Notesale: Turn your study into money

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What is Logistics ?
Logistics:

the science and practical management of
the supply of materials
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ITC

The right type(s) of material(s)
In the right quantity(s)
In the right condition
To the right location(s) and customer
At the right time(s)
For the right cost
Delivered with the right tailored services required by
the buyer
With the right information needed by the customer
during & at the end of the logistics process

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Logistics Stages
1) Inbound logistics:

the transportation of goods into
the purchasing organisation‘s main warehouse

2) Internal distribution:

materials management – the
movement of goods within a firm

3) Outbound logistics:

the distribution flow of goods

from the organisation to a subsequent customer

Integrated approach: linking these
stages to meet corporate objectives;
also integration within the supply chain
ITC

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The logistics manager is involved in a wide range
of business activities, such as:
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ITC

Managing interfaces relating to goods delivery
Scheduling & organising supplies of inputs
Organising picking and packing
Ensuring preparation, labelling, sorting etc
Managing transport
Tracking & recording of deliveries
Administering documentation
Liasing with shipping agents, ports and customs
Ensuring compliance with handling & safely requirements
Organising back-loads
Managing goods to be returned and/or recycled
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Components of Total Product Cost
(often 20-30 % of total purchase costs)

Unit Purchase Price

ITC

5
X
2

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Logistics costs

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Deterioration and write-offs

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Cost of capital

=

Total unit costs

(transportation, storage
and handling)

(% interest x value) from

supply invoice payment until sales cash receipt

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The cost of logistics
SSome logistics costs are obvious, while others are less

obvious and therefore neglected
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What are the
opportunity costs of these hidden logistics costs?

ITC

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Action Point

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Cross-Functional Integration
Logistics activities need to be carried out in close
co-ordination with the other functions within the
organisation including purchasing, inventory
management, manufacturing, and sales operations!
Organisations also need to be closely integrated with
external bodies such as shipping & freight agencies,
independent warehousing, cross-docking centre operators,
customs, transport regulatory authorities & suppliers,
end users & customers

ITC

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