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Flashcards in Logistics Deck (33)
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Logistics Definition

Logistics is that part of supply 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 the customers requirements



The transfer to a third party of the management and delivery of a process previously performed by the company itself.
Involves handing process ownership over to a third party



The transfer of specific processes to locations in other countries.
The company still owns and controls the process in the new location.


What is an IML?

An inventory mixing location. (Public, contract, multi-cliet, private warehousing) Provide economic and service benefits. Takes care of material handling and packaging


Advantages of a Public Warehouse

Serve all legitimate users
Require no capital investment on the user’s part
Allows users to rent space as needed
Can be rented on a month-to-month basis
Offers more locational flexibility
May provide specialized services.


Advantages of a Private Warehouse

Are owned or occupied on a long-term lease
Offer control to owner
Assume both sufficient demand volume and stability so that warehouses remain full, i.e., higher utilization rate.
Drawbacks of private warehouses include:
High fixed cost;
Necessity of having high and steady demand volumes;
May reduce an organization’s flexibility.


What is Contract Warehousing?

(Otherwise known as 3PL warehousing) Is a long-term arrangement providing unique warehousing services to one client. Both vendor and client share the risks associated with the warehousing
Less costly than private warehousing and more costly than public warehousing


What is Multi Client Warehousing?

Mixes attributes of contract and public warehouses
Services are less customized than those in a private facility
One of the biggest advantages in multi-client warehousing is cost
Services are purchased through minimum 1 year contracts
Are attractive to smaller organizations


Economic Benefits of Warehouses

Consolidation/Break Bulk, Assortment, Postponement, Stockpiling and Reverse Logistics


What are Potential Service Benefits of IML's?

Spot stocking, full line stocking, production support and market presence


What is Spot Stocking?

Often used by manufacturers of seasonal products who, in addition to their core warehouse network, lease temporary facilities for specific periods.


What is Full Line Stocking?

Closest to the traditional warehouse in which the supplier stocks the full range of goods in anticipation of demands.


What is Production Support?

Production support may include maintenance of an inventory to support manufacturing operations.


What is Market Presence?

Often used as a justification for a local warehouse. Argument is that it provides a speedier response and, hence, will lead to an increase in market share.


What are the 5 Modes of Transport?

Road, Rail, Air, Water and Pipeline


What does Sea freight primarily transport?

Dry bulk commodities
Bulk petroleum, petroleum products and chemicals


What is MultiModal?

Using a combination of 2 or more kinds of transport in your logistics solution


Benefits of Multimodal Transport

Minimizes time loss at trans-shipment points

Provides faster transit of goods

Reduces burden of documentation and formalities

Savings on freight rates

Establishes only one agency to deal with

Reduces cost of exports


What is a Transport Management System?

A software package that automates the process of logistics-related activities


Why is Facility Location important?

Choosing locations for facilities like DCs, Warehouses and production facilities facilitate logistical effectiveness and efficiency.


Strategic Importance of Facility Location includes...

Cost considerations
Consumers have become sensitized to buy products only when prizes are low
Outsourcing decisions
Near sourcing. Example: Mexico

Customer service expectations continue to increase
Should an organisation rely on one or two facilities or multiple facilities?
More facilities and higher inventory costs, less transport costs
Less facilities and lower inventory costs, more transport costs
Location of customer or supply markets
Improvements in transportation & technology
Economic growth. Ex: McDonald’s in China.


What considerations should be made when deciding on the Network Design?

First and most important, the logistics network strategy must be understood.

Cost-based? Service-based? Or something else?

How many facilities?
What type of facilities?
Transport mode to be used?


Name some Logistics Information Management Systems

Enterprise Resource Planning (ERP), Radio Frequency Identification (RFID), Warehouse Management System, Transport Management System and Vendor Managed Inventory


Corporate Level Strategy is...

focused on determining the goals for the company, the type of business in which the company should compete and the way the company will be managed.


Strategy at business level is...

primarily focused on the products and services provided to customers and on finding ways to develop and maintain a sustainable competitive advantage with these customers.


Functional Strategy is...

to translate corporate and business strategy into action plan for the higher level strategies to succeed.


What is Balanced Scorecard?

Balance scorecard (BSC) is a strategic planning and performance management system used in industry, government, and nonprofit organizations. Management should evaluate their businesses from four perspectives
Internal business processes
Learning and growth

Forces managers to look beyond traditional financial measures
Balances measures of short-long term objectives, financial and non financial measures, leading and lagging indicators and internal and external perspectives


What is an LSP?

Logistics Service Provider


Logistics Service Providers that provide multiple logistics services in an integrated fashion are...

Called 3PL companies


What is a 3PL?

an external supplier that performs all or a part of a company’s logistics functions