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What is logistics
1 management?
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Logistics Management
Logistics management is the process of
planning,
implementing
and
controlling
the efficient, cost-effective forward and reverse flow of raw
materials, in-process inventory, finished goods, services, and
related information from point of origin to point of consumption
for the purpose of conforming to customer requirements.
Council of Logistics Management
Logistics activities
Customer
service
Demand forecasting
Logistics information
systems
Inventory control
Material handling
Order processing
Parts and service support
Plant
and warehouse site
selection
Procurement
Packaging
Reverse logistics
Traffic and
transportation
Warehousing and storage
The Five Rights of Logistics
 Right
Items, needed for consumption or
production,
 Right Place
 Right Time
 Right Condition
 Right Cost,
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Factors Impacting the
Development of Logistics
 Military
logistics developments
 Transportation deregulation
 Competitive pressures
 Information technology
 Channel power
 Profit leverage
1.Military Logistics
Throughout the history ; wars have
been won and lost through logistics
strengths and capabilities or the lack
of them.
1.Military Logistics
 Following
the World War II, logistics
began to receive increased recognition
and emphasis.
 In the Persian Gulf War in 1990-1991,
the ability to efficiently and effectively
distribute and store supplies and
personnel were key factors in the success
of the US Armed Force.
2.Deregulation
Deregulation of the transportation industry in
the late 1970s and early 1980s gave
organizations many more options and
increased the competition within and between
transportation modes.
 Carriers become more creative, flexible,
customer-oriented, and comparative in order to
succeed.
 They can focus on negotiation of rates, terms,
and services, with their overall attention
directed toward getting the best transportation
buy.

3. Competitive Pressures
Globalization and competition
 With rising interest rates and increasing energy
costs during the 1970s, logistics received more
attention as a cost driver-emphasis on cost
control
WHY?
 Local firms versus overseas competitors
 Increased offshore buying and selling
activities, more complex and more costly global
supply chains

4.Information Technology
Information technology gave organizations the
ability to better monitor transactions intensive
activities such as ordering, movement of
goods...
 Computerized quantitative models for
controlling and optimization
 MRP,MRP II,DRP,DRP II,JIT link material
management from order processing to
inventory management, forecasting and
production.

5.Channel Power
 Shifting
channel power from
manufacturers to retailers, wholesalers,
and distributors has also had a profound
impact on logistics.
 Lower brand loyalty decreases a
manufacturer’s power-increases
retailer’s power
6. Profit Leverage
 $1
saved in logistics costs has a much
greater impact on the organization’s
profitability than a $1 increase in sales.
 There
are costs associated with sales (
cost of goods sold…) ] $ 1 increase in
sales does not result in $ 1 dolar increase
in profit
Logistics Is Relevant to All
Types of Organizations
 The
definition of logistics includes the
flow of materials and services in both the
manufacturing and service sector.
 The service sector includes entities such
as the government, hospitals, banks,
retailers and wholesalers.
 It
is only in the recent past that
business organizations have come to
recognize the vital impact that
logistics management can have in
the achievement of competitive
advantage.
Martin
Christopher
Competitive Advantage
 The
source of competitive advantage is
found ;
– In the ability of the organization to differentiate
itself, in the eyes of the customer, from its
competitors,
– By operating at a lower cost and hence at
greater profit.
Christopher s.5
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Components of
Logistics Management
Management actions
Inputs into
logistics
Natural
resources
(land, facilities,
and equipment)
Planning
Implementation
Control
Competitive
advantage
Logistics management
Human
resources
Outputs of
logistics
Suppliers
Raw In-process Finished
materials inventory goods
Customers
Time
and place
utility
Financial
resources
Efficient
movement
to customer
Information
resources
Proprietary
asset
Logistics activities
• Customer service
• Demand forecasting
• Distribution
communications
• Inventory control
• Material handling
• Order processing
• Parts and service support
• Plant and warehouse site
selection
• Procurement
• Packaging
• Reverse logistics
• Traffic and transportation
• Warehousing and storage
The Outputs of the Logistics
System
The outputs of the logistics system are
competitive advantage,
time and
place utility,
efficient movement to the customer, and
providing a logistics service mix such that
logistics becomes a proprietary asset of the
organization.
PETER DRUCKERS stated
that:
Logistics is one of the last frontiers of
opportunity for organizations wishing to
improve their corporate efficiency.