Logistics study aims at reducing the outbound logistics costs by making it more efficient.
Logistics optimization aims at making outbound logistics system efficient as it covers Process Improvement and Cost Reduction.
Process Improvement addresses following issues:
- In-Plant processes: order processing time at plant, product mix planning as per order, packing and loading schedule, truck availability and schedule, etc.
- Plant - Depot Chain: dispatch time from plant to depot, bottlenecks in transportation, transit delays and loss, etc.
- Depot - Dealer -Customer Chain: lead time in order processing, lead time in supply to customer, billing and collection delays, etc.
- Information Processing: Performance monitoring of dealers, competitor and market information analysis, etc.
Cost Reduction where costs are reduced by:
- Reducing primary and secondary freight by using competitive rates in tune with the market, using the right routes and supply points, using the right mode of transport, etc.
- Reducing movement and handling costs by having right number of depots, optimal location and right size.
- Reducing hidden costs by increasing direct supplies, using competitive C&F charges, etc.
Broad methodology involves:
- Situation Analysis.
- Process effectiveness: analysis of logistics system.
- Process Optimization: identification of possibilities of optimization.
It helps in:
- Reducing response time and therefore increasing work efficiency.
- Reducing cost of delivery, and therefore maximizing profits.
- Achieving high supply reliability, therefore higher customer satisfaction.