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Logistics Concepts and Structure
New Logistics Paradigm
Te-Cheng Yu
Dept. of Logistics Management,
National Kaohsiung Marine University
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Outline
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Introduction
Military logistics
Engineering logistics
Business logistics
Event logistics
Process logistics
Service logistics
Emergency logistics
Value-added role of logistics
Introduction
• A consideration of the various practices that,
taken together, define general logistics (cf.
emergency logistics) suggests that logistics is a
branch of management science that is practiced
in seven areas: military logistics, engineering
logistics, business logistics, event logistics,
process logistics, service logistics, and
emergency logistics.
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Military logistics
• . The design of supportability into weapon systems and
other capital assets, assessment of technical
requirements for training and maintenance, and
integration of all aspects of support for the operational
capability of military forces and their equipment.
Examples of military logistics capabilities include
airlift, sealift, operational readiness, and sustainability.
In addition to protocols, there are logistics plans,
provisioning, war reserve spare kits, containerization,
supply support, maintenance plans, materiel and
service contracts, and industrial mobilization, et al.
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Engineering logistics
• The reliability, maintainability, and configuration
planning, provisioning and continuing supply support,
repair level analysis, technical manuals development,
training, data and records management, life-cycle cost
management, and computation of post-sale support
requirements,. In this sense of the word, engineering
logistics is largely a modeling and quantitative
discipline. Examples of engineering logistics
capabilities include design for supportability,
integrated logistics support, tradeoffs, and life-cycle
cost management.
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Business logistics
• The planning and management of supply sources,
inventories, transportation, distribution networks, and
related activities and supporting information to meet
customer requirements.
• Business logistics evolved into a dichotomy of inbound
logistics (materials management or physical supply) to
support production, where the plant is the customer,
and outbound logistics (physical distribution of
product) to support external customers.
• Examples of business logistics capabilities include the
continuous flow, world-class suppliers, shipment
tracking, transportation, network, inventory
management, and automated materials handing of
manufacturing plant(inbound logistics)
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Event logistics
• The network of activities that brings together the resources
required for an event to take place (International Olympic
Committee, 1996). Event logistics is characterized by
deployment of resources (forward logistics) and withdrawal of
resources (reverse logistics) according to the events schedule,
significant contingency-planning, and the powerful presence of
the logistics function in the events management team (Russell,
2000). Examples of event logistics include the detailed planning
and support requirements necessary to execute a circus, a rock
concert, a scout encampment, news coverage of the 0. J.
Simpson murder trial (more than 500 reporters and their
satellite-linked vans and other equipment), the Olympic Games,
and a Presidential trip.
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Process logistics
• The acquisition, scheduling, and management of
human and material resources to support a service.
Process logistics typically involves the coordinated
employment of facilities, capital assets, and service
personnel to create the framework for a process to
occur. Examples include bus transportation of school
children, mail delivery, drug smuggling, Red Cross
relief operations, and operation of a multidimensional
orthodontics office (scheduling stations, personnel, and
parallel and sequential workflow for efficient and
effective service).
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Service logistics
• The acquisition, scheduling, and management of
the facilities/assets. personnel, and materials to
support and sustain a service operation or
business.
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Emergency logistics
• The definition of emergency logistics remains
ambiguous. One of the definition of emergency
logistics is “a process of planning, managing
and controlling the efficient flows of relief,
information, and services from points of origins
to points of destinations to meet the urgent
needs of affected people under emergency
conditions.”
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Emergency logistics (cont’d)
• The timeliness of relief supply and distribution
is hardly controllable in the emergency context.
This is true particularly in the crucial rescue
period which refers to the critical 3-day period
right after the occurrence of a disaster. This can
be further explicated in two different facets:
• (1) inbound logistics to relief distribution
centers.
• (2) outbound logistics from relief distribution
centers to affected areas.
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Emergency logistics (cont’d)
• Resource management for emergency logistics
remains challenging. The operational
environments of emergency logistics are
intricately uncertain as the corresponding
resources are attributed from both public and
private sectors.
