FUNDAMENTALS OF LOGISTICS MANAGEMENT

1
 TABLE OF CONTENTS

1. Definition of Logistics and Logistics Management

2. History of Logistics
3. Types of Logistics
4. Scope of Logistics and Logistics Management
5. Logistics Management (LM) VS Supply Chain Management (SCM)
6. Trade Logistics Management
7. Benefits of Logistics & Logistics Management
8. Logistics Service Providers –Outsourcing
9. Logistics Strategies
10. Logistics Performance
11. Major Challenges of Logistics
12. Trends of Logistics & Logistics Management
 1. Definition of Logistics
and Logistics Management

Logistics refers to the overall process of managing

how resources are acquired, stored, and transported
to their final destination.
Logistics management involves identifying
prospective distributors and suppliers and
determining their effectiveness and accessibility.
“Logistics” was initially a military-based term used in reference to how
military personnel obtained, stored, and moved equipment and supplies. The
term is now used widely in the business sector, particularly by companies in
the manufacturing sector, to refer to how resources are handled and moved
alongWill
theKenton,
supply chain. Logistics: What It Means and How Businesses Use It, October 08, 2024
Investopedia,
 1. Definition of Logistics
and Logistics Management

 In 1967 The National Council of Physical Distribution Management

defined Logistics Management as “A term employed in Manufacturing
and Commerce to describe a broad range of activities concerned with
efficient movement of finished products from the end of the production
line to the customer, and in some cases includes the movement of raw
materials from the source of supply to the beginning of the production
line”
 In 1992 The Council of Logistics Management defined Logistics
Management as “The process of planning, implementing, and controlling
the efficient, effective flow and storage of goods, services, and related
information from point of origin to point of consumption for the purpose
of conforming to customer requirement ”
1. Definition
of Logistics
and
Logistics
Managemen
t
 2. History of Logistics Management
As per Sathyabama Institute of Science and Technology - School of Management
Studies
• Years 30 “Military logistics” - military logistics is begun to be related to industrial production
• Years 50 “Conceptualization of logistics” - Logistics becomes more important due to the transition from an economy
characterized by excessive demand to an economy with excess supply

• Years 60 “Outsourcing” - subcontracting of other companies because the flow of goods or information was efficient and
reached all parts that were within the reach of the company.

• Years 70 “The concept of trial logistics” - Customer service becomes an indispensable requirement to continue competing
with market leaders.

• Since the 80’s “Modification of preferences” - Just in Time’s approach was modified by Quick Response (QR) and
Efficient Consumer Response (ECR), Changes in supply chain preferences where special attention is paid to suppliers, Logistics
operations are energy-intensive: environmental-ecological concern is born.

• 1990 “Promotion of logistics” - integrated process in terms of its external and internal environment - strategic plan
2. History of Logistics Management

Global
Logistics
Scope & Influence

Supply Chain
Logistics

Corporate
Logistics
Facility
Logistics
Workplace
Logistics

1950's 1960's 1970's 1980's 1990's

7
Adapted from:Frazelle, Edward “Supply Chain Strategy” McGraw Hill 2002.
 2. History of Logistics Management
• 1970s : integrating basic operations, reducing inventories

• 1980s : re-engineering supply chain to cut costs

• Late 80s : growing revenues due to Customer Service focus

• 1990s : intensifying interest for Customer Service

improvements & mass customized response

• Late 90s : re-engineering supply-chain to cut costs

• 2000s + : Strategic SCM driving business strategies of many

firms
TOT
 d.

3. Types of Logistics
Procurement / Manufacturing Reverse/
/ Distribution/

KEYENE Corporation of America

 3. Types of Logistics
 Inbound Logistics : Bringing products and supplies into a business. Includes Import,
inventory management, warehousing, transportation.

 Outbound Logistics : the movement of products or finished goods from the production centers to the next
supply chain link.

 Reverse Logistics : the transportation of goods or products from the end-users to the supply chain, those
Products need to be replaced or returned for refurbishing, repairing, exchanging, discarding, or recycling.

 Outsourcing Logistics :
• Third-Party Logistics (3PL) : outsources logistics services to clients, including shipping, warehousing, and logistics
management.
• Fourth-Party Logistics (4PL) : outsource all of their logistics operations to a single logistics partner most aspect of the
company's supply chain, including evaluation, design, construction, management, and tracking.
• Fifth-Party Logistics (5PL) : controls all the supply chain networks while simultaneously using the services of third-party
logistics (3PL) and fourth-party logistics (4PL) via the various supply chain activities.

