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MM CH 6
MM CH 6
CHAPTER SIX
LOGISTICS
“Logistics is the process of planning, implementing and controlling the efficient, cost-
effective flow and storage of raw materials, in-process inventory, finished goods and
related information from the point of origin to point of consumption for the purpose of
conforming to customer requirements.”
Getting the right goods or services to the right place, at the right time, and in the desired
condition at the lowest cost and highest return on investment.
6.3 The Scope of Logistics in Business
Logistics in a business aim to the following contributions:
- Achieve maximum customer service level
- Ensure high product quality
- Achieve minimum (possible) cost
- Be flexible in the constant market changes
Logistics management tries to have the “right product”, in the “right quantity”, at the “right
Place”, at the “right time”, with the “right cost”
6.4 Activities of Logistics
The logistics activities can be classified into a) core and b) supporting
Core activities of logistics
The core activities take place in every supply channel (as can be seen from the figure).
They contribute the most to the total cost of logistics or they are essential to the effective
coordination and completion of the logistics task.
These are mentioned below:
Inbound logistics refers to the transport, storage and delivery of goods coming into a
business. Outbound logistics refers to the same for goods going out of a business.
Inbound and outbound logistics combine within the field of supply-chain management,
as managers seek to maximize the reliability and efficiency of distribution networks
while minimizing transport and storage costs.
Understanding the differences and correlation between inbound and outbound logistics
can provide insight for developing a comprehensive supply-chain management strategy