Logistics Components and Roles

This flashcard set covers the fundamental components of logistics, including product handling, pricing drivers, procurement strategies like FIFO and LIFO, and the roles of transportation, warehousing, and value-added services.

Product

The item, good, or service being moved through the logistics system, which can be raw materials, partially finished goods, or final products ready for customers.

Price

The cost to the customer, influenced by logistics efficiency and costs; it determines cost control strategies and influences inventory policies.

Procurement

The process of acquiring goods, services, or raw materials from suppliers to ensure timely availability and control quantity and quality.

Just-In-Time (JIT) Procurement

A procurement method used by Toyota to reduce storage needs by requiring precise supplier deliveries.

Inventory

The stock of goods held for future use or sale, used to balance supply with customer demand and reduce the risk of stockouts.

FIFO (First In, First Out)

An inventory method where the oldest inventory is sold or used first; best for perishables like food and medicine to prevent spoilage or obsolescence.

LIFO (Last In, First Out)

An inventory method where the newest inventory is sold or used first; best for non-perishables like hardware or paper to match recent costs with current sales.

Transportation

The physical movement of goods from one location to another, impacting delivery speed, cost efficiency, and product condition.

Warehousing

Storage of goods until they are needed for sale or production, protecting them from damage, theft, and spoilage while allowing for bulk breaking.

Supply Chain Network

The interconnected system of suppliers, manufacturers, warehouses, transport providers, and retailers that facilitates coordination and information flow.

Value Added Logistics

Extra services provided in the logistics process to increase customer satisfaction, such as home delivery, assembly, tracking, or packaging.

Local Sourcing

The practice of obtaining materials from within the same region, such as Red Stripe sourcing cassava locally in Jamaica to replace imported starch.

Overseas Sourcing

The practice of obtaining materials or products from international locations, such as Shein sourcing clothing from factories in China for global shipping.