1-1

JAMES
R.
STOCK

STRATEGIC LOGISTICS
MANAGEMENT
DOUGLAS FOURTH EDITION

M.
LAMBERT

McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
 CHAPTER 1
Logistics Role in the
Economy and the
Organization
 1-3
Logistics Management Defined

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 the point-of-origin to the
point-of-consumption in order to meet
customers requirements.
Council of Logistics Management

McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
 Components of 1-4

Logistics Management
Outputs of
Inputs into
logistics
logistics Management actions
Natural Planning Implementation Control Competitive
resources advantage

Logistics management Time and

Human
resources Suppliers
Raw In-process Finished Customers place utility
materials inventory goods
Efficient
Financial movement
resources to customer
Logistics activities
Customer service Plant & warehouse site selection Proprietary
Information Demand forecasting Procurement
Inventory management Packaging asset
resources
Logistics communications Reverse logistics
Material handling Traffic and transportation Copyright 2001 by The
Order processing McGraw-Hill Companies, Inc.
Warehousing and storage All rights reserved.
Parts and service support
McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
 Marketing/Logistics 1-5

Management Concept
Customer satisfaction
Suppliers
Intermediate customers
Final customers

Integrated effort Company profit

Maximize long-term
Product
profitability
Price
Lowest total costs
Promotion
given an acceptable
Place (distribution)
level of customer
service

McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
 1-6
Cost Trade-offs in Marketing
and Logistics
Product

MARKETING
Order processing
Price and information
costs

Place/customer
service levels
Inventory
Transportation
carrying costs
costs

Lot quantity costs Warehousing costs

Order processing
and information
costs
McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
 1-7
Relationship of Logistics
Activities to Logistics Costs

Customer service levels

Transportation costs
Warehousing costs
Order processing/information systems costs
Lot quantity costs
Inventory carrying costs

McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
 1-8
Key Logistics Activities

Customer service Parts and service

Demand forecasting support
Inventory Plant and warehouse
management site selection
Logistics Procurement
communications Reverse logistics
Material handling Traffic and
Order processing transportation
Packaging Warehousing and
storage

McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
 Flow through the Supply Chain 1-9

Customer
Carrier
Distribution
center Customer

Supplier Carrier
Customer
Carrier
Carrier
Manufacturing Customer
Supplier site

Carrier
Carrier Customer
Distribution
Supplier center
Customer
McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
 Sales 1-10
Strategic Profit Model $
Gross margin
-
Cost of
goods sold
Net profit $
$
Net profit $ Variable
margin - expenses
+
% Sales Total expenses $
Return on Financial Net profit $ +
net worth leverage
Return on $ Fixed
assets Net sales expenses
-
= x % x Income taxes $
Sales
Inventory
Net profit Total assets x Net profit Asset $
= turnover
Net worth Net worth Total assets $ $
+ Current assets +
Accounts
Total assets receivable
Net sales $
Total assets $ $
+ +
Fixed assets Other current
assets
$ $
McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
 1-11a
Future Challenges and Areas for 1-11

Performance Improvement

Supply Chain Management

Strategic Planning
Total Quality Management
Just-in-Time
Quick Response
Efficient Consumer Response
Logistics as a Competitive Weapon

McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
 1-12b
Future Challenges and Areas for 1-11

Performance Improvement (cont.)

Accounting for logistics costs

Logistics as a boundary-spanning activity
Global logistics
Increasing skill requirements
Logistics information systems
Strategic alliances, partnerships, and
outsourcing
Green marketing and reverse logistics
McGraw-Hill/Irwin Copyright 2001 by The McGraw-Hill Companies, Inc. All rights reserved.