Professional Documents
Culture Documents
Logistics
DIMENSIONS OF LOGISTICS
Learning Objectives
Understand the role and importance of logistics in
private and public organizations
Appreciate the impact of logistics on the economy
and how effective logistics management
contributes to the economy
Understand the value-added roles of logistics
Define logistics systems from several perspectives
Dimensions of Logistics
Drucker – 1962 “The Economy’s Dark Continent”
◦ Distribution is one of the most sadly neglected but most
promising areas of American business…
15-25% of the cost of manufactured components
goes to cover expenses before it hits the assembly
line
Origins date back to the military around WWII –
Gulf War regarded as a ‘logistics war;
Definition of Logistics
Cost centers
◦ Trade offs
Approaches to
Analyzing Logistics
Systems
Nodes versus links
◦ nodes - points where goods stop for
processing
◦ links - transportation connecting nodes
Logistics Channels - network of intermediaries
that contribute to efficient flow of goods
Logistics and Systems
Analysis
System - is a set of interacting elements, variables,
parts or objects that are functionally related to one
another and that form a coherent group.
Optimization –always the best alternative
Logistics and Systems
Analysis
Levels of optimality
◦ Delivery timeframes
Functional relationships
◦ Interdepartmental cooperation
Constraints
Logistics System
Analysis
Short-Run/Static Analysis
◦ Look at short run situation and select the system with the lowest overall cost.
Long-Run/Dynamic Analysis
◦ Mathematically calculate the point of equality between the two systems
Factors Affecting the
Cost and Importance of
Logistics
Competition via customer service
◦ Order Cycle
◦ shorter order cycle, less inventory required
◦ Substitution
◦ more substitutable product, higher customer service level required
◦ Inventory Effect
◦ increase inventory, reduce cost of lost sales
◦ Transportation Effect
◦ increase transportation costs, reduce cost of lost sales
Factors Affecting the
Cost and Importance of
Logistics
Product factors
Dollar Value - product value increases, cost of
warehousing, transportation and inventory
increases
Density- higher the density, more efficient use of
warehouse and transportation space
Damage -greater the risk of damage, higher the
transportation and warehousing cost
Special Handling Requirments