Logistics, distribution and sourcing roadmap

Logistics and distribution

The logistics and distribution industry is a crucial component of international trade. The interplay of technology, infrastructure, skilled labour and new types of service providers defines the degree to which the logistics and distribution sector will be able to aid its customers, minimize their costs and provide quality services.

India currently has different types of enterprises in the logistics and distribution industries like:

• Government owned enterprises
• Public companies
• Private companies
• Indian companies in joint venture with foreign enterprises

Types of logistics in India

• Inbound logistics
• Outbound logistics
• Reverse logistics
• Third-Party logistics (3PL)

Inbound logistics

Inbound logistics is concerned with activities related to the incoming flow of resources needed to make a product or a service. Inbound logistics processes may include managing suppliers, costs, inventory, and transportation to ensure the right components or subassemblies arrive in your factory on time. Inbound logistics is generally more complex than outbound logistics.

Procurement is the major element in inbound logistics as it deals with sourcing and transporting raw materials from the supplier to buyer's factory.

Outbound logistics

Outbound logistics refers to activities in delivering the right product at the right time to customers at a minimum cost. Customer satisfaction is the primary objective of outbound logistics, that is why many organizations especially e-commerce companies are competing for last-mile or same-day delivery to their customers. Companies bring out their value proposition to their customers and back it up with their outbound logistics capability. 

Reverse logistics

Reverse logistics is the process of moving products from end-user back to the origin to recover value or for proper disposal. The value is recaptured from products recovered from customers through rework, refurbishment, reuse, scrap recycling, or government incentives for recyclable products.

Product returns come in different forms including the commercial return, recall, refurbishment, or product's end-of-life. Companies must have systems and infrastructure able to handle returns to minimize recovery costs, increase recaptured value, and visibility.

Third-party logistics (3PL)

Third-party logistics is the outsourcing of a company's supply chain. 3PL companies offer an integrated logistics solution, including warehousing services, a distribution policy, cross-docking services, as well as transport services.

Finding the right distributor

Your distributor should be someone, who have a deep knowledge of the local market and who fully understands what challenges their customers face in their everyday business lives. The distributor should be proactive in his approach to market.

A good relationship between supplier and distributor is based on frequent communication, an open and constructive dialogue, and the ability to benefit from the strength of both parties in the relationship.

Types of software used by Indian third-party logistic companies   

Logistics and supply chain management software helps manage goods and services details and transfer relevant information from the point of origin to destination. With logistics management, resources can be acquired, stored, and transported and customer requirements can be met in a cost-efficient and timely manner.

Here is a list of a few Logistic software that are used in India:

• Oracle NetSuite
• INFOR WMS
• eFleetAdmin
• Logi-Sys
• Fleetx

The above mentioned types of software are generally customised as per one's own requirements in order to meet all applicable compliances. Software companies can also customize their technologies to make them compatible as required by their business partners.

Sourcing roadmap

Aside from the ever-present sourcing pressures to meet target costs, there's an extensive list of timing considerations that must be simultaneously considered to launch a new program on budget, and on time. An immensely practical and helpful tool for juggling multiple parts and timelines is a Sourcing Roadmap.

The order of the required steps for program development is also critical when it comes to sourcing custom parts with tooling. These unique dependencies make sourcing complex and product assemblies more challenging because when variable A changes, variables B and C are impacted as well.

If you're tasked with strategic sourcing, it's important to have a plan for where you are and where you want to go. 

"Procurement and strategic sourcing are often confused; they're two different things. Procurement is the tactics of facilitating contracts and purchase orders while strategic sourcing is the process by which you select your supply partners, and how you work with them.

Executing the strategic sourcing process effectively takes more or less time based on an organization's sourcing efficiency. Empowering teams with the right technology tools during specifics steps in the process can reduce the time spent on involved tasks and increase focus on strategic ones that maximize impact.

Executing the right task at the right time

There are various forms of the chart, but the common theme is a horizontal timeline that includes multiple steps in a part's and/or module's lifecycle. These steps need to be completed in sequential order to ensure that strategic sourcing is completed at the right cost, time, and risk.

Typically, 10 to 20 steps are outlined, along with the number of weeks required to help map and prioritize the right tasks to focus on, and when. Typical steps in a sourcing roadmap include the following:

• Part/System Engineering
• Identify and Engage Suppliers
• Define and Review Quotes
• Negotiate and Agree on Contract
• Select and Source Supplier
• Prototype Tool / Prototype Manufacturing
• Design Validation (DV) Testing
• Tool Manufacturing
• Part/System Manufacturing
• Production Validation (PV) Testing
• Production Part Approval Process (PPAP)
• Inbound Transportation

These steps are intended to help better communicate, the ideal kick-off and conclusion, as well as critical path and activities. Strategic outputs include determining the longest lead time items, and pinpointing program dependencies and bottlenecks that can be focused on to compress overall launch timelines.