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BY GROUP 3
Logistics Management And Its Link With Inventory Control
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OVERVIEW
• Logistics• Inventory• Inventory control• Methods of inventory control
JIT & H.P. Case JIT II Kanban
Kaizen• Challenges
TrackingInventory costDemand & supplyStrategic locationDistribution• Conclusion
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• Part of supply chain management • Plans, implements and controls the efficient, effective,
forward and reverse flow • Storage of goods, services and related information• Between the point of origin and the point of
consumption• To meet customer’s requirements.
LOGISTICS MANAGEMENT
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INVENTORY
• A physical resource • Firm holds in stock with the intent of selling it or
transforming it into a more valuable state
INVENTORY INCLUDES
• Raw Materials• Works-in-Process • Finished Goods• Maintenance, Repair and Operating (MRO)• Pipeline or in-transit inventory
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Inbound logistics
Procurement Of Raw Materials
Transporting Work In Progress
Transporting Finished Goods
Distribution Channels
WarehouseCentral HubRetailersCustomers
Outbound logistics
LINK OF LOGISTICS AND INVENTORY CONTROL
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• Supervision of the supply and storage and accessibility of items in order to insure an adequate supply without excessive oversupply
INVENTORY CONTROL
Inventory Cost
Market Opportunity
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TOOLS OF INVENTORY CONTROL• Just in time- I & II• Kaizen• Kanban• EOQ
INVENTORY CONTROL
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• Produce output within the minimum lead time• Minimise total cost• Continuously identify wastage and variance• Eliminating corporate waste and variance.
JUST IN TIME (JIT)
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H.P. CASE
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• In JIT II system, vendor’s representatives are stationed at the customer’s place of business
• Designed to create harmony and efficiencies for both sides
• It relies heavily on trust
JUST IN TIME II
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KANBAN
• Pull type• Production depends on customer demand • Production takes place only when order is placed• Bin cards, boxes, shelves etc. are used to place order
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KANBAN BOARD
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KAIZEN TRAINING
• Continuous improvement
• Concentrates on improving methods rather than achieving certain results.
• Philosophy-“Do it better, make it better” rather than “if it aint broke, don’t fix it”
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• Tracking• Carrying cost• Demand and supply• Strategic location management• Distribution
CHALLENGES
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Methods of inventory tracking • Sufficient space for your inventory• Organize your inventory • Develop inventory database• Develop procedures for “check-in” and “check-out”• Strive for accuracy and manually double-check at least
annually
INVENTORY TRACKING
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LOGISTICS TRACKING
INVENTORY TRACKING
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• Amount to about 10-25% of sales• Affects profitability of the company• Factor of competitive edge
INVENTORY COST
`
HIGH COSTHIGH INVENTORY LOWER PROFITS
H.P. Reduced inventory from 7 to 5 weeks Made a profit of $ 30 mn annually
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DEMAND AND SUPPLY
DemandSupply
• Based on previous data• Rational and well planned• According to the market data
• According to demand• Strategically managed
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INCORRECT ESTIMATION
• Subhiksha expanded stores with insufficient
funds
• No control on mobile inventory
• Stock outs in stores
• Archies did overstocking for 3-
4 years
• Incurred loss of Rs. 6.5 crores
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STRATEGIC LOCATION
v
v
A geographical or social position which plays a part in a predetermined plan
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DISTRIBUTION
Best way to reach the strategic location and cater to markets
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