Learning Objectives

To understand the economic impacts of logistics To learn what logistics is To learn about the increased importance of logistics To understand the systems and total cost approaches to logistics

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Learning Objectives
To expose you to logistical relationships within the firm To learn about marketing channels To provide a brief overview of activities in the logistics channel To familiarize you with logistics careers

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Key Terms
Cost trade-offs Disintermediatio n Economic utility Form utility Landed costs Logistics Marketing channels Mass logistics Materials management Physical distribution Place utility Possession utility Postponement Power retailer
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Key Terms
Sorting function Stock-keeping units (SKUs) Stockouts Sustainable products Systems approach Tailored logistics Time utility Total cost approach

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CHAPTER 1
An Overview of Logistics

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Economic Impacts of Logistics

Macroeconomic Impacts Economic Utility
Possession utility Form utility Place utility Time utility

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Table 1-1: The Cost of the Business Logistics System in Relation to a Countrys Gross Domestic Product (GDP)

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Logistics: What It Is
Council of Logistics Management definition:
Logistics is that part of the supply chain process 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 Source: www.cscmp.org requirements.
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The Increased Importance of Logistics

A Reduction in Economic Regulation Changes in Consumer Behavior Technological Advances The Growing Power of Retailers Globalization of Trade

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The Systems and Total Cost Approaches to Logistics

Systems Approach
Interdependence of company and logistics goals Interdependence of functional areas
Stock-keeping units (SKUs)

Interdependence of logistics activities or

Intrafunctional logistics

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Figure 1-1: Control Over the Flow of Inbound and Outbound Movements

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Figure 1-2
The Utilization of Logistics Service as a Major Selling Point

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The Systems and Total Cost Approaches to Logistics

Total Cost Approach
Cost trade-offs: changes to one activity cause some costs to increase and others to decrease Total Logistics Concept: to find the lowest total cost that supports an organizations customer service requirements
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Logistical Relationships within the Firm Finance Production Marketing

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Logistical Relationships within the Firm

Marketing
Place Decisions Price Decisions
Landed costs

Product Decisions
Stockouts

Promotion Decisions

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Marketing Channels
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.
Source: American Marketing Association Dictionary, www.marketingpower.com

Channel members
Manufacturers Wholesalers Retailers Pearson Education, Inc. publishing as Prentice Hall

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Marketing Channels
Ownership channel
Covers movement of the title to the goods

Negotiations channel
Buy and sell agreements are reached

Financing channel
Payments for goods

Promotions channel
Promoting a new or existing product

Logistics channel
Moving and storing product throughout the channel Pearson Education, Inc. publishing as Prentice Hall
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Channel Intermediaries/ Facilitators

Ownership channel
Banks, finance companies

Negotiations channel
Brokers

Financing channel
Banks, insurance companies, finance companies

Promotions channel
Advertising agencies, public relations agencies

Logistics channel
Freight forwarders
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Activities in the Logistical Channel

Customer service Facility location decisions Inventory management Order management Procurement Transportation management Demand forecasting International logistics Materials handling Packaging Reverse logistics Warehousing management

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Responsibilities of Logistics Managers

A specialist A generalist
Freight rates Understands functional Warehouse relationships layouts Relates logistics to Inventory other firm analysis operations, Production suppliers, Purchasing customers Transportation Controls large 1-20 law Pearson Education, Inc. publishing as Prentice Hall expenditures

Logistics Careers
Most business organizations are potential employers Logistician highlighted as one on the 50 best careers for the year 2010
Source: U.S. News & World Report

Career paths for the two most recent CEOs of Wal-Mart included assignments in logistics and distribution.
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Logistics Professionalism
Professional Organizations Dedicated to Advancing the Professional Knowledge of their members:
APICS The Association for Operations Management
(www.apics.org)

American Society of Transportation and Logistics (AST&L) (www.astl.org) Council of Supply Chain Management Professionals
(www.cscmp.org)

Delta Nu Alpha (DNA) (www.deltanualpha.org) International Society of Logistics (SOLE) (www.sole.org) Supply Chain & Logistics Association Canada (SCL)
(www.sclcanada.org)

The Chartered Institute of Logistics and Transport in the UK CILT (UK) (www.ciltuk.org.uk) 1-22 Pearson Education, Inc. publishing as Prentice Hall Warehousing Education and Research Council (WERC)

Copyright Notice

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