Logistics


Logistics department looks after movement of goods

    • from one department to another department; or
    • from one factory to another factory (within organisation); or
    • form vendors to the organisation; or
    • from organisation to the customers.

Some of the movements from / to vendors or customers may be managed by themselves. Organisation may even merge the functions of Logistics department with other departments like purchasing or marketing department.

But, nonetheless we need to understand the importance of functioning of the department either created independently or merged with others. The department has primary responsibility of goods-in-transit reaching its locations TIMELY and with NIL LOSS.

Importance / criticality of the Department

    • Delay = Cost
        • Delay in movement costs money / reputation at organisation’s end OR at entire value-chain.
    • Failed business model
        • Many organisations have built their business models for timely delivery of goods irrespective of en-route issues → any delay → business model disturbance;
        • E.g. Domino’s 30-minute pizza delivery OR Fedex, DHL, etc.
    • Reduced inventory
        • Inventory = Cost → reduced inventory = saving in money → surplus money can be used for other purposes;
        • Time guarantee reduces inventory of entire value chain (vendors → organisation → customer) without affecting production / consumption.
    • Inter-department / inter-factory (within organisation)
        • Smoother logistics facilitates single-piece flow instead of batch production;
        • Single piece flow detects defects faster and reduces handling cost → reduced production time → finished goods get ready faster → customer receives the product faster → improved cash inflow and improved stock turnover ratio → improved profitability.

Functions of the department

    • Goods properly packed
    • Co-ordination with
        • Vendors / customers;
        • Transporters;
        • Dispatch section of store department OR production department for when the movement would start;
        • Accounts / store department for arranging documents, etc.
    • Mode of transport
        • Identification of mode of transportation, i.e. truck, rail, air, ship, courier, etc.
    • Reliable transporter
        • Identification of reliable transporter within a particular mode of transportation who:
            • delivers the goods timely with nil or least in-transit loss;
            • has sufficient capacity of taking work-load of organisation’s goods.
    • Negotiating the best price for transportation;
    • Contingency management
        • Planning logistics during contingencies like strike, holidays, festivals or peak seasons;
    • Clearing agents & others
        • Identification of reliable clearing agents for
            • arranging assessment / inspection of goods by custom authorities;
            • payment of custom duty;
            • clearing the goods after assessment at the earliest for loading into the mode of transport;
            • submitting the documents for claiming incentives from custom department like duty drawback, advance licence, etc.
        • Identification of persons for loading / unloading of goods
            • from one mode to another; OR
            • at final destination at the location of organisation / vendors / customers.
    • Trans-shipment / multi-modal transport
        • Moving the goods from one mode of transport to other mode during transit, e.g.
            • truck → rail → truck; or
            • truck → rail → ship → rail → truck.
        • Ensuring integrated movement to reduce trans-shipment losses.
    • Insurance
        • Ensuring taking adequate insurance of goods;
        • Timely filing of insurance claims for in-transit loss of goods;
        • Follow-up of insurance claims for timely recovery.
    • Documentation
        • Arranging documents to be carried by the transporter (like invoice, packing slips, etc.);
        • Documents need to be proper to avoid in-transit delays due to retention / confiscation of goods by Govt. departments;
        • Arranging permits, entry forms for entry OR passing of vehicle through particular location / state / country, etc.
    • Acknowledgements
        • Ensuring taking acknowledgements for
            • Delivery of goods timely and in good condition from customers for claiming payments from them and without any deductions;
            • En-route loss, if any from transporter for claiming the loss from insurance company OR making deduction from payments to vendors.

Deliverables (i.e. expectations from the Department)

    • Reaching the destination (department / factory / customer / vendor)
        • in the least possible time (so that the next activity on the goods can be started);
        • with least loss.
    • Communication of the present status of goods;
    • Co-ordination with persons involved in the movement of goods;
    • Arranging sufficient documents for other departments.

Important developments in the Logistics function

    • Internet, mobile, GPS have revolutionised the sector → tracking of movement of goods and vehicles possible on real-time basis;
    • Bar codes, RFID tags have enabled faster goods clearance and data management.

Some of the Process Implementation for better Logistics function

    • Transporters’ evaluation forms to be maintained and updated for their performance;
    • Documents checklist before consignment starts its movement;
    • Report on
        • Consignment number; transporter name; start date; delivery date to customers; pending for delivery;
        • Consignment number; transporter name; start date from vendor; receipt date at Gate; pending for receipt;
        • Status of delayed, confiscated goods;
        • Insurance renewal date; adequacy of insurance cover to organisation’s business;
        • Consignment losses; reason for losses;
        • Status of insurance claims pending to be received for in-transit losses;
        • Suggestions, feedback & complaints of the department.

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