2 Definition of Logistics European Logistics Association (ELA):“The planning, execution and control of the movements and placement of people and/or goods, and the supporting activities related to such movement and placement within a system organized to achieve specific objectives.”Logistics is difficult to define because it is ubiquitous and evolving.Logistics no longer concerns only the handling of materials and information; it now has a more expansive concept—a collection of services that facilitate the economic transactions associated with production and trade.It encompasses not only the physical movement of goods (e.g., procurement, transport, consolidation, transshipment, storage, and packaging) but also the facilitation of this movement through the processing of documents, coordination among participants, monitoring of activities, and financing of transactions.Closely linked to this concept of logistics is the concept of a supply chain, a combination of services that deliver inputs from suppliers to the point of production (inbound) or products from point of production to the marketplace and final consumer (outbound).
3 Popular logistics terms Logistics ManagementBusiness Logistics ManagementIntegrated Logistics ManagementMaterials ManagementPhysical Distribution ManagementMarketing LogisticsIndustrial Logistics
4 Civil logistics fields Logistica industriale (business logistics)Logistica delle rinfuse (bulk logistics)Logistica del progetto (project logistics)Logistica dei Sistemi Riparabili (RAM logistics)Logistica degli eventi (Event logistics)Logistica dei servizi (Service Logistics)Business Logistics Logistica Industriale “Council of Logistics Management (USA)”: “That part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption in order to meet customers' requirements."Bulk Logistics (Logistica delle rinfuse). La gestione e la movimentazione di materiali alla rinfusa, generalmente materie prime quali petroli, carbone, cereali, ecc., in grossi quantitativi.Project Logistics Logistica dei progetti La gestione ed il coordinamento delle operazioni di progettazione e di realizzazione di sistemi complessi (centrali elettriche, impianti chimici, ecc.).RAM Logistics RAM dall’inglese Reliability, Availability, Maintainability. La gestione dei prodotti ad alta tecnologia (telecomunicazioni, velivoli, megacomputer, ecc.) per i quali sono essenziali caratteristiche quali l’affidabilità, la disponibilità e la manutenibilità.Event Logistics Logistica dei grandi eventi. Network of activities, facilities, and personnel required to organize, schedule, and deploy the resources for an event to take place and to efficiently withdraw after the event.Service Logistics Logistica dei servizi Acquisition, scheduling, and management of the facilities/assets, personnel, and materials to support and sustain a service operation or business.
5 Business Logistics Logistica Industriale “Council of Logistics Management (USA)”That part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption in order to meet customers' requirements."
6 Logistics systemsA logistics system is made up of a set of facilities (nodes) linked by transport services (links) and information systems.Facilities are sites where materials are processed, e.g. manufactured, stored, sorted, sold or consumed.
7 Nodes and links in a logistics system Freight flowInformation flow
9 A logistics system Retail outlets Manufacturing RDC plant Supplier CDC AssemblyCDCRDCRetailoutletsPort
10 A global logistics system Consolidator/freight forwarder, 3PLManufacturerPort truckingHomeSmall parcel deliveryWarehouse: 3PL, deconsolidator, wholesaler, DCRetailer
11 Facilities and transport They include manufacturing and assembly centers, warehouses, distribution centers (DCs), transshipment points, transport terminals, retail outlets, mail sorting centers, garbage incinerators, dump sites, etc.Transport services move materials between facilities using vehicles and equipment such as trucks, tractors, trailers, crews, pallets, containers, cars and trains.
12 Supply Chain Management SCM Logistics focuses attention on coordinating the product, the information movement and the flow activities of an individual firmsSupply chain management is an expanded version of the logistics process that integrates product, information and cash flows among organization
13 Significance of logistics Logistics is one of the most important activities in modern societies.It has been estimated that the total logistics cost incurred by USA organizations in 2006 was 1,305 $ billion, corresponding to approximately 9,9 % of the USA Gross Domestic Product (GDP).
14 The U.S. Business Logistics System Cost $ Billions Inventory Carrying Costs446Transport Costs801Shipper Related Costs8Logistics Administration50Total Logistics Costs1,305
15 Inventory Carrying Costs $ B Interest93Taxes, Obsolescence, Depreciation, Insurance252Warehousing101Subtotal446
16 Transport Costs $ Billions Motor CarriersTruck – IntercityTruck – Local452203Subtotal635Other CarriersRailroadsWaterOil PipelinesAirForwarders5437103827166Total801
17 Logistics Cost as a % of GDP Source: 18th Annual State of Logistics Report, 2007
19 Logistics and EconomyLogistics is an important component of Gross Domestic product GDP.The range is from 10 – 20% of GDP.Logistics adds value by creating utility.Utility is the value that an item or service has in fulfilling a want or need.
