Contemporary Logistics Eleventh Edition Chapter 01 Overview of

Contemporary Logistics Eleventh Edition Chapter 01 Overview of Logistics Copyright©© 2015, 2012, 2009 Pearson. Education, Inc. All. Rights. Reserved Copyright 1

Key Terms (1 of 2) • Big-box retailer • Humanitarian logistics • Co-branding • Landed costs • Container • Logistics • Cost trade-offs • Marketing channels • Disintermediation • Logistics • Economic utility • Marketing channels • Form utility • Materials management Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 2

Key Terms (2 of 2) • Physical distribution • Stockouts • Place utility • Sustainable products • Possession utility • Systems approach • Postponement • Tailored logistics • Sorting function Stockkeeping units (SKUs) • Time utility • Total cost approach Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 3

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 • 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 Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 4

5 Overview of Class • Chapter 1 • Due: Myers Briggs Due • In-Class Activities (seen on pwpt) – Participation Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 5

News and Books • WSJ • Good Read: The Logistics and Supply Chain Toolkit offers revised tools that reflect the latest innovations in technologies and processes. The book also includes new tools on calculating stock-holding cost, calculating ordering cost, managing slowmoving inventories, and new, additional website resources, such as worked examples. 2015 Cengage Learning Copyright © 2015, 2012, 2009 Pearson©Education, Inc. All Rights Reserved 6

Economic Impacts of Logistics • Macroeconomic Impacts • Economic Utility • Possession utility • Form utility • Place utility • Time utility Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 7

1– 8 Class Participation • Get into groups, pick a utility and share how it effects you? Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 8

Table 1 -1: The Cost of the Business Logistics System in Relation to a Country’s Gross Domestic Product (GDP) (1 of 2) Country Logistics as a Percentage of GDP United States 8. 5 South Africa 12. 7 India 13. 0 Thailand 15. 2 Brazil 15. 4 People’s Republic of China 17. 8 Finland 19. 0 Vietnam 12. 5 Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 9

Table 1 -1: The Cost of the Business Logistics System in Relation to a Country’s Gross Domestic Product (GDP) (2 of 2) • Sources: “South Africa: Logistics costs as percentage of GDP improves, ” Trade. Mark SA; http: //siteresources. worldbank. org/BRAZILINPOREXTN/Resource s/38171661323121030855/Freight. Logistics. pdf? resourceurlname=Freight. Lo gistics. pdf; “Heavy logistics costs weigh on China’s economy: report-Xinhua, ” English. news. cn; Autocar Professional; “Logistics cost to GDP declines, ” The Nation; “Vietnam high logistics costs lower businesses’ competitiveness, ” Talk. Vietnam; http: //www. panostaja. fi/index. php? id=150; 24 th Annual State of Logistics Report, Council of Supply Chain Management Professionals, 2013. Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 10

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 • That is Good Logistics Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 11

1– 12 Class Participation • Have you every thought about where your purchase items came from and how they were made? • Look up 1 school and 1 home product, research where they came from? Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 12

The Increased Importance of Logistics • A Reduction in Economic Regulation • Changes in Consumer Behavior • Technological Advances • The Growing Power of Retailers • Globalization of Trade Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 13

The Systems and Total Cost Approaches to Logistics (1 of 2) • Systems Approach • Interdependence of company and logistics goals and objectives • Interdependence of functional areas • Stock-keeping units (SKUs) • Interdependence of logistics activities or Intrafunctional logistics • What is Logistics? Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 14

Figure 1. 1 Control Over the Flow of Inbound and Outbound Movements In this drawing, the circles represent buildings where inventories are stored, and the lines with arrows represent movement performed by carriers, a stop-and-start process. Current thought deals more with flows, possibly in different volumes and at different speeds, but without the inventory standing still. The supply chain extends to both the left and right of this diagram and includes the suppliers’ suppliers and the customers’ customers. Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 15

The Systems and Total Cost Approaches to Logistics (2 of 2) 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 Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 16

Logistical Relationships within the Firm (1 of 2) • Finance • Production • Marketing Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 17

Logistical Relationships within the Firm (2 of 2) • Marketing • Place Decisions • Price Decisions • Landed costs • Product Decisions • Stockouts • Sustainable products • Promotion Decisions Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 18

1– 19 Class Participation • Do you agree with proposition “H”? • Do you think the “inland empire” could be a mecca for Logistics? Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 19

Marketing Channels (1 of 3) • “set of institutions necessary to transfer the title to goods and to move goods from the point of production to the point of consumption and, as such, which consists of all the institutions and all the marketing activities in the marketing process. ” • Source: American Marketing Association Dictionary, www. marketingpower. com Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 20

Marketing Channels (2 of 3) • Channel members • Manufacturers • Wholesalers • Retailers • Ownership channel • Covers movement of the title to the goods • Negotiations channel • Buy and sell agreements are reached Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 21

Marketing Channels (3 of 3) • Financing channel • Payments for goods • Promotions channel • Promoting a new or existing product • Logistics channel • Moving and storing product throughout the channel Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 22

Channel Intermediaries/Facilitators (1 of 2) • Ownership channel • Banks, finance companies • Negotiations channel • Brokers • Financing channel • Banks, insurance companies, finance companies Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 23

Channel Intermediaries/Facilitators (2 of 2) • Promotions channel • Advertising agencies, public relations agencies • Logistics channel • Freight forwarders • Freight Forward Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 24

Activities in the Logistical Channel • Customer service • Demand forecasting • Facility location decisions • International logistics • Inventory management • Materials handling • Order management • Packaging • Procurement • Reverse logistics • Transportation management • Warehousing management Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 25

Logistics Careers (1 of 3) • 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. Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 26

Logistics Careers (2 of 3) • “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. Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 27

Logistics Careers (3 of 3) • Examples of Logistics-related jobs include: • Logistics analyst • Payscale • • • Consultant Customer service manager Purchasing manager Transportation manager Warehouse operations manager • Source: www. cscmp. org Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 28

29 Next Week • Chapters 2 Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 29

Logistics Professionalism (1 of 2) 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) Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 30

Logistics Professionalism (2 of 2) • 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) Copyright © 2015, 2012, 2009 Pearson Education, Inc. All Rights Reserved 31