Logistics Fundamentals Lecture One - An Introduction

Summary

In this introductory lecture on logistics, Chris Lee, a seasoned logistics professional with nearly 20 years of experience, provides an overview of the field. He explains the origins and definitions of logistics, highlighting its importance in both military and modern business contexts. The lecture covers the role of logistics in supply chain management, the significance of information flow, and the economic impact of efficient logistics. Lee also discusses the concept of economic utility and its various types, as well as the evolving consumer behaviors that affect logistics. The session concludes with an invitation to explore the impact of information technology on logistics in the next lecture.

Takeaways

• 🚚 Logistics is crucial in both military and commercial sectors, with a significant role in supply chain management.
• 🌐 Modern logistics integrates forward and reverse flows, ensuring efficient movement and storage of goods and information.
• 🏢 Logistics management involves planning, implementing, and controlling the flow and storage of goods and services from origin to consumption.
• 📦 The effectiveness of logistics impacts business functions like marketing, operations, production, and finance.
• 📊 The economic utility of logistics includes possession, form, time, and place, all contributing to customer satisfaction and economic development.
• 🛠️ Advancements in information technology and deregulation have transformed logistics, enhancing its economic opportunities and operational efficiency.
• 👨‍👩‍👧‍👦 Changing consumer behaviors and family dynamics influence logistics, demanding more convenience and tailored services.
• 🔄 Mass customization allows companies to meet specific customer needs, reflecting the shift towards more personalized logistics services.
• 🛒 Efficient logistics reduce costs and improve GDP, highlighting the direct relationship between logistics efficiency and economic growth.
• 📈 The logistics job market is robust, offering various roles from analysts to managers, driven by the growing importance of supply chain management.

Q & A

Who is the presenter of the logistics lecture series?

The presenter is Chris Lee.

What background does Chris Lee have in logistics?

Chris Lee has almost 20 years of experience in logistics, beginning with the United States military, and has worked globally in the field.

How does the Council of Supply Chain Management Professionals (CSCMP) define logistics?

CSCMP defines logistics as 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 to meet customer requirements.

What is the main focus of logistics according to the Chartered Institute of Logistics and Transport?

The Chartered Institute of Logistics and Transport focuses on getting the right product to the right place in the right quantity, at the right time, in the best condition, and at an acceptable cost.

Why is the flow and storage of information important in modern logistics?

Information in logistics is crucial because it allows for efficient management and can substitute for inventory, enabling companies to reorder products as they are sold rather than keeping them in storage.

What are the 'eight R's' of logistics mentioned in the lecture?

The 'eight R's' of logistics involve getting the right product, in the right quantity and quality, to the right place, at the right time, for the right customer, at the right cost, in the right way.

How does logistics impact economic development and GDP?

Efficient logistics reduce costs, which allows for greater economic development. Higher logistics costs can limit economic progress and directly affect a nation's GDP.

What are the four types of economic utility in logistics?

The four types of economic utility are possession utility, form utility, time utility, and place utility.

What role do changing family roles and rising customer expectations play in logistics?

Changes in family roles, such as more dual-income households, increase the demand for convenience in logistics, while rising customer expectations require continuous improvement in logistics services to meet evolving demands.

What is the significance of reverse logistics in today's logistics field?

Reverse logistics, which deals with the return of products from the point of consumption, is crucial for managing returns, recycling, and disposal, and is now as important as forward logistics.

What professional opportunities are available in the logistics and supply chain management field?

Career opportunities in logistics and supply chain management include roles such as logistics analysts, consultants, customer service managers, international logistics managers, supply chain software managers, purchasing managers, transportation managers, and warehouse operations managers.

What are the systems and total cost approaches in logistics?

The systems approach in logistics recognizes the interdependence of various organizational functions, while the total cost approach ensures that material management and distribution are coordinated in the most cost-efficient way.

Outlines

00:00

📦 Introduction to Logistics and Its Importance

This paragraph introduces the fundamentals of logistics, presented by Chris Lee. He provides an overview of the field of logistics, starting with its military origins and its significance in today's global economy. The lecture aims to answer key questions about logistics, such as its definition, importance, and impact on daily life. Chris Lee highlights the importance of logistics in supply chain management and its role in planning, implementing, and controlling the flow and storage of goods, services, and information.

05:03

🎯 Tailored Logistics Strategies

This paragraph discusses the importance of tailored logistics strategies to meet diverse customer needs. It contrasts mass logistics, a one-size-fits-all approach, with tailored logistics, which adjusts services to meet specific customer requirements. The lecture emphasizes the 'eight R's of logistics,' focusing on delivering the right product, in the right way, at the right place and time, for the right customer, and at the right cost. The economic impact of logistics on society and its role in enhancing economic development and GDP is also highlighted.

