CHAPTER SEVEN

LOGISTICS

At the end of this unit students will be able to:

 Discuss the concepts of logistic

 Identify In-bound logistics
 Discuss Out-bound logistics
7.1 Meaning of logistics

Council of Logistics Management

 “Logistics is the process of planning, implementing and controlling the efficient, cost-
effective flow and storage of raw materials, in-process inventory, finished goods and
related information from the point of origin to point of consumption for the purpose of
conforming to customer requirements.”

7.2 Mission of logistics

Getting the right goods or services to the right place, at the right time, and in the desired
condition at the lowest cost and highest return on investment.
7.3 The Scope of Logistics in Business
Logistics in a business aim to the following contributions:
Achieve maximum customer service level
Ensure high product quality
Achieve minimum (possible) cost
Be flexible in the constant market changes
Logistics management tries to have the “right product”, in the “right quantity”, at the “right
place”, at the “right time”, with the “right cost”

7.4 Activities of Logistics

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The logistics activities can be classified into a) core and b) supporting
Core activities of logistics
The core activities take place in every supply channel (as can be seen from the figure).
They contribute the most to the total cost of logistics or they are essential to the effective
coordination and completion of the logistics task.
These are mentioned below:
1. Customer service (typically defined by marketing)
2. Transportation
3. Inventory management
4. Information flows and order processing

Support activities of Logistics

Support activities vary from company to company
A comprehensive list includes:
1. Warehousing (Space determination, stock layout, configuration, stock placement)
2. Materials handling (equipment selection & replacement policies, order-picking procedures,
stock storage & retrieval)
3. Purchasing (supply source selection, purchase timing, purchase quantities)
4. Protective packaging (designed for handling, storage, protection from loss/damage)
5. Cooperate with production/operations (specify aggregate quantities, sequence & time
production output, schedule supplies)
6. Information maintenance (info collection, storage & manipulation, data analysis, control
procedures)
7.5 The Role of Logistics in an Organization
Logistics in an organization are considered as a continuation of marketing. Logistics play a
critical role in each of the three critical elements of the marketing concept (customer satisfaction,
integrated effort/systems approach and corporate profit) in several ways.

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 Customer satisfaction

Suppliers
Intermediate customer
Final customers

Corporate Profit
Integrated effort
Maximization of the long term
Product
profitability
promotion
Lowest total costs given an
place (distribution)
acceptable level of customer
Price
service

7.6 Inbound and outbound logistics

Inbound logistics refers to the transport, storage and delivery of goods coming into a
business. Outbound logistics refers to the same for goods going out of a business.
Inbound and outbound logistics combine within the field of supply-chain management,
as managers seek to maximize the reliability and efficiency of distribution networks
while minimizing transport and storage costs.
Understanding the differences and correlation between inbound and outbound logistics
can provide insight for developing a comprehensive supply-chain management strategy

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