Green Logistics

Digital Logistics
DFREIGHT, Different Types of Logistics
 3. Types of Logistics Management
• Supply-Chain Management : includes the warehousing, storage, and movement of
materials and inventory.
• Material Handling and Distribution : relates to the movement of material and
supplies from a central location
• Production Management : planning, execution, and monitoring of the various
stages of production
• Customer Service Management : strategies, practices, and technologies used to
analyze and manage customer interactions
• Reverse Logistics Management : This is also called Returns Management, and refers
to the handling of order returns.

Fleetroot-Kashavdas M., What Is Logistics Management?, July 9, 2022

 4. Scope of Logistics and Logistics
Management in Manufacturing
Collaborative Management Platform
Visibility Monitoring Intelligence Networking
Trade Management

Information Flow Management (I.T. integration Platform)

PURCHASING PRODUCTION WAREHOUSIN DISTRIBUTION

MANAGEMENT MANAGEMENT G
V • concepts • MRP, ERP MANAGEMENT MANAGEMENT C
• methods • stock-control • ASRS, VNA • freight mgmt
• vendor mgmt • inventory • WMS • multimodal
E L
• business law control • MHEs transport
• contracts • ABC & systems • transport I
N • purchasing analysis • packing regulations
principles • JIT & packaging • customs E
• negotiation • VMI • optimization practices &
D
• trends • EOQ • KPI
• SAP • Quality( • order- procedures N
O QA,QC) processing • liability &
TOT Addis Ababa/Ethiopia 05th–18th
Prog Jul 2017
risk
(Thomas SIM)• consolidat
T
 5. Logistics Management Vs Supply
Chain Management
Basis of Comparison Logistics Management Supply Chain
Management
Meaning The process of integrating the The coordination and
movement and maintenance of management of the supply
goods in and out of the chain activities
organization

Objective Customer Satisfaction Competitive Advantage

Evolution The concept of Logistics has Supply Chain Management is a
been evolved earlier modern concept
Organizations Involved Single Multiple
One in Another Logistics Management is a Supply Chain Management is
fraction of Supply Chain the new version of Logistics
Management Management
Sathyabama Institute of Science and Technology - School of Management Studies
5. Logistics Management Vs Supply
Chain Management
 The primary distinction between supply chain management and logistics is that
supply chain management focuses on managing relationships with suppliers and
customers in order to optimize the flow of materials and services while logistics
focuses on the actual physical movement of goods from one location to another.
 While SCM is concerned with managing relationships with suppliers and customers
to guarantee that goods are delivered on time and at the appropriate cost, logistics is
focused on the actual transportation of goods. Additionally, SCM concentrates on
customer satisfaction while logistics concentrates on cost reduction.
 While SCM includes tasks like procurement, production planning, inventory
management, transportation, warehousing, distribution, customer service, etc.,
logistics also involves tasks like inventory management, packaging, warehousing, and
transportation.
Logistics and Supply Chain Management: Fundamentals and Strategies, TURKAY YILDIZ, January
2023
5. Logistics Management Vs Supply
Chain Management
What is the difference?

• A Supply chain is the network of:

• facilities (warehouses, factories, terminals, ports, stores, homes)
• vehicles (trucks, trains, planes, ships)
• logistics information systems
connecting suppliers’ suppliers with its customers’ customers.

• Logistics is:
• “what happens in the supply chain” sub-set
• “putting the right material in the right place at the right time“
• it provides much of the Supply Chain’s value-added.
 6. Trade Logistics Management
Trade logistics refers to the process of planning, organizing and managing the transport
and storage of goods and materials during the import and export of products between
countries.
It is a crucial aspect of international trade as it helps ensure that goods reach their
intended destination in a timely and efficient manner.
There are several key components of trade logistics that must be considered to
effectively manage the movement of goods across international borders.
o One of the most important aspects is transport, which consists in choosing the most suitable
means of transport for the goods to be shipped. This could include air, sea or land transport, all
of which have their own unique set of advantages and disadvantages.
o Another important aspect of commercial logistics is the handling and storage of goods, both in
transit and at their final destination. This includes the use of warehouses and other storage
facilities, as well as the handling of goods using specialized equipment and techniques.
o Effective trade logistics also requires the coordination of various parties, including shippers,
carriers, customs brokers and other intermediaries. This involves the use of advanced
communication and information systems to track the movement of goods and ensure that they
are handled and stored in a manner that complies with all necessary regulations and
requirements.
 6. Trade Logistics Management - Scope

