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Topic 1 Definitions:Logistics: “Logistics is that part of the supply chain process 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.” ---Logistics includes the following components:- Business Logistics- Distribution- Industrial distribution- Logistics- Logistics management- Marketing logistics- Physical distribution- Supply chain managementLogistics impacts in Macro Economics:- Logistics makes up 8-20% of a country’s GDP- Poor transportation infrastructure and high levels of inventory are key drawbacks in a country’s expansionsEconomic utility: the value or usefulness of a product in fulfilling customer needs or wantsPossession utility: the value or usefulness that comes from a customer being able to take possession of a productForm utility: a product’s being in a form that (1) can be used by the customer and (2) is of value to the customerPlace utility: refers to having products available where they are needed by customers; products are moved from points of lesser value to points of greater valueTime utility: having products available when they are needed by customersBasic Logistics Facts:- More than $1 trillion is spent on logistics in the US each year- The field of logistics is the nation’s second largest employer (healthcare is the largest)- Logistics costs represent 5-40% of the total (landed) cost of typical products- OSU is ranked very highly in LogisticsIncreased Importance of Logistics:- A reduction in Economic regulationo Deregulation in the US airfreight, railroad, and trucking industries allowed individual carriers flexibility in pricing and serviceo Flexibility allows companies to implements a tailored logistics approach, service levels, and prices- Changes in consumer behavioro Market demassification- flexibility and optionso Changing family roles- creates convenience for both working parentso Rising customer expectations- Technological advanceso i.e., Internet, Amazon helicopter example, disintermediation- The growing power of retailers & consumerso Companies such as Wal-Mart and Home Depot wield greater power than the companies that supply them- Globalization of tradeo Rising standards of living and multi-country trade alliances have contributed to the growth of global tradePower Retailers: Wield greater power than the companies that supply them (Wal-Mart, Home Depot, Best BuyDisintermediation: the removal of intermediaries between producer and consumerSystems approach: indicates that a company’s objectives can be realized by recognizing the mutual interdependence of the major functional areas of the firm, such as marketing, finance, and logistics.Stock-keeping-units (SKUs): line items of inventory (each different type or package size of a good is a different SKU) offered for sale by many companiesMaterials Management: movement and storage of materials into a firmPhysical Distribution: storage of finished product and movement to the customerLanded costs: refers to the price of a product at the source plus transportation costs to its destinationStockouts: being out of an item at the same time there is a demand for itSustainable products: products that meet present needs without compromising the ability of future generation to meet their needs—can also impact logistical decisionsBait and switch tactics: enticing customers with the promises of a low-priced product, only to find that it is unavailable, but that a higher-priced substitute product is readily availableMarketing channels: a set of institutions necessary to transfer the title to goods and to move goods from the point of production to the point of consumption and, as such, which consists of all the institutions and all the marketing activities in the marketing process- Ownership channel: covers movement of the title to the goods. The goods themselves might not be physically present or even exist- Negotiations channel: is one in which buy and sell agreements are reached. This could include transactions face to face or by phone, email, or any form of communication- Financing channel: handles payments for goods. More importantly, it handles the company’s credit- Promotions channel: concerned with promoting a new or existing product and can be related to the financing channel because monetary allowances are often part of the promotion effort- Logistics channel: the most significant contribution that the logistics channel makes to the overall channel process is the sorting functionSorting function: bridges the discrepancy between the assortment of goods and services generated by the producer and the assortment demanded by the consumer- Sorting out: sorting a heterogeneous supply of products into stocks that are homogeneous- Accumulating: bringing together similar stocks from different sources- Allocating: breaking a homogeneous supply into smaller lots- Assorting: building up assortments of goods for resale, usually to retail customersInternational logistics: logistics activities associated with goods that are sold across national boundaries, is much more costly and challenging than domestic goodsMaterials handling: refers to the short-distance movement of products within the confines of a facility (e.g., plant, warehouse)Procurement: the raw materials, component parts, and supplies bought from outside organizations to support a company’s operationsReverse logistics: Products can be returned for various reasons, such as product recalls, product damage, lack of demand, and customer dissatisfactionTopic 2 Definitions:Demand management: the creation across the supply chain and its markets of a coordinated flow of demand- Time series forecasting: future demand is solely dependent on past demand- Judgmental: Qualitative- Cause-and-effect (associative): looks at related factors to determine anticipates sales for an itemDemand (sales) forecasting: refers to an effort to project future demand, is a key component in demand management, and is also helpful in managing all forms of supply chain strategyDemand Forecasting Issues:- Selection of forecasting technique(s) depends on many factors- Selecting an inappropriate technique will reduce forecast accuracy- Forecast accuracy can have important logistical implications- Computer forecasting software is unable to completely eliminate forecast errorsProduct

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OSU BUSML 3380 - Topic 1 Definitions

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