CHAPTER 1

LOGISTICS?

 The movement of goods and service from point origin to point consumption according to the
7R’s in logistics.
 Right Product
 Right Quality
 Right Condition
 Right Place
 Right Time
 Right Customer
 Right Price

Definition of Logistics Management:

 Logistics management is that part of supply chain management that plans, implements, and
control the efficient, effective forward and reverses flow and storage of goods, service and
related information between the point of origin and the point of consumption in the order
to meet customer’s requirements.

The Goal of Logistics:

 To satisfy customers expectations for delivery of products or services while minimizing the
total cost.

Basic Logistical Performance is measured in terms of:

 Inventory Availability: having inventory consistently meet customer material & product
requirements.
 Operational Performance: time required to deliver a customer’s order (key metrics in this
area involve delivery speed and consistency)
 Service Reliability: involves the quality attributes of logistics (key to quality accurate
measurement of availability and operational performance over time)

5 Major function of work in Logistics:

1. Order Processing (transmission of customers requirements to the supply chain):

 Accurate information needed to achieve superior logistical performance.
 Responsive supply chains require accurate & timely information about customer purchase
behaviour.
 Fast information flow enables improved work balancing.

2. Inventory Strategy seeks to achieve the desired customer service with minimum inventory
commitment. Inventory strategy is based on a combination of:
 Core Customer Segmentation
 Product Profitability
 Transportation Integration
 Time based Performance
 Competitive Performance
 3. Transportation factors for performance (COST/SPEED/CONSISTENCY). It is the operational
area that geographically moves and position inventory.
Three basic ways to satisfy transportation requirements:
 Operate a private fleet of equipment
 Contact with dedicated transport specialists
 Engage carriers that provide different transportation service as needed on a per shipment
basis

4. Warehousing, materials handling and packaging

 Inventory needs to be warehoused at selected times during the logistics process.
 Transportation vehicles require materials handling for efficient loading and
unloading.
 Individual products are most efficiently handled when packaged together into
shipping cartons.
 Effective integration of these functions facilitates the speed and overall ease of
product flow throughout the logistical system

5. Facilities network
– The number, size and geographical relationship of facilities used to perform logistical
operations directly impacts customer service capability and cost
– Types of facilities in the logistics network include
• Manufacturing plants,
• warehouses,
• cross-dock operations,
• retail stores

Why goods return to the manufacturer?

• Returned to be remanufactured or refurbished
• To be repaired under warranty,
• The goods do not meet the expectations of the customer.
• The goods are defective and need reparation to be conform to the requirements of the
market.
• The packaging that used to ship the goods from the manufacturer’s plant to the customer’s
facilities can be reused for another shipment.