Marketing Logistics Chapter 2

Inventory
Management of materials in motion and at rest
Customer
Getting the right product to the right customer, in the right quantity, in the right condition, at the right place, at the right time, and at the right cost (called the “seven Rs of logistics)
Dictionary
The branch of military science having to do with procuring, maintaining, and transporting material, personnel, and facilities
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
Utility / Value
Providing time and place utility or 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
Component support
Supply management for the plant (inbound logistics) and distribution management for the firm’s customers (outbound logistics)
Utilities of Logistics
5 economic utilities that add value to a product or service: Form, Time, Place, Quantity, Possession. Logistics adds place, time and quantity utilities to products and enhances the form and possession utilities added by manufacturing and marketing.
Subdivisions of Logistics
BEMS = Business, Events, Military, Service. Logistics is an area of management that has these four sub-disciplines. All 4 share common characteristics (forecasting, scheduling, and transportation) but also have differences.
Functions of Logistics
TIWO = Transportation, Inventory, Warehouse, Order Management (Operations)
Logistics Management
The process of anticipating customer needs and wants; acquiring the capital, materials, people, technologies, and information necessary to meet those needs and wants; optimizing the goods or service-producing network to fulfill customer requests; and utilizing the network to fulfill customer requests in a timely manner.
Lead Time
Business Logistics
That part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, service, and related information from point of use (consumption) in order to meet customer requirements
Military Logistics
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.
Event Logistics
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.
Service Logistics
The acquisition, scheduling, management of the facilities/assets, personnel, and materials to support and sustain a service operation or business.
Logistic Activities
Transportation, Warehousing and storage, Industrial packaging, Materials handling, Inventory control, Order fulfillment, Demand forecasting, Production planning/scheduling, Procurement, Customer service, Facility location
Form Utility
Value added to goods through a manufacturing or assembly process. Example: raw materials assembled into a finished product.
Place Utility
Value added by moving goods from production points to market points where demand exists.
Quantity Utility
Value added by delivering the proper quantities (how much) of an item to where it is demanded.
Possession Utility
Value added through the basic marketing activities related to the promotion and sale of products and services.
Transportation
Very important and often the largest logistic cost. Physical movement or flow of goods and on the network that moves the product.
Storage
Involves inventory management and warehousing. Number, size, and location of warehouses important to consider.
Packaging
“Industrial” or exterior packaging used during transportation and storage.
Materials Handling
Warehouse design and efficient warehouse operations. Involves movement of goods into warehouse from transportation vehicles, placement of goods in warehouse, and movement of goods to order-picking area and dock areas.
Inventory Control
Used in warehouses and manufacturing facilities. Has 2 dimensions: Assuring adequate inventory levels and certifying inventory accuracy.
Order Fulfillment (or Lead Time)
Activities involved in filling and shipping customer orders. Directly impacts the time from when a customer places and order until the customer receives it. 4 basic processes/activities are order transmittal, order processing, order preparation, and order delivery.
Forecasting (demand forecasting)
Controlling inventory by predicting what will be needed in the future. Required for accurate inventory requirements.
Production Planning (also scheduling)
Based on forecasting, calculates the number of units to manufacture to ensure adequate market coverage.
Procurement
Geographic location and transportation related to raw materials and component parts purchased to meet manufacturing needs.
Customer Service
1. the process of interacting directly with the customers to influence or take the order and 2. the levels of service an organization offers to its customers.
Facility Location
Plant (factories) and warehouse site location between supply points and markets.
Other Logistics Activities
Examples: parts/service support, returned goods handling, salvage and scrap disposal.
Logistics in Economy
Costs have been decreasing which helps the U.S. economy regain competitive position on a global basis