• Accurate, real-time relief demand information is
required but almost inaccessible. Relief
demander and the corresponding information
provider can be different types of relief needed
may vary with time and location.
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Emergency logistics (cont’d)
initialization
updated disaster
damage data
Phase-1:
time-varying relief
demand forecast
t=t+1
Phase-2:
affected area
grouping
updated relief
supply data
Phase-3:
determination of
distribution priority
Phase-4:
group-based relief
distribution
If time-varying urgent relief
demnad is satisfied?
no
Phase-5:
dynamic relief supply
yes
Switch the model of emergency
logistics to normal relief
distribution
The proposed emergency logistics system
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Value-added role of logistics
• Four principal types of economic utility add
value to a product or service. Included are form,
time, place, and possession. Generally, most of
the prodessionals credit manufacturing activities
with providing form utility, logistics activities
with time and place utility, and marketing
activities with possession utility.
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Value-added role of logistics (cont’d)
• Form Utility.
– Form utility refers to the value added to goods through a manufacturing,
production, or assembly process. For example, form utility results when
raw materials are combined in some predetermined manner to make a
finished product. This is the case, for example, when a bottling firm adds
together syrup, water, and carbonation to make a soft drink. This simple
process of adding the raw materials together to produce the soft drink
presents a change in production form that adds value to the product.
– In today’s economic environment, certain logistics activities can also
provide form utility. For example, breaking bulk and product mixing,
which typically take place at distribution centers, change a product’s
form by changing its shipment size and packaging characteristics. Thus,
unpacking a pallet of breakfast cereal into individual consumer-size
boxes adds form utility to the product. However, the two principal ways
in which logistics adds value are in place and time utility.
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Value-added role of logistics (cont’d)
• Place Utility.
– Logistics provides place utility by moving goods from
production surplus points to points where demand exists.
Logistics extends the physical boundaries of the market area,
thus adding economic value to the goods. This addition to
the economic value of goods or services is known as place
utility. Logistics creates place utility primarily through
transportation. For example, moving farm produce by rail or
truck from farm areas to markets where consumers need this
produce creates place utility. The same is also true when steel
is moved to a plant where the steel is used to make another
product. The market boundary extension added by place
utility increases competition, which usually leads to lower
prices and increased product availability.
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Value-added role of logistics (cont’d)
• Time Utility.
– Not only must goods and services be available where consumers need
them, but they must also be at that point when customers demand them.
This is called time utility, or the economic value added to a good or
service by having it at a demand point at a specific time. Logistics creates
time utility through proper inventory maintenance and the strategic
location of goods and services. For example, logistics creates time utility
by having heavily advertised products and sale merchandise available in
retail stores at precisely the time promised in the advertising copy.
– To some extent, transportation may create time utility by moving
something more quickly to a point of demand. For example, substituting
air transportation for warehousing adds time utility. Time utility is much
more important today because of the emphasis upon reducing lead time
and minimizing inventory levels through logistics-related strategies such
as JIT inventory control.
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Value-added role of logistics (cont’d)
• Possession Utility.
– Possession utility is primarily created through the basic
marketing activities related to the promotion of products or
services. We may define promotion as the effort, through
direct and indirect contact with the customer, to increase the
desire to possess a good or to benefit from a service. The role
of logistics in the economy depends upon the existence of
possession utility, for time or place utility make sense only if
demand for the product or service exists. It is also true that
marketing depends upon logistics, since possession utility
cannot be acted upon unless time and place utility are
provided. Order fulfillment is the critical and often final step
for meeting customer requirements.
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Value-added role of logistics (cont’d)
33.3333%
Production
Form utility
Place utility
Time utility
3
33.3333%
33.3333%
Logistics
Marketing
Possession utility
FIGURE 2－5 Fundamental Utility Creation in the Economy
Source: Center for Supply Chain Research, Penn State University
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Next….
• A General Theory of Logistics Practices
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