The term “logistics”, derived from the Greek word “Logos” and the evolved Greek term “Logistikê” or

“Logistikos”, which was used only in modern times by military historians to express, the action of
organized supply of goods and weaponry to an army.

(a) “Logistics is the management of all activities which facilitate movement and the co-ordination of
supply and demand in the creation of time and place utility”.

(b) “Logistics management is the planning, implementation and control of 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 customer requirements” (CSCMP 2006)

(c) “Logistics is the positioning of resources at the right time, in the right place, at the right cost, at the
right quality” (Chartered Institute of Logistics and Transport, UK, 2005).

(d) “In civil organizations, logistics’ issues are encountered in firms producing and distributing physical
goods”.

(e) “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” (Council of
Logistics Management 2003).

LOGISTICS DEVELOPMENT

Around 1956

Invention of the sea container structural evolution of world trade and the boom of international flows of
goods

Around 1940

Military Logistics during the world wars-transfer of military logistics concepts to the business world.

Around 1990

QR and ECR technologies- logistics concepts with a special emphasis on distribution.

Today

The term “logistics” describes the integration and management of the product value chain(the process
or activities by which a company adds value to an article, including production, marketing and the
provision, marketing and the provision of after sales service) from suppliers to the costumer.

1970-1980

Kanban and Just in time logistics concept with emphasis on purchasing

OUR AIM IS TO

Ensure to supply to the customer the following:

• Right product

• Right cost

• Right quantity

• Right quality

• Right place

• Right time

Major functions of Logistics Management

TRANSPORTATION

focuses on planning, optimizing and executing the use of vehicles to move goods from one place to
another.

WAREHOUSING

includes functions like inventory planning and management and order fulfillment. It involves the control
and administration of warehouse operations where equipment, vehicles and goods are kept.

MATERIAL HANDLING

deals with the loading, offloading and the movement of materials at the point of origin, in transit and at
the point of consumption.

INVENTORY MANAGEMENT

refers the process of ordering, storing and using the inventory of the organization with regard to the
type and amount of material in a storage facility.

• Inbound Logistics

refers to the movement of materials from the point of origin to the point of production.

• Outbound Logistics

This is the movement of finished goods from the point of production to the point of consumption.

• Reverse Logistics

This is the movement of damaged goods from customers back to the point of production
 Hi Good day! My job is Logistician, I am expert in logistics and my role are as follows:

1. Find the cheapest and fastest way to transport goods

2. Make suggestions to customers regarding improvements

3. Keep informed on the latest advancements in logistics technology

4. Strive to determine the customers’ needs and ensure that they are met.

5. Assess logistics functions and work to improve them.

Basic modes of transportation

Road

A very popular mode of transport used by suppliers and businesses to deliver orders. Many transport
companies provide scheduled delivery days and next day delivery services, depending upon your needs.

Advantages of Road as Mode of Transportation

o Cost effective;

o Flexible (door-to-door) and versatile (having the widest range of vehicle types).

o Fast delivery;

o Ideal for short distances, national or mainland;

o Ideal for transporting perishables (e.g. fruits and vegetables).

o Easy to monitor location of goods.

o Easy to communicate with driver.

o Ideal for sending by courier shortages to customers.

Disadvantages of Road as Mode of transportation

o Subject to traffic delays;

o Subject to breakdown;

o Goods susceptible to damage through careless driving;

o Bad weather;

o Driving regulations can cause delays;

o Legislative control and driver fatigue are some problems of motor carriers’ long journeys.

Rail

Businesses use rail transportation for the delivery of a variety of goods including post, coal, steel and
other heavy goods.

Advantages of Rail as Mode of Transportation

o Fast delivery;

o Capacity;

o Cost Effective;

o Safe mode of transport;

o Reliable.

Disadvantages of Rail as Mode of Transportation

o Subject to unforeseen delays;

o Reliance on rail freight operator’s timetable;

o Suppliers/customers are not always located near a rail freight depot and delivery to/from the
depot can be costly and time consuming.

Air

Fast but expensive transportation from of shipment. This mode of transport is useful to deliver products
with short lead times, fragile goods and products that are not bulky.

Advantages of Air as Mode of Transportation

o Fast delivery, usually between 24 hours and 48 hours.

o Customer is not kept waiting for order fulfilment.

o Reduced lead time on supplier.

 o Improved service levels.

