THE MANAGEMENT OF BUSINESS LOGISTICS

Chapter 1: Logistics Management An Overview

The customer demand for goods/ services has changed over time. Apart from quality, quantity
or product using guides, customers seemed more interested in cost, seamless service, quick
response to order, and fast product delivery.
To meet the customers expectation, many companies streamlined their ordering, purchasing,
and distribution chain through an integrated logistics system. As a result, their sales increased
considerably and they also experienced better inventory turnover (vng quay hng tn). In
other words, revenue increased and costs decreased.
In fact, many companies (ex. Alpo Pet Foods, Inc.) who had several warehouses located
throughout their countries with reasonable proximity to customer base still disappointed with
the distribution of their companies. Their services were not up to par with those of their
competitors. In other words, their services ranked below those of their rivals. However, after
revamping (tn trang/ ti c cu li) their distribution operation, they achieved an improved
customer service level, not feasible with their old system, and still trimmed their distribution
costs. They attributed their success to reorganizing their distribution and related activities
(purchasing, transportation, inventory, warehousing, and customer service) into an integrated
logistics function.
1.1.
Origin and Definition of Business Logistics
The birth of Logistics can be traced back to ancient war times of Greek and Roman empires
when military officers titled as Logistikas were assigned the duties of providing services
related to supply and distribution of resources supporting for the war, including food,
weapons and drugs. It is not exaggerated that Logistics had great importance to a
successful military effort (p.4).
One would think that an activity as important as Logistics would be as well known as
Marketing, Sales, Finances, or Accounting. Surprisingly, it is not. For one thing, Logistics is
a relatively new area for focused management attention (p.5).
Seven Rs Perspective: Logistics means ensuring availability of the right product, in the
right quality and the right condition, at the right place, at the right time, for the right
customer, at the right cost (p.6).
These Seven Rs imply the essential activities of Logistics. These concept emphasizing the
spatial and temporal dimension ( place and time, or movement and storage). It also
emphasizes cost and service. Logistics managers must continually evaluate cost and
services as they investigate changes for their Logistics Systems. Another aspect emerging
from this definition is the importance of meeting the customer requirements.
Inventory perspective: Logistics can be defined as the effective management and control
of inventory (raw material, goods in process, and finished goods) in motion or at rest in
some facilities.
The Council of Logistics Management definition: Logistics is the process of planning,
implementing and controlling the efficient, effective flow and storage of raw materials, inprocess inventory, finished goods, services, and related information from point of origin to
point of consumption (including inbound, outbound, internal, and external movement) for
the purpose of conforming to customer requirement.
A Typical Logistics Network: illustrates the flow from vendor to customer.