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Prof. Anatoly Sachenko -Kontakt
Zakład Informatyki i Ekonometrii
Budynek A, pokój 414

Instytut
Ekonomii i Informatyki
Wydział Organizacji i Zarządzania
http://dydaktyka.polsl.pl/roz6/asachenko/default.a
spx
sachenkoa@yahoo.com or
 a_sachenko@ieee.org
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Informatics in Logistics
Management
Lecture 1. Logistics Origin and
Basics
Lecturer:
Prof. Anatoly Sachenko
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Lecture Overview
Definition
and Origins
System Approach
Logistics Management
Logistics Perspective
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Definition of Logistics
- “Planning implementing and controlling the
physical flow of material and finished goods from point of
origin to point of use to meet customer`s need at a profit”
Philip Kotler
 Logistics is the management of the flow of goods between
the point of origin and the point of destination in order to
meet the requirements of customers or corporations.
 Logistics involves the integration of information,
transportation, inventory, warehousing, material
handling, and packaging, and often security
 Logistics is one of the main functions within a company
 Logistics
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Origin of Logistics
 The
term logistics comes from the Greek logos
(λόγος), meaning "speech, reason, ratio, rationality,
language, phrase", and
 more specifically from the Greek word logistiki
(λογιστική), meaning accounting and financial
organization
 The word logistics has its origin in the French verb
loger to lodge or to quarter
 Its original use was to describe the science of
movement, supplying & maintenance of military
forces in the field
 Later on it was used to describe the management of
materials flow through an organization
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Main Logistics Targets and Fields
 Its
main targets are divided into performance related and
cost related
 They are high due date reliability, short delivery times, low
inventory level and high capacity utilization
 But when decisions need to be made, there is always a trade
off between these targets
 It’s making a logistician challenging and interesting
 Main Logistics fields:
 Procurement Logistics
 Production Logistics
 Distribution Logistics
 After sales Logistics
 Disposal Logistics
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Logistics Viewpoints
 Inbound
logistics is one of the primary processes and
 it concentrates on purchasing and arranging
inbound movement of materials, parts and/or
finished inventory from suppliers to:
 manufacturing or assembly plants, warehouses
or retail stores
 Outbound logistics is the process related to the storage
and movement of the final product and the related
information flows from
 the end of the production line to the end user
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Scope of Logistic
 It
is a critical importance for organization how it
delivers tangible or intangible products & services to
the customer
 Effective physical movement of the tangible product
will speak of intangible services associated with the
product and the delivered organization
 In Case of intangible product, the delivery of
tangibles at the right place & right time will speak
about its quality
 On the macro level infrastructure it’s contributing to
a large extent in the physical movement of produced
goods
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Scope of Logistic
 This
speed & reliability in distribution of products &
services contribute to a great extent in the growth of a
country`s domestic & international trade
 Logistic cost as a percentage of GDP across the world is
shown in the following table
Country
Logistic cost as a percentage of GDP
Korea
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China
15
Japan
14
India
13
France
12
UK
11
USA
10
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Logistics –A system approach
 Logistics
recognizes that all the activities of material
movement across the business process are interdependent
and needs close coordination and these are to be
maintained as a system
 Logistics System is an adaptive system including following
functional Areas:
Order Processing
Information Flow
Warehousing
Inventory control
Packaging
Transportation
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Order Processing
 Order
checking for any deviation in agreed on
negotiated term
 Technical details; price; delivery period; payment
terms; taxes etc.
 Checking the availability of material in stock
(material requisition)
 Production & material scheduling for shortage.
 Acknowledging the order, indicating deviation if any
It is routine operation but require great deal of
planning training of people involved and investment
to bring about efficiency & accuracy
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Information Flow
 It
is basically info based activity of inventory
movement across the supply chain
 Hence role of info system plays a vital role in
delivering superior customer service
 This function is required to facilitate the following
info needs
 Order registration
 Order checking & editing
 Order processing
 Coordination - means to integrate the total supply
chain of the company with info needs as to time,
quantity, value
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Warehousing
A
storage place wherein finished goods are stored till
they are sold.
 Effectiveness of an organization`s marketing strategy
depends on making the right decision regarding
warehouse
 Warehouse are treated as switching facilities rather
than storage place
 Major decision of warehouse are as follows:
 Location ,Size & Number of warehousing facilities
 Warehouse layout
 Design of building
 Ownership of the warehouse
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Modern Warehouse
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Packaging
 It
is also a critical element in physical distribution of
the product,
 which influences the efficiency of the logistic
system this is done with the view of following:
 For handling and damage prevention
 For communications
 For inter modal transportation
 Storage space economy
Thus to reduce packaging cost
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Transportation
For goods movement of a transportation is the most
fundamental and important component of logistic
 E.g. for low unit value products the transportation
cost component is 20% of the product cost
 In logistic cost its share varies up to 65-70%
 There are the few decision involved in transportation
 Mode of transportation ( Cost & time factor)
 Own fleet or Outsourcing
 Route Planning
 Vehicle scheduling

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Logistics Management
 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
 From a traditional point of a view a goal of any firm
is to produce competitive products and increase its
volume
 In this case management can boil down to a
General Manager + minor staff-see next slide
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Logistics Management – Traditional
Structure
Person’s Decision Making
Process
(Chief Manager)
Supplier
Production
Material flow
Information flow
Customer
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Logistics Management – Traditional
Structure
 Both
terms Flaw and Inventory are the main categories
of Logistics
 In Logistics Management are diffeation Flows- see
previous and next slides
 Material Flow red the Material and Informis the
description of the transportation of raw materials, prefabricates, parts, components, integrated objects and
finally products as a flow of entities
 Logistics operations with Information Flow include
acquisition, storing, processing and transfer of info
 In next slide is shown a contemporary structure of
Logistics Management
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Logistics Management – Contemporary Structure
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Logistics' perspective: Three Forces
 Three
Forces which have change the perspective of
logistics:
 Globalization
 Focus on Supply Chain Management
 Outsourcing of Non Core Competency Functional
Area
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Globalization
The
entire world has become a global village for
marketers because of the liberalization of
economics of most countries, and
the emergence of World Trade Organization
which is forcing business organizations to
supply products beyond the national
boundaries wherever there is a market
opportunity
However in such conditions the role of
LOGISTICS will be
to provide time and place time and place utility
of the product to the customer
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Focus on Supply Chain Management
Business
the world over are striving for
competitiveness
In their struggle for survival their focus has
shifted to the supply chain i.e.
Integrating the process of Procurement ,
processing & distributing to deliver value for
money to the customer
Two key roles logistics planning & support are
Value delivery process
Success of Supply Chain Management
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Outsourcing of Non Core Competency Functional
Area
 Outsourcing
is a acceptable trend in business
 Corporation have realized that doing everything by
themselves does not result in effective & efficient use of
scare resources available to them
 It is better to outsource functional area to experts who
can do job at the lowest cost and that to efficiently &
Effectively
 LOGISTICS is one such area where most of business
org. do not have enough expertise thus needs to be
outsourced
 Thus Logistics have shaped into different service
industry offering complete & customized logistics
solutions