PHYSICAL

DISTRIBUTION
12PGP058
12PGP063
12PGP075
12PGP085
12PGP106
Singh

Aditi Chauhan
Anupriya
Kaveri Sapra
Nilanjan Biswas
Vikas Prakash

LOGISTICS

Derived from
Greek word Logistikos
Latin word Logisticus

10/21/16

Indian Institute of Management

Raipur

PHASES
IN B O U N D

10/21/16

LOGISTIC
S

C
I
T
S
I
G
O
L
D
N
U
O
OUTB

PROCESS
LOGISTICS

Indian Institute of Management

Raipur

LOGISTICS SUBSYSTEMS

W a r e h o u s i n g
Site Selection
Material Storage
Material Handling

I n v e n t o r y M a n a g e m e n t
Material Requirement
Planning

I n f o r m a t i o n F l o w
Tr a n s p o r t a t i o n
Order Registration
Route Planning
Order Checking and
Mode Selection
Editing
Ve h i c l e S c h e d u l i n g
Order Processing
of Management
I n v e n t o r y P l a nIndian
n i nInstitute
g Raipur
10/21/16
4

Warehousing

Transportatio
Inventory
Transportatio
Inventory
Mgmt
n
n
Mgmt

Insuranc
e

WAREHOUSING

Warehouse
a commercial building used for storage of
goods
Important Decisions
Location
Number
Size
Layout
Ownership

Need
Seasonal Production
Quick Supply
Continuous Production
Price Stabilization
Indian Institute of Management
10/21/16
Raipur
Seasonal Demand
Large Scale Production5

Warehousing

Transportatio
Inventory
Transportatio
Inventory
Mgmt
n
n
Mgmt

Insuranc
e

SEASONAL
PRODUCTION

10/21/16

Wheat bought by Government of India an

Indian Institute of Management
6
stored. Raipur

SEASONAL
DEMAND

10/21/16

Wool being stored at London Docks for

Indian Institute
of Management
use
in winters
7
Raipur

LARGE SCALE PRODUCTION

10/21/16

Indian Institute of Management

Raipur
Cement Warehouse
for

QUICK SUPPLY

10/21/16

Indian Institute of Management

Raipur

Cadbury warehouse - for quick

SHORT LEAD TIME

Indian Institute
of Management
Iron warehousing
- For
very short lead time10

10/21/16

Raipur

PRICE
STABILIZATION

Potato warehousing is done by the government to

Indian Institute of Management
10/21/16control prices in non-production season
Raipur

11

TYPES OF WAREHOUSES
CENTRALIZED/DECENTRA
LIZED

RAW MATERIAL AND

COMPONENT/WORK-INPROGRESS/FINISHED GOOD WAREH
DISTRIBUTION
WAREHOUSE
VIRTUAL WAREHOUSE
10/21/16

Indian Institute of Management

Raipur

12

STRATEGIES
PUBLIC WAREHOUSE

PRIVATE
WAREHOUSE

CONTRACT WAREHOUS

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Indian Institute of Management

Raipur

13

FUNCTI
ONS

10/21/16

Storage of goods

Indian Institute of Management

Raipur

14

FUNCTI
ONS

Paddy being processed before storage

10/21/16

Indian Institute of Management

Raipur

Processing of Goods

15

FUNCTI
ONS

10/21/16

Indian Institute of Management

Packaging
of Goods
Raipur

16

FUNCTI
ONS

10/21/16

Indian Institute of
of Management
Sorting
Goods
Raipur

17

FUNCTI
ONS

10/21/16

Indian Institute of Management

Shipping
of Goods
Raipur

18

FUNCTI
ONS

Perishable items like fruits etc. are protected in Cold

Storage
Units
Indian
Institute of Management

10/21/16

Protection
of Goods
Raipur

19

FUNCTI
RISK BEARING
ONS
WAREHOUSES TAKE OVER THE RISKS INCIDENTAL TO
STORAGE OF GOODS
RESPONSIBILITY OF THE GOODS PASSES ON TO THE
WAREHOUSE-KEEPER
GRADING
AND BRANDING
GRADING AND BRANDING OF GOODS ON BEHALF OF
THE
MANUFACTURER,
WHOLESALER
OR
THE
IMPORTER OF GOODS ON REQUEST
PROVIDES FACILITIES FOR MIXING, BLENDING AND
PACKAGING OF GOODS FOR THE CONVENIENCE OF
HANDLING AND SALE
ORDER PICKING
PROCESS OF REMOVING ITEMS FROM STORAGE TO
MEET A SPECIFIC DEMAND
BASIC SERVICE THAT THE WAREHOUSE PROVIDES FOR
THE CUSTOMER
Indian Institute of Management
10/21/16
20
Raipur ARE BASED AROUND THIS
MOST WAREHOUSE DESIGNS