10:05

🛒 Impact of Consumer Behavior on Logistics

This paragraph examines how changes in consumer behavior over the past thirty years have influenced logistics. It explores the concept of the 'customized customer,' the changing roles within families, and rising customer expectations. The lecture introduces the systems approach and total cost approach to logistics, emphasizing the interdependence of organizational functions and the need for cost-efficient material management and distribution. Key logistics activities are listed, including customer service, demand forecasting, and inventory management.

Keywords

💡Logistics

Logistics refers to the process of planning, implementing, and controlling the efficient and effective flow and storage of goods, services, and related information from the point of origin to the point of consumption to meet customer requirements. This is the main theme of the video, with logistics being defined by various organizations and discussed in the context of both historical and modern applications.

💡Supply Chain Management

Supply Chain Management (SCM) is the broader context within which logistics operates. SCM involves the management of the entire production flow of a good or service, from raw materials to delivering the final product to the consumer. The video explains that logistics is a crucial part of SCM, impacting how firms achieve their goals.

💡Reverse Logistics

Reverse logistics involves the process of moving goods from their final destination for the purpose of capturing value or proper disposal. It contrasts with traditional logistics, which focuses on the forward movement of products. The video highlights the importance of reverse logistics in contemporary logistics practices.

💡Economic Utility

Economic utility refers to the value or usefulness of a product in fulfilling customer needs or wants. The video explains four types of economic utility: possession, form, time, and place utility, all of which are influenced by logistics practices to enhance customer satisfaction and economic efficiency.

💡Customer Service

Customer service in logistics involves ensuring that the right products are delivered to the right customers at the right time and place. The video discusses how tailored logistics approaches meet diverse customer needs and how rising customer expectations influence logistics strategies.

💡Information Technology

Information Technology (IT) is critical in modern logistics, allowing companies to substitute information for inventory and streamline operations. The video mentions the role of IT in tracking products, facilitating efficient reorder processes, and enabling companies like Walmart to lead in the retail industry.

💡Deregulation

Deregulation refers to the reduction of government controls over industries, particularly in transportation. The video describes how deregulation in the 1970s and 1980s opened up economic opportunities and allowed for increased competition, which had a significant impact on logistics and transportation management.

💡Mass Customization

Mass customization is the ability of a company to deliver highly customized products and services to meet the specific needs of individual customers. The video addresses how this approach caters to the 'customized customer' and how it affects logistics by requiring more tailored and flexible supply chain processes.

💡Total Cost Approach

The total cost approach in logistics involves managing all logistics activities in the most cost-efficient manner. The video explains how logistics managers use this approach to coordinate material management and distribution to minimize costs while meeting organizational goals.

💡Professional Organizations

Professional organizations such as the Council of Supply Chain Management Professionals and the Chartered Institute of Logistics and Transport provide definitions, standards, and professional development for logistics professionals. The video encourages joining these organizations to advance one's career in logistics.

Highlights

Introduction to the fundamentals of logistics by Chris Lee, who has 20 years of experience in the field.

Logistics origins traced back to military operations, emphasizing the movement and supply of troops.

Logistics is now used by companies for strategic advantage in the global economy.

Definition of logistics by the Council of Supply Chain Management Professionals (CSCMP): part of supply chain management that plans, implements, and controls the efficient flow and storage of goods, services, and information.

Council of Logistic Management's definition of logistics focuses on planning, implementing, and controlling the flow and storage of goods to conform to customer requirements.

Chartered Institute of Logistics and Transport's definition: getting the right product to the right place in the right quantity at the right time and condition at an acceptable cost.

Logistics is a part of supply chain management and affects the achievement of business goals across various functions like marketing, operations, production, and finance.

Modern logistics involves both forward and reverse flows of goods, with information flow being just as important.

Fritz Smith of FedEx emphasizes the importance of information about packages being as crucial as the packages themselves.

Logistics aims to meet customer requirements with strategies tailored to different customer needs, moving away from a one-size-fits-all approach.

The concept of the eight Rs in logistics: right way, right product, right quantity, right quality, right place, right time, right customer, and right cost.

Economic impact of logistics: efficient logistics is key to economic development, affecting a nation's GDP and individual consumers through economic utility.

Four types of economic utility in logistics: possession, form, time, and place.

Mass customization addresses the needs of the 'customized customer' by delivering tailored products and services.

