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TABLE OF CONTENT

Sr.No TOPICS
1 Overwiew of logistics
2 Logistics management
3 Commercial vehicle
operation
4 Containerisation
5 Cross docking
6 Distrubution
7 JIT
8 Logistics Automation
9 Logistics for different field
10 Concept of SCM
11 3 PL
Logistics
Logistics is the art and science of managing and controlling the flow of goods,
energy, information and other resources like products, services, and people, from
the source of production to the marketplace. 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.

1. Overwiew of Logistics
The word of logistics originates from the ancient Greek logos (λόγος), which
means “ratio, word, calculation, reason, speech, oration”.

Logistics as a concept is considered to evolve from the military's need to supply

themselves as they moved from their base to a forward position. In ancient Greek,
Roman and Byzantine empires, there were military officers with the title
‘Logistikas’ who were responsible for financial and supply distribution matters.

The Oxford English dictionary defines logistics as: “The branch of military
science having to do with procuring, maintaining and transporting material,
personnel and facilities.”Another dictionary definition is: "The time related
positioning of resources." As such, logistics is commonly seen as a branch of
engineering which creates "people systems" rather than "machine systems".

Military logistics
In military logistics, experts manage how and when to move resources to the
places they are needed. In military science, maintaining one's supply lines while
disrupting those of the enemy is a crucial—some would say the most crucial—
element of military strategy, since an armed force without food, fuel and
ammunition is defenseless.

The Iraq war was a dramatic example of the importance of logistics. It had become
very necessary for the US and its allies to move huge amounts of men, materials
and equipment over great distances. Led by Lieutenant General William Pagonis,
Logistics was successfully used for this movement. The defeat of the British in the
American War of Independence, and the defeat of Rommel in World War II, have
been largely attributed to logistical failure. The historical leaders Hannibal Barca
and Alexander the Great are considered to have been logistical geniuses.

2.Logistics Management
Logistics Management is that part of the supply chain which 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 in order to meet customers' requirements.

Business logistics
Logistics as a business concept evolved only 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 for the right price and is the
science of process and incorporates all industry sectors. The goal of logistic work
is to manage the fruition of project life cycles, supply chains and resultant
efficiencies.

In business, logistics may have either internal focus(inbound logistics), or external

focus (outbound logistics) covering the flow and storage of materials from point of
origin to point of consumption (see supply chain management). The main functions
of a logistics manager include Inventory Management, purchasing, transport,
warehousing, and the organizing and planning of these activities. Logistics
managers combine a general knowledge of each of these functions so that there is a
coordination of resources in an organization. There are two fundamentally different
forms of logistics. One optimizes a steady flow of material through a network of
transport links and storage nodes. The other coordinates a sequence of resources to
carry out some project. Logistics as a concept is considered to evolve from the
military's need to supply themselves as they moved from their base to a forward
position. In ancient Greek, Roman and Byzantine empires, there were military
officers with the title ‘Logistikas’ who were responsible for financial and supply
distribution matters.

Production logistics
The term is used for describing logistic processes within an industry. The purpose
of production logistics is to ensure that each machine and workstation is being fed
with the right product in the right quantity and quality at the right point in time.

The issue is not the transportation itself, but to streamline and control the flow
through the value adding processes and eliminate non-value adding ones.
Production logistics can be applied in existing as well as new plants.
Manufacturing in an existing plant is a constantly changing process. Machines are
exchanged and new ones added, which gives the opportunity to improve the
production logistics system accordingly. Production logistics provides the means to
achieve customer response and capital efficiency

3.Commercial vehicle operation

Commercial Vehicle Operations is an application of Intelligent Transportation
Systems for trucks.

A typical system would be purchased by the managers of a trucking company. It

would have a satellite navigation system, a small computer and a digital radio in
each truck. Every fifteen minutes the computer transmits where the truck has been.
The digital radio service forwards the data to the central office of the trucking
company. A computer system in the central office manages the fleet in real time
under control of a team of dispatchers.

In this way, the central office knows where its trucks are. The company tracks
individual loads by using barcoded containers and pallets to track loads combined
into a larger container. To minimize handling-expense, damage and waste of
vehicle capacity, optimal-sized pallets are often constructed at distribution points
to go to particular destinations.

A good load-tracking system will help deliver more than 95% of its loads via truck,
on planned schedules. If a truck gets off its route, or is delayed, the truck can be
diverted to a better route, or urgent loads that are likely to be late can be diverted to
air freight. This allows a trucking company to deliver a true premium service at
only slightly higher cost. The best proprietary systems, such as the one operated by
FedEx, achieve better than 99.999% on-time delivery.

Load-tracking systems use queuing theory, linear programming and minimum

spanning tree logic to predict and improve arrival times. The exact means of
combining these are usually secret recipes deeply hidden in the software. The basic
scheme is that hypothetical routes are constructed by combining road segments,
and then poor ones are eliminated using linear programming.

