2 DefinitionLogistics is the function responsible for all aspects of the movement and storage of materials on their journey from original suppliers through to final customers.It follows that every organisation is concerned with logistics (and not just manufacturers)On a national scale logistics is a huge industry
3 Place of logisticsEvery organisation supplies a product, which is the combination of goods and services that it passes to its customersOperations are the activities that make the product, converting inputs into desired outputsMaterials is a general term for everything that an organisation moves to support its operationsLogistics is responsible for moving and storing all the materialsThis includes inward logistics (moving inputs into the organisation), materials management (moving them through operations), and outward logistics (moving products to customers)
4 Materials move through a series of organisations A supply chain consists of the series of activities and organisations that materials move through on their journey from initial suppliers to final customers.Every product has its own unique supply chainSupply chains develop to give efficient flows of materialsThe resulting movements can be very complex, so some people prefer terms like supply networks or supply webs
5 Each organisation sees Inward logistics (moving inputs into the organisation), materials management (moving them through operations), and outward logistics (moving products to customers)Activities in front of the organisation (moving materials inwards) are called upstream; activities after it (moving materials outwards) are called downstream.Upstream activities are divided into tiers of suppliers; downstream activities are divided into tiers of customers
6 Supply chain management is responsible for the flow of materials through a supply chain It is another term for logisticsThe function exists to overcome:Space gapsTime gapsQuantity gapsVariety gapsInformation gaps
7 Logistics overcomes these gaps as efficiently as possible An overriding aim of logistics is to help the organisation achieve customer satisfaction.Higher customer service needs more resources that come with higher costsA realistic aim is to provide the best balance of customer service and costs.
8 Logistics provides customer service by adding utility Place utilityTime utilityOwnership utilityTo achieve these, it uses resources of different kinds
9 Activities of logistics Procurement or purchasingInward transport or trafficReceivingWarehousing or storesStock controlMaterials handlingOrder pickingPackagingOutward transportPhysical distributionRecycling, returns and waste disposalLocationCommunication
10 Features of supply chains Logistics managers make all decisions about the design of supply chains and the subsequent flow of materialsMaterials flow through a series of activities and organisationsThe forward flows start at initial suppliers and end with final customers, with reverse logistic moving materials backwardsEach organisation in the supply chain is a customer when buying materials, and is a supplier when selling its productsThere are different kinds of relationships between suppliers and customersThere are always costs of logistics and these must be controlled and related to the levels of service givenEach element in the supply chain somehow adds value to the productsAlongside the flow of materials are associated flows of money and informationStocks are formed whenever materials stop movingThere are inherent risks in supply chains, and things do not always go according to plans
11 Logistics is important because it: is essential for all organisationshas strategic importanceis expensivehas effects on most operationsdirectly affects profits, lead time, reliability and other measures of organisational performanceforms links with upstream suppliersforms links with downstream customersdetermines the best locations and sizes of facilitiesgives public exposure and familiarityis inherently riskyprohibits or discourages some operationscan encourage growth of other organisations
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