The consumer marketing channels and levels are two different types and those are direct and indirect. These methods explain about the distribution of products from the manufacturer to a retailer and from retailer to customer and other similar relations. These direct and indirect methods are explained in the below diagrams:.
The supply of raw materials, materials management in a firm and distribution of it to customers is known as logistics management. There is a little confusion with the definition of logistics management because there are various terminologies availed to explain logistics management and those are as below:. Integrated logistics management identified that furnishing best service to the customers and costs of trimming distribution needs teamwork in the company and in the complete marketing channels of an organization.
All you need to do is just click on the download link and get it. If you liked it then please share it or if you want to ask anything then please hit comment button. Logistics management - Objectives. Discuss the important objectives of logistics management. What is the role of logistics in supply chain.
Understand outsourcing. What are the catalyst for outsourcing. Discuss benefits of logistics. Understand 3 PL. Understand 4 PL. Request PDF Shipping and Logistics Management The term 'shipping' has evolved from its original relationship to ships and seaborne trade, to encompass any mode of transport that moves goods. The topics contained in Scope of Supply Chains are: Topic 1 Improve business flows Topic 2 Logistics to Supply Chains and Networks Topic 3 Challenges for your business Topic 4 Support the Logistics strategy To view a sample of the full course, watch the YouTube video below titled From Logistics to Supply Networks or download the full video training course: To improve the performance of your supply chains requires analysis of the collected data.
Stock Optimiser v2. External Tools NEW David Cobby recommends the following software tools to better understand supply chain modelling: ModelRisk a free Monte Carlo simulation Excel add-in that allows probability distribution functions to describe uncertainty about values.
Monte Carlo simulation is then used to generate possible scenarios. ExtendSim provides a range of tools for any type of simulation. Other Tools and Learning Materials NEW LucidChart allows you to diagram a supply network using templates — value stream maps and process maps are provided.
Outbound logistics: activities that are related to the maintenance, collection, and delivery of products to the customers are called outbound activities. The functions of the distribution channel are as below: Risk-taking Financing Negotiation Data Promotion Physical distribution Contacting Matching Consumer marketing channels and levels: For the good performance of channels, the struggle has to be managed.
This is NOT another supply chain book.. By Ram Mohan As a former professor of supply chain and a current practitioner, this book tells me that supply chain has come a long way. This book strings together topics that are necessary to make lean operations successful. Some books cover at a high level without being practical.. From value stream mapping through metrics, every step guides you in implementing the lean way.
The House of Lean depicts all topics and their relationships in one picture. And there are some unique aspects that takes the topis one step further. For example, most companies and major consulting firms do not recognize the differences between cycle and processing time.
And these differences have significant impact on bottlenecks and capacity decisions, and more importantly on lead time related metrics. Time-based competition is the last frontier for companies to differentiate when product differentiation is becoming less of a sustainable strategy. The book does not leave out the staple topics such as value stream mapping. The examples are clear and shows the value of these standard techniques. Finally, no book on management is complete without metrics.
There are case studies in the book to demonstrate the value of these techniques. The author has done justice on these topics as well. Style of writing: humor all through. Makes it easier for reading. Jim Romeo By James Romeo Paul Myerson's Lean Supply Chain and Logistics Management is a pragmatic, no-nonsense outlay of lean supply chain and logistics management for today's globally competitive environment.
It is truly a refreshing discussion of the topic without the clutter and lexicon that books of this type sometimes contain. The book is particularly advantageous for those organizations with lean programs who want to employ cross-functional teams to improve and add efficiency to their logistics operations. Of note in the book's 16 Chapters are the numerous real-life examples and case studies used to demonstrate principles and points that the book teaches.
Next is a discussion of the key elements that are fundamental to the logistic function. A description of the historical growth of distribution and logistics is followed by an assessment of its importance throughout the world. Finally, a typical distribution and logistics structure is described and discussed. Every industry has its own characteristics, and for each company in that industry there can be major variations in strategy, size, range of product, market coverage, etc.
Logistics is, therefore, a diverse and dynamic function that has to be flexible and has to change according to the various constraints and demands imposed upon it and with respect to the environment in which it works. Thus, these many different terms are used, often interchangeably, in literature and in the business world. One quite widely respected definition also helps to describe one of the key relationships. This includes the supply of raw materials and components as well as the delivery of products to the final customer.
