in the cost of one element may result in an increase in the cost of the other elements. Thus, the objective of the firm should be to reduce the total cost of o f distribution distribution and not just the cost incurred on any one o ne element.

4. Generating additional sales:

A firm can attract additional customers by offering better services at lowest prices. For example, by decentralizing its warehousing operations or by using economic and efficient modes of transportation, a firm can achieve larger market share. Also by avoiding the out-of stock situation, the loss of loyal customers can be arrested.

5. Creating time and place utilities: u tilities:

The products are physically moved from the place of their origin to the place where they are required for consumption; they do not serve any purpose to the users. Similarly, the products have to be made available at the time they are needed need ed for consumption.

6. Price stabilization: It can be achieved by regulating the flow of the products to the market through a judicious use of



















8. Movement consolidation:

Consolidation one of the most significant logistical costs is transportation. Transportation cost is directly related to the type of product, size of shipment, and distance. Many Logistical systems that feature premium service depend on high-speed, small shipment transportation. Premium transportation is typically high-cost. To reduce transportation cost. It is desirable to achieve movement consolidation.

d. Logistics Management Function

Logistics is the process of movement of goods across the supply chain of the company. This process is consist of various functions, which have to be properly managed to bring effectiveness efficiency in the supply chain of o f organization.

1. Order processing: The starting point of physical distribution activities is the processing of customers‘ orders. In

order to provide quicker customer service, the orders received from customers should be processed within the least possible time. Order processing includes receiving the order, recording



















2. Warehousing:

Warehousing refers to the storing and assorting products in order to create time utility. The basic purpose of the warehousing activity is to arrange placement of goods, provide storage facility to store them, consolidate them with other similar products, divide them into smaller quantities and build up assortment of products. Generally, larger the nu mber of warehouses a firm firm has the lesser would be the time taken in serving customers at different locations, but greater would be the cost of warehousing. Thus, the firm has to strike a balance between the cost of warehousing and the level of customer service.

Major decision in warehousing is as follow: ➢

Location of warehousing facility

➢

Number of warehousing

➢

Size of warehouse

➢

Design of the building

➢

Ownership of the warehouse

3. Inventory Management:



















(such as cost of warehousing, tied up capital and obsolescence) and replenishment cost (including the manufacturing cost).

4. Transportation:

Transportation seeks to move goods from points of production prod uction and sale to points of consumption in the quantities required at times needed and at a reasonable cost. The transportation system adds time and place utilities to the goods handled and thus, increases their economic value. To achieve these goals, transportation facilities must be adequate, regular, dependable and equitable in terms of costs and benefits of the facilities and serv ice provided.

5. Information:

The physical distribution managers continuously need up -to-date information about inventory, transportation and warehousing. For example, in respect on inventory, information about present stock position at each location, future commitment and replenishment capabilities are constantly required. Similarly, before choosing a 16 carrier, information about the availability of various modes of transport, their costs, services and suitability for a particular



















6. Facilities:

The Facilities logistics element is composed of a variety of planning activities, all of which are directed toward ensuring that all required permanent or semi permanent operating and support facilities (for instance, training, field and depot maintenance, storage, operational, and testing) are available concurrently with w ith system fielding. Planning must be comprehensive and include the need for new construction as well as modifications to existing facilities. Facility construction can take from 5 to 7 years from concept formulation to user occupancy. It also includes studies to define and establish impacts on life cycle cost, funding requirements, facility locations and improvements, space requirements, environmental impacts, duration or frequency of use, safety and health standards requirements, and security restrictions. Also included are any utility requirements, for both fixed and mobile facilities, with emphasis on limiting requirements of scarce o r unique resources.





















The Logistics Industry – SNAP SHOT

Globally, the logistics industry is valued at a t US$ 3.5 trillion. trillion.

The U.S., which contributes to over 25% of the global industry value, spends Close to 9% of its GDP on logistic services.

