Logistics Chapter 1 Part 2

• Logistics core functions


  • Transport
  • Warehousing
  • Communication
  • Inventory management
  • Purchasing/ Procurement
  • Packaging
  • Handling materials
  • Order processing
  • Customer Service
  • Reverse logistics
  • Demand management
• Communication (Systems)


  Logistics requires effective and efficient communication between supply chain members and the retailers. Information needs to flow effectively between supply chain members.
• Communication systems


  Communication systems are important for any business that moves goods from one place to another. Logistics and supply chain management is no exception.
• Different types of communication systems and needs in logistics management

  • Radio Frequency Identification (RFID) tags
  • Internet of Things (IoT)-enabled devices
  • Portable computers and handheld devices
  • Voice communication
  • Text messages
  • Email
  • Cloud-based communication systems
  • Computer-based system software
• Inventory management


  Retailers must be able to forecast the right amount of stock to hold to meet customer demands. This is important as it influences planning: sales; marketing; HR; production and logistics management decisions.
• Inventory management (cont.)


  Retailers need to know when to order stock, how much to order, and how to keep stock safe and secure. All the above impacts retailer costs and customer satisfaction.
• Difference between Logistics and Supply Chain Management

  Supply chain Management is a bigger or broader concept than Logistics. Logistics is part of Supply Chain Management. Hence SCM involves the core functions of logistics as well as others.
• Supply Chain Functions


  • Packaging
  • Procurement
  • Handling materials
  • Order processing
  • Reverse logistics
• Packaging


  The technology of enclosing, protecting, and transporting goods.
• Procurement


  Aka Purchasing. Involves the process of buying of goods in order for retailers to resell (or manufacturing). Finding the right suppliers is crucial. Developing and maintaining relationships with suppliers etc. "Buy right sell right"
• Handling materials


  If a retailer is manufacturing its own products it needs to manage its movement of materials (inputs) from the supplier to manufacturer or other processing plants.
• Order processing


  Relates to the processing of customer orders. Includes: receiving of orders, invoicing, packaging, delivery etc. e.g. Takealot makes it easy to purchase online.
• Reverse logistics


  i.e. returns management. This is the management of goods returned by customers to retailers. Retailers then will return to suppliers and/or manufactures. CPA-consumers can demand refunds(defective goods)
• Inbound logistics


  The management of flow of goods (and storage) from the point from supplier of raw materials to the point of where the materials are converted into finished goods.
• Outbound logistics


  The management of flow of goods (and storage of goods) from the point of final manufacture to the retailer and ultimately the consumers.
• Channels of distribution


  • Manufacturer -> Consumer

  Manufacturer -> Online retailer -> Consumer

  Manufacturer -> Own store -> Consumer

  Manufacturer -> Retailer -> Consumer

  Manufacturer -> Wholesaler -> Retailer -> Consumer

  Manufacturer -> Sales agent or broker -> Retailer -> Wholesaler -> Consumer
• Difference between first tier, second tier and third tier suppliers

  Tier 1 Suppliers (OEM): These are direct suppliers of the final product to the manufacturer.

  Tier 2 suppliers: These are suppliers for your tier 1 suppliers.

  Tier 3 suppliers: These are suppliers for your tier 2 suppliers. These tiers can extend longer than three.
• The longer the channel and the more the number of intermediaries or middlemen who operate in the distribution channel, the more expensive the items become.
• What is the difference between supply chain management and distribution?
• View/Summarize Video 3 Top 10 Supply Chain Terms and Definitions [Procurement, Logistics, Warehouse Management, etc.]