It should also be noted that logistics and the supply chain are concerned not only with physical flows and storage from raw material through to the final distribution of the finished product, but also with information flows and storage. This shows the key components, the major flows and some of the different logistics terminology importance of information as well as physical flows and storage. An additional and very rele- vant factor is that of reverse logistics — the flow of used products and returnable packaging back through the system.
Figure 1. The question of what is the most appropriate definition of logistics and its associated name- sakes is always an interesting one. There are a multitude of definitions to be found in textbooks and on the internet.
A selected few are: Logistics is Hesket, Glaskowsky and Ivie, Logistics is the management of the flow of goods and services between the point of origin and the point of consumption in order to meet the requirements of customers. Chartered Institute of Logistics and Transport UK , It is interesting to detect the different biases — military, economic, academic, etc. An appropri- ate modern definition that applies to most industry might be that logistics concerns the efficient transfer of goods from the source of supply through the place of manufacture to the point of consumption in a cost-effective way while providing an acceptable service to the customer.
This focus on cost-effectiveness and customer service will be a point of emphasis throughout this book. A more critical consideration of the difference between logistics and the supply chain is given at the end of Chapter 2. It is developed using some of the ideas that are discussed in that chapter. For most organizations it is possible to draw up a familiar list of key areas representing the major components of distribution and logistics.
These will include transport, warehous- ing, inventory, packaging and information. Some typical examples are given in Figure 1. A number of questions need to be asked and decisions made. The different ways of answering these questions and making these decisions will be addressed in the chapters of this book as consideration is given to the planning and operation of the logistics and supply chain function.
In addition, the total system interrelationships and the constraints of appropriate costs and service levels will be discussed. Historical perspective The elements of logistics and the supply chain have, of course, always been fundamental to the manufacturing, storage and movement of goods and products.
It is only relatively recently, however, that they have come to be recognized as vital functions within the business and economic environment. The role of logistics has developed such that it now plays a major part in the success of many different operations and organizations. In essence, the underlying concepts and rationale for logistics are not new.
They have evolved through several stages of development, but still use the basic ideas such as trade-off analysis, value chains and systems theory together with their associated techniques. There have been several distinct stages in the development of distribution and logistics. Manufacturers manufactured, retailers retailed, and in some way or other the goods reached the shops. There was little positive control and no real liaison between the various distribution-related functions.
This consisted of the recognition that there was a series of interrelated physical activities such as transport, storage, materials handling and packaging that could be linked together and managed more effectively. In particular, there was recognition of a relationship between the various functions, which enabled a systems approach and total cost perspective to be used. Under the auspices of a physical distribution manager, a number of distribution trade-offs could be planned and managed to provide both improved service and reduced cost.
One major change was the recognition by some companies of the need to include distribution in the functional management structure of an organization. The decade also saw a change in the structure and control of the distribution chain. There was a decline in the power of the manufacturers and suppliers, and a marked increase in that of the major retailers.
The larger retail chains developed their own distribution structures, based initially on the concept of regional or local distribution depots to supply their stores.
With this professionalism came a move towards longer-term planning and attempts to identify and pursue cost-saving measures. These measures included centralized distribution, severe reductions in stockholding and the use of the computer to provide improved information and control.
The growth of the third-party distribution service industry was also of major significance, with these companies spearheading developments in information and equip- ment technology. The concept of and need for integrated logistics systems were recognized by forward-looking companies that participated in distribution activities.
Late s and early s In the late s and early s, advances in information technology enabled organizations to broaden their perspectives in terms of the functions that could be integrated. In short, this covered the combining of materials management the inbound side with physical distribution the outbound side. Once again this led to additional opportunities to improve customer service and reduce the associated costs.
One major emphasis made during this period was that informational aspects were as important as physical aspects in securing an effective logistics strategy. This became known as supply chain management see Figure 1.
Thus, for example, manufacturers and retailers should act together in partner- ship to help create a logistics pipeline that enables an efficient and effective flow of the right products through to the final customer. These partnerships or alliances should also include other intermediaries within the supply chain, such as third-party contractors.
