Logistics and Supply Chain Management

Category: International Trade Sub-category: Logistics and Supply Chain Mgmt
Document type: article

We are aware about the meaning of ‘Logistics’ as the detailed coordination of a large and complex operation which mainly covers movement and supply of troops and equipments in armed forces; the commonly used word ‘Chain’ denotes a connected flexible series of metal links used for fastening or pulling. But when used as a jargon of Management Science, the entire concept is an indispensable value driver in boosting economic growth. This is a vital process which plans, implements and controls the efficient flow of goods and services and related information from point of origin to the point of consumption, with significant three dimensional benefits across Cost reduction, Service Levels and the relative competitive position.

This is a new aspect of Management Science implemented to serve the ultimate customers speedily with products and services, with the basic objective of reducing transportation time and expenses on retaining quality of the products with an assurance to the manufacturers to avoid any unwanted loss under this management stream. Hence, the development of Logistic Management is imperative. Therefore, it needs proper management of infrastructure of supply delivery chain, failing to which the chain would collapse. India is fast waking up to the need of proper Logistics, and is building up the required strong and integrated infrastructures for the last 5 years. This has already yielded results by reducing the implementing industry’s inventory and improving delivery time significantly for the consumer group of products. Hence, Indian products and services are gaining the global competitive edge. However, more needs to be done towards popularizing this new facet of Management Science amongst the industry houses involved with the manufacturing and distribution of other groups of products.

For this purpose, if we look into the evaluation of Indian retail marketing, the phases come to our vision from rural ‘mela’/ ‘hut’ to ‘khirana’ shop, ration shop, co-operative society and finally big bazaar, shopping malls, multiplex, hyper-markets. Current retail channel in India is about 3% directly from the manufacturers / producers to the ultimate customers, which would be enhanced day-by-day, due to change of life-style, including food-habits. 65% share of retail market consists of food, beverage, tobacco, and balance 35% consists of clothing, furniture & fixtures, jewellery, etc. Possibly we are aware that about 30 to 40% of wastage of cereals, vegetables, fruits and flowers occur at farmers’ end, due to lack of preservation system and untimely transportation to the markets. A few multinational companies have started road-mapping for national retail approach of agricultural products to different markets, for overcoming such unwanted wastages, through scientific implementation of Logistics & Chain Management.

Further extension of this stream of science needs re-building on the following infrastructures:

  1. Market Potentiality, Market Share, Sales Budget and Growth Plan of the related product.
  2. Installation and Production Capacity of the manufacturing units of the related product.
  3. Mode of Transportation (road, rail, ship and air) and Transportation Time.
  4. Warehouse Storing and Preservation Capacity.
  5. Receipt and Dispatch Activity with due regards to the Legal and Commercial aspects of selling prevailing on the concerned territories of movement of goods.

In order to design the above aspects, we must follow the undernoted chart, which reflects the Logistic and Chain Management of a large complex operation:

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This whole new aspect of Management Science is gaining importance day-by-day with the help of modern business technology, usage of radio frequency identification devices to leverage supply chain, proper implementation of IT to reduce warehouse and distribution costs, enhancement of customer relationship to maximize customer profitability, and introduction of latest technology trends in modernizing of all-round infrastructure to accelerate the growth of Logistics. This is particularly important in the Indian Economy today, when Indian multinational companies are acquiring foreign companies, and setting up joint ventures with organizations across the globe. This has lead to the concept of Global Supply Chain Management (GSCM) as a powerful weapon for organizations working in the International market. Therefore, this is a challenge for the Indian companies for successful implementation and effective practicing of Logistics & Chain Management, with an objective towards GSCM. Hence, over the next decade, there is an ample requirement of qualified personnel aspiring to boost the Indian industries into the global competitive edge. 


[Written by S. Dey Biswas, Sr. Regional Finance Manager – East on 08.09.04 and presented to internal participants of CGL seminars on 10.11.04]