Logistics Lecture Notes

Definition

• Logistics: Art and science of obtaining, producing, and distributing materials and products in the right place and quantities.
• Logistics Management: Part of supply chain management focused on planning, implementing, and controlling forward and reverse flow/storage of goods, services, and information from origin to consumption.

Difference Between Supply Chain and Logistics

• Supply Chain: Transformation of raw materials into products and delivery to customers.
• Logistics: Movement of materials within the supply chain.

7 R's of Logistics

• Right product
• Right quantity
• Right condition
• Right place
• Right time
• Right customer
• Right price

Logistics Functions

• Transportation: Modes include air, rail, road, water, and pipeline.
• Warehousing: Activities related to receiving, storing, and shipping materials.
• Third & Fourth Party Logistics:
  • Third Party (3PL): Provides or manages logistics services.
  • Fourth Party (4PL): Logistics specialists managing entire logistics functions.
• Reverse Logistics: Handling return, reuse, recycling, or disposal of products.

Logistics Value Proposition

• Balancing logistics costs with customer service.
• Focus on customer satisfaction and cost minimization.

Logistics Goals and Strategies

• Rapid response to market/customer changes.
• Minimize service variances and inventory costs.
• Consolidate shipments and maintain quality.
• Support product lifecycle and reverse logistics.
• Effective Logistics Strategy Tactics:
  • Coordination of functions (e.g., transportation management).
  • Integration of the supply chain.
  • Substitution of information for inventory.
  • Reducing supply chain partners.
  • Risk pooling.

Steps for Effective Logistics Strategy

1. Locate in Right Countries: Analyze forward and reverse chains.
2. Develop Export-Import Strategy: Determine freight volume and strategic inventory placement.
3. Select Warehouse Locations: Optimize number and placement of warehouses.
4. Select Transportation Modes & Carriers: Efficient supplier-customer connections.
5. Select Right Partners: Minimize number for effective forward/reverse logistics.
6. Develop Information Systems: Reduce inventory costs through accurate tracking.

Substituting Information for Inventory

• Improve Communications: Regular supplier discussions.
• Collaborate with Suppliers: Use improvement tools and trend observations.
• Track Inventory Precisely: Utilize GPS and barcode systems.
• Keep Inventory in Transit: Use techniques like cross-docking.
• Use Postponement Centers: Delay assembly until order receipt.
• Mix Shipments: Match deliveries to customer needs.
• Customs Efficiency: Clear freight in transit to reduce delays.

Reducing Supply Chain Partners

• Fewer partners simplify management, reduce costs, and cycle time.
• Consider removing entire echelons (e.g., warehouses).

Pooling Risks

• Combine inventory for diverse products to reduce storage costs and stockouts.

Flow of Goods and Information

• Internal process integration and collaboration across functions and supply chain.
• Customer information flows through orders and forecasts.
• Value-added flow begins with procurement.