24222 Lecture Notes - Lecture 10: Logistics, Third-Party Logistics, Order Processing
Lecture 10 – logistics and channel management
Logistics
• Planning, implementing and controlling the physical flows of materials and final
goods from points of origin to points of se to meet customers’ needs at a profit
• The movement of the right amount of the right products to the right place at the
right time
Supply chain management
• Logistical systems that emphasize close cooperation and comprehensive inter-
organizational management to integrate the logistical operations of the different
firms in the channel
Third party logistics providers (3PLs)
• Specialize in performing most or all of the logistical tasks that manufacturers or
other channel members would normally perform themselves
• Provide service at lower cost than the firms who hire third-party providers
• Currently growing rapidly into a major industry
Systems concept
• Interrelated components of a system
o Transportation
o Materials handling
o Order processing
o Packaging
o Inventory control
o Warehousing
Total cost approach
• Basic components of a logistics system
o Systems concept – management views logistics as a system of interrelated
components
o Total cost approach – management attempts to minimize the cost of using
the components taken as a whole
Logistics system components
Transportation
• Most fundamental and necessary component
• Accounts for the highest percentage of the total cost of logistics
• Overriding issue facing the firm = choosing the optimum mode of transportation to
meet customer service demands
Materials handling
• Range of activities and equipment involved in the placement and movement of
products in storage areas
Document Summary
Supply chain management: logistical systems that emphasize close cooperation and comprehensive inter- organizational management to integrate the logistical operations of the different firms in the channel. Interrelated components of a system: transportation, materials handling, order processing, packaging. Transportation: most fundamental and necessary component, accounts for the highest percentage of the total cost of logistics, overriding issue facing the firm = choosing the optimum mode of transportation to meet customer service demands. Materials handling: range of activities and equipment involved in the placement and movement of products in storage areas. Order processing: order cycle time the time between when an order is placed and when it is received by the customer. Issue = developing an efficient order processing system. Inventory control: fir(cid:373)"s atte(cid:373)pt to hold the lo(cid:449)est le(cid:448)el of i(cid:374)(cid:448)e(cid:374)tory that (cid:449)ill still e(cid:374)a(cid:271)le it to (cid:373)eet customer demand. Issue = keeping inventory at the lowest possible level while concurrently placing orders for goods in large quantities.