Disadvantages of Air as Mode of Transportation

o Flight delays and/or cancellations

o Customs and Excise restrictions

o Costly

Water

It is mostly used for bulky, non-perishable products such as grain, petroleum products, cement, steel,
and coal.

Advantages of Water as Mode of Transportation

o Ideal for transporting heavy and bulky goods

o Suitable for products with lead times

Disadvantages of Water as Mode of Transportation

o Longer lead/delivery times

o Bad weather

o Difficult to monitor exact location of goods in transit

o Customers and Excise restrictions

o Could be costly

Pipeline

Used primarily by petroleum industry to move oil and natural gas.

Advantages of Pipeline as Mode of Transportation

o They are ideally suited to transport the liquids and gases.

o Pipelines can be laid through difficult terrains as well as under water.

o It involves very low energy consumption.

o It needs very little maintenance.

o Pipelines arc safe, accident-free and environmentally friendly.

Disadvantages of Pipeline as Mode of Transportation

o It is not flexible, i.e., it can be used only for a few fixed points.

o Its capacity cannot be increased once it is laid.

o It is difficult to make security arrangements for pipelines.

o Underground pipelines cannot be easily repaired and detection of leakage is also difficult.

Digital - Digital or electronic transport is the fastest mode of transportation. Besides its high speed,
digital transport is cost efficient and benefits from its high accessibility and flexibility. However, only a
limited range of products can be shipped by this mode, including electric energy, data, and products
such as texts, pictures, music, movies, and software, all of which are composed of data.

Physical distribution channel is the method and means by which a product or a group of products are
physically transferred, or distributed, from their point of production to the point at which they are made
available

Chain of Distribution Channels

Types of Distribution Channels:

1. Distribution Channel of Consumer Goods:

• Manufacturer → Agent → Wholesaler → Retailer → Consumer:

Product reaches the agent from the manufacturers and from the agent to wholesaler and then to
consumers through retailers. In India, most of the textile manufacturers adopt this method of
distribution.

• Manufacturer → Agent → Retailer → Consumer:

The wholesaler is eliminated and goods reach from manufacturer to agent and then consumers
through retailers only. Manufacturers who want to reduce cost of distribution adopt this method.

• Manufacturer → Agent → Consumer:

There is only one middleman that is the agent. In India and Philippines, for the distribution of
medicines and cosmetics, this channel of distribution is commonly adopted.
 • Manufacturer → Wholesaler → Retailer → Consumer:

A manufacturer may choose to distribute his goods with the help of two middlemen. These two
middlemen may be wholesalers and retailers.

• Manufacturers → Retailer → Consumer:

Manufacturers sell their goods to retailers and retailers to consumers.

• Manufacturers → Consumers:

A producer of consumer goods may distribute his products directly to consumers. The goods may be
sold directly to consumers through vending machines, mail order business or from mill’s own shops.

2. Distribution Channel of Industrial Products:

• Manufacturer → Agent → Wholesaler → Industrial Consumer:

Product reaches from manufacturer to agent and then to industrial consumer through the
wholesaler.

• Manufacturer → Agent → Industrial Consumer:

Under this system, goods reach industrial consumer through the agent. Thus there is only one
middleman.

• Manufacturer → Wholesaler → Industrial Consumer

• Manufacturer → Industrial Consumer:

Under this channel there is no middleman and goods are directly sold to industrial consumer. Railway
engines, electric production equipment are sold by this system.

Direct channel is popular for selling industrial products since industrial users place orders with the
manufacturers of industrial products directly.

Producer Direct to Consumer

The Direct marketing channel is the simplest and shortest distribution channel, and it has no
intermediary levels (channel 1). This channel can be part of direct selling market strategy, which consist
of a producer selling directly to the final consumer.

Business to business Channels

The First industrial distribution channel a business marketer can use is the direct marketing channel,
which is quite similar to channel 1, except the final consumer is replaced with a business customer. Most
industrial goods such as raw materials, equipment and component parts are sold through this business
channel. There is no need for wholesalers or other intermediaries in this channel because the goods are
sold in large quantities. In the case of small accessories, producers sell their products to wholesalers or
industrial distributors, which in turn sell them to business customers. Brokers and sales agents are also
common intermediaries in industrial marketing channels. Often small producers are represented by
independent intermediaries called manufacturers representatives to market their products to large
wholesalers or to large wholesalers or to final business costumers.

