LOGISTICS

MANAGEMENT
Session 17 – August 08, 2023
 Learning Objectives
• Describe logistics and the six functions of integrated
logistics management

• Assess and select transportation modes

• Analyze logistics trade-offs

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 Logistics Vs Supply Chain

Supplier Manufacturer Distributor Retailer Customer

Logistics Supply chain

• Logistics focuses on the • A network of individuals
flow of material and and companies involved in
information across a supply creating a product and
chain delivering it to the customer

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Logistics Management
management of the movement and
storage of materials

at the lowest cost while still

meeting
customers’ requirements.

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Logistics Management
*The Flows*

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Logistics Management

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 Logistics Management

Time Cost Quality Flexibility

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 Logistics Management
Logistics and Supply Chain Flows

Time Cost Quality Flexibility Customer Satisfaction

• Product Delivery
• Support Service

Customer Demand Flows

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 Logistics Management
• Reverse Logistics

Þ Logistics cost accounted for 25% - 30% of sales revenue.

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 A “perfect order” means
*The rights are not enough*

Right
Using the shipping service On time
products
customer wants

Undamaged Can Correct

shipment track the order billing
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 Logistics flows

Inbound
Outbound
Supplier Company Customer

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 Inbound Logistics

Sourcing Order Transportation Receiving

Placement
Inbound flows: logistics managers works with supply managers to
ensure that the flow of materials meet the firm’s operational
requirements
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 Outbound Logistics

Customer Order Transportation Customer

Order Processing Delivery

Outbound flows: logistics managers works with marketing and

sales managers, as well as customers to ensure that customer
requirements are met
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Logistics functions
management of the movement
and storage of materials

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 Logistics functions

2. Inventory 3. Material Handling

1. Order Processing
Management & Packaging

4. Transportation 5. Distribution/Fulfillment 6. Logistics Network

Management Management Design
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 1. Order Processing
• Customers can place orders:

In person By phone Electronically

• Electronic orders: flow directly into the system.

Þ Reduce costs, delays, and errors.
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 2. Inventory Management
Inventory is linked to all logistics management decisions:

How much In How often Where in

inventory? what form? to order? the supply chain?

QUALITY
Logistics Inventory
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CHECK ATTENDANCE

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BREAK-TIME
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 3. Materials Handling and Packaging
• Handling material:
• Increases costs.
• Risk of damage.

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 3. Materials Handling and Packaging

Þ Automated Storage and

Retrieval Systems.
Þ Vinamilk:
https://www.youtube.com/watc
h?v=MEpx6ugQa3A

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 3. Materials Handling and Packaging
• Packaging protects the
products.
Þ Decrease handling costs.
Þ Reduce risk of damage.

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3. Materials Handling and Packaging

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 4. Transportation Management
• A transportation mode: a form or method of transportation items.
• There are 5 transportation modes:

Truck Rail Water Pipeline Air

Economic of Scale Vs Economic of Distance

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 TEAM
DISCUSSION
Determine definition, advantages and disadvantages for each
transportation mode.

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 TRUCK

• Convinient, availability.
• Technology advance.
Þ Almost anything can be transported by trucks.

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 Full-truckload Less-than-truckload
(FTL) (LTL)
• Shipments with enough • Small shipments which do
volume to require a full not require a whole
truck of dedicated space. truck sapce.

https://www.dripcapital.com/en-us/resources/blog/ltl-vs-ftl-freight
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 RAIL

• High fixed costs, slow, shipping flexibility is low.

• Large shipments of bulky, low-cost commodities.
=> Grain, chemicals, cars over long distances.

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 WATER

• Disadvantages: speed and availability.

• Ability to move extremely large shipments.

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 PIPELINE

• Highest fixed cost.

• Operating 24/7, not affected by the weather.
Þ Use to move: natural gas, oil, gasoline, chemicals and even
orange juice.

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 AIR

• The least used transportation mode.

• Fasted but most expensive.
Þ High-value, low quantity, or perishable items.

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 Transportation Modes
Operating Characteristics Truck Rail Water Pipe Air

Speed 2 3 4 5 1
Availability 1 2 4 5 3
Dependability 2 3 4 1 5
Capability 3 2 1 5 4
Frequency 2 4 5 1 3
Cost 2 3 4 5 1
1 = best, highest; 5 = worst, lowest

How to fully take advantage of all modes of transportation?

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 Intermodal Transportation
• Intermodal transportation:
• A combination of two or more
transportation modes.
Þ To take advantage of the economies and
service characteristics of each.

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5. Distribution/Fulfillment Management

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 5. Distribution/Fulfillment Management
Distribution center (DC) Fulfilment center (FC)
• The strategic role of warehouses in • Specialized in processing and shipping
storage. e-commerce orders directly to homes
• DCs pick larger quantities such as businesses.
pallets or cases. • FCs usually pick individual items.
• Often use highly automated • Process is more labour intensive.
materials handling systems.

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 Distribution/Fulfillment Management
• Receiving and unloading
• In-store handling
• Storage
• Order picking and packing
• Staging
• Shipping

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 6. Logistics Network Design
• Logistics network design decisions:

The number and locations How to serve Transportation Where to hold

of facilities customers modes inventory

Þ One of the most impact on supply chain operations.

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 6. Logistics Network Design
• Multiple factors to consider:

Labour Customers Infrastructure

Suppliers Costs, taxes,

Quality of life
incentives
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THANK YOU!