CHAPTER 1

Overview of Logistics

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Key Terms
Big-box retailer
Co-branding
Container
Cost trade-offs
Disintermediation
Economic utility
Form utility

Humanitarian logistics
Landed costs
Logistics
Marketing channels
Logistics
Marketing channels
Materials
management

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Key Terms
Physical
distribution
Place utility
Possession utility
Postponement
Sorting function
Stock-keeping
units (SKUs)

Stockouts
Sustainable products
Systems approach
Tailored logistics
Time utility
Total cost approach

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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
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Learning Objectives
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
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Economic Impacts of
Logistics
Macroeconomic Impacts
Economic Utility
Possession utility
Form utility
Place utility
Time utility

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Table 1-1: The Cost of the Business Logistics

System in Relation to a Countrys Gross
Domestic Product (GDP)

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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

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The Increased Importance of

Logistics

A Reduction in Economic Regulation

Changes in Consumer Behavior
Technological Advances
The Growing Power of Retailers
Globalization of Trade

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The Systems and Total Cost

Approaches to Logistics
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

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Figure 1-1: Control Over the Flow of

Inbound and Outbound Movements

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The Systems and Total Cost

Approaches to Logistics
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 organizations customer
service objectives
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Logistical Relationships within

the Firm
Finance
Production
Marketing

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Logistical Relationships within

the Firm
Marketing
Place Decisions
Price Decisions
Landed costs

Product Decisions
Stockouts
Sustainable products

Promotion Decisions

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Marketing Channels
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

Channel members
Manufacturers
Wholesalers
Retailers

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Marketing Channels
Ownership channel
Covers movement of the title to the
goods

Negotiations channel
Buy and sell agreements are reached

Financing channel
Payments for goods

Promotions channel
Promoting a new or existing product

Logistics channel
Moving and storing product throughout
the channel
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Channel
Intermediaries/Facilitators
Ownership channel
Banks, finance companies

Negotiations channel
Brokers

Financing channel
Banks, insurance companies, finance companies

Promotions channel
Advertising agencies, public relations agencies

Logistics channel
Freight forwarders
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Activities in the Logistical

Channel
Customer service
Facility location
decisions
Inventory
management
Order management
Procurement
Transportation
management

Demand
forecasting
International
logistics
Materials handling
Packaging
Reverse logistics
Warehousing
management

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Logistics Careers
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.

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Logistics Careers
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.

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Logistics Careers
Examples of Logistics-related jobs
include:
Logistics analyst
Consultant
Customer service manager
Purchasing manager
Transportation manager
Warehouse operations manager
Source: www.cscmp.org
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Logistics Professionalism
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)

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)

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Copyright Notice

All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted, in any form or by any means, electronic, mechanical, photocopying,
recording, or otherwise, without the prior written permission of the publisher.

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