Logistics Cost Management

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Jiangsu College of Information Technology
International Academy for Business and Administration
 

 
Logistics cost management

Thesis Paper
Supervised by: Prof. Dr. Siegfried Harmeling

Student’s name: Li Li
Student’s number: 05213116

Date: May 31, 2008

Synopsis
In recent years, the logistics industry of China is developing rapidly. Even some big-size enterprises fizz in the first, second and third industry. It has become the huge and complex industry. The status of the logistics industry is more and more important. As we know, the production industry must rely on the support of all kinds of logistics activities. All process of production started from purchasing require the relative logistics activities to store the materials. Otherwise, the production is difficult to start. During the process of production, it also needs the logistics processes of raw materials and semi finished goods. It is also called manufacturing logistics. It realizes the liquidity of manufacturing. Some remained materials that can be recycled needs recycled logistics. Therefore, the whole manufacturing process contains all kinds of logistics activities. Reasonable and morden logistics reduce the costs, optimize the stock structure, reduce the tied-up capital, shorten the manufacturing period by reducing the expenses. And then ensure the effectively running of morden manufacturing, and advance the society progress.

Content

1. Introduction
What is logistics? What is logistics costs and its elements? The situation of logistics costs in America, Japan and Europe. ………………………................................................................................4

Body:
2.The problems during the logistics costs management we should face and the countermeasure…………………………………………………………………………………………9 3.The approach of reducing the logistics total costs. ……………………………………………….....10 3.1 Reducing the logistics total costs by the point of view of the whole flowing process. 3.1.1 Production planning…………………………………………………………………….11 3.1.2 Procurement ……………………………………………………………………………12 3.1.3 Inventory and warehouse management…………………………………………………13 3.1.4 Transportation ………………………………………………………………………….20 3.2 Reducing the logistics total costs by carrying out the supply chain management…….............24 3.2.1 The supply chain concept and how supply chain works……………………………….28 3.2.2 Introduce what logistics costs compose of in the supply chain and how to manage them 3.3 Reducing the logistics total costs by modern information system…………………………….29 3.3.1 What information is required? …………………………………………………………29 3.3.2 The application of information system in logistics such as EDI……………………….30 4. The problems during the process of carrying out the approaches above and how to solve them…..34 5. Some additional factors that affect the logistics costs such as global sourcing, third party logistics, and green logistics……………………………………………………………………………………..35 6. Conclusion……………………………………………………………………………..39

Abbreviation:
ICT: information and communication technology
EDI: electronic data interchange
MRP: materials requirements planning
WMS: warehousing management systems
SCM: supply chain management
ERP: Enterprise Resource Planning
APS: Automatic Planning and Scheduling
EOQ: Economic order quantity
JIT: Just In Time

1.Introduction
Logistics and other related activities have existed for many years but not been done in a professional way. In the past many businesses paid more attention to what was happening within their organizations. Most of them did not understand what was happening outside such as the entire chain of activities that ultimately delivered products to the final customer. Logistics as a professional has rapidly developed to cope with the fast-changing business world. From a routine and clerical activity, logistics is now a professional and strategic function which contributes to business success...
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