Economicutilitiesaddingvaluetoproduct/serviceFormutility--manufacturingactivitiesTimeutility--logisticsactivitiesPlaceutility--logisticsactivitiesPossessionutility--marketingactivitiesFormutilityFormutilityreferstothevalueaddedtogoodsthroughamanufacturing,production,orassemblyprocess.Forexample,formutilityresultswhenrawmaterialsarecombinedinsomepredeterminedmannertomakeafinishedproduct.Intoday’seconomicenvironment,certainlogisticsactivitiescanalsoprovideformutility.Forexample,breakingbulkandproductmixing,whichtypicallytakeplaceatdistributioncenters,changeaproduct’sformbychangingitsshipmentsizeandpackagingcharacteristics.PlaceutilityLogisticsprovidesplaceutilitybymovinggoodsfromproductionsurpluspointstopointswheredemandexists.Logisticsextendsthephysicalboundariesofthemarket,thusaddingeconomicvaluetothegoods.Logisticscreatesplaceutilityprimarilythroughtransportation.Themarketboundaryextensionaddedbyplaceutilityincreasescompetition,whichusuallyleadstolowerpricesandincreasedproductavailability.TimeutilityNotonlymustgoodsandservicesbeavailablewhereconsumersneedthem,buttheymustalsobeatthatpointwhencustomersdemandthem.Logisticscreatestimeutilitybyhavingheavilyadvertisedproductsandsalemerchandiseavailableinretailstoresatpreciselythetimepromisedintheadvertisingcopy.Timeutilityismuchmoreimportanttodaybecauseoftheemphasisuponreducingleadtimeandminimizinginventorylevelsthroughlogistics-relatedstrategiessuchasJITinventorycontrol.PossessionutilityPossessionutilityisprimarilycreatedthroughthebasicmarketingactivitiesrelatedtothepromotionofproductsorservices.Theroleoflogisticsintheeconomydependsupontheexistenceofpossessionutility,fortimeorplaceutilitymakesenseonlyifdemandfortheproductorserviceexists.Itisalsotruethatmarketingdependsuponlogistics,sincepossessionutilitycannotbeacteduponunlesstimeandplaceutilityareprovided.Orderfulfillmentisthecriticalandoftenfinalstepformeetingcustomerrequirements.ActivitiesthatlogisticsmanagermayberesponsibleforTrafficandtransportationMaterialshandlingWarehousingandstorageInventorycontrolIndustrialpackagingOrderfulfillmentDemandforecastingPlantandwarehousesitelocationReturngoodshandlingSalvageandscrapdisposalTransportationTransportationisaveryimportantpartofthelogisticssystem.Amajorfocusinlogisticsisuponthephysicalmovementorflowofgoodsoruponthenetworkthatmovestheproduct.Thisnetworkiscomposedoftransportationagenciesthatprovidetheserviceforthefirm.Thelogisticsmanagerisresponsibleforselectingthemodeormodesoftransportationusedinmovingtherawmaterialandfinishedgoods.StorageStorageinvolvestwoseparatebutcloselyrelatedactivities:inventorymanagementandwarehousing.Adirectrelationshipexistsbetweentransportationandthelevelofinventoryandnumberofwarehousesrequired.Forexample,iffirmsusearelativelyslowmeansoftransport,theyusuallyhavetokeephigherinventorylevelsandusuallyhavemorewarehousingspaceforthisinventory.Theymayexaminethepossibilityofusingfastertransporttoeliminatesomeofthesewarehousesandtheinventorystoredtherein.DecisionsrelatedtostorageactivitieshowmanywarehouseshowmuchinventorywheretolocatethewarehouseswhatsizethewarehouseshouldbePackagingThetypeoftransportationselectedaffectspackagingrequirementsbothformovingthefinishedproducttothemarketandfortheinboundmaterials.Forexample,railorwatertransportationusuallyrequiresadditionalpackagingexpendituresbecauseofthegreaterpossibilityofdamage.Inanalyzingtrade-offsforproposedchangesintransportationagencies,logisticspersonnelgenerallyexaminehowthechangewillinfluencepackagingcosts.MaterialshandlingLogisticsmanagersareconcernedwiththemovementofgoodsintoawarehouse,theplacementofgoodsinawarehouse,andthemovementofgoodsfromstoragetoorder-pickingareaandeventuallytodockareasfortransportationoutofthewarehouse.Materialshandlingisusuallyconcernedwithmechanicalequipmentforshort-distancemovement;suchequipmentincludesconveyors,forklifttrucks,overheadcranes,andcontainers.Thecompanymayfinditeconomicaltousethesametypeofforklifttrucksintheplantsandinthewarehouses.Productionmanagersmaywantaparticularpalletorcontainertypethatisnotcompatiblewithlogisticswarehousingactivities.Therefore,thematerials-handlingdesignsmustbecoordinatedinordertoensurecongruitybetweenthetypesofequipmentused.SitelocationAnotherareathatisimportanttologisticsisplantandwarehousesitelocation.Alocationchangecouldaltertimeandplacerelationshipsbetweenplantsandmarketsorbetweensupplypointandplants.Suchchangeswillaffecttransportationratesandservice,customerservice,inventoryrequirements,andpossiblyotherareas.Therefore,thelogisticsmanagerisquiteconcernedaboutlocationdecisions.Infact,plantlocationisfrequentlyasimportantaswarehouselocation.Transportationcostisfrequentlyaveryimportantfactorindecidingonalocation.FactorsaffectingthecostandimportanceoflogisticsCompetitiverelationshipsOrdercycleSubstitutabilityProductrelationshipsDollarvalueSusceptibilitytodamageSpecialhandlingrequirementsSpatialrelationshipFrequently,competitionisnarrowlyinterpretedonlyinformsofpricecompetition.Whilethepriceissueiscert