The controlled routes allow a truck to avoid heavy traffic caused by rush-hour,
accidents or road-work. Increasingly, governments are providing digital
notification when roadways are known to have reduced capacity.

A good system lets the computer, dispatcher and driver collaborate on finding a
good route, or a method to move the load. One special value is that the computer
can automatically eliminate routes over roads that cannot take the weight of the
truck, or that have overhead obstructions.

Usually, the drivers log into the system. The system helps remind a driver to rest.
Rested drivers operate the truck more skillfully and safely.

When these systems were first introduced, some drivers resisted them, viewing
them as a way for management to spy on the driver.

A well-managed intelligent transportation system provides drivers with huge

amounts of help. It gives them a view of their own load and the network of
roadways.

Components of CVO include:

 Fleet Administration
 Freight Administration
 Electronic Clearance
 Commercial Vehicle Administrative Processes
 International Border Crossing Clearance
 Weigh-In-Motion (WIM)
 Roadside CVO Safety
 On-Board Safety Monitoring
 CVO Fleet Maintenance
 Hazardous Material Planning and Incident Response
 Freight In-Transit Monitoring
 Freight Terminal Management

4.CONTAINERIZATION

Containerization is a system of intermodal freight transport cargo transport using

standard ISO containers (known as Shipping Containers or Isotainers) that can
be loaded and sealed intact onto container ships, railroad cars, planes, and trucks.

Containerization is also the term given to the process of determining the best
carton, box or pallet to be used to ship a single item or number of items.

ISO Container dimensions and payloads

There are five common standard lengths, 20-ft (6.1 m), 40-ft (12.2 m), 45-ft (13.7
m), 48-ft (14.6 m), and 53-ft (16.2 m). United States domestic standard containers
are generally 48-ft and 53-ft (rail and truck). Container capacity is measured in
twenty-foot equivalent units (TEU, or sometimes teu). A twenty-foot equivalent
unit is a measure of containerized cargo capacity equal to one standard 20 ft
(length) × 8 ft (width) × 8 ft 6 in (height) container. In metric units this is 6.10 m
(length) × 2.44 m (width) × 2.59 m (height), or approximately 38.5 m³. These sell
at about US$2,500 in China, the biggest manufacturer.

Most containers today are of the 40-ft (12.2 m) variety and are known as 40-foot
containers. This is equivalent to 2 TEU. 45-foot (13.7 m) containers are also
designated 2 TEU. Two TEU are equivalent to one forty-foot equivalent unit
(FEU). High cube containers have a height of 9 ft 6 in (2.9 m), while half-height
containers, used for heavy loads, have a height of 4 ft 3 in (1.3 m). When
converting containers to TEUs, the height of the containers typically is not
considered.

The use of US measurements to describe container size (TEU, FEU) despite the
fact the rest of the world uses the metric system reflects the fact that US shipping
companies played a major part in the development of containers. The
overwhelming need to have a standard size for containers, in order that they fit all
ships, cranes, and trucks, and the length of time that the current container sizes
have been in use, makes changing to an even metric size impractical.

The maximum gross mass for a 20-ft dry cargo container is 24,000 kg, and for a
40-ft, (inc. the 2.87 m (9 ft 5 in) high cube container), it is 30,480 kg. Allowing for
the tare mass of the container, the maximum payload mass is there reduced to
approx. 21,600 kg for 20-ft, and 26,500 kg for 40-ft containers.

Shipping Container History

A container ship being loaded by a portainer crane in Copenhagen Harbour.

Twistlocks which capture and constrain containers. Forklifts designed to

handle containers have similar devices.
A container freight train in the UK.
Containers produced a huge reduction in port handling costs, contributing
significantly to lower freight charges and, in turn, boosting trade flows. Almost
every manufactured product humans consume spends some time in a container.
Containerization is an important element of the innovations in logistics that
revolutionized freight handling in the 20th century.

Efforts to ship cargo in containers date to the 19th century. By the 1920s, railroads
on several continents were carrying containers that could be transferred to trucks or
ships, but these containers were invariably small by today's standards. From 1926
to 1947, the Chicago North Shore and Milwaukee Railway carried motor carrier
vehicles and shippers' vehicles loaded on flatcars between Milwaukee, Wisconsin
and Chicago, Illinois. Beginning in 1929, Seatrain Lines carried railroad boxcars
on its sea vessels to transport goods between New York and Cuba. In the mid-
1930s, the Chicago Great Western Railway and then the New Haven Railroad
began "piggy-back" service (transporting highway freight trailers on flatcars)
limited to their own railroads. By 1953, the CB&Q, the Chicago and Eastern
Illinois and the Southern Pacific railroads had joined the innovation. Most cars
were surplus flatcars equipped with new decks. By 1955, an additional 25 railroads
had begun some form of piggy-back trailer service.

