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Logistics
The process of strategically managingthe movement and storage of materials,parts and finished inventory fromsuppliers, through the firm and on to
the customers.Bowersox, D (1978), LogisticsManagement, Macmillan
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Logistics versus distribution
managementLogistics differs from physicaldistribution management because it isconcerned with treating the problem ofthe movement and storage of materialsas a whole,
where physical distribution is onlyconcerned with movement and storageof materials from producer to customer.
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Key Concepts of Logistics:
The management of the storage
Flow of goods,Services and information throughoutyour organization.
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Principal Issues
Elements of Logistics
Materials management:
Sourcing and receiving of raw materials or
unfinished products for subsequent use
Material flow system:
The ability to locate and schedule material
through to end production and dispositionPhysical distribution:
The delivery of finished goods to customers
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Major logistics considerationsWarehousing How many?
What type?
Inventory management JITJust in Timelogistics management.
Transportation Road
Rail Water
Pipeline
Air
Internet
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Integrated logistics
managementEfficient and effective management ofthe logistics is based upon thefollowing:
Manage through information
Electronic data interchange
Cross-functional teamwork Build logistics partnerships
Third party logistics: Outsourcing
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The total logistics cost concept
Order processing andadministration
Inventory control
Transportation
Warehousing
Materials handling
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Channel retailing trends
New retail forms and shortening of the retail life-cycles Wheel of retailing, new types of retailer, usually begin as low-
margin, low-price, low-status operations but later evolve to higherpriced, higher service operations and eventually become like the
conventionalretailers thatthey replacedGrowth of non-store retailing click and brick retailers Retail convergence Rise of mega-retailers
Growing importance of retail technology Global expansion of retailers
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Channel wholesaling trendsFace considerable challenges
Formation of hybrid operators such asthe cash and carry concepts.
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Principal Issues
Logistic goal and objectives
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Principal Issues
Logistic goal and objectives
Accepting a customer order
Receive and enter
Credit clearance / authorize
Delivery commitment
Supplier ordering
Forecasting demand
Scheduling manufacturingInventory management
Delivery to customer.
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Marketing Intermediaries
The use of intermediaries results from theirgreater efficiency in making goods available totarget markets.
Offer the firm more than it can achieve on its ownthrough the intermediaries: Contacts,
Experience,
Specialization,
Scale of operation.
Purpose: match supply from producers todemand from consumers.
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Contact
Financing
InformationRisk Taking
Promotion
MatchingNegotiation
PhysicalDistribution
These Functions Should be Assigned to the Channel Member Who CanPerform Them Most Efficiently and Effectively to Provide Satisfactory
Assortments of Goods and Services to Target Customers.
Distribution Channel Functions
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The logistics functions1.
purchasing - of raw materials, assembled products,finished products from all over the world. Where can youget the quality you want at the best price?
2. manufacturing operations - how should the machines beorganized, how many workers do you need, where do you
stock your materials and finished products, how manyproducts do you manufacture on each production run?And the list goes on . . .
3. transportation - domestic and international, from rawmaterials to finished product; who moves what, and
when, and for what price?4. warehousing - product is either moving (transportation) or
not (warehousing). This is becoming a very sophisticatedarea and a key to shortening the time to market forproducts.
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5. inventory control - how much product is on hand, on order,intransit, and where is it? Inventory drives logistics.
6. import/export - international regulations anddocumentation can be complex. It takes aspecialist to understand the best way to getproduct across borders.
7. information systems - globalization on today'sscale is possible because there is technology thattransfers the needed information.
Logistics is performing any of the above functions, or
combinations of the above. It is the functions thatoccur within a single company. Logistics functionsused to be considered unavoidable costs to acompany, but today they are recognized as crucialto a company's competitiveness and profitability.
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Warehouse/distribution entities
Importer or independent of the Importer:
Possible need to interface with Customs and
other government agencies.Responsible for coordination with rail/truck,direct interface with Importer and/or storelevel personnel, proper storage, adequate
inventory and record keeping for all goodsreceived and dispatched/distributed,equipment control and return on a timelybasis of rail/truck/ocean carrier equipment,etc.
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RailNations largest carrier, cost-effective
for shipping bulk products
RailNations largest carrier, cost-effective
for shipping bulk productsTruck
Flexible in routing & time schedules, efficientfor short-hauls of high value goods
TruckFlexible in routing & time schedules, efficient
for short-hauls of high value goodsWater
Low cost for shipping bulky, low-value,non perishable goods, slowest form
WaterLow cost for shipping bulky, low-value,
non perishable goods, slowest form
PipelineShip petroleum, naturalgas, and chemicalsfrom sources to markets
PipelineShip petroleum, naturalgas, and chemicalsfrom sources to markets
AirHigh cost, idealwhen speed is needed or
distance markets have to be reached
AirHigh cost, idealwhen speed is needed or
distance markets have to be reached
Transportation Modes
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