Warehouse

• is a place for storage or any space or area that is used to keep materials, goods, products and
other items for a period of time until finally withdrawn, used, transferred or sold.
• it is a facility used for receiving, storing and distributing materials or goods in support of
organizational strategies.
• it also provides information to management on the status and condition of items being stored

MAJOR OBJECTIVES OF WAREHOUSING

• To receive materials and supplies in accordance with proper documentation, procedures and in
conformance with specified quality
• To plan and provide adequate storage spaces for goods
• To keep storage of goods in accordance with efficient practices.

FUNCTIONS OF WAREHOUSING

To receive and store materials

To protect the materials from damage or unauthorized removal

To issue materials in the right quantity, at the right time and to the right place

To provide these services at the least possible cost

Three (3) Basic function of Warehousing

1. Movement
2. Storage
3. Information Transfer
MOVEMENT

The movement or material handling function is represented by four primary activities.

Receiving and put away this activity includes unloading goods from the transportation equipment as
well as verifying their count and specifications against order records, inspecting them for damage and
updating warehouse inventory records. Receiving also include sorting and classification of products and
prepacking bulk shipments into smaller ones before moving them to their warehouse storage location.

Order filling or order picking is a fundamental movement activity in warehousing and involves
identifying and retrieving products from storage areas according to costumer orders. Order filling also
includes accumulating, regrouping and packaging the products into customer desired assortments.

Cross docking in this process, receiving products from one source are occasionally consolidated with
products from other sources with the same destination and immediately sent to costumers, without
moving to long term storage. A Pure cross docking operations only organizes the transfer of materials
from inbound receiving dock to the outbound dock, eliminating nonvalue adding activities such as put
away, storage and order filling.

WAREHOUSE OPERATIONS

RECEIVING is the first and most crucial. Warehouse should be able to verify that is has received the
goods at the right quantity, in the right condition at the right time.

PUTAWAY

The acts of placing materials in storage. It includes handling location and product placement

STORAGE
The physical containment of materials while it is awaiting a demand or withdrawal
PICKING

The process of removing from storage to meet a specific demand. It is the basic service a warehouse
provides for costumers.

FREQUENTLY USED UNITS LOAD IN WAREHOUSING

Unit loads in warehouses

combines individual item or items in shipping containers into a single unit that can be moved easily with
a pallet, jack or forklift

Packaging The wrapping material around a consumer item that serves to contain, identify, describe,
protect, display promote and otherwise make the product marketable and keep it clean.

PRIMARY PACKAGING

It is the material that first envelopes the product and hold it. This usually is the smallest unit of
distribution or use and is the package which is in direct contact with the contents.

SECONDARY OR COMPOUNDED PACKAGING

It is done outside of the packaging perhaps used to group primary packages together.

SECONDARY PACKAGING is another level of protection that is commonly used for protection, bundling
and marketing purposes. It is combines multiple items together.it is visually enticing it attracts
costumers. This level of packaging is typically printed with high quality images, logos and other branding
material.

TERTIARY OR OUTER PACKAGING

It is used for bulk handling, warehouse storage and transport shipping. The most common form is a
palletized unit load that packs tightly into containers.

Packaging and Unit Loads

Almost all the products flowing through logistics networks are packaged, mainly to promote or protect
the product.

In general, the main reason for packaging goods can be summarized as follows

• To protect or preserve items

• To identify the product and provide basic information
• To facilitate the handling and storage of products
 • To improve the product appearance and assist in promoting, marketing and advertising it.

Packaging individual items are available for use in any of the packaging configurations right up to the
time of need.

Shipping

• Utilizing and shipping include the following:

✓ Checking orders for completeness
✓ Packaging merchandise inappropriate shipping containers.
✓ Preparing shipping documents, including packing list, address labels and bill of lading
✓ Weighting shipment to determine shipping charge
✓ Accumulating orders by outbound carrier
✓ Loading trucks (in many instances, this is carrier responsibility)

SHIPPING

This activity involves physically moving and loading assembled orders onto transportation camers,
checking the content and sequence of order and updating inventory records.
STRATEGY PLANNING

o Strategy originates from the Greek word strategies (“general” of the army), but its
contemporary definition refers to a plan for achieving chosen objectives.

o Therefore, strategy as planning and positioning is the traditional definition of strategy.

Strategic planning is the process of setting goals, deciding on actions to achieve those goals and
mobilizing the resources needed to take those actions.

