1、Unit One What Is Logistics Pre-reading Discussion 1. What do you know about logistics?2. What activities do you think are belonged to logistics?3. Do you know any logistics companies and what do they do?Introduction 1 Logistics refers to series of activities associated with flow of merchandise, info

2、rmation and payments among suppliers and consumers. It has couples of versions of definitions. The most popular one is introduced by the Council of Logistics Management (the CLM now becomes the Council of Supply Chain Management Professionals): the process of planning, implementing and controlling t

3、he efficient, effective flow and storage of goods, services, and related information from the point of origin to the point ofIntroduction consumption for the purpose of conforming to customers requirements. Note that this definition includes inbound,outbound,internal, and external movements, and ret

4、urn of materials for environmental purposes.Definition2We can briefly conclude logistics as “having the right thing, at the right place, at the right time”. Going to explore the implied meaning, logistics, at its heart deals with satisfying the customer by allocating all kinds of resources and arran

5、ging various activities. It is the service conception. Logistics usually bring both tangible and intangible benefits to the users. The tangibility is in the form of moving products to the user, while intangibility is known as extra services.Definition3The explanation above is based on the modern con

6、ception of logistics, which has been changing and developing a great deal from the very beginning and turned out to be more complex. In the following section, lets see how logistics grows.History of Logistics4Logistics as a term was introduced into business by Peter Druker in 1960s, but the activity

7、 of goods movement existed from very ancient time when trading appeared. In the business world this activity used to be called “physical distribution”. It only refers to delivering raw materials and final products in manufacturing industries.5Logistics received recognition in military operations dur

8、ing World War II, and gained its momentum as it contributed to the effective distribution of machinery and supplies to troops. The US and allies have won the war through successful logistics capability. So in a military sense, the term “l(fā)ogistics” encompasses transport organization, army replenishme

9、nts and material maintenance. And this sense has been enhanced in the 1991 Gulf War. This kind of movement is more than physical handling, but resource allocating and information management. This is learnt by business which leads to enrich the meaning of logistics in business. The developed logistic

10、s means not only “physical distribution” but also integrating information and providing quality services.Functions of Logistics 6The modern conception of logistics consists of several functions, which relate with each other, as follows: 7Procurement deals with the buying of goods and services that k

11、eep the organization functioning. Since these inputs have a direct impact on both the cost and quality of the final product/service offered to the consumer, this activity is vital to the success of the logistics effort. The objective is to secure optimal supplier performance with respect to quality,

12、 timely delivery, and minimum cost of purchased items. To achieve these objectives, it is necessary to develop the satisfactory sources of supply and to maintain good relationships with these suppliers. 8There are some basic steps for procurement process. The first step is to receive a request to pl

13、ace an order. Second, make a decision on which supplier to choose, based on his past history and the ability to supply highquality product with timely delivery at a reasonable cost. The third step, after selecting the suppliers, is placing an order. Last, make payment. 9Packaging focuses on protecti

14、ng the product while it is being shipped and stored. It needs to be compatible with the processes through which it will pass, such as filling, and with packaging machinery and the design, which related to the costs. Too much packaging increases costs while inadequate protection can result in merchan

15、dise damage and, finally, customer dissatisfaction. In addition, since every bit of packaging is ultimately discarded, packaging management must also consider the societal costs associated with waste disposal. Increasingly, firms are working to develop materials that provide required levels of prote

16、ction yet are recyclable or quickly biodegradable. 10Inventory management deals with balancing the cost of maintaining additional products available against the risk of not having those items when the customer wants them, which is related with warehouse management (also known as storage and material

17、s handling). The challenge of inventory management is to manage the rest of the logistics system to coordinate the lack of inventory so that customer service does not suffer. Although all of the interest focuses on reducing inventories, the fact remains that they are still necessary for serving cust

18、omers in many markets. There is no doubt that holding inventory costs money, so firms dont want to have any more than is absolutely necessary to keep themselves and their customers satisfied. The warehouse management should be addressed here. Simply speaking, it is physical requirements of managing

19、inventory. Storage includes the tasks necessary to manage whatever space is needed; materials handling is concerned with the movement of goods within that space. Thus, the former considers issues related to warehouse number, size, layout, and design; the latter concentrates on the systems needed to

20、move goods into, through, and out of each facility. Obviously, an organizations inventory policies have a direct impact on its storage and handling needs. Thus, one result of the move to smaller inventories is the requirement for less storage space.11Transportation is a key part of the logistics mix

21、, because it takes a larger percentage of logistics costs than any other logistics activity. And transportation is frequently used to offset the potentially damaging impact on customer service levels that would otherwise result from the inventory reductions in justintime (JIT) strategies which is ga

22、ining its popularity recently. It refers to the physical movement of goods from the point of origin to the point of consumption. And it involves raw materials being brought into the productionprocess and/or finished goods being shipped out to the customer. Transportation management has some chief ta

23、sks to do, mode selection, carrier routing, vehicle scheduling, and so on. Among all those things above, the selection of mode depends on variety of service characteristics, ranging from speed to assistance in problem solving. All service characteristics are not of equal importance. And cost, speed

24、and dependability are the most important factors.12Distribution becomes an important function in logistics fairly recently. It keeps close relation with transportation and storage, but is quite different from them. Distribution means product travels from manufacturer to the final customer. It perfor

25、ms physical movement through members of logistics channel involving carriers that transport products, and warehouses that store them. So distribution center can be regarded as a large and highly automated warehouse designed to receive goods from various plants and suppliers, take orders, fill them e

26、fficiently and deliver goods to customers as quickly as possible. But it is distinguished from traditional warehouse. Obviously, distribution center is much more than a warehouse. It provides more valueadded services, like assembly, package and other distribution processing activities, which can max

27、imize the profit margin of meeting the customers delivery requirements.Importance of Logistics13Logistics plays an important role in business today. No marketing, manufacturing or project execution can succeed without logistics support. For companies, 10 percent to 35 percent of gross sales are logi

28、stics cost, depending on business, geography and weight/value ratio.14As economy expands and peoples life diversifies, logistics becomes more and more important. Now it is a new source of companies to generate profits, because it provides price and cost strategy among procurement and inventory manag

29、ement. And it also benefits final customers because it provides high quality services, which were ignored before. To this extent, logistics can be expressed like this: get the right material, at the right time, at the right point and in the right condition at the lowest cost.Trends of Logistics15As the economy in North America evolved in the 1970s and 1980s, transportation deregulation changed the competitive landscape of business. Carriers were free to charge their customers (