Scope of Logistics

As against the old concept, which was restricted to the army, logistics has gained recognition in business organizations as an important business function and as a tool for developing competi­tiveness. To an organization how it delivers products and services to the customers—whether the product may be tangible or intangible—is of critical importance. The effective and efficient physical movement of the tangible product will speak about the intangible services associated with the product and the organization that is delivering it. In the case of intangible products, the delivery of tangibles at the right place at the right time will speak about its quality. Logistics is one of the major enablers of growth of trade and commerce activity in a country. At a macro level, the logistical infrastructure, such as modes of transportation, transportation equipment, storage facilities, connectivity, and information processing, are contributing to a large extent to the physical movement of goods produced in manufacturing, mining, and agricultural sectors. The speed and reliability in distribution from the place of production to the place of consump­tion contributes greatly to the growth of a country’s domestic and international trade. The logistics costs as a percentage of gross domestics products (GDP) of various countries are shown in Table 1.1.

It is evident from Table 1.1 that it costs nearly USD 150 billion to move material from one user to another in India. The key issues are freights and inventory management. A country’s public distribution system needs logistical support to deliver the goods to the right place at the right time for the lowest possible cost. At micro level, logistics plays a critical role in the value delivery system of a business organization to provide a superior customer service. Hence, the mission of a logistical system is to achieve the desired level of delivered service and quality at the lowest possible cost. The scope of logistics covers management of material procurement through manufacturing to delivery of finished products to the consumer. In a nutshell, any pro­ductivity improvement that could be achieved in any part of a logistics system, whether at macro or micro levels, would help in cost reduction and proper deployment of scarce national resources to a productive purpose.

PERVASIVENESS OF LOGISTICS

1. Logic in Logistics for 30-Minutes Pizza

Ideally, the time taken for registering the order should be one minute. After that the pizza goes to the guy in the “make line.” He takes two minutes, and then oven time is five minutes. When the pizza comes out of the oven it is inspected. One minute goes into quality check and packing. Another minute goes in checking the route and confirming the order one last time.

The moment he is leaving, the delivery boy shouts the out-of-the-door time, which is normally between 10 and 12 minutes. Then everybody yells out “drive safe.” When he returns he punches the time in. At the end of the day the average delivery time for all his orders is checked. This helps the manager figure out which orders were not delivered in time. The next day, the store manager calls each one of those whose orders got delayed and apologizes.

The essence is process sequencing, just-in-time inventory availability, and time management for the success in this service operations logistics.

Source: http://www. agencyfaqs.com/news/interviews/data/68.html

2. Twenty-Four Hour ATM

An ATM (automatic teller machine) is not a novelty today. Invariably, all major banks in India started this service as a part of the retail finance drive. In fact, foreign banks operating in India were the pio­neers in ATMs in India. However, the lead taken by ICICI, HDFC, and Citi Bank gave the face-lift to the ATM concept, as a result of which it has witnessed an exponential growth to over 75000 numbers in 2011. The success of ATMs depend on the effectiveness of the networking. The logistics supply chain for the currency notes needs to be very efficient so as to ensure the availability of the currency notes at the stroke of a button. An ATM is a service product having perishability as the basic characteristic, which needs to be looked into to satisfy the “any time” cash need of the customer who is time starved. The other logistics aspect is the information on the credit limits available to the customer at any point of cash withdrawal. Data warehousing and data mining with automatic updating for real-time informa­tion on credit worthiness are the other essential support systems required for processing the customer request for cash withdrawal. E-business solution takes care of the complex transaction processes in­volved in ATM operations.

3. Dabbawalas of Mumbai

Dabbawalas of Mumbai offer a reliable foolproof logistics system of delivering lunch boxes to over 200,000 office employees every day without mix up of having the wrong tiffin going to the wrong office or arriving late, irrespective of conditions such as rains, strikes, and scorching heat. A team of around 5000 men and women, mostly illiterate, operate in assigned areas in Mumbai, each handling 25-30 dabbas, which is the optimum lot size as more could create confusion and affect promptness, which will lead to customer dissatisfaction. The dabbas are collected from the houses and put in tiffin racks at a network of 96 railway stations all over Mumbai to load into the train for further movement toward delivery points. They use a colour code system on the dabbas to identify the collection and delivery points. After the lunch hour, the system operates in reverse direction, again displaying accuracy with collection and quality of delivery closer to Six Sigma. This system gives a much cheaper alternative to office workers than having their food in restaurants and food joints. With this logistics system, 400,000 transactions are done daily with the precision of Six Sigma accuracy.

Source: Information adapted from MyDabbawala.com.

4. Laundry Service in Five Star Hotels

The laundry service in a five star hotels is a very simple service operation that does not use any sophis­ticated software tools. At 10 a.m., the housekeeping department collects the laundry from 210 rooms of a 300-room hotel operating at 70 per cent occupancy. The laundry is divided into three parts; staff uniforms, room laundry (bed sheets, pillow covers), and guest clothes. Special attention is given to the guest’s clothes for same-day or express delivery. Every single piece of clothing is allotted an identifica­tion code, and the information is punched into the computer for tracking, processing, and final delivery. The entire laundry is handed over to the laundry service supplier, who collects the laundry in the morn­ing and delivers to the housekeeping department in the evening per the customers’ requirements. This is a simple but effective laundry logistics operation of a hotel housekeeping department that leads to customer satisfaction.

5. Indian Postal Service

Indian Postal Service is one of the largest logistics networks in the world today that delivers the letters in the most cost-effective way. The Indian Postal Service operates through a network of 1,54,973 post offices covering 6,09,030 villages, towns, and cities across the country, delivering 3000 million letters every year. They use all transportation modes available in India for movement of postal cargo. The collection of let­ters from 5,79,595 letter boxes, followed by sorting, packing, moving, unpacking, and again sorting for final delivery is a mammoth logistical task that they have performed cost effectively for the past one and a half centuries.

Source: http://www. indiapost.gov. in

6. Gulf War in 1991

After World War II, the 1991 Gulf War was the largest military operation, lasting for four days. The planning process of logistics operations was initiated many months before the actual war started. It involved the movement of over 1,25,000 ground troops to defend the area, stretching to 175 km long and 300 km deep in the Saudi Arabian desert. Around 500 tactical cargo trucks and 200 wheeled vehicles moved into place within the short time frame of two weeks. The ammunition of 35,000 tonnes, fuel of 5.6 million gallons, rations of 2 million meals, and drinking water of 1 million gallons were made available at the appropriate time during the war operations. Entire logistics operations were based on information flow, which was based on excellent communication connectivity across the supply chain using the latest technology. The status of material, food, maintenance, and manpower to individual supply chain centres was reported on a daily basis to organize and facilitate speedy replenishment from the United States and bases in Europe. The logistics involved were of mammoth scale. However, efficiency and effectiveness of logistics operations contributed greatly to the success of the winners.

Source: http://ibib.cfc.dnd.ca, http://en.wikipedia.org

7. Public Distribution System

Food Corporation of India (FCI), a government undertaking, is handling the massive logistics opera­tions of the procurement, storage, and distribution of foodgrains throughout the country. FCI moves around 22 million tonnes of foodgrains over the distance of 1500 km per annum. On an average, 4,00,000 bags are transported by rail, road, and inland water from the point of production to the point of consumption for distribution across 4,50,000 fair price shops spread across the country. On an aver­age, FCI is storing over 23 million tonnes of grains in 1700 warehouses, which are near the consumption centres at various locations in the country.

Source: Sople V.V (2013), Logistics Management, Pearson Education India; Third edition.