Changing family roles and rising customer expectations have influenced logistics, leading to extended store hours, home delivery, and ready-to-eat foods.

The systems approach in logistics recognizes the interdependence of organizational functions to achieve goals.

The total cost approach ensures material management and distribution are coordinated efficiently.

Key logistics activities include customer service, demand forecasting, facility location, international logistics, inventory management, material handling, order management, packaging, procurement, reverse logistics, transportation, and warehouse management.

The job market in logistics and supply chain management is strong, with various entry-level and second-level positions available.

Professional organizations are dedicated to advancing logistics knowledge, and joining these can benefit one's career.

Next lecture will discuss the impact of information technology on logistics.

Transcripts

[Music]

welcome to the fundamentals of logistics

my name is Chris Lee and over the series

of fourteen lectures I will be providing

a background and overview of the

profession of logistics I began my

logistics career almost 20 years ago

with the United States military and I've

had the opportunity to work in logistics

around the world for a number of

organizations I still find the logistics

field just as exciting today as I did

when I began my logistics career and in

fact the origins of logistics can be

traced back to the military and the

military operations relating to systems

of moving and supplying troops today

companies utilize logistics for

strategic advantage in the global

economy this first lecture offers an

introduction to logistics and provides

an overview of the field so what is

logistics why do we study logistics what

impact is logistics have on our daily

lives these are just a few of the

questions we will strive to answer as we

go through this series of lectures the

first thing we need to do as we examine

the topic of logistics is ask the

question what is logistics that is

define logistics as a term it should

come as no surprise that there are many

definitions of logistics but we're going

to concentrate on three major ones first

we will look at the definition of the

Council of supply chain management

professionals next we'll examine the

Council of logistic management's

definition and finally we will look at

the Chartered Institute of logistics and

transportation Stefan ition for

comparison the Council of supply chain

management professionals CSC MP one of

the world's most prominent organizations

for logistics professionals states that

logistics management is that part of

supply chain management that plans

implements and control

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 by comparison the castle

logistics management defines logistics

as the process of planning implementing

and controlling the effective and

efficient flow and storage of goods

services and related information from

the point of origin to the point of

consumption for the purpose of

conforming to customer requirements

finally the Chartered Institute of

logistics and transport the finest

logistics is getting the right product

to the right place in the right quantity

at the right time in the best condition

and at an acceptable cost okay we have

some definitions that help us nail down

the term of logistics what does this all

really mean well first logistics is part

of supply chain management which means

logistics is part of the larger overall

business functions across organizations

functions such as marketing operations

production and finance the fact that

logistics is explicitly recognized as

part of supply chain management means

that logistics can affect how well or

how poorly an individual firm and its

associated supply chain or chains can

achieve goals and objectives which istic

should also be involved in the three

activities of planning implementing and

controlling and not just one or two

organizations are also tested on how

effective and efficient they are at

managing their logistical operations

traditionally logistics focused only on

the forward movement of moving product

to an end destination but today the

logistics field has recognized the

importance of reverse flows and storage

reverse logistics those that originate

at the point of consumption today the

flow and storage of information is just

as important in logistics as is the flow

and storage of goods

the importance of information in

contemporary logistics was captured by

Fritz Smith a CEO and chairman of FedEx

who believes that information about the

package is just as important as a

package itself modern logistics and

supply chain management allow us to

substitute information for inventory so

for example the cash register at many

contemporary retailers also track what

and when products are being purchased

this allows those retailers to then

reorder a product as product is sold

instead of keeping it in storage it is

this very idea that is allowed Walmart

to become one of the world's leading

retailers it is also important to

remember that the purpose of logistics

is to meet customer requirements

logistics strategies and activities

should be based on customer wants and

needs due to the fact that different

customers have different needs and wants

a one size all approach may not work

mass Logistics is a one-size-fits-all

approach in which every customer gets

the same type and level of logistic

service this will result in some

customers being over served while others

are under served that's why most

companies today take a tailored

Logistics approach in which groups of

customers with similar logistics needs

and wants are provided with logistics

services appropriate to those individual

needs and wants as we move through the

fundamentals of logistics series of

lectures keep in mind the eight hours of

logistics logistics involves getting in

the right way the right product in the

right quantity and right quality in the

right place at the right time for the

right customer at the right cost

ever since society's first learned that

by trading goods they produce for goods

they could not logistics is driven

economic development in progress

furthermore the greater the cost of

logistics the lesser society can develop

economically in other words logistics

costs directly relate to a nation's

gross domestic product GDP so efficiency

in logistics is key the economic impact

of logistics also affects individual

