LOGISTIC

An Overview
of Logistics
CHAPTER 1
 Economic impact of logistics
Economic utility
Value or usefulness of a product in fulfilling
customer needs or wants.

Possesion Form Place Time

Value or usefulness Refers to a product’s

Refers to having Related to place utility
that comes from a being in a form that
products available is time utility, which
customer being able to
when they are needed refers to having
take possession of a (1) can be used by the
by customers. products available
product. customer and
when they are needed
(2) is of value to the
by customers.
Can be influenced by customer.
the payment terms
associated with a
product.
What is...?
Logistics
Is that part of supply chain management
that plans, implements, and controls the
efficient, effective forward and reverse
flow and storage of goods, services, and
related information between the point of
origin and the point of consumption in
order to meet customers’ requirements

Council of Supply Chain Management Professionals, most

prominent organizations for logistics professionals
 What is...?
Logistics
supply chain management focuses on
affect directly the firm and its associated
coordination among business functions
supply chain(s) goals and objectives.

Effectiveness “How
well does a company
do what it says it’s
Is that part of supply chain management three of them

going to do?” that plans, implements, and controls the

efficient, effective forward and reverse reverse logistics:
those that originate
flow and storage of goods, services, and at the point of
Efficiency: how well
(or poorly) company
related information between the point of consumption
resources are used to origin and the point of consumption in
achieve what a
order to meet customers’ requirements information about
the package is as
company promises it
can do important as the
the purpose of logistics package itself
is “to meet customer
technology allows for real-time
requirements.”
interactive communication with
customers
Council of Supply Chain Management Professionals, most
prominent organizations for logistics professionals
some

types of

logistics
1 mass logistics
different customers have different logistical needs and wants,
every customer gets the same type and levels of logistics
service—some customers being overserved while others are
underserved

2 tailored logistics
in which groups of customers with similar
logistical needs and wants are provided with
logistics service appropriate to these needs and
wants

3 humanitarian logistics
represents an emerging application of logistics to notfor-profit
situations. example food bank (logistics was first associated with
the militar involves mobilizing people, resources, skills, and
knowledge to help people who have been affected by either a
natural or man-made disaster
THE INCREASED IMPORTANCE OF LOGISTICS
A Reduction in Changing Consumer
BACKGROUND
Economic Regulation Behavior
Post-1950 DEREGULATION CONSUMER
Formal study of IMPACT EXPECTATIONS
logistics gained
traction. 1970s-80s Demand for
Relaxation of controls in customized products
1950-1980 U.S. transportation. and services.
Logistics was Rise of mass
underappreciated. BENEFITS customization (e.g., 3D
printing).
CURRENT More control over
IMPORTANCE logistics costs. DUAL-INCOME FAMILIES
Flexibility in pricing
Recognition grew from and service Convenience Focus
1980 onwards due to customization. (e.g., home delivery,
significant industry Enabled tailored extended store hours).
changes. logistics strategies.
RISING EXPECTATIONS

Faster, reliable delivery

(e.g., same-day delivery
by Toyota and
Amazon).
 Advances in
Retailing
BIG-BOX RETAILERS

Technological Globalization of Trade

Logistics as a
Advances strategic
GROWTH IN GLOBAL TRADE

IMPACT ON LOGISTICS component (e.g., 5% average annual

Walmart, Carrefour). growth since 1990.
Channel Design
TRENDS Logistics as a key
Direct distribution
enabler.
channels; Environmental
disintermediation. sustainability goals. CHALLENGES

Greater geographic
Order Picking OMNICHANNEL
distances; longer transit
RF devices, robotic RETAILING
times.
picking for efficiency. Seamless customer
Complex logistics due to
experience across
cultural and business
Shipment Tracking online and offline
practice differences.
Real-time GPS tracking; channels.
environmental Importance of COST IMPLICATIONS
monitoring. inventory visibility
and demand Higher transportation
forecasting. costs.
Increased
documentation
requirements.
LOGISTICAL RELATIONSHIPS WITHIN THE FIRM
From a companywide perspective, the system and total cost approaches to logistics require an under standing of
logistics and its relationships with other functional areas.

Finance Production Marketing

-Allocates funds for
logistics projects, such -Longer runs lower unit
costs but create large -Contemporary marketing
as purchasing material places a heavy emphasis on
or packaging inventories that logistics
must manage. customer satisfaction, and
equipment. logistics strategies can
-The concept of facilitate customer
-Finance focuses on satisfaction by reducing the
monetary value, while "postponement"
(delaying value-added cost of products.
logistics measures it in
units, potentially leading activities until the last
to friction. possible moment) is -The interactions between
influencing logistics, logistics and marketing
-During inflation, shifting tasks like focuses on the marketing
inventory valuation can packaging to distribution mix, sometimes referred to
be complex, especially centers. as the four Ps of marketing
for products that lose . (place, price, product, and
value over time. promotion).
Marketing decisions Promotion Decisions:

Close coordination
Price Decisions: ensures product
availability during
Marketers decide how to handle shipping costs promotions, with logistics
in product prices. Logistics managers help managing timely delivery.
optimize costs and advise on strategies like free
shipping with minimum orders.

