Introduction into LogisticsPhD Natasha LutovinovaLogistics LecturerE-mail: Lutovinova.N@nhtv.nlRoom: G1.006

Handbook: Paul R. Murphy & Donald F. Wood, Contemporary logistics (New Jersey 2011), 10th edition*

Introduction into Logistics Course Outline12.05 Introduction13.05 SCM Concept, Inventory14.05 Demand Management, Warehousing Management15.05 Transportation Management, International Logistics16.05 Poster Session

CHAPTER 1Logisticsand the Supply Chain*

Learning ObjectivesTo learn the definition of logistics (what it is) To understand the economic importance of logistics

To gain an understanding of logistics practices within a firm

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Logistics: what it isCouncil of Logistics Management definition: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.Source: clm1.orgLogistics and the Supply Chain*

Figure 1-1: Control Over the Flow of Inbound and Outbound Movements*

Logistics and the Supply Chain*

Logistics and the Supply Chain (What it is)The forward and reverse flow of product and infoLogistics Reverse logistics

The importance of meeting customer requirementsMass logistics Tailored logistics*

Figure 1-2: The utilization of logistics service as a major selling point*

Logistics and the Supply Chain (the economic importance)Economic impacts of logistics on Macro level (see table 1-1)

Economic impact on Micro level Economic utility: value of product in satisfyingthe need of the customerPossession utilityForm utilityPlace utilityTime utility*

Table 1-1: The cost of the Business Logistics system in relation to Gross Domestic Product (GDP) in $ billionSource: R. Wilson and R. Delaney, Twelfth Annual State of Logistics Report, 2001*

YearInventory carrying costsTransportation costsAdministrative costsTotal U.S. \logistics costLogistics as a percentage of GDP1960314437814.719653864410614.719705691615314.7197597116922213.519802202141745116.119852272742052112.419902833512565911.419953024413077310.42000377590391,00610.12001320609379669.52002300582359178.82003304607369478.620043376523910288.820053957394611809.520064478095013069.9200748785754139810.1

SalesrevenueCostsCashAccountsreceivable/payableInventoryFixed assetsReturn on investmentCustomerServicePipeline managementCash-to-cashcycle timeJust-in-timelogisticsAssetdeploymentand utilizationProfitCapitalemployedLogisticsefficiencyFig. 3.2 Logistics impact on ROILogistics and the bottom line*

The systems approach Companys objectives can be recognized by the mutual interdependence of the major functional area of the firm, such as marketing, production, finance and logistics.

The total cost approachCost trade-offs have to be made.Logistics and the Supply Chain (logistical relationships within the firm)

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FinanceCapital budgeting (SO&P)Inventory (asset valuation LIFO or FIFO)Cash flow associated with holding inventoryInventory cost versus inventory units

Logistics and the Supply Chain (logistical relationships within the firm)

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Logistics and the Supply Chain (logistical relationships within the firm)

Marketing (4 ps)Place decisionsPrice decisions Landed costPhantom freightFreight absorptionProduct decisionsStockoutsPromotions decisions*

Figure 1-3: Phantom freight and freight absorption*

The supply chain becomes the value chainSupportActivitiesPrimary ActivitiesFig. 1.7 The value chain*

Logistics and the Supply Chain (logistical relationships within the firm)

* ProductionLength of production runsPostponement

Logistics and the Supply Chain (activities in the logistical channel)

Customer Service (Ch. 7)

Warehousing Management (Ch. 10)*

Y-as

X-as

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Logistics and the Supply Chain (activities in the logistical channel)

* Inventory Management (Ch. 8)Cost of carrying productCost of ordering productCost of being out of stock

Order Management (Ch. 7)Production schedulingReturned products (Ch. 1)(Reverse logistics)

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Logistics and the Supply Chain (activities in the logistical channel)

* Transportation (Ch. 12)

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Logistics and the Supply Chain (Activities in the logistical channel)

Demand forecasting (Ch. 7)Industrial packaging (Ch. 11)Materials handling (Ch. 11)Parts and service supportProcurement (Ch. 6)Salvage and scrap disposal (Ch. 6)

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Retailer AProducer (Manufacturing)Warehouse facility (Inventory)Transportation(Distribution)SalesRetailer BRetailer CLogistics and the Supply Chain (Activities in the logistical channel)Retailer ARetailer BRetailer CFig. 10-1 Adding a Warehousing Facility: shorter-Haul TransporationTransportation(Distribution)Transportation(Distribution)(Volume shipment)Warehousing Management (Ch. 10)*

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Next time:

Assignment * 3 vacancies / advertising + short working paper 250 words about job of a logistics manager / warehouse manager / transportation manager / Supply Chain Manager