Topics: Supply chain management, Inventory, Logistics Pages: 19 (5061 words) Published: April 21, 2013
Chapter 1 An overview of logistics
Economic impacts of logistics
Economic utility (the value or usefulness of a product in fulfilling customer needs or wants) 4 general types:
* Possession utility: the value or usefulness that comes from a customer being able to take possession of a product * Form utility: a product’s being in a form that can be used by the customer and is of value to the customer(allocation; smaller quantities that are desired by customers) * Place utility:having products available where they are needed by customers * Time utility : having products available when they are needed by customers What is logistics?

‘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.’ Mass logistics: every customer gets the same type and levels of logistics service(then some will be overserved/underserved) Tailored logistics: groups of customers with similar logistical needs and wants are provided with logistics service appropriate to these needs and wants Increased importance of logistics by:

* A reduction in economic regulation
* Changes in consumer behavior
* Technological advances
* The growing power of retailers
* Globalization of trade
The systems and total cost approaches to logistics
Systems approach: indicates that a company’s objectives can be realized by recognizing the mutual interdependence of the major functional areas(marketing, production, finance and logistics) of the firm. Stock-keeping units(SKUs): each different type or package size of a good is a different SKU. Materials management: movement and storage of materials into a firm. Physical distribution: storage of finished product and movement to the customer. Total cost approach: all relevant activities in moving and storing products should be considered as a whole, not individually. Logistical relationships within the firm

Postponement: the delay of value-added activities such as assembly, production, and packaging until the latest possible time. Marketing
* Place decisions
* Price decisions
* Landed costs: which refers to the price of a product at the source plus transportation costs to its destination. * Phantom freight
* Freight absorption

* Product decisions
Stockouts: being out of an item at the same time there is demand for it * Promotion decisions
Marketing channels
‘a set of institutions necessary to transfer the title to goods and to move goods from the point of production to the point of consumption and, as such, which consists of all the institutions and all the marketing activities in the marketing process.’ * Ownership channel: covers movement of the title to the goods; * Negotiations channel: the one in which buy and sell agreements are reached; * Financing channel: payments for goods/ company’s credit * Promotions channel: promoting a new or an existing product Sorting function

‘the discrepancy between the assortment of goods and services generated by the producer and the assortment demanded by the consumer.’ * Sorting out; A-eggs from different suppliers into a company’s storage-> Storage only A-eggs (is sorting a heterogeneous supply of products into stocks that are homogeneous) * Accumulating; bring together similar stocks from different sources * Allocating; breaking a homogeneous supply into smaller lots. * Assorting; building up assortments of goods for resale(to retail customers) Activities in the logistical channel

Customer service: keeping existing customers happy
Demand forecasting: estimate product demand in a future time period. Facility location decisions: location of the relevant warehousing and production facilities. International logistics: the...
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