consumers just like you these impacts

are illustrated through the concept of

economic utility which is a value or

usefulness of a product in fulfilling

customers needs or wants there are four

general types of economic utility

these are possession form time and place

let's look at each of these in a little

bit more detail possession utility

refers to the value or usefulness a

customer derives from being able to take

position of a product possession utility

is often influenced by the payment terms

associated with a product credit and

debit cards for example facilitate

possession utility by allowing the

customer to purchase products without

having to produce cash or a cash

equivalent at the time of purchase form

utility refers to a product being in a

form that one can be used by the

customer and two is a value to the

customer form utility is traditionally

associated with production and

manufacturing but logistics can also

contribute to form utility by utilizing

a concept known as allocation which

allows for an increase in production to

the ideal production cost per unit that

is the least amount of cost for each

additional unit being made and

allocating that product across markets

that is making sure that we are

utilizing that Astra production in the

most efficient way

place utilities the idea of making

products available where they are needed

by customers in other words products are

moved from areas where they are not

needed or not popular to areas where

they are so for instance winter gloves

are very little purpose in Southern

California or Florida but are highly

desired in the winter months on the

eastern seaboard or around the Great

Lakes areas time utility is related to

place utility and that products are made

available to customers when they need

them using our example of winter gloves

earlier there's no need for winter

gloves even in the northern eastern

seaboard or the Great Lakes areas in the

middle of a summer heat wave during the

1970s and 80s widespread reductions and

economic regulations commonly referred

to as deregulation relaxed government

controls of carriers rates and fares

entry and exit international markets and

mergers and acquisitions of companies

and their logistical routes this led to

an increase in economic opportunities

that relied on logistics capabilities

these original regulations were

particularly dangerous to the u.s.

transportation industry because price

competition was essentially non-existent

and customers were pretty much forced to

accept whatever service the carrier's

chose to provide which meant that

logistics managers had relatively little

control over one of the most important

cost components in a logistics system

transportation changes in consumer

behavior over the past thirty years have

also had an impact in the field of

logistics these changes in consumer

behavior include the customers customer

the changing family roles and rising

customer expectations let's look at each

of these in a little bit more detail the

customized customer signifies that the

customer desires a product

during that is highly tailored to the

customers exact preferences one approach

for addressing the customized customer

is through mass customization which

refers to the ability of a company to

deliver highly customized products and

services that are designed to meet the

needs and wants of individual segments

or customers in reference to the

changing family rules in the United

States approximately 60% of families

with children report that both parents

work one consequence of these dual

income families has been an increasing

emphasis on the convenience associated

with a family's grocery shopping

experience this convenience is

manifested in various ways to include

extended store hours home delivery of

purchased items and ready-to-eat or

ready to cook foods and each of these

have an impact to logistics that's for

rising customer expectations it should

come as no surprise that customer

expectations tend to increase over time

which means that a satisfactory level of

performance in the past might not be

considered to be the same level today

there are also a couple important

approaches at logistics professionals

take in regards to logistics two major

approaches are the system's approach and

the total cost approach the systems

approach in a case that a company's

objectives can be realized by

recognizing the mutual interdependence

that a major functional areas of an

organization such as marketing

production finance and logistics in the

system's approach to logistics it is

understood the goals and objectives vary

from organization to organization

because different organizations have

different goals and objectives Logistics

managers use the total cost approach to

ensure that material management and

distribution are coordinated in the most

cost efficient way to properly apply the

systems and total cost approaches Allah

Geist 6 it is essential to understand

the various logistics activities

including customer service demand

forecasting facility location decisions

international logistics inventory

management material handling order

management packaging procurement reverse

logistics transportation management and

warehouse management the job market in

logistics and for supply chain managers

continues to be very strong at both the

undergraduate and MBA levels entry-level

jobs include logistics or supply chain

analysts consultants customer service

managers and fulfillment supervisors

second level positions in an

organization include international

logistics manager supply chain software

manager purchasing manager

transportation manager and warehouse

operations manager because of the

growing importance of logistics and

supply chain management a number of

professional organizations are dedicated

to advancing the professional knowledge

of their members and I invite you to

join those organizations that fit your

current field or specialty of interest

just as I have whose lecture we

presented an introduction and overview

of logistics and we work to define what

logistics is and how it operates in our

next lecture we will discuss how

information technology impacts logistics

my name is Chris Lee it's been my

pleasure to have you join us as we

explore the wonderful world of logistics

I hope you can join us for our next

presentation and invite you to reach out

to me if you've got questions on this

lecture or ideas for future lectures at

Chris and Li 0-7 at hotmail.com