LEVELS OF STRATEGIC PLANNING

o Corporate level strategy

A corporate-level strategy is when a business makes a decision that affects the whole company.
A corporate-level strategy affects a company's finances, management, human resources, and where the
products are sold.

o Business level strategy

Business level strategies detail actions taken to provide value to customers and gain a
competitive advantage by exploiting core competencies in specific, individual product or service
markets. Business-level strategy is concerned with a firm's position in an industry, relative to
competitors and to the five forces of competition.

o Operational level strategy

refers to the methods companies use to reach their objectives. By developing operational
strategies, a company can examine and implement effective and efficient systems for using resources,
personnel and the work process.

o Competitive level strategy

Competitive strategy is a long-term action plan of a company which is directed to

gain competitive advantage over its rivals after evaluating their strengths, weaknesses, opportunities
and threats in the industry and compare it with your own.
Logistics Planning Decisions

o Strategic Decisions

these decisions are business objectives and mission statements, as well as marketing and
customer-service strategies. Therefore, they are long-term kinds of decisions made over one or more
years. These decisions are made by executive administrators, top managers, and stockholders. The data
at hand for such decisions are often imprecise, incomplete, and need forecasts.

o Tactical Decisions

these decisions are made on a longer-term basis, whether monthly, quarterly, or even annually.
Production planning, transportation planning, and resource planning are the best known types of
logistics tactical decisions. These decisions are often made by middle managers or logistics engineers
and often with disaggregated data.

o Operational Decisions

these decisions are made in real time on a daily or weekly basis, so their scope is narrow.
Decisions such as vehicle loading or dispatching, shipment, and warehouse routines are among the
many types of operational decisions. These kinds of decisions are based on lots of detailed data and
usually made by supervisors.

Three (3) Objectives of Strategic Decisions:

According to Stock and Lambert, “Strategic plans provide direction and control or tactical plans and daily
operations”
 1. Capital reduction -refers to the level of investment, which depends on owned equipment and
inventories

2. Cost reduction- refers the total cost of transportation and storage.

3. Service level improvement- pertains to customer satisfaction and order cycle time

A logistics plan is about implementing the logistics strategy, this strategy should be adaptable to both
tactical (how the distribution system can be utilized) and operational (implement action) actions.

DEVELOPING A LOGISTICS PLANNING

o Marketing inputs

knowledge of products, pricing programs, sales programs and forecasts, and customer-service policies.

o Manufacturing inputs

manufacturing capabilities and locations.

o Purchasing inputs

new sources, materials, services, and technologies.

o Financial inputs

the source of the cost data and the availability of capital.

o Logistics inputs

location of current logistics facilities

Types of Logistics Strategic Decisions

o Customer service

✓ refers to the output of logistics.

o Logistics network design

✓ To achieve corporate strategies, an organization must ensure that its structure and flow of
materials and information are appropriate.

o Outsourcing versus vertical integration

✓ Decisions related to outsourcing bring greater flexibility, lower investment risk, improved cash
flow, and lower potential labor costs. Instead, the business might lose control over its process,
might have long lead times or shortages, or choose the wrong supplier. Outsourcing decisions
 determine which functions should be outsourced, as well as the nature and extent of
outsourcing agreements

Tools of Strategic Decision Making

o Benchmarking

✓ It is about comparing the performance of a logistics system to a best practice standard and
auditing the performance of the competitors in the market and finding their gaps in serving
customers.

o Optimization programming

✓ most logistics strategic problems can be cast as mathematical problems. Unfortunately, these
optimization problems are among nondeterministic polynomial-time hard (NP-hard) problems,
which has resulted in the development of fast heuristic algorithms.
✓ These algorithms are intended to search the solution space for good but not necessarily the best
solutions.

o Continuous approximation

✓ This method can be used whenever customers are so numerous that demand can be seen as a
continuous spatial function. Approximation often yields closed-form solutions, and it can be
used as a simple heuristic.

o Simulation

✓ evaluates the behavior of the system or a particular configuration under different alternative
conditions.
✓ With each simulation run, these conditions are set one by one, and the results show the
probable reaction of the system to these scenarios.

o Forecasting

✓ It is an attempt to determine in advance the most likely outcome of an uncertain variable.

✓ Logistics requirements to be predicted include customer demands, raw material prices, labor
costs and lead times.

Logistics managers should have a complete knowledge of the life cycle of a product and the role of
market changes in the life cycle so that they can respond to changes and decide when to abandon or
improve the product.