Introduction to Logistics

PDE4910

Dr Lindsey Brodie
 Relationship between Logistics and SCM

Inclusionist Evolutionist Intersectionist

SCM Logistics

Logistics SCM
Logistics
SCM

Larson and Halldorsson

Three different perspectives on the relationship between Logistics and Supply

Chain Management. The “inclusionist” perception is the prevailing one today.

...... Consider the relationship between Kelloggs and TDG (a logistics specialist)
Supply Chain Model
‘‘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 point of origin to point of
consumption for the purpose of conforming to customer
requirements.”
Council of Logistics Management, which became CSCMP. See www.cscmp.org

‘‘The mission of logistics is to get the right goods or services

to the right place, at the right time, and in the desired
condition and quantity in relation to customers order”
Chartered Institute of Logistics and Transport, UK, 2005
 7 Rs of Logistics
GET THE RIGHT PRODUCT
IN THE RIGHT QUANTITY
TO THE RIGHT PLACE
FOR THE RIGHT CUSTOMER
AT THE RIGHT TIME
IN THE RIGHT CONDITION
AT THE RIGHT COST
 Logistics Management
“Logistics management is that part of supply
chain management 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”
– The Council of Supply Chain Management
Professionals (CSCMP) 2006
Comment – “to meet the customers’ requirements” – How accurate is that?
Logistics
 Logistics Management
Logistics

Physical supply or inbound Physical distribution or

logistics outbound logistics

Purchasing Materials Order processing

Management Warehouses
Transportation

Suppliers Plants Warehouses Customers

Material & information flow

Another logistics diagram
Another logistics diagram

Apply what you

have learnt about
Kellogg’s UK to
this diagram
 Some Definitions

https://www.pwc.com/gx/en/transportation-logistics/pdf/the-future-of-the-logistics-industry.pdf
 Types of Logistics
• Logistics Service Providers (LSPs) and carriers
form the major part of the total market
• B2B dominates
• A third of B2C is by Courier / Express / Parcel
(CEP) operators
• Postal operators also play a part
 Main Logistics Activities
Main logistics activities include:
• cooperate with marketing to set customer service
levels
• facility location decisions
• transportation activities (e.g. transportation mode
selection, vehicle scheduling, carrier routing)
• inventory management (inventory short -term
forecasting, planning and control, cooperate with
production to calculate EOQ, sequence and time
production)
• information collection and flows and order processing
• warehousing and materials handling
• packaging and packing
 In-house Logistics provision

Outsource Logistics provision

Logistics Management
and Logistics outsourced

Supply chain
Management outsourced

Papadimitriou, Chlomoudis and Koliousis,

Department of Maritime Studies PL = Party Logistics
University of Piraeus
Papadimitriou, Chlomoudis and Koliousis,
Department of Maritime Studies
University of Piraeus
http://www.onthemosway.eu/wp-content/uploads/2015/06/Actors-and-ops_final.pdf?00cab0
https://www.reddit.com/r/supplychain/comments/auv3ji/what_are_3pl_4pl_5pl_models/
https://www.logisticsglossary.com/term/4pl/
https://www.logisticsglossary.com/term/5pl/
 Logistics Costs
• Warehousing
– Incoming Goods: No. of SKUs / Quantity / Service Provision
– Storage: Occupied space by shape and size / use of pallets
– Special Conditions: security / temperature / hazardous goods

• Fulfilment
– Pick and Pack: No. of Orders / No. of SKUs / Packaging Materials

• Delivery
– Shipping Costs by Provider: CEP / Freight Forwarders / Carriers
– Transport and Handling

• Returns
– Shipping Costs
– Return Handling
 Hidden Costs
• Admin. and Order Processing for Logistics
• Customs Duty and Taxes

• Tolls
Logistics Costs
 Changes in Logistics
• Changing customer expectations
– B2B looking for efficiency and transparency which
implies ‘digital fitness’
– B2C becomes increasingly important as patterns of
buying change. Customers often ‘shipper-agnostic’ and
tend only to be willing to pay for faster delivery
• Technological breakthroughs
– Automation could reshape the workforce, e.g. use of
robots (see Amazon video) and AI
– Digital culture and training is still a challenge for many
logistics organisations
 Changes in Logistics Continued
• New entrants to the industry
– Start-ups with more IT skills using data to match capacity to
transportation need or to find the best price, e.g. Uber
deliveries
– Customers and/or suppliers can become competitors,
e.g. Amazon

• New ways to compete or collaborate

– Better integration of IT across organisations could bring
benefits
– ‘Physical Internet’ standardization, e.g. shipping containers
– Collaborations, e.g. airlines code-sharing
 Future of Logistics
In summary, PwC suggest four possible scenarios of how logistics
might develop in future:
• Sharing the ‘Physical Internet’
– Collaboration supported by standardisation of shipment package sizes,
labelling and systems
• Start-up / Shake Up
– New entrants especially in the ‘last mile’
• Complex Competition
– Large industrial or retail customers and suppliers enter the logistics
business
• Scale Matters
– Current market leaders buy up smaller players and start-ups
https://www.pwc.com/gx/en/transportation-logistics/pdf/the-future-of-the-logistics-industry.pdf
 Additional Considerations
Will look later in the module at:
• Sustainability, especially environmental
concerns
• Trade Agreements
• Supply Chain Networks, thinking about hubs
and trade gateways (land, maritime and air),
and facility locations within a network
End of Slides