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Supply Chain Management 1 Logistics

Business requirement - Logistics, importance of Logistics, Cost Savings in Logistics

AFMI -SCM -BL01M01-Day02-09Oct20

Logistics management is defined as a process of management which joins the movement of products, services, data and capital from the stage of raw materials to the consumer end product. Activities of logistics are categorized into two types and those are as below:

  1. Inbound logistics

  2. Outbound logistics

1.Inbound logistics: Activities related to the business procurement, transportation, handling and storing are called as inbound logistics.

2.Outbound logistics: These activities mainly constitute to the maintenance, collection, and delivery of products to the customers are called as outbound activities.

The flow of products and storage of products in an organization and outside of an organization is called as logistics. The vital objective of it is the complete customer satisfaction and a single organization gets involve in logistics management, it is an activity of supply chain management. So, logistics management involves the operations like implementation, planning and controlling an effective flow of raw materials, storage of raw materials, and finished products.

There are seven “R”s which are related to logistics management

  • Right product

  • Right quantity

  • Right condition

  • Right place

  • Right customer

  • Right time

  • Right price

Case Study : Business Case for Logistics

Rohan is the Marketing Manager of VP Bakers and Confectioners, he recently gets an order of 100,000 packets of Bread for continuously supply. He is very happy about the order. You are the General Manager of the VPBC and you need to take the business decision about the viability and delivery of the order. Initial capital investment can be funded by Bank Loan @ 6% special interest for SME and Food industry


  1. What questions you will ask Rohan before taking the decision.

  2. What business decisions will be taken before accepting the proposal

Additional information

  1. You get more details and find that the purchaser is genuine one and pays on time

  2. If VPBC is able to get order delivered on time, then there is scope of more

  3. Delivery period is 5 hours from Factory and away from factory @150 Kms.

  4. City of delivery has ample supply of Raw materials and cost of procurement of Refined flour is less than the present procurement cost

  5. Additional rent to be paid if factory is put is Rs 25,000 which sustainable

  6. Rohan is asked to check about more orders in the same city

Lakshminarasimman V Rao |SCM| Corporate Neeti Consulting Pvt Ltd| Mysuru

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