The Context of Logistics

Chapter 1 | February 16, 2019

Logistics

• The function responsible for the flow of materials from suppliers into an organization, through
operations within the organization, and then out to customers

• The subset of supply chain management that controls the forward and reverse movement,
handling and storage of goods between origin and distribution points

• The art and science of obtaining, producing and distributing materials and products in the
proper place and in proper quantities

• 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
point of origin to point of consumption for the purpose of conforming to customer requirements
Logistics

• Moving materials into the organization from suppliers is called INBOUND

or INWARD LOGISTICS

• Moving materials out to customers is OUTBOUND or OUTWARD LOGISTICS

• Moving materials within the organization is MATERIALS MANAGEMENT

Logistics

• Manufacturers build factories that collect raw materials from suppliers and deliver finished
goods to customers

• Retail shops have regular deliveries from wholesalers

• A television news service collects reports from around the world and delivers them to viewers

• Most of us live in towns and cities and eat food brought in from the country

• When you order a book or DVD from a website, a courier delivers it to your door
Materials

• Materials are all the things that an organization moves to create its products

• These materials can be both tangible (such as raw materials) and intangible (such as
information)

• Materials can be:

• Raw Materials, Components, Finished Products, People, Information, Paperwork,
Messages, Knowledge, Consumables, Energy, Money and anything else needed by
Operations
Supply Chain

• Consists of the series of activities and organizations that materials move through on their journey from
initial suppliers to final customers

• Materials may move through raw materials suppliers, manufacturers, finishing operations, logistics
centers, warehouses, third party operators, transport companies, wholesalers, retailers, and a whole
range of other operations.

• Cadbury’s supply chain starts with cocoa beans growing on farms and ends with the delivery of bars
of chocolate to hungry customers
• Supply chain for Levis jeans starts with cotton growing in a field and ends when you buy the jeans in a
shop
Supply Chain Structure
Case Study – Wal-Mart
Supply Chain Intermediaries
 Activities of Logistics

Procurement / Inward transport or Receiving Warehousing or

Purchasing traffic Stores

• Issues Purchase • Moves materials • Acknowledges • Moves materials

Order from suppliers to receipt into storage
organization
• Initiates flow of • Unloads vehicles • Manages storage
materials • Finds transporter requirements
• Designs route • Inspects materials
• Does all required • Ensures timely • Frozen,
to procure delivery • Sorts materials Controlled,
materials • Reasonable costs Restricted,
Expired
 Activities of Logistics

Stock Control Order Picking Materials Handling Outward Transport

• Sets policies for • Finds and • Moves materials • Manages

inventory removes materials through material
operations movements
• Materials • Materials are
storage, • Located, • Efficient • From organization
Investment, Identified, movements, Short to customers
Customer Service, Checked, journeys,
Stock Levels, Removed from Appropriate
Order Sizes, racks, Load Equipment, Little
Order Timing consolidation, damage, Special
Loading for packaging and
delivery handling
 Activities of Logistics

Physical distribution Recycling, returns Location Communication

management and waste disposal
• Activities that • Non conforming • Finds best • Information links
deliver goods to materials are locations for all parts of
customers collected and activities supply chain
brought back
• Includes outward • Considers size • Products,
transport • Returned goods and numbers of Customer
are recycled or facilities demand,
• Aligned with disposed off Materials, Timing,
marketing • Affects overall Stock Level,
• Reverse Logistics Supply Chain Availability,
Design Problems, Costs,
• Important link in Service Levels etc
downstream
activities
Case Study – Augulla Limited

Book 2 – Page 14
Case Study – Konigshaven Suppliers

Book – Page 19