Product Decisions: Place Decisions:

More products increase Efficiently moving and storing

storage and tracking demands. products is key to strong
Marketing pushes for higher supply chains. Co-branding
inventory to prevent stockouts, strategies require careful
while logistics controls the coordination of deliveries to
added costs. keep costs down.
 THE SYSTEMS AND
TOTAL COST APPROACHES TO LOGISTICS

The systems approach indicates that a company’s

objectives can be realized by recognizing the mutual
interdependence of the major functional areas of the
firm, such as marketing, production, finance, and
logistics.

the goals and objectivesof the major functional

areas should be compatible with the company’s
goals and objectives.
one logistics system does not fit all companies
the logistics system hat emphasizes customer
satisfaction
logistics system of an organization that
emphasizes cost minimization.
one consequence of pursuing the marketing
concept is often a marked increase in the
number of stock-keeping units (SKUs) or line items
of inventory (each different type or package size of a
good is a different SKU) offered for sale by many
companies. An increased number of
SKUs provides customers with more choices, which
customers often want Alternatively, from a logistics
perspective, the proliferation of SKUs creates
challenges such as more items to identify, more
items to store, and more items to track, which
increases the chances of
mistakes—which customers don’t like

123+ K 200+ 123+ K

Shipping Customer Feedback
 Control over the Flow of Inbound and Business logistics is made up of materials management
Outbound Movements (movement into and storage of materials in a firm) and
physical distribution
Intrafunctional logistics
attempts to coordinate materials management and physical
distribution in a cost-efficient manner
that supports an organization’s customer service objectives.

The key to the total cost approach is that all relevant logistical
cost items are considered simultaneously when making a
decision
changes to one logistics activity cause some costs to increase
and others to decrease.
When used in the logistics decision-making process, the
total cost concept approach forms what is commonly called
the total logistics concept. This concept is unique not
because of the activities performed, but because of the
integration of all activities into a unified whole that seeks to
minimize distribution costs in a manner that supports an
organization’s strategic objectives

In this drawing, the circles represent buildings where inventories are stored, and the lines with
arrows represent movement performed by carriers, a stop-and-start process. Current thought
deals more
with flows, possibly in different volumes and at different speeds, but without the inventory
standing still. The supply chain extends to both the left and right of this diagram and includes
the suppliers and the customers.
 Definition of Marketing Channels: They are a set of

Marketing channels
institutions necessary to transfer the title of goods and
move them from production to consumption. The main
actors are the manufacturer, the wholesaler, and the
retailer.

types of channels
Ownership Channel Negotiation Channel: Financing Channel: - Promotion Channel
- Promotion Channel: Related to
- : Involves the transfer the promotion of products and
Where purchase and sale its coordination with logistics
of the title of goods. Handles payments and and financing
agreements are reached, often
The goods may not be without the need for direct credit within the channel. It
physically present, and negotiations. is vital to maintaining the logistics Channel:
the owner assumes the financial viability of all
risks and costs of participants L Responsible for the sorting
inventory. function, which includes organizing,
accumulating, allocating, and
assorting products for the consumer.
Intermediaries: These are secondary actors that improve the
system's efficiency and are used when they add value to the
transaction, such as banks, brokers, advertising agencies, and
freight forwarders.
 ACTIVITIES IN THE LOGISTICAL CHANNEL

Customer Service:
involves making sure International Logistics:
Demand Forecasting: which refers to the logistics
that the right person
receives the right Demand forecasting refers activities associated with
product at the right to efforts to estimate goods that are sold across
place at the right time in product demand in a
national boundaries, is much
the right condition and more costly and challenging
at the right cost. future time period than domestic logistics.
International Logistics

Inventory Management: Facility Location

Inventory refers to Decisions: are
Materials Handling: stocks of goods that are increasingly important as
Materials handling refers to maintained for a variety the configuration of
of purposes, such as for logistics systems is
the short-distance resale to others, as well
movement of products altered due to the
as to support impacts of multinational
within the confines of a manufacturing or
facility trade agreements
assembling processes.
 Order Management
Order management refers to management of the
activities that take place between the time a custom-
er places an order and the time it is received by the
customer.

Packaging

has important interfaces with the materials handling and warehousing activities.

Procurement
Procurement refers to the raw materials,
component parts, and supplies bought from
outside organi- zations to support a company’s
operations.
 Reverse Logistics
Products can be returned for various reasons, such as
product recalls, product damage, lack of de- mand, and
customer dissatisfaction. The challenges associated with
reverse logistics can be com- plicated by the fact that
returned products often move in small quantities and may
move outside forward distribution channels.

Transportation Management
Transportation can be defined as the actual physical
movement of goods or people from one place to
another, whereas transportation management refers
to the management of transportation activities by a
particular organization.

Warehousing Management
Warehousing refers to places where
inventory can be stored for a particular
period of time.
Thank You
VIDEO LINK:
KAHOOT