Maharashtra HSC Logistics Supply Management (Vocational) cheat sheet

Logistics is the process of planning, implementing and controlling the efficient forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption to meet customer requirements.

Supply chain management (SCM) coordinates the network of upstream suppliers, internal operations and downstream customers; logistics is one function inside that network, so SCM is broader than logistics.

The seven rights of logistics: the right product, in the right quantity, in the right condition, at the right place, at the right time, to the right customer, at the right cost.

Key logistics activities: customer service, demand forecasting, inventory management, material handling, order processing, procurement, packaging, transportation, warehousing and reverse logistics.

Logistics cost is commonly estimated at 8-14% of sales turnover for Indian manufacturing and trading firms; transportation and inventory carrying cost are the two largest components.

Reverse logistics covers returns, recalls, warranty repair, refurbishment, recycling and disposal; it flows from consumer back to producer and is cost-heavy because volumes are small and unpredictable.

The bullwhip effect is the amplification of demand variability as orders move upstream; causes include demand forecast updating, order batching, price fluctuation, rationing and shortage gaming.

Third-party logistics (3PL) providers perform outsourced logistics functions such as transport, warehousing and value-added services; a 4PL provider integrates and manages multiple 3PLs without owning assets.

Trade-off rule: total logistics cost must be minimised, not any single component; for example, cheaper transport by rail may raise inventory carrying cost through longer transit time.

Procurement covers the full cycle: need identification, specification, sourcing, negotiation, purchase order, receipt, inspection, payment and supplier performance evaluation; purchasing is the transactional subset.

Direct (production) materials enter the finished product and are high-value, high-volume; indirect (MRO) materials - maintenance, repair, operating supplies - are low-value but numerous.

Kraljic matrix classifies items by profit impact and supply risk into four quadrants: non-critical (leverage buying), leverage (competitive tendering), bottleneck (secure supply, long contracts) and strategic (partnership).

ABC analysis by annual consumption value: A items are roughly the top 70-80% of value from about 10-20% of items and get tight control; C items are the reverse and get simple periodic review.

VED classification ranks spare parts by criticality: Vital, Essential, Desirable; it complements ABC because a low-value vital spare can stop production.

Single sourcing concentrates volume for price leverage and supplier loyalty but raises supply-continuity risk; multiple sourcing reduces risk but dilutes volume discounts and adds administrative cost.

Purchase order is a legally binding offer to buy at stated price and terms; a request for quotation (RFQ) asks for price only, while a request for proposal (RFP) asks for a full technical and commercial solution.

Supplier selection criteria: quality capability, price and total cost of ownership, delivery reliability, financial stability, technical competence, capacity, service and compliance with statutory and ESG requirements.

Total cost of ownership (TCO) = purchase price + transport + inspection + inventory carrying + quality failure + disposal cost; TCO, not unit price, is the correct basis for supplier comparison.

Inventory holding (carrying) cost per year is typically 18-25% of average inventory value and includes capital cost, storage, insurance, obsolescence, shrinkage and handling.

Economic order quantity: EOQ = square root of (2 × annual demand × ordering cost per order ÷ holding cost per unit per year); it minimises the sum of ordering and carrying costs.

Reorder level = average daily demand × lead time in days + safety stock; if demand or lead time is variable, safety stock covers the variability.

Safety stock for a given service level = Z × standard deviation of demand during lead time, where Z is 1.65 for 95% service and 2.33 for 99% service (one-tailed normal).

Inventory turnover ratio = cost of goods sold ÷ average inventory value; days of inventory = 365 ÷ turnover ratio.

Reorder point, periodic review and two-bin systems are fixed-quantity versus fixed-interval controls; two-bin is a simple visual reorder-point method suited to low-value C items.

Warehouse layout principles: high-turnover and heavy items near the dispatch dock, reserve storage above or behind pick faces, straight-line flow from receiving to dispatch to avoid cross-traffic.

Selective pallet racking gives direct access to every pallet at about 50% floor-space utilisation; block stacking is cheaper per pallet but needs high volume per SKU and gives no direct access to lower tiers.

Cross-docking moves goods from receiving to dispatch with no put-away or storage; it requires accurate advance shipment notices and synchronised inbound and outbound schedules.

