1. 1 Prof. Anatoly Sachenko -Kontakt  Zakład Informatyki i Ekonometrii  Budynek A, pokój 414  Instytut Ekonomii i Informatyki  Wydział Organizacji i Zarządzania  http://dydaktyka.polsl.pl/roz6/asachenko/default.a spx  sachenkoa@yahoo.com or  a_sachenko@ieee.org

2. 2 Lecture 1. Logistics Origin and Basics Lecturer: Prof. Anatoly Sachenko Informatics in Logistics Management

3. 3 Lecture Overview  Definition and Origins  System Approach  Logistics Management  Logistics Perspective

4. 4 Definition of Logistics  Logistics - “Planning implementing and controlling the physical flow of material and finished goods from point of origin to point of use to meet customer`s need at a profit” Philip Kotler  Logistics is the management of the flow of goods between the point of origin and the point of destination in order to meet the requirements of customers or corporations.  Logistics involves the integration of information, transportation, inventory, warehousing, material handling, and packaging, and often security transportationinventorywarehousingmaterial handlingpackagingsecurity  Logistics is one of the main functions within a company

5. 5 Origin of Logistics  The term logistics comes from the Greek logos (λόγος), meaning "speech, reason, ratio, rationality, language, phrase", and  more specifically from the Greek word logistiki (λογιστική), meaning accounting and financial organization  The word logistics has its origin in the French verb loger to lodge or to quarter  Its original use was to describe the science of movement, supplying & maintenance of military forces in the field  Later on it was used to describe the management of materials flow through an organization

6. 6 Main Logistics Targets and Fields  Its main targets are divided into performance related and cost related  They are high due date reliability, short delivery times, low inventory level and high capacity utilization  But when decisions need to be made, there is always a trade off between these targets  It’s making a logistician challenging and interesting  Main Logistics fields:  Procurement Logistics  Production Logistics  Distribution Logistics  After sales Logistics  Disposal Logistics

7. 7 Logistics Viewpoints  Inbound logistics is one of the primary processes and  it concentrates on purchasing and arranging inbound movement of materials, parts and/or finished inventory from suppliers to:  manufacturing or assembly plants, warehouses or retail stores  Outbound logistics is the process related to the storage and movement of the final product and the related information flows from  the end of the production line to the end user

8. 8 Scope of Logistic  It is a critical importance for organization how it delivers tangible or intangible products & services to the customer  Effective physical movement of the tangible product will speak of intangible services associated with the product and the delivered organization  In Case of intangible product, the delivery of tangibles at the right place & right time will speak about its quality  On the macro level infrastructure it’s contributing to a large extent in the physical movement of produced goods

9. 9 Scope of Logistic  This speed & reliability in distribution of products & services contribute to a great extent in the growth of a country`s domestic & international trade  Logistic cost as a percentage of GDP across the world is shown in the following table CountryLogistic cost as a percentage of GDP Korea16 China15 Japan14 India13 France12 UK11 USA10

10. 10 Logistics –A system approach  Logistics recognizes that all the activities of material movement across the business process are interdependent and needs close coordination and these are to be maintained as a system  Logistics System is an adaptive system including following functional Areas: Order Processing Information Flow Warehousing Inventory control Packaging Transportation

11. 11 Order Processing  Order checking for any deviation in agreed on negotiated term  Technical details; price; delivery period; payment terms; taxes etc.  Checking the availability of material in stock (material requisition)  Production & material scheduling for shortage.  Acknowledging the order, indicating deviation if any It is routine operation but require great deal of planning training of people involved and investment to bring about efficiency & accuracy

12. 12 Information Flow  It is basically info based activity of inventory movement across the supply chain  Hence role of info system plays a vital role in delivering superior customer service  This function is required to facilitate the following info needs  Order registration  Order checking & editing  Order processing  Coordination - means to integrate the total supply chain of the company with info needs as to time, quantity, value

13. 13 Warehousing  A storage place wherein finished goods are stored till they are sold.  Effectiveness of an organization`s marketing strategy depends on making the right decision regarding warehouse  Warehouse are treated as switching facilities rather than storage place  Major decision of warehouse are as follows:  Location,Size & Number of warehousing facilities  Warehouse layout  Design of building  Ownership of the warehouse

14. 14 Modern Warehouse

15. 15 Packaging  It is also a critical element in physical distribution of the product,  which influences the efficiency of the logistic system this is done with the view of following:  For handling and damage prevention  For communications  For inter modal transportation  Storage space economy Thus to reduce packaging cost

16. 16 Transportation  For goods movement of a transportation is the most fundamental and important component of logistic  E.g. for low unit value products the transportation cost component is 20% of the product cost  In logistic cost its share varies up to 65-70%  There are the few decision involved in transportation  Mode of transportation ( Cost & time factor)  Own fleet or Outsourcing  Route Planning  Vehicle scheduling

17. 17 Logistics Management  Logistics Management is that part of Supply Chain ManagementSupply Chain Management  that plans, implements, and controls the efficient, effective, forward, and reverse flow and storage of goods, services, andplansimplementscontrolsefficient effective goodsservices  related information between the point of origin and the point of consumptioninformationpoint of originpoint of consumption  in order to meet customers’ requirements  From a traditional point of a view a goal of any firm is to produce competitive products and increase its volume  In this case management can boil down to a General Manager + minor staff-see next slide

18. 18 Logistics Management – Traditional Structure Person’s Decision Making Process (Chief Manager) SupplierProductionCustomer Material flow Information flow

19. 19 Logistics Management – Traditional Structure  Both terms Flaw and Inventory are the main categories of Logistics  In Logistics Management are diffeation Flows- see previous and next slides  Material Flow red the Material and Informis the description of the transportation of raw materials, pre- fabricates, parts, components, integrated objects and finally products as a flow of entities  Logistics operations with Information Flow include acquisition, storing, processing and transfer of info  In next slide is shown a contemporary structure of Logistics Management

20. 20 Logistics Management – Contemporary Structure

21. 21 Logistics' perspective: Three Forces   Three Forces which have change the perspective of logistics:  Globalization  Focus on Supply Chain Management  Outsourcing of Non Core Competency Functional Area

22. 22 Globalization  The entire world has become a global village for marketers because of the liberalization of economics of most countries, and  the emergence of World Trade Organization which is forcing business organizations to supply products beyond the national boundaries wherever there is a market opportunity  However in such conditions the role of LOGISTICS will be  to provide time and place time and place utility of the product to the customer

23. 23 Focus on Supply Chain Management  Business the world over are striving for competitiveness  In their struggle for survival their focus has shifted to the supply chain i.e.  Integrating the process of Procurement, processing & distributing to deliver value for money to the customer  Two key roles logistics planning & support are  Value delivery process  Success of Supply Chain Management

24. 24 Outsourcing of Non Core Competency Functional Area  Outsourcing is a acceptable trend in business  Corporation have realized that doing everything by themselves does not result in effective & efficient use of scare resources available to them  It is better to outsource functional area to experts who can do job at the lowest cost and that to efficiently & Effectively  LOGISTICS is one such area where most of business org. do not have enough expertise thus needs to be outsourced  Thus Logistics have shaped into different service industry offering complete & customized logistics solutions