The first vessels purpose-built to carry containers began operation in Denmark in

1951. Ships began carrying containers between Seattle and Alaska in 1951. The
worlds first truly intermodal container system used purpose-built container ship the
Clifford J. Rodgers built in Montreal in 1955 and owned by the White Pass and
Yukon Route. Its first trip carried 600 containers between North Vancouver,
British Columbia and Skagway, Alaska on November 26, 1955; in Skagway, the
containers were unloaded to purpose-built railroad cars for transport north to the
Yukon, in the first intermodal service using trucks, ships and railroad cars.
Southbound containers were loaded by shippers in the Yukon, moved by truck,
rail, ship and truck to their consignees, without opening. This first intermodal
system operated from November 1955 for many years.

The U.S. container shipping industry dates to 1956, when trucking entrepreneur
Malcom McLean put 58 containers aboard a refitted tanker ship, the "Ideal-X," and
sailed them from Newark to Houston. What was new about McLean's innovation
was the idea of using large containers that were never opened in transit between
shipper and consignee and that were transferable on an intermodal basis, among
trucks, ships and railroad cars. McLean had initially favored the construction of
"trailerships" - taking trailers from large trucks and stowing them in a ship’s cargo
hold. This method of stowage, referred to as roll-on/roll-off, was not adopted
because of the large waste in potential cargo space onboard the vessel, known as
broken stowage. Instead, he modified his original concept into loading just the
containers, not the chassis, onto the ships, hence the designation container ship or
"box" ship.See also pantechnicon van and trolley and lift van.

During the first twenty years of growth containerization meant using completely
different, and incompatible, container sizes and corner fittings from one country to
another. There were dozens of incompatible container systems in the U.S. alone.
Among the biggest operators, the Matson Navigation Company had a fleet of 24-
foot containers while Sea-Land Service, Inc used 35-foot containers. The standard
sizes and fitting and reinforcement norms that exist now evolved out of a series of
compromises between international shipping companies, European railroads, U.S.
railroads, and U.S. trucking companies. The bulk of the discussions occurred in the
late 1960s and the first draft of the resulting ISO standards were prepared for
publication in 1970.

A social cost arises as a result of the high cost of trasporting the empty containers
back to the original shipping point by agents. This cost, often greater than that of
containers themselves, results in large areas in ports and warehouses to be
occupied by empty containers left when at the destination. In 2004 in the US this
has ironically generated a contest addressed to those that present the best project
for alternative use of these abandoned containers.

In the United States, at first, containerization grew despite the unfavorable

regulatory structure of the 1960s. But the United States' present fully integrated
systems became possible only after the Interstate Commerce Commission's
regulatory oversight was cut back (and later abolished in 1995), trucking and rail
were deregulated in the 1970s and maritime rates were deregulated in 1984.

Containerization has revolutionized cargo shipping. Today, approximately 90% of

non-bulk cargo worldwide moves by containers stacked on transport ships; 26% of
all containers originate from China. As of 2005, some 18 million total containers
make over 200 million trips per year. There are ships that can carry over 14,500
TEU ("Emma Mærsk", 396 m long, launched August 2006). It has even been
predicted that, at some point, container ships will be constrained in size only by the
Straits of Malacca—one of the world's busiest shipping lanes—linking the Indian
Ocean to the Pacific Ocean. This so-called Malaccamax size constrains a ship to
dimensions of 470 m in length and 60 m wide (1542 feet * 197 feet).
However, few initially foresaw the extent of the influence containerization would
bring to the shipping industry. In the 1950s, Harvard University economist
Benjamin Chinitz predicted that containerization would benefit New York by
allowing it to ship industrial goods produced there more cheaply to the Southern
United States than other areas, but did not anticipate that containerization might
make it cheaper to import such goods from abroad. Most economic studies of
containerization merely assumed that shipping companies would begin to replace
older forms of transportation with containerization, but did not predict that the
process of containerization itself would have some influence on producers and the
extent of trading.

A converted container used as an office at a building site.

The widespread use of ISO standard containers has driven modifications in other
freight-moving standards, gradually forcing removable truck bodies or swap bodies
into the standard sizes and shapes (though without the strength needed to be
stacked), and changing completely the worldwide use of freight pallets that fit into
ISO containers or into commercial vehicles.

Improved cargo security is also an important benefit of containerization. The cargo

is not visible to the casual viewer and thus is less likely to be stolen and the doors
of the containers are generally sealed so that tampering is more evident. This has
reduced the "falling off the truck" syndrome that long plagued the shipping
industry.

Use of the same basic sizes of containers across the globe has lessened the
problems caused by incompatible rail gauge sizes in different countries. The
majority of the rail networks in the world operate on a 1,435 mm (4 ft 8½ in) gauge
track known as standard gauge but many countries like Russia, Finland and Spain
use broader gauges while other many countries in Africa and South America use
narrower gauges on their networks. The use of container trains in all these
countries makes trans-shipment between different gauge trains easier, with
automatic or semi-automatic equipment.

