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In this paper, a prototype was developed to implement a decision support system for outbound logistics by a large cement manufacturing organization with multiple plants and distribution channels. While the dataflow from the transaction system to the optimization model was developed smoothly and transparently, the output of the model is integrated to the decision support system to manage outbound logistics. The approach adopted to integrate the transaction processing application with the decision support system is aimed at strengthening the existing scalable Supply Chain Infrastructure (SCI).
New models of managing and conducting businesses demand the
organizations to manage spatially spread organizational units and sub-units
through networking which in turn presumes to implement an integrated logistics
planning as a strategic option (Alan, 2001). Integration has been the focus in
the development of logistics which endeavors to integrate the supply and
distribution network that may comprise different tiers of suppliers and distributors and
uses different modes and means of transporting the goods. This integration
has enhanced the importance of logistic function and made the top management
to give a strategic importance to it. The strategic models as envisaged by
Porter (1985) have identified a central role to the integrated logistic function to
make a major contribution to the competitiveness and growth of a business.
This integration involves the primary activities, namely the inbound and
outbound logistics, operations, marketing and sales and services across the
organizational units of several firms, involved in the supply chain network. An
effective management of logistics network can maximize contribution, reduce
turnaround times, and make product distribution cycle shorter and more efficient.
While planning such logistics, the inbound logistics which spans sourcing
and procurement, poses problems related to where to acquire materials
and components, where to store, how much to store and how to retrieve from
stores, etc. On the other hand, the outbound logistics which spans
post-manufacturing delivery into distribution channels and sales outlets poses problems related
to what markets to serve, what modes of transport to engage and when to ship,
etc. In the case of market-driven manufacturing, the logistics of manufacturing
such as what to produce, how much to produce, when to produce, etc., is bound
to depend on the outbound logistics. The manufacturing strategy and
decisions combined together with inboundand outbound logistics strategy and
decisions enable the supply chain to become more efficient and responsive, and helps
the organization to respond to the changing demand-supply scenarios at
minimum cost and time. Some of the issues related to the outbound logistics for
those organizations, which manufacture and distribute bulk materials such as
cement and fertilizers, revolve around many questions that remain answered
using management tools and techniques. What form of transportation - by road, by
rail or by sea - is ideal to deliver the material? What size of the fleet and which
routes to optimize the distances and reduce costs without compromising on the
delivery schedules? How to reduce losses due to damage and pilferage? How to
streamline the number of stock points or depots reducing inventory based on demand
and rationalizing delivery based on demand, consumer segments and price
realization. To get the answers, the logistics
management systems run algorithms simulating the output under varying inputs. Taking the plants and market locations
fixed the software-enabled models run various permutations and combinations
to decide modes of transport, fleet sizes, route-planning to locations of depots
or supply points to work out optimum solutions.
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