CHAPTER 1 - INTRODUCTION

Dung H. Nguyen
Faculty of International Economic Relations
University of Economics and Law

‹#› Het begint met een idee

CONTENTS

 Logistics definition
 Main activities of logistics
 Systems and total cost approaches to logistics
 Integrated logistics
 Logistics concepts
 Logistics vs supply chain management

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LOGISTICS DEFINITION

 Logistics is responsible for the movement of raw materials, work-in-

process, finished inventories from suppliers through an
organization to customers.
 “Logistics management is that part of supply chain management
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.” (CSCMP)

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LOGISTICS IN VIETNAM’S COMMERCIAL LAW

“Điều 233. Dịch vụ logistics

Dịch vụ logistics là hoạt động thương mại, theo đó thương nhân tổ chức
thực hiện một hoặc nhiều công việc bao gồm nhận hàng, vận chuyển, lưu
kho, lưu bãi, làm thủ tục hải quan, các thủ tục giấy tờ khác, tư vấn khách
hàng, đóng gói bao bì, ghi ký mã hiệu, giao hàng hoặc các dịch vụ khác có
liên quan đến hàng hoá theo thoả thuận với khách hàng để hưởng thù
lao. Dịch vụ logistics được phiên âm theo tiếng Việt là dịch vụ lô-gi-stíc.”

 Further detailed in Decree No. 163/2017/NĐ-CP

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LOGISTICS DEFINITION

External Operations within External

supplier the organization customer

Internal Internal
supplier customer

Inbound Outbound
Materials management
logistics logistics

Logistics

Source: Waters (2003)

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AIMS OF LOGISTICS

 Product
 Customer
 Quality
 Condition
 Place
 Time
 Cost

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MAIN ACTIVITIES OF LOGISTICS

 Customer service  Packaging

 Demand forecasting  Material handling
 Inventory management  Transportation management
 Facility location decisions  Reverse logistics
 Warehousing management  Communication

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MAIN ACTIVITIES OF LOGISTICS

Source: Waters (2003)

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SYSTEMS AND TOTAL COST APPROACHES TO LOGISTICS

 Systems approach: goals and objectives of major functional areas

compatible with company’s goals and objectives
 Total cost approach: all logistics cost items considered
simultaneously when making a decision

Total logistics cost = transport cost + warehouse cost + stock holding

cost + packaging cost + information processing cost + other logistics
overheads

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INTEGRATED LOGISTICS

Facility network

Warehousing
Integrated logistics
Material handling Order processing
management
Packaging

Transportation Inventory

Source: Bowersox et al. (2012)

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LOGISTICS CONCEPTS – OMNI-CHANNEL RETAILING

Source: Deloitte (2015)

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LOGISTICS CONCEPTS – OMNI-CHANNEL RETAILING

Physical and online channels are interchangeable and seamless

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Source: Dreamtimes.com
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CHANGES OF PURCHASING MODELS

Source: Zebra Technologies (2018)

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LOGISTICS CONCEPTS - POSTPONEMENT

 The delay of final activities until the latest possible time

o Risk is minimized in meeting various customer demands
o Total inventory can be reduced by using inventory of the base product
 Types
o Manufacturing postponement
o Geographic postponement

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LOGISTICS VS SUPPLY CHAIN MANAGEMENT

Supply chain consists of all links/stages

involved directly or indirectly in
fulfilling customer’s request /order

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DETERGENT SUPPLY CHAIN

Paper Packaging
Timber Company
Manufacturer Company

Retailers
FMCG
Wholesalers (Wal-Mart, Customers
(P&G, Unilever)
Carrefour)

Chemical Plastic
Manufacturer Producer

Source: Chopra and Meindl (2016)

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SUPPLY CHAIN MANAGEMENT

“The planning and management of all activities

involved in sourcing and procurement, conversion and
all logistics management activities. Importantly, it also
includes coordination and collaboration with channel
partners, which can be suppliers, intermediaries, third-
party service providers and customers.” (CSCMP)

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LOGISTICS VS SUPPLY CHAIN MANAGEMENT
Logistics management
Logistics management basically consists of activities
within an organization (intra-organization)
Logistics management focuses on transport,
inventory management, warehousing, etc.
Supply chain management
SCM refers to network among organizations
coordinating to deliver products to markets
(inter-organization)
SCM consists of procurement, logistics
activities, distribution, sales and operations,
etc.
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LOGISTICS VS SUPPLY CHAIN MANAGEMENT

Source: Rushton et al. (2014)

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FREIGHT FORWARDING

 Function by a freight forwarder on behalf of shippers/consignees to

arrange and ship the merchandise
 Focusing on specific areas e.g., negotiating freight charges, booking
cargo space, cargo insurance, preparation of shipping and export
documents, filing of insurance claims, tracking transportation

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 CHAPTER 1 - INTRODUCTION

THANK YOU!

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