CHAPTER 1

Overview of Logistics

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 Learning Objectives
• To discuss the economic impacts of logistics
• To define what logistics is
• To analyze the increased importance of logistics
• To discuss the systems and total cost approaches
to logistics

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 Learning Objectives
• To expose you to logistical relationships within
the firm
• To introduce you to marketing channels
• To provide a brief overview of activities in the
logistics channel
• To familiarize you with logistics careers

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 Economic Impacts of Logistics
• Macroeconomic Impacts
• Economic Utility
– Possession utility
– Form utility
– Place utility
– Time utility

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Table 1-1: The Cost of the Business Logistics System in
Relation to a Country’s Gross Domestic Product (GDP)

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 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.”

Source: www.cscmp.org

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The Increased Importance of Logistics

• A Reduction in Economic Regulation

• Changes in Consumer Behavior
• Technological Advances
• The Growing Power of Retailers
• Globalization of Trade

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Figure 1-1: Control Over the Flow of Inbound
and Outbound Movements

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 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: integration of all

activities into a unified whole that seeks to
minimize distribution costs in a manner that
supports an organization’s customer service
objectives
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Logistical Relationships within the Firm

• Finance
• Production
• Marketing

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Logistical Relationships within the Firm
• Marketing
– Place Decisions
– Price Decisions
• Landed costs
– Product Decisions
• Stockouts
• Sustainable products
– Promotion Decisions

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Activities in the Logistical Channel
• Customer service • Demand forecasting
• Facility location • International logistics
decisions • Materials handling
• Inventory • Packaging
management • Reverse logistics
• Order management • Warehousing
• Procurement management
• Transportation
management

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 Logistics Careers
• Logisticians need to be both a generalist and a
specialist
– As a generalist, the logistician must understand the
relationship between logistics and other corporate
functions, both within and outside the firm.
– As a specialist, the logistician must understand the
relationships between various logistics activities and must
have some technical knowledge for various activities.

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 Logistics Careers
• “Logistician” highlighted as one on the 50 best
careers for the year 2010 and suggested that
logistics employment should increase by 20%
through 2018.
Source: Liz Wolgemuth, “The 50 Best Careers of 2010”, U.S. News &
World Report, December 28, 2009.

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 Logistics Careers
• Examples of Logistics-related jobs include:
– Logistics analyst
– Consultant
– Customer service manager
– Purchasing manager
– Transportation manager
– Warehouse operations manager
Source: www.cscmp.org

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 Logistics Professionalism
Professional Organizations Dedicated to Advancing the
Professional Knowledge of their members:
• APICS – The Association for Operations Management (www.apics.org)
• American Society of Transportation and Logistics (AST&L) (www.astl.org)
• Council of Supply Chain Management Professionals (www.cscmp.org)
• Delta Nu Alpha (DNA) (www.deltanualpha.org)
• International Society of Logistics (SOLE) (www.sole.org)
• Supply Chain & Logistics Association Canada (SCL) (www.sclcanada.org)
• The Chartered Institute of Logistics and Transport in the UK – CILT
(UK) (www.ciltuk.org.uk)
• Warehousing Education and Research Council (WERC) (www.werc.org)

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