Chapter 15 - Logistics and Distribution Management

Logistics

The art and science of obtaining, producing, and distributing material and product in the proper place and in the proper quantities

International Logistics

Managing these functions when the movement is on a global scale

Third-party Logistics Company

An outside company used to manage all or part of another company’s logistics functions

Transportation Modes

Truck - great flexibility

Ship - high capacity and low cost but slow

Plane - fast but expensive

Train - low cost but slow and variable

Pipeline - highly specialized and limited to liquids, gases, and solids in slurry form

Hand Delivery - last step in many supply chains, multimodal solutions are the norm

Distribution Facilities

Cross-docking

Large shipments are broken down into small shipments for local delivery in an area

• Minimizes inventory in the warehouse

Hub-and-spoke Systems

The sole purpose of the warehouse (the hub) is sorting goods to consolidation areas, where each area is designed for shipment to a specific location

• hubs are located near the geographic center of the region that are serving to minimize the travel distance

Proximity to Customers

Makes rapid delivery easier (locating logistics facilities)

Business Climate

can include presence of similar-sized businesses, in the same industry, and/or other foreign companies

(locating logistics facilities)

Total Cost

Objective is to minimize overall costs

(locating logistics facilities)

Tariffs

A special type of tax on the imports or exports of a country that is used by governments to generate revenue

(locating logistics facilities)

Infrastructure

Adequate road, rail, air, and sea transportation along with energy and telecommunications

(locating logistics facilities)

Quality of Labor

Educational and skill levels must match needs

(locating logistics facilities)

Suppliers

Proximity of important suppliers supports lean production.

(locating logistics facilities)

Other Facilities

Location of other facilities can influence a location decision

(locating logistics facilities)

Free trade