20 Trend of Logistics Costs Logistics costs as a percentage of GDP have declined in US from 16 percent in 1980, to under 10 percent in 1999.Early to mid-1970s saw the figure closer to 20 percent.This reflects a serious improvement in the efficiency of logistics systems.
26 Types of UtilityForm utility is the process of creating the good or service, or putting it in the proper form for the customer to use.Possession utility is the value added to a item or service because the customer is able to take actual possession made possible by credit arrangements, loans and so on.
27 Type of Utility related to logistics A product desired by consumers is in transit, in a warehouse or in another store, it does not create any utility for them, it needs two more utilities provided by logistics:time utility is the value added by having a product or service when it is needed in the marketplace or within the organization;place utility, which means having the item or service available where it is needed.
28 The Seven Rights of Logistics The right product, publicized with the proper promotion and needed for consumption or production in the right quantity, must be to the right place at the right time in the right condition at the right cost for the right customer.
29 Key logistics activities Customer serviceDemand forecasting/planningInventory managementLogistics ICTMaterial handlingOrder processingPackagingParts and service supportPlant and warehouse site selectionProcurementReturn goods handlingReverse logisticsTraffic and transportWarehousing and storage
30 Place/customer service level MarketingPlace/customer service levelLogisticaIl marketing massimizza i profitti aziendaliLa logistica minimizza i costi totali dati gli obiettivi di servizio al cliente
31 Place/customer service level Costi del MarketingProduct/ServicePricePromotionPlace/customer service level
32 Logistics Costs Luogo/livello di servizio cliente Place/customer service levelMateriale inventariatoInventory carrying costsTrasportoTransportAcquisto/produzione lottiProcurement/Lot prod.MagazzinoWharehouseesecuzione ordine e informazioneOrder processing and information
33 Luogo/livello di servizio cliente Place/customer service level Servizio al cliente Customer serviceAssistenza ricambi e servizi Parts and service supportSostituzione prodotti in garanzia Return goods handling
34 Costi del materiale inventariato Inventory carrying costs Gestione delle scorte Inventory managementImballaggi PackagingSmaltimento rifiuti o riciclaggio di materiale di scarto Reverse logistics
35 Costi di acquisto/produzione lotti Procurement/lot production costs Movimentazione materiali Material HandlingApprovvigionamenti Procurement
36 The setup cost of lot quantity Time required to set up a line or locate a supplier and place an orderScrap due to setting up the production lineoperating inefficiency as the line begins to run, or as a new suppliers is brought on board
37 Other components of lot quantity costs Capacity lost due to downtime during changeover of line or changeover to a new suppliermaterial handling, scheduling and expeditingprice differentials due to buying in different quantitiesorder costs associated with order placement and handling
38 Costi di trasporto Transport costs Trasporto dal punto di origine al punto di consumoTrasporto rifiuti al punto di smaltimentoTrasporto del materiale di scarto al punto di riciclaggio
39 Costi di immagazzinamento Warehousing costs Immagazinamento e deposito dei prodotti Warehousing and storageLocalizzazione del deposito e della azienda Plant and Warehouse site selection
40 The relevant inventory costs are those that vary with the amount Capital cost, or opportunity cost, the return that the company could make on the money that it has tied up in inventoryInventory service cost, insurance and taxeswarehousing space related costsinventory risk cost, obsolescence, pilferage, relocation within the inventory system, and damage
41 Costi di esecuzione ordine e informazione Order processing and information costs Gestione ordini Order processingComunicazioni nella rete logistica Logistics communicatiosPianificazione e previsione della domanda Demand forecasting/planning
42 Questions (1)What is the role and importance of logistics in private and public organizations?Discuss the impact of logistics on the economy and how effective logistics management contributes to the vitality of the economy.What is the value-added roles of logistics on both a macro and micro level?Explain logistics systems from several perspectives.What is the relationship between logistics and other important functional areas in an organization, including manufacturing, marketing, and finance?
43 Questions (2)Discuss the importance of management activities in the logistics function.Analyze logistics systems from several different perspectives to meet different objectives.Determine the total costs and understand the cost tradeoffs in a logistics system.Why does a push-based supply chain react more slowly to changing demand than a pull-based system?What is the impact of product diversification (the increase in the number of product variants) on logistics systems planning and control.