SUPPLY CHAIN

MANAGEMENT

LOGISTICS
LECTURE -2
 LOGISTICS
“The process of planning, implementing and controlling the efficient,
effective flow and storage of goods, services and related information
from point of origin to point of consumption for the purpose of
customer Satisfaction”
(council of logistics management)
Planning
Implementing
Controlling
Logistics has existed since the beginning of civilization. Things
began changing with the advance in transportation. Population began
moving from rural to urban areas and to business center. No longer
did people live near production center, nor did production take place
near residence center. The geographical distance between the
production point and consumption point increased. And logistics
gained importance.
Business Logistics
◦ The planning, implementation, & control of the efficient & effective
flow and storage of goods, services, & related information from point
of origin to point of use or consumption in order to meet customer
requirements
Military Logistics
◦ The design & integration of all aspects of support for the operational
capability of the military forces (deployed or in garrison) and their
equipment to ensure readiness, reliability, & efficiency
Event Logistics
◦ The network of activities, facilities, and personnel required to
organize, schedule, and deploy the resources for an event to take
place and to efficiently withdraw after the event
THE PURPOSE OF LOGISTICS
SYSTEM
Right quantities of the Right time in the

Right goods to the Right condition at the

Right places at the Right cost.

Military logistics
Transportation deregulation
Competitive pressures
Information technology
Channel power
Profit leverage
 A Simple Logistics Channel

Raw materials Market

supply point Customers

Production Market
facility Customers

Raw materials
supply point Market
Customers

Product Flow
 A Multi-Echelon Logistics Channel

Raw materials Retailer

supply point
Warehouse Retailer
Production
Raw materials Retailer
facility
supply point
Retailer

Warehouse Retailer
Raw materials
supply point Retailer
 Inbound logistics: The management of materials from
suppliers and vendors into production processes or storage
facilities.

 Outbound Logistics: The process related to the

movement and storage of products from the end of the
production line to the end user.
• Make transport a customer service activity instead of a cost
• Reduce your stock pipeline to cut costs and improve service (go easy
by low inventory)
• Pick as soon as you can (pick once, pick right and cut the cost time and
error)
• Is everything you are doing is really necessary
 Transportation
Transport or transportation is the movement of people
and goods from one place to another.
Basic modes of transport
By Air

By Road
◦ By Train

By Sea
 Cost / Rates
 Reliability
 Safety / Damages
 Insurance
 Speed / Time
 Mode of Transportation
 Routes
 Vehicles type
 In-house / Outsource
3RDPARTY LOGISTIC
SERVICE PROVIDERS
 “Third-party Logistics is simply the use of an outside
company to perform all or part of the firm’s materials
management and product distribution function.”

-- Simchi-Levi (2000)
Perform outsourced logistics activities

Process management / Multiple activities

More customized services

Long-term commitments (1~ 3 years)

Advantages
Cost reduction
Focus on core competency
Improved efficiency, service and flexibility

Disadvantages
Loss of control
Impact on in-house workforce
 3PL-Shipper Relationships Continue to Progress & Improve

 Openness, transparency and good communication

 Interest in collaborating with other companies, even competitors,
to achieve logistics cost and service improvements
THANK YOU