FIFO and FEFO (first-expired-first-out) rotation rules apply to perishable and shelf-life items; LIFO is an accounting valuation method, not a physical picking rule.

Mode choice trade-offs: road is flexible and door-to-door but costly per tonne-km; rail is cheap for bulk over long hauls; air is fastest and dearest; water is cheapest for bulk international cargo; pipeline is lowest cost for continuous liquids and gases.

Freight cost per tonne-km falls as consignment size and distance rise because fixed terminal, loading and documentation costs are spread over more units.

Vehicle utilisation metrics: load factor = actual payload ÷ rated payload; empty running (deadhead) kilometres should be minimised by backhaul planning.

Incoterms 2020 define cost and risk transfer but not title; FOB transfers risk on board the vessel, CIF adds cost and marine insurance to the seller's obligation but risk still passes at shipment.

Container sizes: a 20-foot container (TEU) holds about 33 cubic metres and 28 tonnes gross; a 40-foot (FEU) holds about 67 cubic metres and 30 tonnes gross, so light bulky cargo is volume-limited.

Last-mile delivery typically accounts for 40-50% of total logistics cost in e-commerce because of small drop sizes, failed deliveries and urban congestion.

Distribution network options: centralised warehouse (lower inventory, longer delivery), decentralised depots (faster service, higher stock), and hub-and-spoke or milk-run routing for consolidated deliveries.

Route planning heuristics: nearest-neighbour and savings algorithm build routes; constraints include vehicle capacity, delivery time windows, driver hours and one-way restrictions.

Freight rate structures include per-kg, per-tonne, per-cubic-metre, per-container and per-trip; chargeable weight for air freight is the greater of actual weight and volumetric weight (L×W×H in cm ÷ 6000).

Bill of lading (B/L) is a receipt for goods, evidence of the contract of carriage and a document of title; a clean on-board B/L is required for payment under a letter of credit.

Air waybill (AWB) is a non-negotiable receipt and contract of carriage; it is not a document of title, so the consignee can take delivery without the original.

Commercial invoice states seller, buyer, description, quantity, unit price, Incoterm and total value; customs uses it to assess duty, so it must match the packing list and B/L.

Packing list itemises packages, marks, dimensions, gross and net weight per package; it supports cargo handling and customs verification but carries no commercial value.

Certificate of origin (COO) certifies where goods were produced; it is needed for preferential tariff treatment under trade agreements and for import licensing rules.

Letter of credit (L/C) is a bank undertaking to pay against compliant documents; the bank examines documents, not goods, so any discrepancy between documents causes rejection.

Shipping bill is the Indian export declaration filed with customs; the EGM (export general manifest) closes the export, and the mate's receipt confirms cargo loaded on board.

Bill of entry is the Indian import declaration; duty is assessed on the assessable value, which is transaction value plus freight and insurance (CIF basis) where applicable.

Documents must be consistent: the description, quantity, marks and consignee across invoice, packing list, B/L and L/C must agree exactly; a mismatch is a documentary discrepancy.

Marine cargo insurance covers perils of the sea; ICC(A) is all-risks, ICC(B) and ICC(C) are named-perils covers with progressively narrower protection.

General average is a voluntary sacrifice of cargo or ship to save the whole adventure; all cargo owners share the loss proportionally, which is why general average contribution is insured.

Insurable interest must exist at the time of loss; the policy is usually taken out for 110% of CIF value to cover duty, freight and expected profit.

Exclusions in cargo policies commonly include inherent vice, inadequate packing, delay, ordinary leakage and war or strikes unless separately covered by a rider.

Customs duty in India on imported goods generally includes basic customs duty, social welfare surcharge, integrated GST and compensation cess; IGST paid on import is creditable.

Assessable value for imports is normally the transaction value (CIF) plus any buying commission, royalty or assist not included in the invoice price.

Duty drawback refunds customs duty on imported inputs used in export goods; advance authorisation and EPCG schemes allow duty-free import against an export obligation.

Customs valuation disputes are common when the invoice value is understated; customs may reject transaction value and determine value by comparison or computed value methods.

Insurance claim procedure: notify the insurer or surveyor immediately, preserve damaged cargo and packing, obtain a survey report, and submit the claim with policy, invoice, B/L and survey documents.

