03-Aug-15

Logistics Concepts & Planning

Session 3 & 4:

Warehousing,
Material
Handling &
Packaging

Inventory

Transportation

Logistical
Competency

Information

Network
Design

1
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03-Aug-15

Logistical competency
Is a relative assessment of a firm's capability to
provide competitively superior customer service
at the lowest possible total cost.
This typically means that logistical performance
is dedicated to supporting any or all marketing
and manufacturing requirements in a manner
that exploits delivery capability.

Logistical competency
In short, the strategy is to provide superior
service at a total cost below industry average.
One of several competencies required to create
customer value is logistics.
When logistics becomes a cornerstone of basic
business strategy, it must be managed as a core
competency.

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03-Aug-15

Network Design
Typical logistics facilities are manufacturing
plants, warehouses, cross-dock operations and
retail stores.
Determining how many of each type of facility
are needed, their geographic locations, and the
work to be performed 'at each is a significant
part of network design.
In specific situations, facility operation may be
outsourced to service specialists.

Information
Current technology is capable of handling the
most demanding information requirements.
Information can be obtained on a real-time
basis.
Managers are learning how to use such
information technology to devise new and
unique logistical solutions.

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03-Aug-15

Transportation
Transportation requirements can be accomplished in
three basic ways.
First of all, a private fleet of equipment may be operated.
Second, contracts may be arranged with transport specialists.
Third, an enterprise may engage the services of a wide variety of
carriers that provide different transportation services on an
individual shipment basis.

These three forms of transport are typically referred to as

private, contract, and common carriage.
From the logistical system viewpoint, three factors are
fundamental to transportation performance: cost, speed,
and consistency.

Transportation
Speed of transportation is the time required to complete
a specific material movement.
Consistency of transportation refers to variations in time
required to perform a specific movement over a number
of shipments.
Speed and consistency combine to create the quality
aspect of transportation.
In the design of a logistical system, a delicate balance
must be maintained between transportation cost and
quality of service.

4
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03-Aug-15

Inventory
The inventory requirements of a firm depend on the
network structure and the desired level of customer
service.
The objective is to achieve the desired customer service
with the minimum inventory commitment, consistent
with lowest total cost.
Logistical strategies are designed to maintain the lowest
possible financial assets in inventory.
The basic goal of inventory management is to achieve
maximum turnover while satisfying customer
commitments.

Inventory
Inventory strategies need to be focused on meeting
requirements of such core customers.
The key to effective segmented logistics rests in the
inventory priorities designed to support core
customers.
Most enterprises experience a substantial variance in
volume and profitability across product lines.
If no restrictions are applied, a firm may find that less
than 20 percent of all products marketed account for
more than 80 percent of total profit.

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03-Aug-15

Warehousing, material handling, and packaging

Warehousing, material handling, and packaging are
an integral part of other logistics areas.
For example, merchandise typically needs to be
warehoused at selected times during the logistics
process.
Transportation vehicles require material handling for
efficient loading and unloading.
Finally, the individual products are most efficiently
handled when packaged together into shipping
cartons or other types of containers.

Warehousing, material handling, and packaging

Within the warehouse, material handling is an
important activity.
Products must be received, moved, sorted, and
assembled to meet customer order requirements.
The direct labor and capital invested in materialhandling equipment are a major part of total logistics
cost.
A variety of mechanized and automated devices exist
to assist in material handling.

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