This led to the develop- ment of many new ideas for improvement, specifically recognized in the redefinition of business goals and the re-engineering of entire systems. Logistics and the supply chain finally became recognized as an area that was key to overall business success. Indeed, for many organizations, changes in logistics have provided the catalyst for major enhancements to their business. Thus, the role and importance of logistics continued to be recognized as a key enabler for business improvement.
Importance of logistics and distribution It is useful, at this point, to consider logistics in the context of business and the economy as a whole. Importance in the economy Logistics is an important activity making extensive use of the human and material resources that affect a national economy. Due to the difficulty of data collection, only a limited number of studies have been undertaken to try to estimate and compare the extent of the impact of logistics on the economy. Indeed, in recent years it has been very difficult to locate a study that provides this information in any detail.
A recent study by Capgemini Consulting found that total logistics expenditure as a percentage of sales revenues was the same for the three major trading regions of North America, Europe and Asia-Pacific — at 11 per cent; for Latin America it was 14 per cent.
Another study, undertaken by Armstrong and Associates , was able to present similar data at a country level, which indicated that for major economies logistics represented somewhere between 8 and 21 per cent of the gross domestic product GDP of that country.
This information is summarized in Figure 1. For developing countries this range was higher at around 12 per cent to 21 per cent — with India at about 17 per cent and China at 21 per cent. These numbers represent some very substantial costs, and serve to illustrate how important it is to understand the nature of logistics costs and to identify means of keeping these costs to a minimum.
Countries with the lowest costs are generally those where the importance of logistics was recognized relatively early and where there has been time to create more efficient systems.
It is to be expected that the logistics costs of developing countries will decrease over the next few years as these countries are able to benefit from improvements. About 25 years ago, if the same statistics had been available, these percentage elements would undoubtedly have been a lot higher in all of these countries. In the UK, records go back for about 30 years, and logistics costs were then around the 18 to 20 per cent mark.
However, since percentage costs have marginally increased. This was due to the global financial crisis and the increase in the cost of fuel. A useful discussion paper presented at the International Transport Forum provides some specific figures for the measurement of national level logistics cost and performance for certain individual countries and can be used for further information.
Importance of key components The breakdown of the costs of the different elements within logistics has been addressed in various surveys. The survey also produced a pan-European cost breakdown. In both studies the transport cost element of distribution was the major constituent part, often due to high fuel costs. US transport costs are especially affected by the long distances travelled, so the transport cost element is markedly higher there than it is in Europe.
Importance in industry The statistics described in the previous section are useful to provide a broad perspective on the importance of the relative logistics components. When looking at industry and company level, however, it is essential to be aware that the above costs are average figures taken across a number of companies. The relative make-up of these costs can vary quite significantly between different industries.
Listed in Table 1. There are some quite major variations amongst the results from the various companies and there can be a number of reasons for this. One of the main reasons for these cost differences is that logistics structures can and do differ quite dramatically between one company and another, and one industry and another.
Channels can be short ie very direct or long ie have many intermediate stocking points. Supply chains may be operated by different players: manufacturers, retailers, specialist third-party distribution companies, or indeed by a mixture of these. For example, cement is a low-cost product as well as being a very bulky one!
Spirits whisky, gin, etc are very high-value products, so the relative logistics costs appear very low. This is principally because large companies can benefit from economies of scale. This is because the high value of their goods tends to distort downwards the importance of the respective logistics costs.
These and other associated aspects are discussed in subsequent chapters. A series of studies undertaken by Datamonitor indicate that the global logistics market including all in-house and outsourced logistics operations is dominated by retail logistics services This applies globally and is reflected in all key markets see Table 1. The retail sector has been at the forefront of some of the most advanced and innovative devel- opments in logistics and supply chain thinking.
Table 1. The fundamental characteristics of a physical distribution structure, illustrated in the first part of Figure 1. This flow is usually some form of transportation of the product. The stationary periods are usually for storage or to allow some change to the product to take place — manufacture, assembly, packing, break-bulk, etc.
