What is logistics management?
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 Logistics Chain
- Logistics organises the transport between suppliers and manufacturers as well as between the manufacturer and the warehouse
- Controls the data exchange between the warehouse and the stores
- Manages the manpower needed for the product to reach the customer from the store.
Which business activities does logistics cover?
- Transportation
- Warehousing
- Material handling
- Packaging
- Inventory management
- Logistics information systems
What are the 4 transportation modes?
- Highway
- Water
- Rail
- Air
What are the strengths of highway?
- Flexibility to deliver when and where needed.
- Often the best balance among cost, flexibility, and reliability/speed of delivery
What are the weaknesses of highway?
Neither the fastest nor the cheapest option.
What are the strengths of water?
- Highly cost-effective for bulky items
- Most effective when linked to a multimodal system
What are the strengths of rail?
- Highly cost-effective for bulky items
- Can be most effective when linked to a multimodal system
What are the strengths of air?
- Quickest mode of delivery
- Flexible especially when linked to the highway mode
What are the weaknesses of water?
- Limited locations
- Relatively poor delivery reliability/speed
What are the weaknesses of rail?
- Limited locations, although less than water
- Not as fast as highway, but improving over time
What are the weaknesses of air?
Often the most expensive mode on a per-pound basis
What are Multimodal Solutions?
A transportation solution that seeks to exploit the strengths of multiple transportation modes through physical, information, and monetary flows that are as seamless as possible
What is warehousing?
Any operation that stores, repackages, stages, sorts, or centralizes goods or materials.
Why do organisations use warehousing?
Organizations use warehousing to reduce transportation costs, improve operational flexibility, shorten customer lead times, and lower inventory costs.
What is Consolidation warehousing?
Pulls together shipments from a number of sources (often plants/suppliers) in the same geographic area and combines them into larger-and hence more economical shipping loads.
Cross docking
- May use a cross-docking warehouse to break up large rail or truck shipments into smaller shipments to local customers.
- A cross-docking operation that receives goods from a single source or manufacturer is often referred to as break-bulk warehousing.
Regional distribution center
- Remix the incoming goods and delivery to individual stores/customers, often multiple times a day.
- Can be a hybrid cross docking operation
Logistics information systems
- Logistics managers often use decision support tools to design and fine-tune their logistics systems.
- Managers choose locations, determine the number of containers or vessels they need, estimate costs and travel times.
- Planning systems
- Execution systems
What are Planning Systems?
Planning systems help managers with specific activities, such as selecting a carrier for an outgoing shipment or developing a weekly schedule of deliveries.
What are Execution Systems?
- The most detailed level of a logistics information system.
- Ensure planned activities take place as expected
- Help managers identify problems
Key questions of the Logistics Strategy?
- Does the firm have the volume needed to justify a private logistics system?
- Would owning the logistics system limit the firm’s ability to respond to changes in the marketplace or supply chain?
- Is logistics a core competency for the firm?
Does the firm have the volume needed to justify a private logistics system?
Firms with low volumes or sporadic shipping needs (e.g., transport of seasonal produce) are probably better off contracting for those services.
Would owning the logistics system limit the firm’s ability to respond to changes in the marketplace or supply chain?
Investing in a private fleet of trucks or network of warehouses ties up capital and commits a firm to managing those systems.
