Logistics in Business and Supply Chain

Logistics Costs relative to GDP

9.2% (compound annual growth rate)

Static Analysis

Concentrates on a specific point in time or level of production output

Product Related Factors

Dollar value affects warehousing, inventory, transportation, packaging, and handling costs; density affects transportation and warehousing costs; susceptibility to damage and special handling requirements impact warehousing, transportation, and packaging costs

Dynamic Analysis

Examines a logistics system over a long time period or range of output

Inventory Effect

Increasing inventory costs can reduce the cost of lost sales, ensuring customer satisfaction

Spatial Relationships in Logistics

Location of fixed points in the logistics system with respect to demand and supply points is crucial to transportation costs

Logistics Spending in the U.S.

Mainly in storage; transportation makes up 30% of logistics spending

Interface of Logistics

Manufacturing: production run length, raw material quantity, industrial packaging; Marketing: 4Ps (Price, Product, Promotion, Place)

Supply Chain Management (SCM)

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 to meet customers' requirements

Logistics

Refers to the movement, storage, and flow of goods, services, and information inside and outside the organization

Economic Utility

Something of value that a company provides to the customer; production/manufacturing provides form utility, logistics provides time, place, and quantity utilities, marketing provides possession utility

Transportation Effect

Spending more on transportation service can reduce the cost of lost sales and improve customer service