Some of the largest global companies containerizing containers today are Patrick
Global Shipping, Bowen Exports and Theiler & Sons Goods, LLC.

Loss at sea of ISO Containers

Containers occasionally fall from the ships that carry them, something that occurs
an estimated 2,000 to 10,000 times each year. For instance, on November 30, 2006,
a container washed ashore on the Outer Banks of North Carolina, along with
thousands of bags of its cargo of tortilla chips. Containers lost at sea do not
necessarily sink, but seldom float very high out of the water, making them a
shipping hazard that is difficult to detect. Freight from lost containers has provided
oceanographers with unexpected opportunities to track global ocean currents.

Double-stack containerization

Part of a United States double-stack container train loaded with

53 ft (16.2 m) containers.
A railroad car with a 20' tank container and a conventional 20' container.

Most flatcars cannot carry more than one standard 40 foot container, but if the rail line has been
built with sufficient vertical clearance, a well car can accept a container and still leave enough
clearance for another container on top. This usually precludes operation of double-stacked
wagons on lines with overhead electric wiring (exception: Betuweroute). Double stacking has
been used in North America since American President Lines introduced this "double stack"
principle under the name of "Stacktrain" rail service in 1984. It saved shippers money and now
accounts for almost 70 percent of intermodal freight transport shipments in the United States, in
part due to the generous vertical clearances used by US railroads.

ISO Container types

Various container types are available for different needs:[5]

general purpose dry van for boxes, cartons, cases, sacks, bales, pallets, drums in standard, high or
half height

High cube palletwide containers for europallet compatibility

Temperature controlled from -25°c to +25°c reefer

Open top bulktainers for bulk minerals, heavy machinery

Open side for loading oversize pallet

Flushfolding flat-rack containers for heavy and bulky semi-finished goods, out of gauge cargo

Platform or bolster for barrels and drums, crates, cable drums, out of gauge cargo, machinery,
and processed timber

Ventilated containers for organic products requiring ventilation

Tank containers for bulk liquids and dangerous goods

Rolling floor for difficult to handle cargo

Biggest ISO container companies

Top 10 container shipping companies in order of TEU capacity, first
January 2006

TEU Market Number of

Company capacity Share ships

A.P. Moller-Maersk Group 1,665,272 18.2% 549

Mediterranean Shipping Company

S.A. 865,890 8.6% 299

CMA CGM 507,954 5.6% 256

Evergreen Marine Corporation 477,911 5.2% 153

Hapag-Lloyd 412,344 4.5% 140

China Shipping Container Lines 346,493 3.8% 111

American President Lines 331,437 3.6% 99

Hanjin-Senator 328,794 3.6% 145

COSCO 322,326 3.5% 118

NYK Line 302,213 3.3% 105

Other container systems

Haus-zu-Haus (Germany)

RACE (container) (Australia)

Determining the best carton, box or pallet

While the creation of the best container for shipping of newly created product is
called "Containerization", the term also applies to determining the right box and
the best placement inside that box in order fulfillment. This may be planned by
software modules in a warehouse management system. This optimization software
calculates the best spatial position of each item withing such constraints as
stackability and crush resistance.

5.CROSS DOCKING
Cross-docking is a practice in logistics of unloading materials from an incoming
semi-trailer truck or rail car and loading these materials in outbound trailers or rail
cars, with little or no storage in between. This may be done to change type of
conveyance, or to sort material intended for different destinations, or to combine
material from different origins.

In purest form this is done directly, with minimal or no warehousing. In practice

many "cross-docking" operations require large staging areas where inbound
materials are sorted, consolidated, and stored until the outbound shipment is
complete and ready to ship. If the staging takes hours or a day the operation is
usually referred to as a "cross-dock" distribution center. If it takes several days or
even weeks the operation is usually considered a warehouse.

Crossdocking is used to decrease inventory storage by streamlining the flow

between the supplier and the manufacturer.

Typical applications
"Hub and spoke" arrangements, where materials are brought in to one central
location and then sorted for delivery to a variety of destinations

Consolidation arrangements, where a variety of smaller shipments are combined

into one larger shipment for economy of transport

Deconsolidation arrangements, where large shipments (e.g. railcar lots) are broken
down into smaller lots for ease of delivery.
 Factors influencing the use of cross-docks
Customer and supplier geography -- particularly when a single corporate customer
has many multiple branches or using points

Freight costs for the commodities being transported

Cost of inventory in transit

Complexity of loads

Handling methods

Logistics software integration between supplier(s), vendor, and shipper

Tracking of inventory in transit

6. DISTRIBUTION
Distribution is one of the four aspects of marketing. A distributor is the
middleman between the manufacturer and retailer. After a product is manufactured
it is typically shipped (and usually sold) to a distributor. The distributor then sells
the product to retailers or customers.