Sales and operations planning (S&OP) is a monthly cycle balancing demand plan and supply plan at the aggregate product-family level; the output is a single consensus plan.

Demand forecasting methods: moving average and exponential smoothing for stable demand; trend and seasonal models for patterned demand; causal regression when promotional or price effects matter.

Forecast accuracy is measured by mean absolute percentage error (MAPE) = average of |actual − forecast| ÷ actual × 100; lower MAPE means better forecast.

Master production schedule (MPS) disaggregates the S&OP plan into end-item quantities by period; MRP then explodes the bill of materials into component and raw-material requirements.

MRP inputs are the MPS, bill of materials and inventory status; MRP outputs are planned orders, order release dates and exception messages.

Capacity planning hierarchy: rough-cut capacity planning at S&OP level, capacity requirements planning at MRP level, and finite scheduling at the shop-floor level.

Vendor managed inventory (VMI) shifts replenishment decisions to the supplier, who sees the buyer's stock and sales data; it reduces stockouts but requires data sharing and trust.

Collaborative planning, forecasting and replenishment (CPFR) extends VMI to joint forecasting between trading partners; benefits are lower inventory and fewer stockouts across the chain.

The SCOR model structures supply chain performance around five processes: Plan, Source, Make, Deliver and Return, with Enable as a supporting layer.

Logistics cost elements: transportation, warehousing, inventory carrying, order processing, packaging, administration and the cost of poor service; total logistics cost is the sum, not the transport bill alone.

Inventory carrying cost per year = average inventory value × carrying rate (typically 18-25%), covering capital, storage, insurance, obsolescence and shrinkage.

Activity-based costing assigns overheads to logistics activities by cost driver (orders, lines, pallets, shipments) rather than by volume, giving truer cost per order or per SKU.

Cost-to-serve analysis allocates total logistics cost to customers or channels; a high-revenue customer with many small orders and returns can be loss-making.

Freight cost per unit = total freight cost ÷ units shipped; cost per tonne-km = freight cost ÷ (tonnes × kilometres) and allows comparison across modes and routes.

Pricing methods: cost-plus (cost plus markup), market-based (competitor rate), value-based (price reflects customer value) and dynamic or spot pricing for capacity.

Key performance indicators: on-time-in-full (OTIF), order cycle time, perfect order rate, inventory turnover, freight cost as a percentage of sales, and warehouse cost per unit handled.

Perfect order rate = proportion of orders delivered complete, on time, damage-free and with correct documentation; it is a stricter measure than OTIF alone.

Balanced scorecard for logistics uses four perspectives: financial, customer, internal process, and learning and growth; SCOR metrics add reliability, responsiveness, agility, cost and asset management.

ERP integrates finance, procurement, inventory and production in one database; it gives a single source of truth but is weak at real-time transport visibility.

Warehouse management system (WMS) controls put-away, picking, packing and dispatch with barcode or RFID scanning, and directs task allocation to operators.

Transport management system (TMS) plans routes, selects carriers, tenders loads, tracks shipments and audits freight bills for overcharges.

Electronic data interchange (EDI) exchanges standard business documents (orders, invoices, ASNs) between trading partners in structured formats; it predates APIs and is still dominant in retail and shipping.

Application programming interface (API) integration enables real-time data exchange between systems; webhooks push events such as shipment status changes without polling.

GPS and telematics give vehicle location, fuel use, driver behaviour and engine diagnostics; RFID enables non-line-of-sight bulk reading for pallets and containers.

Blockchain in logistics targets tamper-evident documentation and provenance, for example electronic bills of lading and cold-chain traceability; adoption is limited by governance and interoperability.

Data analytics in logistics covers descriptive dashboards, predictive demand and delay forecasting, and prescriptive route optimisation; data quality is the binding constraint.

Automation tools include automated guided vehicles, conveyors, sortation and goods-to-person systems; they suit high-throughput, stable-volume operations with high labour cost.

Digital freight platforms match shippers and carriers online and typically price by lane and load type; they reduce empty running but shift pricing toward spot rates.

Control tower is a centralised visibility layer that aggregates carrier, WMS and TMS data to give a single view of in-transit inventory and exceptions.

