The document discusses logistics management and decision areas. It defines logistics management as planning, implementing, and controlling the efficient movement and storage of goods and services between the point of origin and consumption. Key logistics activities include transportation, warehousing, material handling, packaging, and inventory management. The main transportation modes are highway, water, air, rail, and pipeline. Highway transportation dominates in the US due to geographic dispersion of supply chains and emphasis on delivery speed and flexibility. Water transportation has very low costs but is best for bulk, low value goods. Warehousing can be used to reduce costs, improve flexibility, and shorten lead times through consolidation, cross-docking, and hub-and-spoke systems.

1. Logistics

2. Introduction
 Logistics management – That part of supply chain management that
plans, implements, and controls the efficient, effective forward and
reverse flow and storage of goods, services, and related information
between the point of origin and the point of consumption in order
to meet customers’ requirements. © CSCMP – Council of Supply Chain Management Professionals
Copyright © 2016 Pearson Education, Inc. 8-2

3. Introduction
 Logistics Management Activities
 Transportation
 Warehousing
 Material handling
 Packaging
 Inventory management
 Logistics information systems
Copyright © 2016 Pearson Education, Inc. 8-3

4. Logistics Decision Areas
 Five Transportation Modes
 Highway
 Water
 Air
 Rail
 Pipeline
Copyright © 2016 Pearson Education, Inc. 8-4

5. Logistics Decision Areas
Highway
 Dominates the U.S. logistics infrastructure due to:
 Geographic extension of supply chains
 Greater emphasis on delivery speed and flexibility
 Continues to grow because it is one of the most flexible modes of transportation
 Very few goods are moved without highway transportation at some point in transit
 Has become more cost effective over time due to:
 Better scheduling and use of vehicle capacity
 More efficient and reliable vehicles
 Increased cost competition due to deregulation
 Involves different types of shipments
 Direct truck – Shipment made with no stops
 Less than truckload (LTL) – Smaller shipment combined with other loads
Copyright © 2016 Pearson Education, Inc. 8-5

6. Logistics Decision Areas
Water
 Ideal for materials with high weight-to-value ratio, especially if delivery speed is
not critical.
 Examples of these materials include farm produce, timber, petroleum-based
products.
 Has one of the lowest ton-mile rates of any mode which helps to keep costs
down.
Copyright © 2016 Pearson Education, Inc. 8-6

7. Logistics Decision Areas
Air
 Ideal for customers with a low weight-to-value ratio, especially if delivery speed
or delivery reliability is critical.
 Is the least-used mode in terms of tons and ton-miles.
 Higher shipping costs and improvement in other modes have reversed the rise
in air growth over the past decade.
Copyright © 2016 Pearson Education, Inc. 8-7

8. Logistics Decision Areas
Rail
 Has characteristics similar to water transportation but is somewhat more
flexible.
 To accommodate growth, rail carriers have doubled the number of lines along
busy corridors, changed the physical configuration of the trains, and utilized
multimodal solutions.
Copyright © 2016 Pearson Education, Inc. 8-8

9. Logistics Decision Areas
 Warehousing – Any operations that stores, repackages, stages, sorts,
or centralizes goods or materials.
 Warehousing can be used to:
 Reduce transportation costs
 Improve operational flexibility
 Shorten customer lead times
 Lower inventory-related costs.
Copyright © 2016 Pearson Education, Inc. 8-9

10. Logistics Decision Areas
Figure 8.2
Consolidation Warehousing
Copyright © 2016 Pearson Education, Inc. 8-10

11. Logistics Decision Areas
Figure 8.3
Cross-Docking
Copyright © 2016 Pearson Education, Inc. 8-11

12. Logistics Decision Areas
Figure 8.5
Hub-and-spoke system
Copyright © 2016 Pearson Education, Inc. 8-12