FUNCTI
RISK BEARING
ONS
WAREHOUSES TAKE OVER THE RISKS INCIDENTAL TO
STORAGE OF GOODS
RESPONSIBILITY OF THE GOODS PASSES ON TO THE
WAREHOUSE-KEEPER
GRADING
AND BRANDING
ON BEHALF OF THE MANUFACTURER, WHOLESALER
OR THE IMPORTER OF GOODS ON REQUEST PROVIDES
FACILITIES FOR MIXING, BLENDING AND PACKAGING
OF GOODS FOR THE CONVENIENCE OF HANDLING
AND SALE
ORDER PICKING
PROCESS OF REMOVING ITEMS FROM STORAGE TO
MEET A SPECIFIC DEMAND
BASIC SERVICE THAT THE WAREHOUSE PROVIDES FOR
THE CUSTOMER
Indian Institute of Management
10/21/16
21
Raipur ARE BASED AROUND THIS
MOST WAREHOUSE DESIGNS

FUNCTI
RISK BEARING
ONSTHE RISKS INCIDENTAL TO
WAREHOUSES TAKE OVER
STORAGE OF GOODS
RESPONSIBILITY OF THE GOODS PASSES ON TO THE
WAREHOUSE-KEEPER
GRADING
AND BRANDING
GRADING AND BRANDING OF GOODS ON BEHALF OF
THE
MANUFACTURER,
WHOLESALER
OR
THE
IMPORTER OF GOODS ON REQUEST
PROVIDES FACILITIES FOR MIXING, BLENDING AND
PACKAGING OF GOODS FOR THE CONVENIENCE OF
HANDLING
AND SALE
ORDER
PICKING
PROCESS OF REMOVING ITEMS FROM STORAGE TO
MEET A SPECIFIC DEMAND
BASIC SERVICE THAT THE WAREHOUSE PROVIDES FOR
THE CUSTOMER
Indian Institute of Management
10/21/16
22
Raipur

HIGH

LOCATION ATTRACTIVENESS OF
WAREHOUSING
NCR

Connectivi
ty

Jaipu
r

Sura
t
Bangalo
re

Barod
a
Ajme
r

Nagp
ur

Vizag
Kolkat
a
Chenna
i

Hyd

Indor
e

Competitive
Intensity
Low
Medium

Ranc
hi

High
Ludhiana

LOW

Guwah
ati

Bhop
al

LOW

10/21/16

TotalIndian
Cargo
Institute of Management
Raipur
Traffic

HIGH

Source: KPMG
In
23

Warehousing

Transportatio
Inventory
Transportatio
Inventory
Mgmt
n
n
Mgmt

Insuranc
e

Established : 1957
Warehouses : 470
Storage Capacity : 10.13MT
Personnel : 5,370
National Presence : 18 Regional Offices
Chandigarh, Delhi, Panchkula, Lucknow,
Jaipur, Patna, Kolkata, Raipur, Bhopal,
Bhubaneshwar, Hyderabad, Chennai,
Kochi, Bangalore, Mumbai, Navi Mumbai,
Ahmedabad, Guwahati

10/21/16

Indian Institute of Management

Raipur

24

 Include Agricultural produce, Industrial rawmaterials, finished goods and variety of

hygroscopic and perishable items.

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Indian Institute of Management

Raipur

25

Warehousing

Inventory
Mgmt

Transportatio
n

Insuranc
e

Snowman Frozen Foods

Ltd

Indias first Cold Supply Chain

Company
End-to-End solution from source
to stores
Nationwide Presence more than
100 cities
Net Capacity more than 1000
MT
Outlets : 4400
Temperature range : 10 deg C to
10/21/16

Indian Institute of Management

Raipur

26

Warehousing

Transportatio
Inventory
Transportatio
Inventory
Mgmt
n
n
Mgmt

Insuranc
e

IMC Ltd
Indian Molasses Company Leading
Independent Bulk Liquid Storage
Company
One Stop Solution For Bulk Liquid
Storage Needs At Indian Ports
Capacity : 6, 80,000 cu.mts
Terminals : 13 major sea ports
Kandla, Mumbai, Jawaharlal Nehru Port,
Goa, Karwar, Mangalore, Cochin, Chennai,
Haldia, Kakinada, Vizag, Kolkata, Ennore
10/21/16

