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Logistics Management
Logistics management is the process of
planning,
implementing and
controlling
the efficient, cost-effective forward and reverse flow of raw
materials, in-process inventory, finished goods, services,
and related information from point of origin to point of
consumption
Logistics activities
Customer
service
Demand forecasting
Distribution
communications
Inventory control
Material handling
Order processing
Parts and service support
Plant
Definition of Logistics
Management
Materials management
Physical distribution
Business logistics
Channel management
Distribution
Industrial logistics
Logistical management
System Approach/Integration
Logistics is, in itself, a system; it is a network of
related activities with the purpose of managing
the orderly flow of goods, information and
service with the logistics channel.
The systems approach simply states that all
functions or activities need to be understood in
terms of how they affect, and are affected by,
other elements and activities with which they
interact.
Systems Approach
The
14
Marketing / Logistics
Management Concept
Customer
satisfaction
Suppliers
Intermediate
customers
Final customers
Integrated
effort
Company
profit
Product
Price
Promotion
Place (distribution)
Maximize long-term
profitability
Lowest total costs
given an acceptable
level of customer
service
Marketing-Logistics
Concepts
Time
Customer
Competitive Advantage
The
Christopher s.5
It
Martin
Christopher
12
Components of
Logistics Management
Management actions
Inputs into
logistics
Natural
resources
(land, facilities,
and equipment)
Human
resources
Planning
Implementation
Control
Outputs of
logistics
Competitive
advantage
Logistics management
Suppliers
Customers
Time
and place
utility
Financial
resources
Efficient
movement
to customer
Information
resources
Proprietary
asset
Logistics activities
Customer service
Demand forecasting
Distribution
communications
Inventory control
Material handling
Order processing
Parts and service support
Competition
Christopher s. 16,38
logistics developments
Transportation deregulation
Competitive pressures
Information technology
Channel power
Profit leverage
1.Military Logistics
1.Military Logistics
Following
2.Deregulation
Deregulation of the transportation industry in
the late 1970s and early 1980s gave
organizations many more options and increased
the competition within and between
transportation modes.
Carriers become more creative, flexible,
customer-oriented, and comparative in order to
succeed.
They can focus on negotiation of rates, terms,
and services, with their overall attention
directed toward getting the best transportation
buy.
3. Competitive Pressures
Globalization and competition
With rising interest rates and increasing energy
costs during the 1970s, logistics received more
attention as a cost driver-emphasis on cost
control
WHY?
Local firms versus overseas competitors
Increased offshore buying and selling
activities, more complex and more costly global
supply chains
4.Information Technology
Information technology gave organizations the
ability to better monitor transactions intensive
activities such as ordering, movement of
goods...
Computerized quantitative models for
controlling and optimization
MRP,MRP II,DRP,DRP II,JIT link material
management from order processing to
inventory management, forecasting and
production.
5.Channel Power
Shifting
6. Profit Leverage
$1
There
1
6
Customer service
Demand forecasting
Inventory management
Logistics
communications
Material handling
Order processing
Packaging
CUSTOMER SERVICE
DEMAND FORECASTING
INVENTORY
MANAGEMENT
Inventory
LOGISTICS
COMMUNICATIONS
Communications
Computerized
systems
Wal-Mart
advance communication
MATERIALS HANDLING
Materials
ORDER PROCESSING
Order processing entails the systems
getting orders from customers,
checking on the status of orders
communicating to customers about them,
filling the order
making it available to the customer.
Advanced order-processing methods ( EDIelectronic data interchange, EFT-electronic
funds transfer, barcoding costs
PACKAGING
For
PROCUREMENT
Procurement is the purchase of materials
and service from outside organizations to
support the firms operations from
production to marketing, sales, and
logistics.
Supplier selection, negotiation of price,
supplier quality assessment
REVERSE LOGISTICS
TRAFFIC AND
TRANSPORTATION
WAREHOUSING AND
STORAGE
Warehousing supports time and place
utility by allowing an item to be
produced and helps for later
consumption.
Warehouse layout, design,ownership,
automation
Development of Logistics
6 Eras
Era 1: Farm to market ( early 1900s)
( 1916-1940)
Major influence- agricultural economies
distribution of farm products
transportation
The
service levels
Transportation costs
Warehousing costs
Order processing/information
systems costs
Lot quantity costs
Inventory carrying costs
1
5
Inventory
carrying costs
Inventory management
Packaging
Reverse logistics
Transportation
costs
Traffic and transportation
Lot quantity
costs
Material handling
procurement
Warehousing
costs
Warehouse and storage
Plant and warehouse
selection
Source: Adapted from Douglas M. Lambert, The Development of an Inventory Costing Methodology: A Study of the Costs
Associated with Holding Inventory (Chicago, IL: National Council of Physical Distribution Management, 1976), p. 7.
TRADE-OFF APPROACH
IN LOGISTICS
Product
Price
Promotion
LOGISTICS
Place/
customer service
levels
Inventory
carrying costs
Transportation
costs
Lot quantity
costs
Warehousing
costs
MARKETING
Order processing
and information
costs
Source: Adapted from Douglas M. Lambert, The Development of an Inventory Costing Methodology: A Study of the Costs
Associated with Holding Inventory (Chicago, IL: National Council of Physical Distribution Management, 1976), p. 7.
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Future Challenges in
Logistics
Strategic
Future Challenges in
Logistics
(Continued)
JIT
Just in time
Aim to reduce waste and redundant inventory
by delivering products, components, materials
when they are needed.
Needs close coordination
Reduces inventory, increases customer service
level
JIT in retail and grocery: QR and ECR
Quick response
Began in apparel and textile industry
Retail sector strategy
Speeding inventory flows
Mostly between manufacturer and retailer
When fully implemented, QR applies JIT.
Moving product fastly-cross docking rather
than warehousing, floor ready
merchandise( prehung and preticketed)
Wide usage of IT ( EDI, POS, Barcodes, CAD,
CAM)
ECR
%