Track-and-trace depends on event data: pickup, in-transit scan, out-for-delivery and delivered; each scan is a milestone and missing scans break the customer promise.

Electronic proof of delivery (ePOD) captures signature, photo and timestamp at the door; it shortens the cash-to-cash cycle by speeding invoicing and dispute resolution.

Cloud-based TMS and WMS are priced by subscription and usage, converting capital expenditure into operating expenditure and lowering entry cost for small 3PLs.

Cybersecurity risk in logistics covers ransomware on WMS/ERP, EDI spoofing and cargo theft via data leaks; multi-factor authentication and vendor access control are baseline controls.

Digital documentation such as e-way bill, e-invoice and electronic bill of lading reduces paperwork and manual error; the e-way bill is mandatory in India for goods movement above the notified value threshold.

Internet of Things sensors for cold chain log temperature and humidity; excursion alerts allow intervention before a consignment is condemned.

Automation maturity path: manual, barcode scanning, system-directed work, then optimisation and predictive analytics; each step requires clean master data before the next.

Logistics adds place and time utility to goods; production adds form utility, and both are needed to create customer value.

Inbound logistics brings materials from suppliers to the plant; outbound logistics moves finished goods to customers; internal or materials handling connects them.

A supply chain is a network of organisations, people, activities, information and resources; the chain competes as a chain, not firm against firm.

Logistics service level is measured against targets for order fill rate, cycle time and damage rate; higher service level normally raises cost, so the level is a management choice.

Postponement delays final configuration or location of inventory until demand is known; it lowers forecast risk but may raise unit production or handling cost.

Lean logistics removes waste (excess inventory, waiting, unnecessary movement); agile logistics builds responsiveness for volatile demand; most chains need a hybrid by product type.

The cash-to-cash cycle = days inventory outstanding + days sales outstanding − days payables outstanding; shorter cycles free working capital in the chain.

Logistics infrastructure includes ports, rail, road, warehouses and IT; India's logistics cost as a share of GDP is officially targeted to fall toward single digits through the National Logistics Policy.

Three-way match compares purchase order, goods receipt note and supplier invoice before payment; a mismatch is held for resolution and prevents overpayment.

Purchase requisition is an internal request to buy; it is approved before a purchase order is raised, which separates the user from the buyer.

Segregation of duties: the person who raises the order should not approve payment or receive goods; this control reduces fraud and collusion.

Negotiation levers include volume commitment, longer contract term, payment terms, specification change, and freight and packaging responsibility.

Make-or-buy decision compares internal full cost (materials, labour, overhead, capacity) with the supplier's total cost of ownership plus risk of dependency.

E-procurement tools: e-tendering, reverse auction (price falls as suppliers bid down), catalogue buying and punch-out to supplier catalogues; reverse auctions suit commodity, well-specified items.

Supplier scorecard metrics: quality (defect ppm, rejection rate), delivery (OTIF), cost (price variance), responsiveness and compliance; scores drive volume allocation.

Contract types: fixed-price (supplier bears cost risk), cost-plus (buyer bears cost risk), and framework agreement (pre-agreed terms, call-off as needed).

Early supplier involvement brings the supplier into design; it improves manufacturability and cost but requires confidentiality and intellectual property safeguards.

Inventory categories: raw material, work-in-progress, finished goods, maintenance spares and goods in transit; each is controlled by a different policy.

Continuous review (Q, reorder point) orders a fixed quantity when stock hits the reorder point; periodic review (P) orders a variable quantity at fixed intervals.

Stockout cost includes lost margin, expediting cost, penalty and lost goodwill; it is hard to quantify, so service level is often set as a policy target.

Obsolescence risk rises with long lead times, wide product ranges and short product life cycles; slow-moving and non-moving (SLOB) stock should be identified and written down.

ABC–XYZ matrix combines value (ABC) with demand variability (XYZ); AX items are high value and stable and suit tight automated control, while CZ items need buffer or make-to-order.

Goods receipt process: unload, count and verify against PO, inspect quality, record in system, put away to bin; discrepancies are logged as short, excess or damage claims.

Cycle counting counts a small subset of SKUs frequently instead of a full annual stocktake; it locates errors faster and avoids shutting the warehouse.

