ACS 2013

FUNDAMENTAL OF LOGISTICS
& DISTRIBUTIVE TRADE

SEMESTER SEPTEMBER 2021/2022

INDIVIDUAL ASSIGNMENT

QUESTION:
WHAT IS LOGISTICS MANAGEMENT? HOW DOES LOGISTICS
MANAGEMENT ADD VALUE TO TRADE ORGANIZATIONS?

: KHALIDATUNNUR FARHANAH BINTI ABDUL

NAME
KADIR
MATRIC NO. : A21A2528
LECTURER’S : DR. MUHAMMAD NIZAMUDDIN BIN ABDUL
NAME RAHIM

Table of Content
NO. CONTENTS PAGES
1.0 Introduction 1

2.0 Definitions 2-3

3.0 Objectives
3.1 Inventory reduction.
3.2 To minimize damage to goods. 4
3.3 To increased efficiency.
4.0 Term’s of logistic management
4.1 Offer management.
4.2 Production Logistics.
4.3 Distribution and movement of materials. 5

5.0 How logistic add value to trade organizations 6-7

6.0 Conclusions 8

7.0 References 9-12

1.0 INTRODUCTION

A corporate organization's logistics management strategy is one of its time and

cost-saving techniques. Currently, supply chain management is related with it. For
firms to obtain a competitive advantage in terms of speed and cost of delivering
products and services to their customers, the supply chain is critical. As a result,
marketers must understand logistics and value chain objectives. Logistics and
distribution channels are two components of distribution that can be examined.
The process by which a client transports a product from a production to a retail
location is referred to as logistics. Locations of factories and warehouses, delivery
modes, inventory, and packaging are all included. The concept of a logistics
system establishes a persistent link between various sub-activities. This is known
as integrated market logistics, because it understands each activity's cost
interdependence. These are activities that begin when a consumer places an order
and terminate when the customer receives the product.

Logistics, according to the Logistics Management Council, entails an integrated

plan for all internal and network-wide material, component, and product flows, as
well as the needed information flows for industries and trading companies
throughout the value chain. Control, implementation, and monitoring are all
included. The goal is to satisfy the needs of the customer. As a result of the
foregoing description, logistics can be defined as the process of planning,
executing, and controlling the effective and efficient flow of commodities and
services from point of origin to point of consumption. The process of delivering
the appropriate goods to the right place at the right time and in the correct amount
has traditionally been termed as logistics management. Typically, logistics
management considers the entire supply chain, from the procurement of raw
materials to the delivery of finished goods to clients.

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2.0 Definitions

The goal of supply chains is to add value to the manufacturing and distribution
processes. Supply chains can be differentiated based on characteristics such as
price, time reliability, and risk, depending on the markets and value chains they
serve. Efficient logistics adds value in four areas that are all interconnected:

 Production costs. Resulted from increased manufacturing efficiency as a

result of proper shipment size, packaging, and inventory levels. As a
result, logistics helps to reduce production costs by streamlining the supply
chain.

 Location. Logistics increases value by maximising the use of different

locations, resulting in enlarged markets (more customers) and lower
distribution costs.

 Time. With better inventory and transportation management, added value

is obtained from having items and services available when needed along
the supply chain (e.g., shorter lead times).

 Control. Controlling most, if not all, stages of the supply chain, from
production to distribution, provides added value. Logistics provides
improved marketing and demand response by better synchronising cycles
and lead times, forecasting flows and assigning distribution resources
accordingly.

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The configuration of supply chains is shaped by a number of factors:

 Logistics costs. Considers the complete range of expenditures associated with

getting products to the final consumer, such as transportation, warehousing,
and transshipment. Supply chain managers are especially concerned with the
cost structure's consistency (consistent costs), which means that routes with
cost variations may be abandoned in favour of routes with a higher cost but
lower volatility. As a result, costs are a typical criterion for selecting the most
cost-effective routing option, as long as the cost structure stays stable, as
supply chains are unlikely to be altered if a cost benefit is only transitory. Cost
is a relative concept since it refers to the worth of the cargo being transported.
Cost considerations are more common for low-value containerized goods,
such as commodities (e.g. paper), than for high-value goods (e.g. electronics).

 Transit time. A factor that is becoming increasingly important in supply chain

management since it has a significant impact on inventory carrying costs and
inventory cycle time. As a result, for cargo with a higher value (clothing) or
that is perishable (refers), the fastest and/or shortest routing option will be
picked.

 Reliability. This term refers to a factor that is mitigated by modern supply

chain management techniques. Time might be a secondary consideration in
some supply chains as long as shipments arrive at the distribution hub on time.
It is possible to design supply chains suitably by having more inventory in
transit if shipments are regular and this reliability is consistent.

 Supply chain risk. Refers to a largely imponderable factor influencing the

level of trust that the shipment will arrive at its final destination within budget,
time, and dependability constraints. Risk can also include the possibility of
cargo damage or theft in specific instances. Routes with lower risks are clearly
preferred over routes with higher risks.

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3.0 OBJECTIVES

The primary purpose of logistics management is to effectively and efficiently

move inventory along the supply chain while also managing waste in order to
provide the appropriate level of customer service at the lowest possible cost. The
following subset of the broader supply chain management goals must be met in
order to do this.

