Logistics and Supply Chain Introduction

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Slides

Logistics (Academic): The discipline studying functional activities that determine the flow of materials (and relative information) in a company—from suppliers, through finished product delivery, to post-sales service (Ghiani et al., 2013).
Logistics (Operational / 7 Rs): Ensuring the right good, in the right quantity, in the right condition, at the right time, at the right place, with the highest possible economic efficiency.
- The 7 Rs: Right Product, Right Quantity, Right Condition, Right Place, Right Time, Right Customer, Right Cost.
DMAIC Framework: A process improvement methodology (Define, Measure, Analyze, Improve, Control) applied to manage and optimize logistics operations.

Supply Chain Management (SCM): The overarching system/discipline that coordinates all supply chain activities.
Logistics: A subset of SCM focused on managing the physical flow of materials and information.
Inventory & Transportation: The operational pillars of logistics, responsible for holding stock and moving materials.

Micro-Logistics: The business of logistics; procurement, distribution, reverse, spare parts; supply chain and production management. Also transportation logistics.
Macro-Logistics: The logistics of the economy; infrastructure, transport systems, and regulations. Also the modal choice: air/rail/road/water.
Meta-Logistics: Cooperation between companies, governments, and other stakeholders to optimize logistics at a societal level.

Cost Leadership: Focuses on economies of scale to achieve cost savings. Involves fixed cost degression and technology choice, which typically leads to centralization.
Product Differentiation: Focuses on economies of scope to offer customized, service-oriented variety (e.g., color, design), which typically leads to decentralization.
Mass Customization: A hybrid strategy combining elements of both, often utilizing postponement (delaying final product differentiation).

Shippers & Carriers: Shippers demand logistics services, while carriers (air, sea, land, train) supply them, focusing on asset management (capacity and utilization).
Service Providers: Include forwarders, contract logistics, and logistics platforms.
System Providers: Focus on third-party (3PL) or fourth-party (4PL) logistics providers, as well as Courier, Express, and Parcel (CEP) services managing highly complex global distribution networks (e.g., DHL/Post, UPS, TNT).

Control and System Costs: Expenses related to the design, planning, and monitoring of material flows.
Inventory Costs: Capital lock-up, insurance, and inventory devaluation.
Storage Costs: Costs for holding and operating warehouse capacity.
Transportation Costs: Expenses for internal/external, and inbound/outbound transport.
Handling Costs: Expenses for packaging, transshipment (handling), and order picking.

Cost vs. Service: Balancing inventory level against product availability (lost sales), or transportation costs (speed/mode) against delivery lead time.
Cost vs. Cost: Trade-offs between transport and inventory, packaging and transit damages, or purchasing (batch size) and inventory (holding costs).
Material vs. Quality: Balancing material costs with the quality of the product.
Competitiveness & Efficient Frontier: Logistics performance defines competitiveness. Innovation can shift the efficient frontier outwards, allowing lower costs for a given service level.

Strategic-Tactical: Long-term/medium-term planning, such as logistics strategies, make-or-buy decisions (3PL/4PL), technology and capacity planning (modes, fleet, warehouse layout, picking technology), and location planning (design of distribution systems).
Operational: Short-term execution, including transportation planning (routing, shortest paths, intermodal chain), packaging (container loading), inventory management, and warehouse planning (storage assignment, order picking).

Flo's Notes