The movement of goods / services from one point to another point or from the point of initiation to the point of consumption by proper forecasting, by defining sequential flow along with quality checks under a supervision of process ownership and right person at the right place.
Logistics is involved in every part of the SCOR model. For example, we need to move feedstock from supplier to our production house. Feedstock is basically another name for raw material. For example, XYZ company makes a bottle caps by using polypropylene, the small pieces of plastic (polypropylene) is a feedstock for bottle caps.
Deliver driver Of SCOR Model:
Deliver driver of the SCOR model can be further divided into three parts:
- Warehouse or DC: Warehouse is also known as distribution center (DC). They are responsible for primary sales. Primary customer for XYZ Company are the distributors, whereas the secondary customer or secondary sale are from distribution and onwards.
Following are some important points to be considered pertaining to a warehouse:
- Location of warehouse is very critical and should be at a place where all the resources are easily available. It should be at the central location depending on the requirement of the company.
- Covered are of a warehouse is another important factor. This depends on the storage requirement of the company. When designing a warehouse, a company must also consider its future requirement as well.
- Proper demarcation / segregation of different types of goods is also very important inside a warehouse. For example, the goods can be arranged in Alphabetical order or as per the property of a good.
- When designing a warehouse, the company also needs to consider that how many number of docks should be available in it. Docks are simply points of loading and unloading in a warehouse.
- Height of the warehouse is also another important factor, which also depends on the company’s storage requirement or stack height. Stack height tells that how much the containers can be piled up on top of each other. For example a stack height of 7 means that 7 container can be piled up on top of each other.
- Machinery’s required also depends on the company’s requirement, that is how much of folk lifter, stacker, etc. required.
- Aging report should be maintained in order to keep a track of products that are near to the expiry level of requirement.
- Distribution Planning: It is done in order to make decision as to how the goods are going to be distributed, which warehouses and DC are need to be covered, etc.
- Distribution of a product should be on timely manner. For example, we have one or two months in hand for winter to arrive then the company should make distribution plan, after receiving winter products from the manufacturing department, in such a way that all winter products are readily available in the market just before the start of the winter, in order to supersede other competitor.
- They need to ensure that no wrong dispatch across, else this will give the company a great loss, inters of product unavailability in the market, etc.
- If the old product is still in stock and new product of the similar type has been produced, then the distribution planner has to make sure that the old stock is first distributed and then the new stock.
Inter DC (Distribution Center) Transfer:
Considering the above figure, suppose 1000 boxes of a product ‘X’ was produced in a factory. 500 boxes were transported to DC-C and 500 boxes to DC-D. Due to an unforeseen situation, the demand of product ‘X’ increased near the region of DC-D. Later on, 100 boxes of the product X had to be transferred from DC-C to DC-D. This concept is known as inter DC transfer.
Back Freighting: Considering the same scenario, suppose we have a deficiency of 20 boxes in DC-C, due to which we had to transfer back 20 boxes of product X from DC-D to DC-C, is called back freighting. Back freighting usually occurs due to wrong analysis done on the demand and supply of any product.
3. Logistics: This unit should needs to keep in mind following challenges:
- Road Congestion: They need to avoid congested roads, where traffic are mostly high in order to avoid delay in delivery of a product.
- Fuel Prices: Fuel prices plays an important role in logistics. Companies providing logistical support, should make sure that they have adequate supply of fuel on the same price they have strategically negotiated with their partners to deliver the product, else rise in price may affect the cost of distribution.
- Safety and Security: Logistic companies should make sure that the products are delivered with safety and security.
- Carbon Foot Prints: This terminology is used to make sure that the carbon emission of vehicles should be as minimum as possible, so that environment is not effected much and the fuel consumption is also low.
- Proper human resources should be available in order to handle whole logistic part.
- No logistics means no business.
There are two types of transportation:
A. Dedicated: In dedicated transportation, the transporter is bound to provide you services as per your need and requirement.
B. Non Dedicated: In non-dedicated transportation, you need to request for transportation as and when required by the company.
Logistic Strategic Alliance:
In order to reduce carbon footprints, companies (Logistic / nonlogistic) can make a strategic alliance with each other. For example, the XYZ Company has to move product from point A to B only and on return it has to come empty (without carrying any product) from point B to A. This is going to result in unnecessary consumption of fuel with no return. On the other hand an ABC company has to move product from B to A only and back to B with empty vehicle. Both companies (ABC and XYZ) can have a strategic alliance with each other that one of them can carry its own product from one point to another and on the way back it can carry other company’s product instead of coming back empty. This will reduce carbon footprint by saving fuel and also reducing price of transportation for both companies.