3.1 Inventory reduction.

Maintaining proper inventory levels is critical for a company's success.
Logisticsians seek to reduce inventory levels by processing all orders as
rapidly as possible because excess inventory causes capital obstruction.
Inventory is kept to a minimal minimum by making frequent deliveries,
obtaining supplies, and generating products in appropriate amounts.

3.2 To minimize damage to goods.

Maintaining proper inventory levels is crucial for a company to run
smoothly. Logisticsians seek to reduce inventory levels by processing all
orders as rapidly as possible because excess inventory leads to capital
blockage. Inventory is kept to a minimal minimum by making frequent
deliveries, obtaining supplies, and generating products in large enough
quantities.

3.3 To increased efficiency.

Logistics management aims to increase a company's overall efficiency. To
keep the project on track, it streamlines all inbound and outbound
logistical procedures. High-quality materials are obtained at the lowest
possible cost and used efficiently with the least amount of waste. Logistic
managers keep track of all operations and cut expenses when possible,
resulting in increased overall efficiency.

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4.0 TERM’S OF LOGISTIC MANAGEMENT

4.1 Offer Management.

This comprises determining, obtaining, and coordinating the resources
required to perform a work at a specific time and location. This covers
both goods transportation and storage. Furthermore, to meet customer
expectations, delivery volumes must be evaluated at various phases of the
process, such as giving resources to building sites and parts to
manufacturing plants. The distribution of forwarded and saved articles
determines how they are sent to their intended recipients. This covers
loading, unloading, and moving products, as well as inventory tracking
and use responsibility. H. A record of the material's use and who used it.

4.2 Production Logistics.

It oversees the stages that bring together many distribution methods into a
single product. B. Modification of what is required to manufacture or
assemble anything. This includes delivering materials at the appropriate
moment to begin construction on the product. Product management
encompasses this type of logistical management.

4.3 Distribution and movement of materials.

The item will be transported from the warehouse to your location via this
method. Material movement (loading, unloading, transportation, and so
on), inventory, and usage tracking are all covered. The flow of items from
the central warehouse to the retail stores where they are generally sold is
monitored by this sort of management.

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5.0 HOW LOGISTICS ADD VALUE TO TRADE ORGANIZATIIONS
End customers are the only ones that invest money in the supply chain, as smart
managers understand. We must recall Peter Drucker's recommendations in order
to address the needs of our customers. "What a customer thinks is worth buying is
not just a product. It's always a profit, that is, what a product or service does for
him."

Economic Utilities
Utility is an economic term used to describe perceived value. Economists discuss
five utilities. Logistics influences all five :

I. Possession Utility.
When marketing translates consumer demands into product and service
requirements, promotes the value of the resulting product, and facilitates
sharing so that customers may "own" it, it is said to have been created
through marketing. increase. The majority of adverts you see on social
media and on your favourite websites are personalised to your network and
viewing habits. The idea is to make people want to "own" this item. You
can only possess it if your logistics system is in good working order.

II. Form Utility.

Purchasing and operations managers' primary role is to acquire inputs and
change them into higher-value products or services for customers. Procter
& Gamble and General Mills, for example, employ logistics to repackage
their products in unique sizes, trial packs, or multi-packs while in transit,
maybe for warehouses like Costco and Sam's Club. It has a significant
impact on how forms are used. Product recall (reverse logistics),
readjustment, and resale are all handled by logistics.

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III. Time Utility.
Occur when the product is delivered at the right time. Just-in-time
production ensures that parts and components arrive on time for assembly
or sale, thanks to meticulous delivery times. Walmart and Costco, for
example, need suppliers to have precise delivery schedules so that docks
and workers can unload. The items are sometimes quickly reloaded into a
trailer waiting at a different wharf (cross-docking). It's not worth it if the
product is just sitting around.

IV. Place Utility.

It entails getting products to you when and where you need them. The
convenience of shopping online is one of the most compelling reasons to
do so. Place utilities are provided by online retailers such as Amazon.com
and Alibaba.com, which deliver items straight to customers' homes and
offices. Companies that supply other companies, like as Bosch, a German
auto parts maker, provide value by supplying plants and docks where parts
or components are needed for production.

V. Quantity Utility.
The quantity programme focuses on giving the optimum amount of
products to clients. The aforementioned Costco Distribution Centre (DC)
can receive a truck full of toilet paper, coffee, and canned corn all at once.
The retailer, on the other hand, is not required to purchase these things for
the entire truck. As a result, they are unloaded at DC (breaking bulk) and
perhaps mixed with other items (sorting) in order to fill the trailer to the
warehouse. Businesses can meet client requests for a variety of things in
one place at a reasonable price by combining "break bulk" with
"assortment."

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6.0 CONCLUSIONS

In the country, the logistics management system is becoming increasingly

significant. Logistics management requires transportation to carry out its activities
because transportation and logistics systems are linked, and the success of
logistics systems can assist enhance the transportation environment and
development. Transportation is a key part of the logistics system, and its
operations can be seen in many stages of the process. An effective logistics
strategy cannot fully exploit its capabilities unless it uses a combination of
transportation methods. In the following decades, logistics will continue to
advance rapidly, and the notion of logistics may be applied to new fields.

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