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Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin1-1JAMESR.STOCKDOUGLASM.LAMBERTSTRATEGICLOGISTICSMANAGEMENTFOURTHEDITIONCHAPTER1Logistics’RoleintheEconomyandtheOrganizationCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin1-3Thatpartofthesupplychainprocessthatplans,implements,andcontrolstheefficient,effectiveflowandstorageofgoods,services,andrelatedinformationfromthepoint-of-origintothepoint-of-consumptioninordertomeetcustomers’requirements.CouncilofLogisticsManagementLogisticsManagementDefinedCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin1-4ComponentsofLogisticsManagementCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.ManagementactionsPlanningImplementationControlRawmaterialsIn-processinventoryFinishedgoodsNaturalresourcesHumanresourcesFinancialresourcesInformationresourcesTimeandplaceutilityEfficientmovementtocustomerProprietaryassetCompetitiveadvantageLogisticsmanagementSuppliersCustomersInputsintologisticsOutputsoflogisticsCustomerserviceDemandforecastingInventorymanagementLogisticscommunicationsMaterialhandlingOrderprocessingPartsandservicesupportPlant&warehousesiteselectionProcurementPackagingReverselogisticsTrafficandtransportationWarehousingandstorageLogisticsactivitiesCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin1-5Marketing/LogisticsManagementConceptCustomersatisfactionIntegratedeffortCompanyprofit•Suppliers•Intermediatecustomers•Finalcustomers•Maximizelong-termprofitability•Lowesttotalcostsgivenanacceptablelevelofcustomerservice•Product•Price•Promotion•Place(distribution)Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin1-6CostTrade-offsinMarketingandLogisticsProductOrderprocessingandinformationcostsInventorycarryingcostsPlace/customerservicelevelsOrderprocessingandinformationcostsPriceLotquantitycostsWarehousingcostsTransportationcostsMARKETINGCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin1-7RelationshipofLogisticsActivitiestoLogisticsCosts•Customerservicelevels•Transportationcosts•Warehousingcosts•Orderprocessing/informationsystemscosts•Lotquantitycosts•InventorycarryingcostsCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin1-8KeyLogisticsActivities•Customerservice•Demandforecasting•Inventorymanagement•Logisticscommunications•Materialhandling•Orderprocessing•Packaging•Partsandservicesupport•Plantandwarehousesiteselection•Procurement•Reverselogistics•Trafficandtransportation•WarehousingandstorageCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin1-9FlowthroughtheSupplyChainCustomerCustomerCustomerCustomerCustomerCustomerSupplierSupplierSupplierDistributioncenterDistributioncenterManufacturingsiteCarrierCarrierCarrierCarrierCarrierCarrierCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin1-10StrategicProfitModel$FinancialleverageReturnonnetworthReturnonassetsNetprofitNetworthTotalassetsNetworthNetprofitTotalassetsNetsalesTotalassetsNetprofitNetsalesNetprofitmarginNetprofitGrossmarginSalesSalesCostofgoodssoldVariableexpensesFixedexpensesAccountsreceivableOthercurrentassetsInventorySalesTotalassetsAssetturnoverCurrentassetsFixedassetsIncometaxesTotalexpenses==xx++++++---x%%$$$$$$$$$$$$$$$Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin1-11FutureChallengesandAreasforPerformanceImprovement•SupplyChainManagement•StrategicPlanning•TotalQualityManagement•Just-in-Time•QuickResponse•EfficientConsumerResponse•LogisticsasaCompetitiveWeapon1-11aCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin1-12FutureChallengesandAreasforPerformanceImprovement(cont.)•Accountingforlogisticscosts•Logisticsasaboundary-spanningactivity•Globallogistics•Increasingskillrequirements•Logisticsinformationsystems•Strategicalliances,partnerships,andoutsourcing•Greenmarketingandreverselogistics1-11b

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