The other three parts of the marketing mix are product management, pricing, and
promotion.

Traditionally, distribution has been seen as dealing with logistics: how to get the
product or service to the customer. It must answer questions such as:

Should the product be sold through a retailer?

Should the product be distributed through wholesale?

Should multi-level marketing channels be used?

How long should the channel be (how many members)?

Where should the product or service be available?

When should the product or service be available?

Should distribution be exclusive, selective or extensive?

Who should control the channel (referred to as the channel captain)?

Should channel relationships be informal or contractual?

Should channel members share advertising (referred to as co-op ads)?

Should electronic methods of distribution be used?

Are there physical distribution and logistical issues to deal with?

What will it cost to keep an inventory of products on store shelves and in channel
warehouses (referred to as filling the pipeline)?

The distribution channel

Frequently there may be a chain of intermediaries, each passing the product down
the chain to the next organization, before it finally reaches the consumer or end-
user. This process is known as the 'distribution chain' or the 'channel.' Each of the
elements in these chains will have their own specific needs, which the producer
must take into account, along with those of the all-important end-user.

Channels
A number of alternate 'channels' of distribution may be available:

Selling direct, such as via mail order, Internet and telephone sales

Agent, who typically sells direct on behalf of the producer

Distributor (also called wholesaler), who sells to retailers

Retailer (also called dealer), who sells to end customers

Advertisement typically used for consumption goods

Distribution channels may not be restricted to physical products alone. They may
be just as important for moving a service from producer to consumer in certain
sectors, since both direct and indirect channels may be used. Hotels, for example,
may sell their services (typically rooms) directly or through travel agents, tour
operators, airlines, tourist boards, centralized reservation systems, etc.

There have also been some innovations in the distribution of services. For
example, there has been an increase in franchising and in rental services - the latter
offering anything from televisions through tools. There has also been some
evidence of service integration, with services linking together, particularly in the
travel and tourism sectors. For example, links now exist between airlines, hotels
and car rental services. In addition, there has been a significant increase in retail
outlets for the service sector. Outlets such as estate agencies and building society
offices are crowding out traditional grocers from major shopping areas..

Channel members
Distribution channels can thus have a number of levels. Kotler defined the simplest
level, that of direct contact with no intermediaries involved, as the 'zero-level'
channel.

The next level, the 'one-level' channel, features just one intermediary; in consumer
goods a retailer, for industrial goods a distributor, say. In small markets (such as
small countries) it is practical to reach the whole market using just one- and zero-
level channels.

In large markets (such as larger countries) a second level, a wholesaler for

example, is now mainly used to extend distribution to the large number of small,
neighbourhood retailers.

In Japan the chain of distribution is often complex and further levels are used, even
for the simplest of

Channel structure
To the various `levels' of distribution, which they refer to as the `channel length',
Lancaster and Massingham also added another structural element, the relationship
between its members:
'Conventional or free-flow - This is the usual, widely recognized, channel with a
range of `middle-men' passing the goods on to the end-user.

Single transaction - A temporary `channel' may be set up for one transaction; for
example, the sale of property or a specific civil engineering project. This does not
share many characteristics with other channel transactions, each one being unique.

Vertical marketing system (VMS) - In this form, the elements of distribution are
integrated.

The internal market

Many of the marketing principles and techniques which are applied to the external
customers of an organization can be just as effectively applied to each subsidiary's,
or each department's, 'internal' customers.

In some parts of certain organizations this may in fact be formalized, as goods are
transferred between separate parts of the organization at a `transfer price'. To all
intents and purposes, with the possible exception of the pricing mechanism itself,
this process can and should be viewed as a normal buyer-seller relationship.

Less obvious, but just as practical, is the use of `marketing' by service and
administrative departments; to optimize their contribution to their `customers' (the
rest of the organization in general, and those parts of it which deal directly with
them in particular). In all of this, the lessons of the non-profit organizations, in
dealing with their clients, offer a very useful parallel.

Channel Decisions
Channel strategy

Product (or service)<>Cost<>Consumer location

Channel management
The channel decision is very important. In theory at least, there is a form of trade-
off: the cost of using intermediaries to achieve wider distribution is supposedly
lower. Indeed, most consumer goods manufacturers could never justify the cost of
selling direct to their consumers, except by mail order. In practice, if the producer
is large enough, the use of intermediaries (particularly at the agent and wholesaler
level) can sometimes cost more than going direct.

Many of the theoretical arguments about channels therefore revolve around cost.
On the other hand, most of the practical decisions are concerned with control of the
consumer. The small company has no alternative but to use intermediaries, often
several layers of them, but large companies 'do' have the choice.

