CHAPTER 1

Overview of Logistics

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 Key Terms
Big-box retailer Humanitarian logistics
Co-branding Landed costs
Container Logistics
Cost trade-offs Marketing channels
Disintermediation Logistics
Economic utility Marketing channels
Form utility Materials management

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 Key Terms
Physical distribution Stockouts
Sustainable products
Place utility
Systems approach
Possession utility Tailored logistics
Postponement Time utility
Sorting function Total cost approach
Stock-keeping units
(SKUs)

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 Learning Objectives
To discuss the economic impacts of logistics
To define what logistics is
To analyze the increased importance of logistics
To discuss the systems and total cost approaches
to logistics

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 Learning Objectives
To expose you to logistical relationships within
the firm
To introduce you to marketing channels
To provide a brief overview of activities in the
logistics channel
To familiarize you with logistics careers

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 Economic Impacts of Logistics
Macroeconomic Impacts
Economic Utility
Possession utility
Form utility
Place utility
Time utility

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Table 1-1: The Cost of the Business Logistics System in
Relation to a Countrys Gross Domestic Product (GDP)

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 Logistics: What It Is

Council of Logistics Management definition:

Logistics is that part of the supply chain process that
plans, implements, and controls the efficient,
effective forward and reverse flow and storage of
goods, services, and related information between
the point of origin and the point of consumption in
order to meet customers requirements.

Source: www.cscmp.org

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 The Increased Importance of Logistics

A Reduction in Economic Regulation

Changes in Consumer Behavior
Technological Advances
The Growing Power of Retailers
Globalization of Trade

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 The Systems and Total Cost
Approaches to Logistics
Systems Approach
Interdependence of company and logistics goals and
objectives
Interdependence of functional areas
Stock-keeping units (SKUs)
Interdependence of logistics activities or
Intrafunctional logistics

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Figure 1-1: Control Over the Flow of Inbound
and Outbound Movements

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 The Systems and Total Cost
Approaches to Logistics
Total Cost Approach
Cost trade-offs: changes to one activity cause
some costs to increase and others to decrease

Total Logistics Concept: integration of all

activities into a unified whole that seeks to
minimize distribution costs in a manner that
supports an organizations customer service
objectives
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Logistical Relationships within the Firm

Finance
Production
Marketing

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Logistical Relationships within the Firm
Marketing
Place Decisions
Price Decisions
Landed costs
Product Decisions
Stockouts
Sustainable products
Promotion Decisions

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 Marketing Channels
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.
Source: American Marketing Association Dictionary, www.marketingpower.com

Channel members
Manufacturers
Wholesalers
Retailers
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 Marketing Channels
Ownership channel
Covers movement of the title to the goods
Negotiations channel
Buy and sell agreements are reached
Financing channel
Payments for goods
Promotions channel
Promoting a new or existing product
Logistics channel
Moving and storing product throughout the
channel
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Channel Intermediaries/Facilitators
Ownership channel
Banks, finance companies
Negotiations channel
Brokers
Financing channel
Banks, insurance companies, finance companies
Promotions channel
Advertising agencies, public relations agencies
Logistics channel
Freight forwarders

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Activities in the Logistical Channel
Customer service Demand forecasting
Facility location International logistics
decisions Materials handling
Inventory management Packaging
Order management Reverse logistics
Procurement Warehousing
Transportation management
management

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 Logistics Careers
Logisticians need to be both a generalist and a
specialist
As a generalist, the logistician must understand the
relationship between logistics and other corporate
functions, both within and outside the firm.
As a specialist, the logistician must understand the
relationships between various logistics activities and must
have some technical knowledge for various activities.

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 Logistics Careers
Logistician highlighted as one on the 50 best
careers for the year 2010 and suggested that
logistics employment should increase by 20%
through 2018.
Source: Liz Wolgemuth, The 50 Best Careers of 2010, U.S. News & World
Report, December 28, 2009.

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 Logistics Careers
Examples of Logistics-related jobs include:
Logistics analyst
Consultant
Customer service manager
Purchasing manager
Transportation manager
Warehouse operations manager
Source: www.cscmp.org

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 Logistics Professionalism
Professional Organizations Dedicated to Advancing the
Professional Knowledge of their members:

APICS The Association for Operations Management (www.apics.org)

American Society of Transportation and Logistics (AST&L) (www.astl.org)
Council of Supply Chain Management Professionals (www.cscmp.org)
Delta Nu Alpha (DNA) (www.deltanualpha.org)
International Society of Logistics (SOLE) (www.sole.org)
Supply Chain & Logistics Association Canada (SCL) (www.sclcanada.org)
The Chartered Institute of Logistics and Transport in the UK CILT (UK)
(www.ciltuk.org.uk)
Warehousing Education and Research Council (WERC) (www.werc.org)

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 Copyright Notice

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system,
or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording,
or otherwise, without the prior written permission of the publisher. Printed in the United States
of America.

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