used in private business sectors but also in the public/government and nonprofit sectors. In addition, service organizations such as banks, hospitals, restaurants, and hotels have logistics challenges and issues, and logistics management is an appropriate and growing activity for service organizations.
management of materials in motion and at rest
get it to the right customer, at the right time, at the right quality, in the right condition (7 R’s of logistics”
international society of logistics
the art and science of management, engineering, and technical activities concerned with requirements, design, and supplying and maintaining resources to support objectives, plans, and operations
Providing time and place utility/value of materials and products in support of organization objectives
council of supply chain management professionals
That part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption in order to meet customer requirements
Supply management for the plant (inbound logistics) and distribution management for the firm’s customers (outbound logistics)
branch of military science having to do with procuring, maintaining, and transporting material, personnel, and facilities
focuses on the outbound side of the logistics system ( plant to market)
That part of the supply chain that plans, implements, and controls the efficient, effective, flow and storage of goods, services, and related information from point of origin to point of consumption in order to meet customer requirements.
The design and integration of all aspects of support for the operational capability of the military forces (deployed or in garrison) and their equipment to ensure readiness, reliability, and efficiency.
The network of activities, facilities, and personnel required to organize, schedule, and deploy the resources for an event to take place and to efficiently withdraw after the event.
The acquisition, scheduling, and management of facilities, assets, personnel, and materials to support and sustain a service operation or business.
value added roles to logistics
form utility-value added to good through a manufacturing or assembly process
place utility- from one production point to market
time utility-value added by having it at a specific time needed
quantity utility- delivering the proper quantity to where it’s demanded
possession utility- created though marketing activities like promotion and sales
• Transportation • Warehousing and storage • Industrial packaging • Materials handling • Inventory control • Order fulfillment • Inventory forecasting • Production planning and scheduling • Procurement • Customer service • Facility location • Return goods handling • Parts and service support • Salvage and scrap disposal
logistics in the firm: The Micro Dimension
logistics interfaces with manufacturing or operation
A classic interface between logistics and manufacturing relates to the length of the production run. Logistics and manufacturing also interface on the inbound side of production. For example, a shortage or stockout could result in the shutdown of a manufacturing facility and an increase in production costs.
logistics interfaces with marketing
Logistics has an important relationship with marketing that also necessitates collaboration. The rationale for this strong relationship is that physical distribution, or the outbound side of an organization’s logistics system, plays an important role in the sale of a product.
price-Organizations selling products often provide a discount schedule for larger purchase quantities.
logistics interfaces with other areas
While manufacturing and marketing are probably the two most important internal functional interfaces for logistics in a product-oriented organization, there are other important interfaces. The finance area has become increasingly more important during the last decade, etc.
Logistics in the firm: Factors affecting the cost and importance of logistics
Frequently, competition is narrowly interpreted only in terms of price competition. While price is certainly important, customer service can also be a very important form of competition.
Order cycle–can be defined as the time that elapses from when a customer places an order until the order is received.
substitutability–if a product is similar to other products, consumers may be willing to substitute a competitive product when a stockout occurs.
inventory effect–by increasing inventory costs (either by increasing the inventory level or by increasing the reorder point), organizations can usually reduce the cost of lost sales.
transportation effect–Companies can usually trade off increased transportation costs against decreased lost sales costs.
A number of product-related factors affect the cost and importance of logistics. Among the more significant of these are dollar value, density, susceptibility to damage, and the need for special handling.
Dollar value–The product’s dollar value typically affects warehousing costs, inventory costs, transportation costs, packaging costs, and even materials-handling costs.
Density– Another factor that affects logistics cost is product density, which refers to the weight/ space ratio of the product.
Susceptibility to damage–The greater the risk of damage to a product, the higher the transportation and warehousing cost.
Special handling requirements–A fourth factor is special handling requirements for products. Some products might require specifically designed equipment, for example, refrigeration, heating, or strapping. These special requirements will usually increase warehousing, transportation, and packaging costs.
the location of fixed points in the logistics system with respect to demand and supply points. Spatial relationships are very important to transportation costs, since these costs tend to increase with distance.