However, many suppliers seem to assume that once their product has been sold
into the channel, into the beginning of the distribution chain, their job is finished.
Yet that distribution chain is merely assuming a part of the supplier's
responsibility; and, if he has any aspirations to be market-oriented, his job should
really be extended to managing, albeit very indirectly, all the processes involved in
that chain, until the product or service arrives with the end-user. This may involve
a number of decisions on the part of the supplier:

Channel membership

Channel motivation

Monitoring and managing channels

Channel membership
Intensive distribution - Where the majority of resellers stock the `product' (with
convenience products, for example, and particularly the brand leaders in consumer
goods markets) price competition may be evident.

Selective distribution - This is the normal pattern (in both consumer and industrial
markets) where `suitable' resellers stock the product.

Exclusive distribution - Only specially selected resellers (typically only one per
geographical area) are allowed to sell the `product'.

Channel motivation
It is difficult enough to motivate direct employees to provide the necessary sales
and service support. Motivating the owners and employees of the independent
organizations in a distribution chain requires even greater effort. There are many
devices for achieving such motivation. Perhaps the most usual is `bribery': the
supplier offers a better margin, to tempt the owners in the channel to push the
product rather than its competitors; or a competition is offered to the distributors'
sales personnel, so that they are tempted to push the product. At the other end of
the spectrum is the almost symbiotic relationship that the all too rare supplier in the
computer field develops with its agents; where the agent's personnel, support as
well as sales, are trained to almost the same standard as the supplier's own staff.

Monitoring and managing channels

In much the same way that the organization's own sales and distribution activities
need to be monitored and managed, so will those of the distribution chain.

In practice, of course, many organizations use a mix of different channels; in

particular, they may complement a direct salesforce, calling on the larger accounts,
with agents, covering the smaller customers and prospects.

Vertical marketing
This relatively recent development integrates the channel with the original supplier
- producer, wholesalers and retailers working in one unified system. This may arise
because one member of the chain owns the other elements (often called `corporate
systems integration'); a supplier owning its own retail outlets, this being 'forward'
integration. It is perhaps more likely that a retailer will own its own suppliers, this
being 'backward' integration. (For example, MFI, the furniture retailer, owns
Hygena which makes its kitchen and bedroom units.) The integration can also be
by franchise (such as that offered by McDonald's hamburgers and Benetton
clothes) or simple co-operation (in the way that Marks & Spencer co-operates with
its suppliers).

Alternative approaches are `contractual systems', often led by a wholesale or retail

co-operative, and `administered marketing systems' where one (dominant) member
of the distribution chain uses its position to co-ordinate the other members'
activities. This has traditionally been the form led by manufacturers.

The intention of vertical marketing is to give all those involved (and particularly
the supplier at one end, and the retailer at the other) 'control' over the distribution
chain. This removes one set of variables from the marketing equations.
Other research indicates that vertical integration is a strategy which is best pursued
at the mature stage of the market (or product). At earlier stages it can actually
reduce profits. It is arguable that it also diverts attention from the real business of
the organization. Suppliers rarely excel in retail operations and, in theory, retailers
should focus on their sales outlets rather than on manufacturing facilities ( Marks
& Spencer, for example, very deliberately provides considerable amounts of
technical assistance to its suppliers, but does not own them).

Horizontal marketing
A rather less frequent example of new approaches to channels is where two or
more non-competing organizations agree on a joint venture - a joint marketing
operation - because it is beyond the capacity of each individual organization alone.
In general, this is less likely to revolve around marketing synergy.

LOGISTICS IN FOOD DISTRIBUTION

Food distribution, a method of distributing (or transporting) food from one place
to another, is a very important factor in public nutrition. Where it breaks down,
famine, malnutrition or illness can occur. During some periods of Ancient Rome,
food distribution occurred with the policy of giving free bread to its citizens under
the provision of a common good.

There are three main components of food distribution:

Transport infrastructure, such as roads, vehicles, rail transport, airports, and ports.

Food handling technology and regulation, such as refrigeration, and storage,

warehousing.

Adequate source and supply logistics, based on demand and need.

Information logistics

In general, it is exactly logistics of information.

The field of information logistics aims at developing concepts, technologies and

applications for need-oriented information supply. Information-on-demand
services are a typical application area for information logistics, as they have to
fulfil user needs with respect to content, location, time and quality

Information Logistics consists of two words - information and logistics.

Information can mean a lot of things, but usually is text (syntax with a semantic
meaning) and logistics which is the transportation of sth from point A to point B.
In a simplified sense is a newsletter information logistics, also an e-mail or even
the ordinary mail you receive.

Information logistics is concerned with the supply of information to individuals

and aims to optimize it by targeted delivery in accordance with requirements in
such a way that the substantively correct and actually necessary information is
available where and when it is needed. This information should be transformed in
line with users' needs, depending on the communication media and users'
preferences, in order to aid custom processing of it.

