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Logistics

Tran Van HoaiFaculty of Computer Science & Engineering

HCMC University of Technology

2010-2011

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Outline

• What is logistics ?– As a part of supply-chain

• Systems and total cost approaches• Logistical relationships with a firm• Activities in the logistical channel

2010-2011

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Economic impactsYear Inventory

carrying costs

Transportation costs

Administrative costs

Total US logistics

costs

Logistics as a percentage of

GDP1960 31 44 3 78 14.71965 38 64 4 106 14.71970 56 91 6 153 14.71975 97 116 9 222 13.51980 220 214 17 451 16.11985 227 274 20 521 12.41990 283 351 25 659 11.41995 302 441 30 773 10.42000 377 590 39 1006 10.1

2010-2011

12th Annual State of Logistics Report, 2001

Strong macro-level economic impacts

mainly contributes to explosive growth- (60% GDP increase) of Ireland’s economy in

mid- and late- 1990s- 15-20% GDP of Vietnam (~12billions USD 2010,

source: Vietstock.vn)

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Impacts to individual customer

2010-2011 Tran Van Hoai

Economic utility

Possession utility Form

utilityPlace utility

Timeutility

• A student uses online service to order Valentine’s Day flowers for his out-of-country girlfriend– Possession utility: service provides secured payment by credit

card– Form utility: service provides correct bouquet– Place utility: bouquet arrives at girlfriend’s residence– Time utility: on Valentine’s Day

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What is logistics ?

• It has been referred by many terms– Business logistics– Distribution– Industrial distribution– Logistics– Logistics management– Materials management– Supply chain

management– …

2010-2011

• Different organizations may have different definition of logistics• 1st organization:

transportation & inventory management

• 2nd organization: transportation, inventory management & warehousing

Logistics is a part of supply chain process that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between point of origin and point of consumption in order to meet customers’ requirements(Council of Logistics Management)

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Supply chain configurations (1)

2010-2011

Supplier Organization Customer

Direct Supply Chain

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Supply chain configurations (2)

2010-2011

Supplier’s supplier Organization Customer

Extended Supply Chain

Supplier’s supplier

Customer’s customer

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Supply chain configurations (3)

2010-2011

Supplier’s supplier Organization Customer

Ultimate Supply Chain

Ultimate supplier

Ultimate customer

Financialprovider

Marketresearch firm

3rd partylogistics supplier

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Supply chain management

2010-2011

A supply chain management is as systemic, strategic coordination of traditional business functions and tactics across these business functions within a particular and across businesses in the supply chain, for the purposes of improving long-term performance of individual companies and supply chain as a whole(Mentzer et al, 2001)

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Supply-Chain Operations Reference(SCOR)

SCOR process

Definition

Plan Balancing demand & supply to develop actions which best meets requirements

Source Procuring goods & services to meet planned or actual demand

Make Transforming product to finished state to meet planned or actual demand

Deliver Providing finished goods & services to meet planned or actual demand

Return Returning & receiving returned products for any reason

2010-2011

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Increased importance of logistics

• A reduction in economic regulation– Tailored logistics approach to meet different

specific service levels• Technological advances– Computer– Internet

• Growing power of retailers• Globalization of trade– $200billions in 1970 -> $7.7trililions in 2000

2010-2011

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Logistical relationships within firm

2010-2011

FINANCE PRODUCTIONMARKETING

LOGISTICSSystems approach and total cost approach should be applied to logistics

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Activities in logistical channel

• Customer service• Facility location

decisions• Inventory management• Order management• Production scheduling• Returned products• Transportation

management

• Demand forecasting• Industrial packaging• Materials handling• Parts and service

support• Procurement• Salvage and scrap

disposal• Warehousing

management2010-2011