Logistics Management

Lecture 1

Instructor: Arslan Haider

Lahore Business School, University of Lahore

Learning Objectives
1. What is supply chain management

2. Origin of Logistics & Definitions

3. Functions of Logistics

4. Specific Strategies for Logistics

5. Complex logistics channel, why is it necessary?

6. Inbound, in plant and outbound logistics

7. Logistics Service Elements

 Supply Chain Management Defined by Stock
& Boyer in 2009

The management of a network of relationships

within a firm and between interdependent
organizations and business units consisting
of material suppliers, purchasing,
production facilities, logistics, marketing,
and related systems that facilitate the
forward and reverse flow of materials,
services, finances and information from the
original producer to final customer with the
benefits of adding value, maximizing
profitability through efficiencies, and
achieving customer satisfaction.
 Supply Chain Management

A supply Chain is the series of activities and

organizations that materials-tangible or intangible
–move through on their journeys from initial
suppliers to final customers. (Waters,2003)

The supply chain is a sequence of events intended to

satisfy customers. It can include procurement,
manufacture, distribution and waste disposal
together with associated transport, storage and
The activities are planned, executed, and
monitored under the guidelines set by the
information technology. (Chartered Institute of
Transport & Logistics, UK)
 Definition of Logistics
 Logistics is the function responsible
for moving materials through the
supply chains. (Waters, 2003)

 Logistics is the term related

positioning of resources or the
strategic management of the
resources. (Chartered Institute of Transport &
Logistics, UK)
Definition of Logistics

 Council of Logistics Management defines as

 that part of the supply chain process that
plans, implements and control the efficient,
effective flow and storage of goods, services,
and related information from the point of
origin to the point of consumption in order to
meet customers requirements.

 Making the goods and performing the services

does not come under the scope of logistics
management
Definition by Martin Christopher

Logistics is the process of strategically

managing the procurement, movement,
handling and storage of materials, parts,
semi-finished and finished inventories
along with its information flows through
the organization and also its marketing
channels in such a way that current and
future profitability are maximized through
cost effective fulfillment of orders.
 Origin of Logistics

• As Important tool used in wars

• Moving huge amount of material great
distances was a big problem
• Material handling, material movements
and material storage were the three areas
which were strategically worked on before
the start of the war ALWAYS.
• Aspect of military science dealing with
procurement, maintenance, and
transportation
Functions of Logistics
 Procurement
 Transport
 Receiving
 Warehousing
 Inventory Management
 Material Handling
 Order Processing
 Distribution
 Recycling
 Location Decisions
 Information Processing
 And other related functions.
Levels of Integration
 Level 1
 Logistics as separate activities within an
organization.
 Level 2
 Internal Integration to bring them together
into a single function.
 Level 3
 External integration where organization look
beyond their own operations & integrate more
of the supply chain.
 Level 4
 Physical integration, information integration,
control integration, infrastructure integration
If Logistics strategy matches supply chain
strategy, firm effectiveness improves…

Logistics Supply Firm

Strategy Chain Strategy Effectiveness

If:
Logistics Supply Firm
Strategy = Chain Strategy
Effectiveness
If:
Logistics Supply Firm
Strategy ≠ Chain Strategy Effectiveness

If not, the firm’s performance could actually decline.

Logistics Strategy:-Decisions have
strategic Importance
 Design of Supply Chains
 Sourcing Policies
 Alliances with suppliers
 Methods of procurement
 Relations with customers
 Mode of transport
 Location of Facilities
 Size of Operations
 Use of Technology
 Recycling Policies, etc
These decisions form a part of logistics
Strategy
 Specific Strategies for Logistics
 Time based strategy which deliver the products
quickly to customer
 High productivity strategy which use resources
fully.
 Value added strategy which maximize added
customer value
 Diversification or Specialization Strategy which
define width of product range
 Growth strategy which aim for economies of
scale
 Globalization strategy which buy, store and
move materials in a single, worldwide market.
 Environmental Protection Strategy which focus
on sustainable operations, renewable
resources, recycling etc.
Logistics and Systems Analysis

 Cost Perspective
 Keep in mind that the most efficient
systems are not always comprised of
each system component operating at
its lowest possible cost.
 The critical concern is to have the
entire system operating at its lowest
total cost.
 Sales Branches

DRP

RDC’s

Product MPS’s

MRP

BOM’s
Logistics flows in a Firm
A Complex Logistics Channel
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Why is it necessary?

 In-plant logistics
 is under the control of one organization, but
 Inbound and Outbound logistics practices
 evolve through the interplay of independent
economic agents, each of whom acts based on
assumptions about the others.
 Resolving such issues requires not only
technically workable solutions but also the
means of persuading players that the game
has changed.
Why is it necessary?

 Parts spend more time in the

custody of Logistics than in
Production,

 But improving Production is often

the easiest way to reduce the
waiting time in Logistics.
 What do Logistics cover and what
it does not.
 In machining: Bringing work pieces, fixtures, and
tools to a machine is logistical, but cutting metal
isn’t.

 In assembly: Bringing parts to the line is logistical

 In aviation: Logistics includes bringing the plane

to the gate, getting passengers on and off, arranging
for a crew to be available, loading and unloading
luggage, etc., but not piloting the plane.

 In car rental business: Normal operations are all

logistical, because it is the customer who drives the
car. The only non-logistical aspect is cleaning &
repairing the cars.
Various Logistics Flows

 Material flows: Shipping,

transportation, receiving, and storage and
retrieval between plants and between
production lines within a plant.
 Information flows: Transaction
processing associated with the material
flows, analysis of past activity, forecasting,
planning, and scheduling future activity.
 Funds flows: Payments triggered by the
movements of goods and information.
Total Cost of
Ownership
Lowest

University of Management and 23

Technology
Inbound and Outbound Logistics
In plant Logistics cover more space
than production
Milk runs in logistics management
Approaches to Analyzing Logistics
Systems: Materials Management v.
Physical Distribution

 Frequently the movement and storage of

raw materials is far different from the
movement and storage of finished goods.
 Four different classifications of logistics
systems
 Balanced system - e.g., consumer products
 Heavy inbound - e.g., aircraft, construction
 Heavy outbound - e.g., chemicals
 Reverse systems - e.g., returnable products
University of Management and 28
Technology
 Logistics Professionalism
Professional Organizations Dedicated to
Advancing the Professional Knowledge of their members:
 Council of Logistics  Association for
Management Transportation Law,
Logistics, and Policy
 Canadian Association  International Society of
of Logistics Logistics
Management  Transportation Research
 American Production Forum
and Inventory Control  Warehousing and
Education Research
Society Council
 American Society of  Chartered Institute of
Transportation and Transport & Logistics,
Logistics UK

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