Information is created throughout the entire product creation process. The goal of
information logistics is to optimize the content and format of the information,
reduce throughput times and achieve a high degree of parallel processing. Our
approach is such that information can be created and reused in a structured manner
all along the value creation chain. This requires the use of an information model,
an overall product tree and a graphic design concept. The deployed system must
meet these requirements optimally.

The result is automated configuration of fully scalable information for a wide

variety of target group perspectives (e.g. by sector or area of application). The
customer can simply navigate through the information. The information and
documentation creation process is made easier, safer and more efficient.

7. JUST IN TIME CONCEPT

Just In Time (JIT) is an inventory strategy implemented to improve the return on
investment of a business by reducing in-process inventory and its associated costs.
The process is driven by a series of signals, or Kanban , that tell production
processes to make the next part. Kanban are usually simple visual signals, such as
the presence or absence of a part on a shelf. When implemented correctly, JIT can
lead to dramatic improvements in a manufacturing organization's return on
investment, quality, and efficiency.

New stock is ordered when stock reaches the re-order level. This saves warehouse
space and costs. However, one drawback of the JIT system is that the re-order level
is determined by historical demand. If demand rises above the historical average
planning duration demand, the firm could deplete inventory and cause customer
service issues. To meet a 95% service rate a firm must carry about 2 standard
deviations of demand in safety stock. Forecasted shifts in demand should be
planned for around the Kanban until trends can be established to reset the
appropriate Kanban level. In recent years manufacturers have touted a trailing 13
week average as a better predictor than most forecastors could provide.

A related term is Kaizen which is an approach to productivity

improvement literally meaning "continuous impr

History of JIT

The technique was first used by the Ford Motor Company This describes the
concept of "dock to factory floor" in which incoming materials are not even stored
or warehoused before going into production. The concept needed an effective
freight management system (FMS); Ford's Today and Tomorrow (1926) describes
one.

The technique was subsequently adopted and publicised by Toyota Motor

Corporation of Japan as part of its Toyota Production System (TPS).

Japanese corporations cannot afford large amounts of land to warehouse finished

products and parts. Before the 1950s, this was thought to be a disadvantage
because it reduced the economic lot size. (An economic lot size is the number of
identical products that should be produced, given the cost of changing the
production process over to another product.) The undesirable result was poor
return on investment for a factory.

The chief engineer at Toyota in the 1950s, Taiichi Ohno, examined accounting
assumptions and realized that another method was possible. The factory could be
made more flexible, reducing the overhead costs of retooling and reducing the
economic lot size to the available warehouse space.

Over a period of several years, Toyota engineers redesigned car models for
commonality of tooling for such production processes as paint-spraying and
welding. Toyota was one of the first to apply flexible robotic systems for these
tasks. Some of the changes were as simple as standardizing the hole sizes used to
hang parts on hooks. The number and types of fasteners were reduced in order to
standardize assembly steps and tools. In some cases, identical subassemblies could
be used in several models.

Toyota engineers then determined that the remaining critical bottleneck in the
retooling process was the time required to change the stamping dies used for body
parts. These were adjusted by hand, using crowbars and wrenches. It sometimes
took as long as several days to install a large (multiton) die set and adjust it for
acceptable quality. Further, these were usually installed one at a time by a team of
experts, so that the line was down for several weeks.

Toyota implemented a strategy called Single Minute Exchange of Die (SMED),

developed by Shigeo Shingo. With very simple fixtures, measurements were
substituted for adjustments. Almost immediately, die change times fell to about
half an hour. At the same time, quality of the stampings became controlled by a
written recipe, reducing the skill required for the change. Analysis showed that the
remaining time was used to search for hand tools and move dies. Procedural
changes (such as moving the new die in place with the line in operation) and
dedicated tool-racks reduced the die-change times to as little as 40 seconds. Dies
were changed in a ripple through the factory as a new product began flowing.

After SMED, economic lot sizes fell to as little as one vehicle in some Toyota
plants.

Carrying the process into parts-storage made it possible to store as little as one part
in each assembly station. When a part disappeared, that was used as a signal to
produce or order a replacement.
 Philosophy
Just-in-time (JIT) inventory systems are not just a simple method that a company
has to buy in to; it has a whole philosophy that the company must follow. The
ideas in this philosophy come from many different disciplines including; statistics,
industrial engineering, production management and behavioral science. In the JIT
inventory philosophy there are views with respect to how inventory is looked upon,
what it says about the management within the company, and the main principle
behind JIT.

Inventory is seen as incurring costs instead of adding value, contrary to traditional

thinking. Under the philosophy, businesses are encouraged to eliminate inventory
that doesn’t add value to the product. Secondly, it sees inventory as a sign of sub
par management as it is simply there to hide problems within the production
system. These problems include backups at work centres, lack of flexibility for
employees and equipment, and inadequate capacity among other things.

In short, the just-in-time inventory system is all about having “the right material, at
the right time, at the right place, and in the exact amount.”

