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 © Pearson Education, Inc. publishing as Prentice Hall 1-1

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 1-2 © Pearson Education, Inc. publishing as Prentice Hall

Key Terms – Cost trade-offs – Disintermediation – Economic utility – Form utility – Landed costs – Logistics – Marketing channels – Mass logistics – Materials management – Physical distribution – Place utility – Possession utility – Postponement – Power retailer 1-3 © Pearson Education, Inc. publishing as Prentice Hall

Key Terms – Sorting function – Stock-keeping units (SKUs) – Stockouts – Sustainable products – Systems approach – Tailored logistics – Time utility – Total cost approach 1-4 © Pearson Education, Inc. publishing as Prentice Hall

CHAPTER 1 An Overview of Logistics © Pearson Education, Inc. publishing as Prentice Hall

Economic Impacts of Logistics Macroeconomic Impacts Economic Utility – Possession utility – Form utility – Place utility – Time utility 1-6 © Pearson Education, Inc. publishing as Prentice Hall

Table 1-1: The Cost of the Business Logistics System in Relation to a Country’s Gross Domestic Product (GDP) 1-7 © Pearson Education, Inc. publishing as Prentice Hall

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’ requirements.” 1-8 Source: © Pearson Education, Inc. publishing as Prentice Hall

The Increased Importance of Logistics A Reduction in Economic Regulation Changes in Consumer Behavior Technological Advances The Growing Power of Retailers Globalization of Trade 1-9 © Pearson Education, Inc. publishing as Prentice Hall

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 1-10 © Pearson Education, Inc. publishing as Prentice Hall

Figure 1-1: Control Over the Flow of Inbound and Outbound Movements 1-11 © Pearson Education, Inc. publishing as Prentice Hall

Figure 1-2 The Utilization of Logistics Service as a Major Selling Point 1-12 © Pearson Education, Inc. publishing as Prentice Hall

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 organization’s customer service requirements 1-13 © Pearson Education, Inc. publishing as Prentice Hall

Logistical Relationships within the Firm Finance Production Marketing 1-14 © Pearson Education, Inc. publishing as Prentice Hall

Marketing – Place Decisions – Price Decisions Landed costs – Product Decisions Stockouts – Promotion Decisions 1-15 © Pearson Education, Inc. publishing as Prentice Hall Logistical Relationships within the Firm

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, Channel members – Manufacturers – Wholesalers – Retailers 1-16 © Pearson Education, Inc. publishing as Prentice Hall

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 1-17 © Pearson Education, Inc. publishing as Prentice Hall

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 1-18 © Pearson Education, Inc. publishing as Prentice Hall

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 1-19 © Pearson Education, Inc. publishing as Prentice Hall

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

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 CEO’s of Wal-Mart included assignments in logistics and distribution © Pearson Education, Inc. publishing as Prentice Hall

Logistics Professionalism APICS – The Association for Operations Management ( American Society of Transportation and Logistics (AST&L) ( Council of Supply Chain Management Professionals ( Delta Nu Alpha (DNA) ( International Society of Logistics (SOLE) ( Supply Chain & Logistics Association Canada (SCL) ( The Chartered Institute of Logistics and Transport in the UK – CILT (UK) ( Warehousing Education and Research Council (WERC) ( Professional Organizations Dedicated to Advancing the Professional Knowledge of their members: © Pearson Education, Inc. publishing as Prentice Hall

Copyright Notice 1-23 © Pearson Education, Inc. publishing as Prentice Hall

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