This simple physical flow consists of the different types of transport primary, local delivery, etc and stationary functions production, finished goods inventory, etc. The importance of this distribution or logistical cost to the final cost of the product has already been highlighted. As has been noted, it can vary according to the sophistication of the distribution system used and the intrinsic value of the product itself.
This is a more positive view of logistics and is a useful way of assessing the real contribution and importance of logistics and distribution services. The added value element varies considerably from one product to another. Summary In this initial chapter, a number of concepts and ideas have been introduced. These will be expanded in subsequent chapters of the book. The rather confusing number of associated names and different definitions was indicated, and a few of the very many definitions were considered.
The recent history of distribution, logistics and the supply chain was outlined, and a series of statistics served to illustrate how important logistics and the supply chain are to the economy in general and to individual companies. The breakdown between the constituent parts of distribution and logistics was given. The basic structure of the supply chain was described, and the concepts of material and information flow and the added value of logistics were introduced.
It was shown that the various logistics and supply chain functions are part of a flow process operating across many business areas. In this chapter, the emphasis is on the integration of the various logistics components into a complete working structure that enables the overall system to run at the optimum.
Some key aspects of planning for logistics are reviewed, and the financial impact that logistics has in a business is described. Finally, a number of key developments in logistics thinking are put forward, including the impact of the globalization of many companies, integrated planning systems, the use of logistics to help create competitive advantage and the development of supply chain management.
The total logistics concept The total logistics concept TLC aims to treat the many different elements that come under the broad category of distribution and logistics as one single integrated system. Thus, the total system should be considered and not just an individual element or subsystem in isolation.
An understanding of the concept is especially important when planning for any aspect of distribution and logistics. These boxes are packed on to wooden pallets that are used as the basic unit load in the warehouse and in the transport vehicles for delivery to customers.
A study indicates that the cardboard box is an unnecessary cost because it does not provide any significant additional protection to the quite robust plastic toys and it does not appear to offer any significant marketing advantage. Thus, the box is discarded, lowering the unit cost of the toy and so providing a potential advantage in the marketplace.
One unforeseen result, however, is that the toys, without their boxes, cannot be stacked on to wooden pallets, because they are unstable, but must be stored and moved instead in special trays. These trays are totally different to the unit load that is currently used in the warehouse and on the vehicles ie the wooden pallet. The additional cost penalty in providing special trays and catering for another type of unit load for storage and delivery is a high one — much higher than the savings made on the product packaging.
This example illustrates a classic case of sub-optimization in a logistics system. It shows that if the concept of total logistics is ignored, this can be a significant cost to a company. As the product packaging costs have been reduced, those concerned with this company function will feel that they have done their job well.
However, the overall effect on the total logistics cost is, in fact, a negative one. The company is better served by disregarding this potential saving on packaging, because the additional warehouse and transport costs mean that total costs increase. This simple example of sub-optimization emphasizes the importance of understanding the interrelationships of the different logistics elements.
A more positive action would be to measure and interpret these and other interrelationships using a planned approach to identi- fying and determining any cost trade-offs. This approach will be a benefit to the logistics system as a whole.
Such a trade-off may entail additional cost in one function but will provide a greater cost saving in another. The overall achievement will be a net gain to the system. This type of trade-off analysis is an important part of planning for logistics. Four different levels of trade-off can be identified: 1. Within logistics components: this refers to the trade-offs that occur within single functions eg warehousing. One example would be the decision to use random storage locations compared to fixed storage locations in a depot.
The first of these provides better storage utilization but is more difficult for picking; the second is easier for picking but does not provide such good storage utilization. Between logistics components: these are the trade-offs that occur between the different elements in logistics. To reverse the earlier packaging example, a company might increase the strength and thus the cost of packaging but find greater savings through improve- ments in the warehousing and storage of the product ie block stacking rather than a requirement for racking.
Between company functions: there are a number of areas of interface between company functions where trade-offs can be made. This is illustrated in Figure 2. One example is the trade-off between optimizing production run lengths and the associ- ated warehousing costs of storing the finished product.
Long production runs produce lower unit costs and thus more cost-effective production but mean that more product must be stored for a longer period which is less cost-effective for warehousing. Between the company and external organizations: there may be opportunities for a trade-off between two companies that are directly associated with each other. These types of trade-offs are thus at the heart of the total logistics concept. For the planning of distribution and logistics, it is important to take this overall view of a logistics system and its costs.
