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Chapter 1

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16 views19 pages

Chapter 1

Uploaded by

Aceuや
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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INTRODUCTION TO

BUSINESS LOGISTICS
CHAPTER 1
LEARNING OBJECTIVES:
By the end of this chapter, students should be able to:

1) Discuss business logistics.


2) Explain the objectives of business logistics.
3) Explain the importance of logistics from the perspective of company, society and
economics.
4) Relate the logistics activities and distribution structures.
5) Explain reverse logistics & product return management.
6) Apply the stages in the reverse logistics/product return process.
DEFINITION OF BUSINESS LOGISTICS
Getting your products or services from supplier to consumer is business
logistics. It involves everything from acquisition from wholesalers and
suppliers to manufacturing, storage and delivery to customers. It is
imperative for every business owner to have a strong understanding of his
logistics systems to ensure he is maximizing profits and can give customers
the most positive experience possible.
ACTIVITIES INVOLVED IN BUSINESS LOGISTICS

1. Transportation;
2. Inventory management;
3. Order processing;
4. Customer service standard;
5. Purchasing;
6. Warehousing;
7. Materials handling;
8. Packaging;
9. Product scheduling.
LOGISTICS – is a part of supply chain. It is a process of
planning, implementing and controlling the raw
materials, work in process, finished goods and
documentation from the point of origin to the point of
consumption in order to meet the customer
satisfaction.

SUPPLY CHAIN MANAGEMENT – integration of all


activities through improving supply chain
relationship to achieve sustainable competitive
advantage.
Supply chain management is referring to the management of
interaction and coordination of the upstream and downstream
value-added flows of materials, final goods and related information
among suppliers, the company, resellers and final consumers.

An upstream: value-added flow is known as materials management:


Materials management is a very common term used in
manufacturing. It is the process that organizations use to plan,
organize, and control the steps they use to manage tangible
components within its business processes.

The downstream: value-added flow is known as physical distribution:


Physical distribution is also called marketing logistics. It involves planning,
implementing and controlling the physical flow of goods, services and related
information from the points of origin to the points of consumption in order to
meet customer requirements at a profit. Physical distribution is primarily
concerned with finished and semi-finished goods that a company produces
and are usually on offer for sale.

Another flow, which is also important in the whole flow process, is


the reverse logistics.
SCOPE OF BUSINESS LOGISTICS
Business
Logistics

Physical supply
Physical
(Material
distribution
management)

Sources of
Plants/Factory Customers
supply

Physical Supply/Inbound Logistics Physical Distribution/Outbound Logistics


ACTIVITIES MIX
Warehousing
Customer
Service
Information Materials
maintenance Handling

Order
Transportation
processing

Production/
Purchasing
Operation
Inventory
Management Protective
Packaging

Primary Supporting
OBJECTIVES OF BUSINESS
LOGISTICS

Cost Capital
reduction reduction

Service
improvement
Market
expansion

Cost Job
efficiency opportunity
The
importance
of logistics

Customer
Customer
need &
Value
wants
Key components of distribution and logistics

11
REVERSE LOGISTICS

Reverse logistics is a part of return


management that plans,
implements and controls the
efficient, effective flow of goods
and related information between
the point of consumption and the
point of origin, in order to
recapture value or property
dispose of the goods.
THE SCOPE OF PRODUCT RETURNS
MANAGEMENT
• The returns management process includes the planning, implementation
and execution (including control) of avoidance, gatekeeping and the
product disposition process.

• Avoidance refers to analyzing returns, determining the causes of product


returns and implementing program that minimize the number of return
requests. Gatekeeping refers to the screening of return requests and the
returned products at the earliest point in the reverse flow. Disposition options
are numerous and include recycling, remanufacturing, refurbishing and
removing products to waste sites or landfills.
• Product returns management mainly consists of the management of product
returns and waste disposal.

• Product returns management has to take place because parts, materials


and products sometimes have to be returned to source either from the
consumer to the retailer or from the manufacturer to the supplier.

• Waste is an inevitable byproduct of any manufacturing and consumption


activity. This waste has to be processed, reused, recycled or disposed of in
an effective and responsible way.
Returns management involves a range of activities, such as:

• Customer service and help desk enquiries.


• The collection, sorting, screening, grading and processing of returned products and
parts.
• Gatekeeping (managing the insertion of products into the reverse chain).
• The management of recycling program.
• The management of hazardous-material program.
• Measuring vendor performance in terms of product failures.
• The management of return policies and procedures.
• The repair, remanufacturing, refurbishment and upgrading of products.
• The contracting of third-party service providers to handle various reverse logistics
activities.
• Service logistics (including field service, supporting spare parts management and
supporting replacement management).
• All the physical logistics activities involved in the movement and positioning of
returned/disposed materials.
Product returns may occur at three general stages of a product’s movement
through the supply chain:

• Manufacturing returns: which include the return of surplus raw materials, returns
due to failed quality controls and production scraps.

• Distribution returns: which include product recall, returns due to inventory


adjustment and returns due to redistribution of products.

• Customer returns: which include warranty returns, service returns and the returns
of products that have reach their end of used.
The most common causes for product returns are:

• Refusal of items upon delivery or items that are undeliverable.


• Excess or wrongly delivered items.
• Damaged, malfunctioning or defective items.
• Items that reach the end of marketing period while still unsold.
• Consumer returns of unwanted products due to buyers’ dissatisfaction.
Return products and materials can move along one of the following paths:

• Returned to vendor for refund.


• Sold as new if not used or opened.
• Repackage and sold as new.
• Sold via outlet or auction.
• Remanufactured or refurbished.
• Donated to charity.
• Recycled.
• Disposed of in landfill.
STAGES IN THE REVERSE LOGISTICS
PROCESS

Stage 3: Stage 4: Stage 5:


Stage 1: Stage 2: Sort
Returns Returns Support
Receipt and Stage
Processing Analysis operations

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