Effects
Some of the results at Toyota were unexpected. A huge amount of cash appeared,
apparently from nowhere, as in-process inventory was built out and sold. This by
itself generated tremendous enthusiasm in upper management.

Another surprising effect was that the response time of the factory fell to about a
day. This improved customer satisfaction by providing vehicles usually within a
day or two of the minimum economic shipping delay.

Also, many vehicles began to be built to order, completely eliminating the risk they
would not be sold. This dramatically improved the company's return on equity by
eliminating a major source of risk.

Since assemblers no longer had a choice of which part to use, every part had to fit
perfectly. The result was a severe quality assurance crisis, and a dramatic
improvement in product quality. Eventually, Toyota redesigned every part of its
vehicles to eliminate or widen tolerances, while simultaneously implementing
careful statistical controls. (See Total Quality Management). Toyota had to test and
train suppliers of parts in order to assure quality and delivery. In some cases, the
company eliminated multiple suppliers.

When a process problem or bad parts surfaced on the production line, the entire
production line had to be slowed or even stopped. No inventory meant that a line
could not operate from in-process inventory while a production problem was fixed.
Many people in Toyota confidently predicted that the initiative would be
abandoned for this reason. In the first week, line stops occurred almost hourly. But
by the end of the first month, the rate had fallen to a few line stops per day. After
six months, line stops had so little economic effect that Toyota installed an
overhead pull-line, similar to a bus bell-pull, that permitted any worker on the
production line to order a line stop for a process or quality problem. Even with this,
line stops fell to a few per week.

The result was a factory that became the envy of the industrialized world, and has
since been widely emulated.

The Just in Time philosophy was also applied to other segments of the supply
chain in several types of industries. In the commercial sector, it meant eliminating
one or all of the warehouses in the link between a factory and a retail
establishment.

Benefits
As most companies use an inventory system best suited for their company, the
Just-In-Time Inventory System (JIT) can have many benefits resulting from it. The
main benefits of JIT are listed below.

Set up times are significantly reduced in the warehouse. Cutting down the set up
time to be more productive will allow the company to improve their bottom line to
look more efficient and focus time spent on other areas that may need
improvement.

The flows of goods from warehouse to shelves are improved. Having employees
focused on specific areas of the system will allow them to process goods faster
instead of having them vulnerable to fatigue from doing too many jobs at once and
simplifies the tasks at hand.

Employees who possess multiple skills are utilized more efficiently. Having
employees trained to work on different parts of the inventory cycle system will
allow companies to use workers in situations where they are needed when there is
a shortage of workers and a high demand for a particular product.

Better consistency of scheduling and consistency of employee work hours. If there

is no demand for a product at the time, workers don’t have to be working. This can
save the company money by not having to pay workers for a job not completed or
could have them focus on other jobs around the warehouse that would not
necessarily be done on a normal day.

Increased emphasis on supplier relationships. No company wants a break in their

inventory system that would create a shortage of supplies while not having
inventory sit on shelves. Having a trusting supplier relationship means that you can
rely on goods being there when you need them in order to satisfy the company and
keep the company name in good standing with the public.

Supplies continue around the clock keeping workers productive and businesses
focused on turnover. Having management focused on meeting deadlines will make
employees work hard to meet the company goals to see benefits in terms of job
satisfaction, promotion or even higher pay.

Problems
Within a JIT System

The major problem with Just In Time operation is that it leaves the supplier and
downstream consumers open to supply shocks. In part, this was seen as a feature
rather than a bug by Ohno, who used the analogy of lowering the level of water in
a river in order to expose the rocks to explain how removing inventory showed
where flow of production was interrupted. Once the barriers were exposed, they
could be removed; since one of the main barriers was rework, lowering inventory
forced each shop to improve its own quality or cause a holdup in the next
downstream area. Just In Time is a means to improving performance of the system,
not an end.
With shipments coming in sometimes several times per day, Toyota is especially
susceptible to an interruption in the flow. For that reason, Toyota is careful to use
two suppliers for most assemblies. As noted in Liker (2003), there was an
exception to this rule that put the entire company at risk by the 1997 Aisin fire.
However, since Toyota also makes a point of maintaining high quality relations
with its entire supplier network, several suppliers immediately took up production
of the Aisin-built parts by using existing capability and documentation. Thus, a
strong, long-term relationship with a few suppliers is preferred to short-term, price-
based relationships with competing suppliers.

Within a raw material stream

As noted by Liker (2003) and Womack and Jones (2003), it would ultimately be
desirable to introduce flow and JIT all the way back through the supply stream.
However, none of them followed this logically all the way back through the
processes to the raw materials. With present technology, for example, an ear of
corn cannot be grown and delivered to order . The same is true of most raw
materials, which must be discovered and/or grown through natural processes that
require time and must account for natural variability in weather and discovery.

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