The other side of the equation is, of course, the need to provide the service level that is required by the customer. This balance of total logistics cost and customer service level is essential to successful logistics. In this section, the various planning horizons with their associated logistics decisions are described. In Chapter 6, a more formalized planning framework will be discussed. This will be developed in subsequent chapters into a more practical and detailed approach to logistics planning.
Planning should be undertaken according to a certain hierarchy that reflects different planning time horizons. These are generally classified as strategic, tactical and operational. They are represented on the left side of Figure 2. There is an overlap between the different levels, which emphasizes that there are some factors that can be considered at different stages in this planning hierarchy.
The relative importance of these various elements can differ between one company and another. For example, the choice of transport mode might be a strategic decision for a company that is setting up a new global logistics operation, but might just be a tactical decision for another company that is principally a supplier to a locally based market and only occasionally exports over long distances. Choice of transport mode could even be an initial strategic decision and also a subsequent tactical decision for a single company.
Both of these different elements are essential to the running of an effective and efficient logistics operation. Most elements need to be planned correctly in the first place, and then subsequently they need to be monitored and controlled to ensure that the operation is running as well as it should be.
The practical means of monitoring and controlling logistics are described in Chapter Some of the major aspects and differences between the three time horizons are summarized in Figure 2. The importance and relevance of these different aspects will, of course, vary according to the type and scale of business, product, etc. It is helpful to be aware of the plan- ning horizon and the associated implications for each major decision that is made.
As already indicated, these may vary from one company to another and from one operation to another. Some of these — in no particular order — are as indicated in Figure 2. In addition, they underline the need for appropriate planning and control. Distribution and logistics are not merely the transportation of goods from one storage point to another.
There are many and varied elements that go together to produce an effective distribution and logistics operation. These elements interrelate, and they need to be planned over suitable time horizons. The planning and control of an operation can also be described within the context of a broader planning cycle. This emphasizes the need for a systematic approach, where continual review takes place.
This is a particularly important concept in logistics, because most operations need to be highly dynamic — they are subject to continual change, as both demand and supply of goods and products regularly vary according to changes in customer requirements for new products and better product availability. One example of a fairly common framework is shown as the planning and control cycle in Figure 2.
The key stages in the cycle are as follows: 1. This might be through a regular information feedback procedure or through the use of a specific logistics or distribution audit. The second stage is to determine the objectives of the logistics process, to identify what the operation should be trying to achieve. These objectives need to be related to such elements as customer service requirements, marketing decisions, etc.
The third stage in the cycle is the planning process that spans the strategic and operational levels previously discussed. Finally, there is a need for monitoring and control procedures to measure the effective- ness of the distribution operation compared to the plan. This should be undertaken on a regular weekly, monthly and annual basis.
Where are we now? This allows for the dynamic nature of logistics, the need for continual review and revision of plans, policies and operations. This must be undertaken within a positive planning framework in order to ensure that continuity and progress are maintained. Logistics has traditionally been seen as an operational necessity that cannot be avoided; however, a good logistics operation can also offer opportunities for improving financial performance.
For improved business performance, this ratio needs to be shifted to increase profits and reduce capital employed.
There are many different ways in which logistics can have both a positive and a negative impact on the ROI. These are outlined in Figure 2. This shows ROI as the key ratio of profit and capital employed, with the main elements broken down further as sales revenue less cost representing profit and inventory plus cash and receivables plus fixed assets representing capital employed. One of the aims of many service level agreements is to try to achieve OTIF on time in full deliveries — a key objective of many logistics systems.
On the other hand, costs can be minimized through efficient logistics operations. For example, there are many different types of inventory held by companies, including raw materials, components, work-in-progress and finished goods. The key logistics functions impact very significantly on the stock levels of all of these. This impact can occur with respect to stock location, inventory control, stockholding policies, order and reorder quantities and integrated systems, amongst others.
Cash and receivables are influenced by cash-to-cash and order cycle times — both of these being key logistics processes. Finally, there are many fixed assets to be found in logistics operations: warehouses, depots, transport, and material han- dling equipment.
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