The Indian Logistics Industry is presently estimated at US$ 90 billion. (CII) the industry has generated employment for 45 million people in the country in comparison with the IT and ITeS sector which employs approximately 4.3 million People.





















The introduction of Value Added Tax (VAT) and the proposed introduction of a singular Goods and Services Tax (GST) are expected to significantly reduce the number of warehouses manufacturers are required to maintain in different states, thereby resulting in a substantial increase in demand for integrated logistics logistics solutions. o Robust trade growth

Strong economic growth and liberalization have led to considerable increase in domestic and international trade volumes over the past five years. Consequently, the requirement for transportation, handling and warehousing is growing at a robust pace and is driving the demand for integrated logistics solutions.





















iii. FDI up to 49% under the automatic route is permitted for air transport services,

including air cargo services. It is pertinent to mention in this context, that Press Note 1 (2007) that is expected to be imminently notified by the DIPP proposes to increase the limit of FDI on air cargo services in 74%.

The industry has been at the receiving end of increasing interest from the private equity sector. The year 2007 witnessed just under US$ 1 billion in private equity investments in this industry, representing approximately 7% of total private equity investments during the year, against 3% in the previous year.





















THE INDIAN LOGISTICS SECTOR: Wars have been won or lost on the strength of logistics capability or lack of it. Although quite an old concept, logistics has been becoming efficient only since the globalisation wave of the early 1990s and hence, the businesses supported by it, worldwide, have been pushed for competitive balance-sheets, providing consumers a better product/service and yet adding value to its investors. Triggering intense competition, globalisation, coupled with liberalisation, forced both private and public firms to commit themselves to making available to their customers the right material of right condition, at the right time and place at the lowest cost — be it a product or a service. The World Bank, in a recent survey Connecting to Compete: Trade Logistics in the Global Economy, has developed a Logistics Performance Index (LPI) that can serve as a benchmarking tool for measuring performance of businesses along a country‘s logistics supply chain. The Bank





















The level of inefficiency in logistics activities in the country has been very high across all













































increasingly difficult and / or undesirable to manage this non-core activity in house. The result is a wide need gap that is seemingly widening much faster than it is being filled. It is in this context that capability development of logistics service providers assumes critical importance. While rapid development across all dimensions of organizational capability will be required to achieve and sustain demand growth, logistics being a service industry, manpower capabilities assume utmost 5 importances. The sector currently employs about 40 million million people, peo ple, a number that will rise rise rapidly with exponential growth expectations expectat ions in the























SIZE OF THE LOGISTICS MARKET IN INDIA:

Indian Supply Chain and Logistics Industry is more than USD 100 Billion in size and is the backbone of Indian Economy. Our industry is growing at a rate of 8-10% annually and has been a crucial contributor in the growth and development of the Indian economy. In the near future, Traditional Logistics services like Transportation and Warehousing would continue to growth at a good rate. However, the big ticket growth would come from the Value Added Logistics























GLOBAL LOGISTICS SCENARIO:

In a move to cut down costs, producers are exploring around the t he globe in search for the lowest cost exporters/suppliers. Lured towards developing countries in south-east Asian region for lower-wages, transportation industry is stretching its reach longer than ever before. Major players are focusing overseas markets for outsourcing cheap manufacturing as well as expanding their businesses. This result in outbound logistics. And acceleration in manufacturing























combinations of containers, ports, and so on are likely counted for moving a shipment. International logistics vendors also maintains cost and route information on hundreds of hundreds carriers, which are operational in dozens of regions, which offers both lower freight bills and cutting of delivery times. A biggest disadvantage in international logistics is the vagueness in arrival times. Materials managers have had modest choice, so they had get around by adding more safety stocks. Thus, the costs of inventory management in the overseas parts are naturally higher. The uncertainty of delivery time is due to not tapping of international shipments

























Size of the global logistics industry

























Current status and dynamics of the industry

























profitability profitability for a long term, enter into suitable alliances to complement the range of services

























Logistics Companies of India

























Best logistics companies in India. I ndia.



































































































































































































































































































































































































Logistic Project

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