Inventory Functionality

Irrespective of its location in the supply chain, product inventory essentially serves the following functions: Balancing Supply and Demand. The production and consumption cycles never matches. The sudden requirement of a product in large quantities may not be fulfilled immediately as the pro­duction cannot be taken up so soon. In such a case, the

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Reasons for Carrying Inventories

Inventory is required for producing finished goods, extending service to customers and to keep the customer’s manufacturing operations running. Hence, inventory plays a crucial role in the supply chain of an organization. It helps to keep a smooth flow of products across the supply chain. On the other hand, excess inventory in the supply

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Inventory-Related Costs

The major portion of the working capital of a firm is blocked in inventory. If the inventory is in excess of the optimum level, more funds will be blocked that cannot be used for other productive purposes, resulting in opportunity loss. Hence these funds are tied up unnecessarily. There are other costs related to

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Inventory Controls

The variability in customer demand if not conveyed properly or conveyed with distortion as it trav­els upstream in the supply chain—the phenomenon called ‘bullwhip effect’—causes either stock­outs or inventory pile-ups in the distribution logistics chain. The bullwhip effect is a deformation in information when it goes upstream in the supply chain. The ripple effect

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Kanban Method for Inventory Management

It is basically an information system to support JIT inventory for manufacturing operations. It signals supply of material when used. Kanban, meaning signboard or label, is used as a commu­nication tool in the inventory system. A kanban is attached to every box of parts as they go to the assembly lines. Because these parts

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Inventory Policy Guidelines

These are the guidelines for inventory procurement, maintenance, positioning and placement with respect to quantity, time and customer service. Policy decisions are also concerned with manag­ing inventory independently or interdependently across the various distribution centres. Defining policy helps in improving the inventory effectiveness across the supply chain. 1. Centralized/Decentralized System In the centralized system

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Square Root Law (SRL) of Inventory

As regards inventory, many a time companies believe that centralization will cost them more as compared to decentralization. However, as per the business expert D.H. Maiser, maintaining the inventory in a variety of warehouses instead of just one would result in saving money. This he proved mathematically in 1976. His law is known as

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Evolution of Transportation System

Transportation ensures movement of people as well as goods (manufactured or produced) from one place to another. So it helps in growth of trade and commerce of the country. A good transportation system is one of the pillars of industrial growth and commercial structure of the country. Along with the growth of industry and

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Transportation Infrastructure

In the movement of raw materials or products from place of production to the place of consumption, transportation is the most important component of the logistical system. It serves two purposes, one is product movement and the other is in-transit product storage. Movement of the product can be achieved through various modes, such as

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Freight Management

The selection of transportation mode depends on the product characteristics and customer service requirements. For example, raw materials are invariably transported in bulk and through cheaper mode of transportation such as rail or sea. The unit value being less, the transportation cost, as per­centage of the value of material being transported, is very high.

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Factors Influencing Freight Cost

The logistics manager has to achieve objectives of freight cost reduction, speed and reliability in delivery. However, the freight cost is influenced by the following factors. 1. Volumes With the economies of scale, the cost of operations is distributed over large volumes resulting into lower per unit cost of cargo movement. For example, a

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Transportation Networks

Movement of goods from the point of production to the point of consumption is done through various modes of transportation. Depending on the transportation load, number of delivery points, existing distribution centres, product value, frequency of deliver, urgency and the cost economics, different types of networks are used. 1. Point-to-Point Network Point-to-point type of

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Route Planning

For the conservation of precious fuel and saving the transportation time, route planning exercise is of utmost importance to the carrier owner. Route planning may be advisory or statutory. The advi­sory routes are those with less operational problems and shortest distance. The cost of operation of the truck on such routes is the lowest.

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Containerization

Containerization is making waves in the transportation of goods, ensuring manifold benefits to the users, transport companies and the country’s economy. A container can be defined as a transport device for moving solid or liquid material. It is a case or a tank with adequate strength to be repeat­edly used for packing and transportation

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Consumer Versus Logistical Packaging

Packaging is a marketing tool and is related to the performance of marketing function. It is primar­ily a delimitation of space and setting aside of a product from external environment. Packaging forms the important cost element of the goods and represents 5-30 per cent of the value of the goods depending on the product

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Packaging as Unitization

The physical distribution process involves storage, handling and transportation of the product dur­ing its journey from manufacturing plant to the end customer. For ease in distribution process, individual products are grouped together in quantities to form a package which can be conveniently moved in the distribution system. This process of grouping large number of

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Design Considerations of Logistical Packaging

Logistical packaging is a crucial element in the physical distribution system, which helps in enhanc­ing the system’s efficiency and effectiveness of the supply chain of the company. Proper packaging for logistics application takes care of the cost, which otherwise would have been incurred in the form of product damages during transit, ultimately resulting in

Packaging Material

For logistical packaging variety of materials are in use. However the most common are follows. 1. Corrugated Fibreboard The master cartons are invariably made out of two to three ply corrugated sheets. However, for logistical packaging, thicker corrugated sheets with five to six ply or more are preferred. This material is most commonly used

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Returnable Logistical Packaging

The new trends in logistical packaging today are the use of returnable containers. Returnable pack­aging (RP) is used in consumer durable and automobile manufacturing industry wherein the sup­pliers are located in proximity of the assembly plant. Over the past two decades, the automotive industry has switched over from using disposable packaging to reusable plastic

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Packaging Cost

The logistical packaging helps in reducing the transit damages, enhancing the operating efficiency of the material handling equipment and economizing on space utility. The net result is reduction in operating cost of the system through better asset utilization and prevention of transit damage to the product. However, the gain is more than the loss,

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