Space utilisation = occupied pallet positions ÷ available pallet positions; picking productivity = order lines picked ÷ labour hours.

Value-added warehouse services: kitting, labelling, repacking, quality inspection and returns processing; they raise revenue per square metre beyond pure storage.

Transport cost drivers: distance, weight or volume, consignment size, mode, route, seasonality, fuel price and special handling such as cold chain or hazardous goods.

Consolidation combines small shipments into full loads to cut per-unit freight; it trades delivery frequency and lead time for lower cost.

Hub-and-spoke networks route freight through hubs to raise line-haul load factors; direct delivery is faster but costs more per unit for thin flows.

Fleet productivity metrics: vehicle turnaround time, kilometres per litre, payload utilisation, on-time departure and on-time arrival.

Own versus hire fleet: own fleet gives control and brand visibility but ties up capital and suffers empty backhauls; hired transport gives flexibility at market rates.

Incoterms 2020 groups: E (EXW, buyer does everything), F (FCA, FAS, FOB, buyer arranges main carriage), C (CFR, CIF, CPT, CIP, seller pays main carriage), D (DAP, DPU, DDP, seller delivers at destination).

Under DDP the seller clears import duty and bears all risk to the named destination; under DAP the seller delivers but the buyer clears import duty.

Dangerous goods require classification, packing, marking, labelling and a transport document under IMDG (sea), IATA DGR (air) and ADR/CMVR (road) rules.

Cold chain requires temperature-controlled vehicles and pre-cooling; a break in the chain can condemn the whole consignment, so data loggers and excursion alerts are standard.

Proforma invoice is a quotation before sale; commercial invoice is the actual sale document used for customs valuation and payment.

A freight forwarder arranges carriage and documentation as an agent; a customs broker (CHA) files the shipping bill or bill of entry and clears goods.

Certificate of insurance evidences cover; the policy itself states the insured, voyage, sum insured, risks covered and exclusions.

Dock receipt and mate's receipt confirm that goods were received at the terminal or loaded on the vessel; they are interim papers until the B/L is issued.

A switched bill of lading replaces the original B/L with a new one showing a different shipper or port; it is legal only where the underlying trade allows it.

Demurrage is a charge for detaining a vessel or container beyond free time at the port; detention applies to containers held outside the port beyond free days.

A letter of indemnity may be given when the original B/L is not available; banks usually reject it, so it is a risk-bearing workaround.

A TA/L (transhipment additional/landing) or delivery order authorises the carrier to release cargo to the consignee at destination.

Documents in an L/C must be presented within the stated presentation period, commonly 21 days after shipment and never beyond the L/C expiry.

Customs clearance steps for imports: bill of entry filing, assessment, duty payment, examination and out-of-charge; for exports: shipping bill, let export order and EGM.

Importer of record is legally liable for declaration accuracy and duty payment; using a CHA does not transfer that liability.

HS (harmonised system) code determines duty rate and import policy; a wrong classification can cause short levy, penalty and seizure.

Rules of origin determine eligibility for preferential duty under free trade agreements; goods must satisfy the specified change in tariff heading or value-addition threshold.

Prohibited and restricted goods lists under the Foreign Trade Policy bar or license certain imports and exports; check the ITC-HS policy column before contracting.

Customs bonded warehouse allows duty deferral until goods leave the warehouse; it improves cash flow for importers who store and redistribute.

Export incentives in India have shifted from duty drawback-style schemes to WTO-compatible ones such as RoDTEP; verify the current scheme before quoting landed cost.

Cargo insurance claims are time-barred; marine policies normally require suit within 12 months of the loss, so survey and documentation must start immediately.

Under-insurance means the average clause applies: claim paid = loss × (sum insured ÷ value at risk), so the sum insured must reflect the full CIF value plus markup.

Aggregate planning options to match supply and demand: change workforce, change inventory, subcontract, use overtime, backorder or influence demand through pricing.

Chase strategy matches output to demand and keeps inventory low but carries hiring and firing cost; level strategy keeps output steady and absorbs variation in inventory.

MRP lot-sizing rules: lot-for-lot (order exactly net requirement), fixed order quantity, and economic order quantity; lot-for-lot minimises inventory but raises order frequency.

