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