LOGISTICS

Logistics?
• management of the flow of products from the point of origin to the
point of consumption.

• the commercial activity of transporting goods to customers.

• a group of related activities all involved in the movement and

storage of products and information from the sources of raw
materials through to final consumers and beyond to recycling and
disposal
Business Logistics System
• How the business/ org is relates to its partners

• Essential for the customers to be able be provided with the g/s

they required

• Transportation is a very important element in most logistics

systems
 Components of a Business
Logistics System
• 1. order processing

• generation of an internal document within a business enterprise that

authorizes the consummation of a sales transaction.

• process consists of :
1. request from a customer for a particular product via an order form.
2. inventory management
3. completeness and accuracy check ups.
4. The availability of the requested product
5. customer’s credit status are verified.
6. products are retrieved from the stock, packed, and delivered along
with their shipping documents.
• NB-the customers have to be kept informed about the status of their orders. 
Cont…
• 2. Inventory Management

• supervises the flow of goods from manufacturers to

warehouses and from these facilities to point of sale.

• practice of overseeing and controlling of quantities of finished

products for sale.

• having the right inventory at the right quantity, in the right

place, at the right time, and at the right cost.
 Importance of Inventory
Management
• Transport costs reduction

• Meeting demand uncertainties

• Product availability
Cont….
• 3. Freight transportation

• Movement of goods from one point to another

• The main modes of transportation used by logistics system

• management are:
Ship
Rail
Truck
Air
pipeline.
Core competencies required
• Rational decision making

• making choices between alternatives.

• Build logic, discipline and consistency into your decision
making process.

• Forecasting

• The use of historic data to determine the direction of future

trends
• sound predictions of demands and trends
Cont…
• Scheduling

• arranging, controlling and optimizing work and workloads

• Proper method of allocating resources accordingly

• Determining routes for vehicles

• Logistical costs

• Controlling inventory levels

• generating maximum profits with minimum inventory.

 Management
Supply Chain
What is a supply chain?
 Supply Chain
• network between an organization and its suppliers to produce
and distribute a specific product

• represents the steps it takes to get the product or service to

the customer.

•  the production and distribution process within the company

Supply Chain Management?

•  the management of the flow of goods and services from point

of origin to point of consumption.

• administration of material and information flow in a supply

chain to provide the highest degree of customer satisfaction.
Supply Chain vs Logistics
• SCM-

• includes supply order management/procurement, MRP-

production scheduling, and sourcing of finished goods.

• Logistics-
• Involves handling, storage and transportation of goods and
services
Logistics vs Systems analysis
Logistics vs Systems analysis
• Logistics analysis

• the technical planning a company will go through to manage the

flow of goods or information through various business channels.

• Tools/instruments
1. Forecasting
2. Analysis
3. Rational d-m
4. Facility location
5. Route planning
6. Inventory control
7. Scheduling
8. Queuing theory
• Systems analysis

• the process of studying a procedure or business in order to identify

its goals and purpose.
• evaluation of an activity to identify its desired objectives

• Steps
1. Define business objectives
2. Understand current environment
3. All technically feasible alternatives
4. Optimise/assess
5. Most viable alternative
6. Organise and intro the selected activities
7. Develop and apply appropriate performance measures
Logistics Management
• Ensuring the efficient, effective flow and storage of goods,
services and related information, from the place of origin to
the place of consumption

•  supply chain management component that is used to meet

customer demands
LM functions
• Planning
• defining goals for company's future direction and determining
on the missions and resources to achieve those targets.

• Activities
 Facility sites
 Durable equipment
 Distribution parties
 Carriers
• Organizing
• Arranging several elements/resources into a purposeful sequential
or spatial (or both) order or structure.

• Activities
• Resource allocation
• Product/service design

• Execution
• uses to determine whether organizational goals have been
met

• Activities
• Customer satisfaction
• Efficient deployment of resources
• Corrective action
Logistics-related activities
• Demand forecasting- amount of goods needed
• Site selection and design-location of partners
• Procurement-sourcing of goods
• Material handling-material flow
• Warehouse management- administration of space to store
inventory
• Inventory management- stock administration
• Order processing- customer orders
• Logistics communications-effective communication
• Transport- goods movement
• Reverse logistics- handling returns
• Customer service- customer satisfaction
Logistics within SA context
• global competitive advantage

• Logistics costs -Drop in GDP

• Energy crisis

• Transhipping
• …………………………….