1. Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 1-1 JAMES R. STOCK  DOUGLAS M. LAMBERT STRATEGIC LOGISTICS MANAGEMENT FOURTH EDITION

2. CHAPTER 1 Logistics’ Role in the Economy and the Organization

3. Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 1-3 That part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point-of-origin to the point-of-consumption in order to meet customers’ requirements. Council of Logistics Management Logistics Management Defined

4. Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 1-4 Components of Logistics Management Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Management actions PlanningImplementationControl Raw materials In-process inventory Finished goods Natural resources Human resources Financial resources Information resources Time and place utility Efficient movement to customer Proprietary asset Competitive advantage Logistics management Suppliers Customers Inputs into logistics Outputs of logistics Customer service Demand forecasting Inventory management Logistics communications Material handling Order processing Parts and service support Plant & warehouse site selection Procurement Packaging Reverse logistics Traffic and transportation Warehousing and storage Logistics activities

5. Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 1-5 Marketing/Logistics Management Concept Customer satisfaction Integrated effort Company profit Suppliers Intermediate customers Final customers Maximize long-term profitability Lowest total costs given an acceptable level of customer service Product Price Promotion Place (distribution)

6. Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 1-6 Cost Trade-offs in Marketing and Logistics Product Order processing and information costs Inventory carrying costs Place/customer service levels Order processing and information costs Price Lot quantity costsWarehousing costs Transportation costs LOGISTICS MARKETING

7. Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 1-7 Relationship of Logistics Activities to Logistics Costs Customer service levels Transportation costs Warehousing costs Order processing/information systems costs Lot quantity costs Inventory carrying costs

8. Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 1-8 Key Logistics Activities Customer service Demand forecasting Inventory management Logistics communications Material handling Order processing Packaging Parts and service support Plant and warehouse site selection Procurement Reverse logistics Traffic and transportation Warehousing and storage

9. Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 1-9 Flow through the Supply Chain Customer Supplier Distribution center Distribution center Manufacturing site Carrier

10. Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 1-10 Strategic Profit Model $

11. Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 1-11 Future Challenges and Areas for Performance Improvement Supply Chain Management Strategic Planning Total Quality Management Just-in-Time Quick Response Efficient Consumer Response Logistics as a Competitive Weapon 1-11 a

12. Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin 1-12 Future Challenges and Areas for Performance Improvement (cont.) Accounting for logistics costs Logistics as a boundary-spanning activity Global logistics Increasing skill requirements Logistics information systems Strategic alliances, partnerships, and outsourcing Green marketing and reverse logistics 1-11 b