Indian Institute of Management

Raipur

27

Warehousing

Transportatio
Inventory
Transportatio
Inventory
Mgmt
n
n
Mgmt

Insuranc
e

IMC Ltd
Products
Petroleum
Petrochemicals
Edible Oil

10/21/16

Indian Institute of Management

Raipur

28

Warehousing

Inventory
Mgmt

Transportatio
n

Insuranc
e

Documentation Management
Solution to Business Corporations
Services
Document Collection
Data Processing
Document Verification
Storage
Image Processing
Search and Retrieval
10/21/16

Indian Institute of Management

Raipur

29

Warehousing

Inventory
Mgmt

Transportatio
n

INVENTORY
MANAGEMENT
Categories

Insuranc
e

Raw material
Work in progress
Finished goods
In Transit

Technically an asset but affects

profitability of firm

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Indian Institute of Management

Raipur

30

Inventory
Mgmt

Warehousing

Transportatio
n

Insuranc
e

Inventory Reduction by Supply Chain

Re-engineering

10/21/16

Raipur

1.Reduced
Inventory
Levels
2.Eliminati
on of
stock
redundanc
y

Effect

1.
Computeriz
ed demand
analysis
2.
Production
of Base
colours
Indian Institute only
of Management

Re-engineered

High
Finished
Goods
inventory

Effect

Earlier

shades
be
anufactur
in all
viants

31

Warehousing

Inventory
Mgmt

Transportatio
n

I
J

Insuranc
e

Joint venture between Transport Corporation

India(TCI) and Mitsui & Co. (Mitsui)
Just-in-Time solution to Toyota India
Helped Toyota produce vehicles at competitive
price against Tata and Mahindra & Mahindra
Average inventory level reduced from 30 days
Indian Institute of Management
10/21/16
32
to 2 days
Raipur

Warehousing

Inventory
Mgmt

Transportatio
n

Insuranc
e

TRANSPORTATION
Transportation modes and mix
decisions
Roads
Rails
Airways
Water
Inland
Sea

Pipeline
Ropeways
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Indian Institute of Management

Raipur

33

Warehousing

Inventory
Mgmt

Transportatio
n

Insuranc
e

TRANSPORTATION
Factors
Volume
Distance
Product Shape
Market Dynamics

10/21/16

Networks
Point-to-Point
Multiple Delivery
Point
Trans-shipment Poin
Nodal Network

Indian Institute of Management

Raipur

34

Warehousing

Inventory
Mgmt

Transportatio
n

Insuranc
e

TRANSPORTATION
Factors

Large Volume over

Large Distance

Shape of product
determines the mode of
transportation
10/21/16

Indian Institute of Management

Raipur

35

Warehousing

Inventory
Mgmt

Transportatio
n

Insuranc
e

TRANSPORTATION
Networks
Origin

Destinat
ion

Point-to-Point Network

Origin

10/21/16

Indian Institute of Management

Multiple
Raipur

Destinat
ion

Delivery Points Network

36

Warehousing

Inventory
Mgmt

Transportatio
n

Insuranc
e

TRANSPORTATION
Networks

Origin

Long Distance Haulage

Transshipment
Point

Local Area
Distribution

Destinati
on

Trans-shipment Points

10/21/16

Indian Institute of Management

Raipur

37

Inventory
Mgmt

Warehousing

Transportatio
n

Insuranc
e

TRANSPORTATION
Networks
Multiple Pickup and
Road
Distribution

Port
Termin
al

Termin
al
Rail
Termin
al

Multiple Pickup and

Road
Distribution

Air
Termin
al

Termin
al

Nodal Network

10/21/16

Indian Institute of Management

Raipur

38

Warehousing

Inventory
Mgmt

Transportatio
n

Insuranc
e

TRANSPORTATION
Networks
Distribution Center

Distribution Center

Mother
Hub

Distribution Center

Distribution Center

Hub and Spoke Network

10/21/16

Indian Institute of Management

Raipur

39

Warehousing

Inventory
Mgmt

Transportatio
n

Insuranc
e

INSURANCE
Marine Cargo Insurance, National Insurance
Company Ltd.
Scope of Cover
Particular Average
General Average
Risk of wars and strikes
Extent of CoverProvided
Duration of Cover
War Risk, Strike Risk
10/21/16

Indian Institute of Management

Raipur

40

Warehousing

Inventory
Mgmt

Transportatio
n

Insuranc
e

INSURANCE
The New India Assurance Co. Ltd.
Marine Cargo Policy
Scope: inland transport, import and export
Marine Hull Policy
Covers loss or damage to ships, tankers,
bulk carriers, smaller vessels, fishing boats
and sailing vessels

10/21/16

Indian Institute of Management

Raipur

41

Warehousing

Inventory
Mgmt

Transportatio
n

Insuranc
e

Insurance
Bharti AXA
Smart Cargo Insurance policy
Covers loss or damage while
transported by rail, road, sea or air.
Stock Throughput Policy (Cradle to
Crave)
Raw material, WIP, Finished goods at
warehouse
Deals with risk of transit and storage
under a single policy
10/21/16

Indian Institute of Management

Raipur

42

CASES

10/21/16

Indian Institute of Management

Raipur

43

 Inventory
replenishment approach
Focus on information flow

Transportation
Uses road transport and rail transport depending on which one is
cheaper and efficient
reverseauctions, where it asks on an average six to ten transporters
overall, thecompany works with about 20 main transporters across the
country to bidonline for a consignment.

