LOGISTICS LOGISTICS MANAGEMENT 2MANAGEMENT 2

Definition Of LOGISTISDefinition Of LOGISTISWhat is Logistics ?

“ Logistics means having the right thing at the right place , at the right time Business Logistics deals with all move- store activates that facilitate

product flow from one point of raw material acquisition to the point of final consumption, as well as the information flow that set the product in motion for the purpose of providing adequate levels of customer service at a reasonable cost.

Logistics is also defined as the process of planning , implementing, and controlling the efficient , effective flow and storage of goods, services, and related information from point to origin to point of consumption for the purpose of confirming to customer requirements”.

Note that this definition includes inbound, out bound, internal, and external movements, ,and return of materials for environmental purposes .

Main Logistics ActivitiesMain Logistics Activities 1- Transportation 2- Inventory Maintenance 3- Order Processing

Supporting ActivitiesSupporting Activities 1- Warehousing 2- Materials handling 3-Protective packaging 4- Acquisition 5-Production 6- In formation maintenance

Customer Customer ServicesServices

CustomersCustomersVendorsVendors

Marketing

Finance Logistics OtherFunctions

Production

ENVIRONMENTSENVIRONMENTS

POLITICALPOLITICALSOCIALSOCIAL

ProductionProduction

FormForm

UtilityUtility

MarketingMarketing

PossessionPossession

UtilityUtility

LogisticsLogistics

Place UtilityPlace Utility

Time UtilityTime Utility

LOGICTICSSample Activates:

Transportation Inventory

Maintenance Order processing

Warehousing Materials Handling

LOGICTICSSample Activates:

Transportation Inventory

Maintenance Order processing

Warehousing Materials Handling

Interface Activities

• CustomerService

Standards • Pricing

• Packaging• RetailLocation

Interface Activities

•Customer Service

Standards •Pricing

•Packaging •Retail Location

Interface Activities

• ProductsScheduling

• Plant location• Purchasing

Interface Activities

•Products Scheduling

•Plant location •Purchasing

MARKETINGSample activities:

• Promotion•Market research• Product mix• Sales Force• Management

MARKETINGSample activities:

•Promotion •Market research•Product mix •Sales Force •Management

PRDUCTIONSample activities •Quality control •Detailed plant Loading •In plant materials handling •Equipment maintenance

PRDUCTIONSample activities •Quality control •Detailed plant Loading •In plant materials handling •Equipment maintenance

Production

Logistics

interface

Production

Logistics

interface

Marketing

Logistics

Interface

Marketing

Logistics

Interface

A generalized view of logistics activities among traditional business activities of the firm A generalized view of logistics activities among traditional business activities of the firm A generalized view of logistics activities among traditional business activities of the firm A generalized view of logistics activities among traditional business activities of the firm

Cost Trade Off Definition of trade off

Adding more of one cost item while subtracting some of another cost item to achieve more desirable results.

Total cost concept Refer to the recognition that conflicting

cost patterns should be examined collectively balanced at optimum

Transportation

costs

Order – processing

costs

Cost

Total costs ( addition of transportation , inventory and order – processing

Costs )

Inventory

costs

Rail Truck Air

Basic cost trade- offs in selecting a mode of transportationBasic cost trade- offs in selecting a mode of transportation

Main Function of Business Logistics

1.1. Physical DistributionPhysical Distribution (outbound). From the firm to the customers.

2.2. Materials Materials ManagementManagement( inbound or Sourcing or physical supply) From the suppliers to the firm.

Physical distribution It is the brunch of business logistics that

deals with the movement storage and processing of orders for a firm’s output. In terms of cost, it is the most important branch for most firms because it absorbs roughly two thirds of the logistics cost.

Physical distribution is primarily concerned with finished and semi finished goods. I.e. goods that company offers for sale, and which the firm plans no further processing

DeclineMaturityGrowthIntroduction

Time

A generalized Product – life – cycle curve A generalized Product – life – cycle curve

The product life cycleThe product life cycle Four stages as shown in the figure Introduction stages : the physical

distribution strategy is cautious, with stocking restriction but ready to serve customers at high level of cost attract customers

Growth stage : Sales are likely to increase but planning is particularly difficult for physical distribution. It is a fairly short period.

Maturity stage :sales at a peal level and longer and stable period. Planning and control are possible. So reduction in logistics costs can be realized.

Decline stage: the number of stocking points is likely to be reduced and stocks are drawn back towards regional points or to the firm

Strategic Distribution Strategic Distribution arrangementsarrangements

1.1. Direct shipmentsDirect shipments from production line to consumers .

2.2. Direct shipmentsDirect shipments from plant inventories to consumers

3.3. Indirect shipmentsIndirect shipments through a warehousing system

A. The role of acquisitionA. The role of acquisition B. Meeting operating B. Meeting operating

requirements :requirements : 1- supply to operating requirements 2- to inventory

C. Creating the operating schedule. C. Creating the operating schedule. D. Breaking down the D. Breaking down the

operating scheduleoperating schedule

Objective of materials Objective of materials managementmanagement

Traffic Management Responsibilities

Mode and Transport Service Selection Mode and Transport Service Selection Routing Routing Loading balancing Loading balancing Vehicle Scheduling Vehicle Scheduling Tracing Tracing Freight consolidation Freight consolidation Claims processing Claims processing Rate auditing Rate auditing

Inventory Management Inventory Management Reasons for inventoriesReasons for inventories

They improve customer service Encourage production economies Permit purchase and

transportation economies Hedge against price changes Protect against demand and lead

time uncertainties Hedge against contingencies

Types of InventoryTypes of Inventory Inventories may be in the pipeline Stocks for speculation Stocks may be Regular or cyclical

in nature.Safety Stocks :Obsolete , dead , or shrinkage

stocks