Distribution requirements planning (DRP) explodes requirements through the distribution network from the central warehouse to regional depots, mirroring MRP for outbound stock.

Bullwhip damping tactics: share point-of-sale data, shorten lead times, reduce order batching, use everyday low pricing and allocate on shortage rather than on orders.

Supply chain risk categories: supply (supplier failure), demand (forecast error), operational (system or process failure), and disruption (natural disaster, port closure, strike).

Resilience levers: dual sourcing, safety stock at strategic points, nearshoring, visibility tools and business continuity plans with tested recovery time objectives.

Collaboration mechanisms: VMI, CPFR, joint business planning and shared KPIs; each requires common data standards and a gain-sharing agreement.

S&OP maturity rises from siloed departmental plans to an integrated, financially aligned plan with scenario planning and a formal executive review.

Total cost of ownership for a logistics decision includes transport, inventory carrying, warehousing, handling, obsolescence and cost of service failure.

Break-even analysis for a distribution centre: break-even volume = fixed cost ÷ (revenue per unit − variable cost per unit).

Cost per order shipped = total order fulfilment cost ÷ orders shipped; cost per order line and cost per unit give finer diagnostic detail.

Contribution margin = selling price − variable logistics cost; a positive contribution means the order helps cover fixed cost even if fully allocated profit is negative.

Freight bill audit checks invoices against contracted rates, accessorial charges and weight or dimension records; overcharges of 2-5% are common when rates are not audited.

KPI hierarchy: strategic (cost as % of sales, perfect order rate), tactical (vehicle utilisation, inventory turns), operational (picks per hour, dock-to-stock time).

Benchmarking compares KPIs against internal history, industry averages or best-in-class; the metric definition must match before comparison is valid.

Dashboards should show trend and target, not just a snapshot; a metric without a target and an owner does not drive action.

Pricing for 3PL services uses open-book (cost plus agreed margin) or closed-book (fixed rate per transaction) models; open-book builds trust but needs audit rights.

Order management system (OMS) captures orders, applies allocation and promise-date logic, and passes fulfilment instructions to WMS and TMS.

Yard management system controls gate-in, dock assignment and gate-out of vehicles; it reduces dock congestion and driver waiting time.

Transportation visibility platforms aggregate carrier EDI and API feeds to predict ETA; predictive ETA uses historical lane performance, not just distance.

Master data management ensures one consistent item, location, supplier and customer record across ERP, WMS and TMS; duplicate master data is a leading cause of planning error.

Barcode symbologies: 1D (Code 128, EAN-13) for identifiers; 2D (QR, DataMatrix) for dense data; GS1-128 encodes batch, expiry and serial data for traceability.

RFID passive tags need no battery and are read in bulk at dock doors; active tags have a battery and longer range for high-value or cold-chain containers.

Electronic logging of driver hours and geofencing supports compliance and automatic arrival or departure events at sites.

System integration patterns: point-to-point, middleware/ESB, and event-driven messaging; event-driven design suits high-volume shipment status updates.

Robotic process automation handles repetitive rules-based tasks such as invoice matching and rate entry, while leaving exceptions to human review.

Digital twin of a warehouse or network simulates layout, labour and flow changes before capital is committed; it needs accurate process and time data.

Artificial intelligence use cases in logistics: demand forecasting, dynamic pricing, route optimisation, predictive maintenance and document extraction from invoices and B/Ls.

Machine learning forecasting outperforms simple averages when there is enough history and the drivers are captured; it still fails on new products with no history.

Geospatial analytics and route optimisation engines solve vehicle routing with time windows using heuristics, because exact solutions become intractable at scale.

Digital payments and reconciliation: automated freight settlement matches invoice, POD and rate contract, cutting days from the payment cycle.

Data privacy and retention obligations apply to driver, customer and shipment data; access should be role-based and logged.

Interoperability standards: GS1 EPCIS for supply chain event data and UN/EDIFACT or ANSI X12 for EDI messages; standards reduce integration cost per trading partner.

Last-mile tech includes route apps, locker and pickup-point networks, and crowd-sourced delivery; each changes cost per drop and the customer promise.

Technology ROI must be assessed on total benefit (labour saved, inventory reduced, service improved) against licence, integration, training and change-management cost.