Logistics- Chapter 1- Overview of Logistics

economic utility
value or usefulness of a product in fulfilling customer needs or wants–> customer satisfaction
-four types
possession utility
value or usefulness that comes from a customer being able to take possession of a product
ex: credit cards get products without cash
form utility
product in a form that can be used by a customer and is of value to the customer
ex: use of allocation with producing soda
place utility
having products where they’re needed by customers
-products move from places of lesser to greater value
time utility
having products available when they are needed by customers
part of supply chain management
-plans, implements and controls
-efficient and effective forward and reverse flows and storage (how well does company do what it says it will)
forward flow of consumption
towards point of consumption
reverse flow of consumption
originates at point of consumption
mass logistics
every customer gets same type an levels of logistics service (some over/underserved)
tailored logistics
groups of customers with similar logistical needs/wants are served
humanitarian logistics
for not-for-profit organizations
-process and systems involved in mobilizing people, resources, skills, and knowledge to help people who have been affected by disaster
removal of intermediaries between producer and consumer
big box retailers
stores with large amounts of both floor space and products for sale
ex: walmart, costco, dick’s
shipping container
uniform sealed reusable metal box in which goods are shipped- important catalyst for growth in global trade
systems approach
company’s objectives can be realized by recognizing the mutual interdependence of major functional areas of the firm, such as marketing, production, finance and logistics
-one logistics system does not fit all
-each system should comply with company goals and objectives
-ex: satisfaction vs. minimization
SKU’s (stock keeping units)
increased SKUs –> more choices for customers
too many SKUs –> challenges
materials management
movement and storage of materials into a firm
physical distribution
storage of finished product and movement to the customer
total cost approach
coordinate materials management and physical distribution in a cost-efficient manner
cost trade offs
changes to one’s logistics activity cause some costs to increase and others to decrease
four p’s of marketing
allows customers to purchase products from two or more name-brand retailers at one store location
landed costs
price of product at source plus transportation costs to destination
sustainable products
meet present needs without compromising ability of future generations to meet their needs
increased importance of logistics
a. reduction in economic regulation- deregulation, competition of pricing
b. changes in consumer behavior- customized customer, changing family roles
c. customer expectation-tends to increase, better performance necessary
d. technological advances- improved productivity, disintermediation
e. growing power of retailers- big box retailers
f. globalization of trade- greater geographical distances –> longer transit times, monitoring process more difficult due to differences in business practices, culture and language, and higher transportation and documentation costs
the delay of value-added activities such as assembly, production, and packaging until the latest possible time
being out of an item at the same time there is demand for it
departments of logistical relationships within the firm
finance, production and marketing
marketing channels
a set of institutions necessary to transfer the title to goods and to move goods from the point of production to the point of consumption and as such, which consists of all the institutions and all the marketing activities in the marketing process
sorting function
bridges the discrepancy between the assortment of goods and services generated by the producer and the assortment demanded by the consumer
four steps of sorting function
sorting out
sorting out
sorting a heterogenous supply of products into stocks that are homogeneous
bringing together similar stocks from different sources
breaking a homogeneous supply into smaller lots
building up assortments of goods for resale, usually to retail customers
activities in the logistical channel
customer service
facility location decisions
inventory management
order management
transportation management
demand forecasting
international logistics
materials handling
reverse logistics
warehousing management