CHAPTER 1:

INTRODUCTION TO
LOGISTICS AND SUPPLY
CHAIN MANAGEMENT
 LEARNING OUTCOMES

After completing this chapter, you should be able to

• understand the megatrends
• describe the different types of logistics
• define supply chain management
• explain the concepts of third-party and fourthparty logisticsdescribe the historical
development of logistics and supply chain management
• comment on the performance of logistics in South Africa
 LEARNING OUTCOMES continued

• understand the supply chain planning framework

• Explain Porter’s value chain
• Describe the primary and secondary activities of the value chain
• Link the value chain with logistics and supply chain management.
 MEGATRENDS

1 Globalisation
2 The empowered consumer
3 Shift in global economic power
4 Demographic shifts
5 Rise in technology
6 COVID-19 pandemic
7 Climate change and resource scarcity
 DEFINING LOGISTICS
• Military logistics – Military Logistics is the processes, resources, and
systems involved in generating, transporting, sustaining, and redeploying or
reallocating materiel and personnel. A nation's ability to perform these
functions relates directly to its military power.
• Engineering logistics – Review and design logistics operations to improve
companies' operational efficiency and reduce costs. They may help companies
in areas such as transportation, shipment, inventory control, or information
management. They work closely with other engineers, logistics analysts, and
production managers.
• Business logistics – Refers to the entire set of processes involved in moving
goods, whether from a supplier to a business or from a business to a
customer. The key concept here is managing these processes as a unified
system
 DEFINING LOGISTICS continued

Figure 1.1 Logistics, supply and distribution management

 DEFINING LOGISTICS continued

• Production logistics – can be understood as the planning, control and execution of the
transport and storage of raw materials, auxiliary materials, operating materials, purchased parts,
spare parts, semi-finished and finished products and the associated supporting activities within
a company's production system

• Reverse logistics – a type of supply chain management that moves goods from customers
back to the sellers or manufacturers. Once a customer receives a product, processes such as
returns or recycling require reverse logistics.

• Construction logistics – is the process of planning, coordinating and executing the

transportation, storage and distribution of materials and equipment needed for construction
projects.

• City logistics – The process for optimizing both logistics and transport. activities done by
private companies in urban areas while considering the traffic environment, traffic congestion
and energy consumption within the framework of a market economy.

• Humanitarian logistics – the processes and systems involved in mobilising people, resources,
skills and knowledge to help vulnerable people affected by natural disasters and complex
emergencies
 DEFINING SUPPLY CHAIN
MANAGEMENT
Figure 1.2 Supply chain management Source: Fawcett, Ellram & Ogden (2014: 5)
THIRD-PARTY LOGISTICS
Figure 1.3 Third-party logistics
 THIRD-PARTY LOGISTICS continued

Types of 3PL service providers

• Transportation based
• Warehouse and distribution based
• Forwarder based
• Shipper/management based
• Finance based
• Information based
See Table 1.1 Types and characteristics of 3PL service providers (page 10)
FOURTH-PARTY LOGISTICS
Figure 1.4 Fourth-party logistics
 HISTORICAL DEVELOPMENT OF
LOGISTICS

• 1950s AND EARLY 1960s

• 1960s AND EARLY 1970s
• 1970s
• 1980s
• 1990s
• 2000s
• 2010s
• 2020 and beyond
LOGISTICS PERFORMANCE IN SOUTH
AFRICA
Figure 1.5 South
Africa Logistics
Performance Index
SUPPLY CHAIN PLANNING FRAMEWORK

Figure 1.6 Supply chain

planning framework
Source: Adapted from Stock and
Lambert (2001: 702–704)
PORTER’S VALUE CHAIN AND
COMPETITIVE ADVANTAGE
Figure 1.7 The value chain
LINKING THE VALUE CHAIN WITH LOGISTICS
AND SUPPLY CHAIN MANAGEMENT
 ROLE OF LOGISTICS AND SUPPLY CHAIN
MANAGEMENT IN GAINING A COMPETITIVE
ADVANTAGE