Warehouse
work with CFAs to optimize stacking patterns
Uses FIFO
advanced stacking and racking systems for usingthem in areas where
the rentals are high. Vertical stacking used
Go green : encourages the warehouse owners- the CFAs-to use
natural lighting

Warehouse
Location
22 Warehouses
Major capital
cities

High logistics cost

Transportation
Outsources
Consumer durables are seasonal
Restricted theft, misrepresentation and
counterfeiting by deploying Global Digital Logistics
System (GDLS)
Follow the hub-and-spoke model
Mobiles shipped by air price elastic

Inventory
Rolled out 12 Inventory Optimization solutions

Warehouse
Central DC - Noida and Ranjangaon
53 warehouses

Location of
EMS
Added 15 Electronic
Manufacturing Services
located near to central DC
to ensure components
reach the EMS companies
on time, location are
either
located near Pune or
Noida
plant
Dehradun
Roorkee
Rudrapur
Baddi
Noida
Kolhapur
Rajpura

Main
Plant

PADMINI MOTORS LTD.

Material System
Transportation and Logistics
Inbound logistics activities outsourced to 3PL
firm
This ensured reliable and speedy deliveries
Vendors were divided into 7 zones
Material was collected by the firm to either send
it to plant warehouse or to zonal warehouse
Stock limit 1 day
Daily shipments were planned to meet JIT
requirement of plant

PADMINI MOTORS LTD.

Inventory Management
No. of models

% of total
variety

% of annual
sales

Fast-moving
group(FMG)

33

22

88

Slow moving
group

117

78

12

Total

150

100

100

FMG to be carried in buffer stocks and SMG

models to be manufactured against firm orders

Buffer quantity for replenishment was worked

out on the basis of:
Forecasted average retail sales
Lead time variable factor
Demand variable factor

AMUL
Logistics
Collection centers located at over 15000
villages.
Milk is transported to more than 30
processing units via 1200 routes using Tank
trucks.
Raw milk Silos- tanks have capacities of 150000
liters approximately.
After processing the pasteurized milk is
then stored in the pasteurized milk silos.
This milk after being packaged and
sorted is then loaded onto the milk
Indian Institute of Management
10/21/16
Raipur
delivery
vans/Tank trucks.

50

rivate Warehousing
One warehouse in every state (C&FAs)
Inventory - JIT
Transportation
Outsourced SCM to third party logistics service
provider Radhakrishna Foodland

10/21/16

Indian Institute of Management

Raipur

51

Inventory
Just in Time
Minimum delay in Placing and Getting
Pre-cooked Hamburgers kept under heat la
Products not sold are discarded
Hub and Spoke Model

10/21/16

Indian Institute of Management

Raipur

52

REVERSE LOGISTICS INITIATIVES

Why?
Short life of mobile phones
Retailers exchange old mobiles for new
ones
30% of Indian replaced their mobiles (80
million per year) : huge opportunity

Launched We recycle campaign in

2008
Used Kabadi chain to filter the
10/21/16

Indian Institute of Management

Raipur

53

 Warehousing
Regional Warehouses: Mumbai, Delhi, Bangalore,
Kolkata
No in-store warehouses

Inventory Management
Everyday Auto Replenishment
Lead Time for Replenishment 1 Day

Transportation
Delivery from Warehouse to Store by Distribution
Center
Mode: Trucks
10/21/16

Indian Institute of Management

Raipur

54

 Quick Replenishment
Low Inventory
Quick Response to Market Changes
Own Fleet of Trucks
Wal-Mart-managed
QR

Warehouse Just-in-Time
System
Distribution
Center

Distribution
Center

Wal-Mart

Wal-Mart

Order
POS Data
Supplier

Store

Supplier

Store

Vendor-managed QR
10/21/16

Indian Institute of Management

Raipur

55

THIRD PARTY LOGISTICS

10/21/16

Indian Institute of Management

Raipur

56

THANKYOU

10/21/16

Indian Institute of Management

Raipur

57