Supplier to
Port
-----------------------------------
---------

Port to
Consumer
6. Trade Logistics Management - Scope

TOT Addis Ababa/Ethiopia 05th–18th

Prog Jul 2017 (Thomas SIM)
 6. Trade Logistics Management
Major Trade Logistics Stakeholders in Ethiopia
 Ministry of Transport and Logistics and all its affiliates = EMA, EDR, CAA,
 Ministry of Trade and Regional Integration and its affiliates
 Ministry of Revenue and its affiliates like ECC
 Ministry of Finance
 Ministry of Agriculture
 Ministry of Foreign Affairs
 Ethiopian Investment Commission (EIC)
 Ethiopian Investment Holdings (EIC) and its affiliates like ESL
 National Bank of Ethiopia
 Ethiopian Freight Forwarders and Ships Agents Association (EFFSAA)
 6. Trade Logistics Management
Major Trade Logistics Stakeholders in Ethiopia

Ethiopian Logistics Sectoral Association

 Ethiopian and Regional Chamber of Commerce & Sectoral Association (ECC-SA)
 Ethiopian Customs Clearing Agents Association (ECCAA)
 Ethiopian Horticulture Producer Exporters Association (EHPEA)
 Ethiopian Transport Employers Federation
 Government & Private Importers & Exporters
 Ethiopian Airlines Group
 Shipping Lines (Branches / Agents)
 Commercial Banks

Development Partners
7. Benefits of Logistics Management
Proper logistics management ensures that businesses can
meet both demand and consumer expectations.
• Improving customer experience. ... The.Six.Rights.. of.Logistics
• Optimizing operational costs. ...
• Boosting profitability. ... The RIGHT goods
in the RIGHT quantities
• Better intermodal operations. ... in the RIGHT condition delivered…
• Greater delivery, productivity and efficiency. ... to the RIGHT place
at the RIGHT time
• Intelligent route planning.
for the RIGHT cost

Typically, a logistics management system includes inbound and outbound

transportation management, warehouse management, fleet management,
order processing, inventory control, supply and demand forecasting, and
management of third-party logistics service providers.
 7. Benefits of Logistics Management
11 Benefits Of Logistics Management To Drive Business Growth
1. End-to-End Visibility - ample transparency and visibility in the supply chain and operations
2. Reduce Operational Cost - reduce the overhead cost by proactively managing the operations
3. Enhanced Customer Experience - customer relations can positively impact the business
growth
4. Warehouse Management - smooth workflow of managing the aspects of storage and
distribution in the warehouses
5. Demand Forecasting - manages the supply chain by forecasting the product demand,
inventory needs, transporting, stocking, etc.
6. Inventory Management - determines how much stock to order at what time
7. Support Expansion - supporting the expansion of businesses by embracing new age digital
tools
8. Preventive Maintenance - help the businesses running efficiently by forecasting
the equipment failure and preventing unplanned machine downtime
9. Intelligent Route Planning - tends to have visibility on the entire supply chain which enhances
the last-mile logistics
10. Boost Profitability - Organising the flow of goods can impact a company’s profitability and
growth of your business.
11. Risk Management - constantly updating the risk management processes.
Tomas Žvinklys – Kregždė, Logistics Management, August 11, 2023, in LinkedIn
 8. Logistics Service Providers
A Logistics Service Provider (LSP) is an outsourced company
that provides supply chain management services such as
transportation, warehousing or distribution services.
LSPs offer many benefits including access to vital analytics,
expertise in new industry technology and the ability to create
and deliver value to end-user customers and consumers.
LSPs have evolved mostly from freight forwarders as First-Party
Logistics (1PL), Second-Party Logistics (2PL), Third-Party Logistics
(3PL), Fourth-Party Logistics (4PL), Fifth-Party Logistics (5PL).
 Reasons for Outsourcing to LSPs
• Reduce Cost
• Focus on Core Competencies/own business
• Access to Local Market Knowledge and
Special Expertise
• Access to Newer Technologies, World- Class
Standards and Processes
• Relieving Resource Constraints
• Long-Term Partnership
Building

TOT Addis Ababa/Ethiopia 05th–18th

Prog Jul 2017 (Thomas SIM)
 8. Logistics Service Providers
Evolution of logistics outsourcing
Present &
Future 4PL-7PL
Early 3
2000’s PL
Late Complex logistics
1990’s system
Mid 1990’s Warehousing transportation related
service
Early 1990 Transportation service

SCM, S.K. & Co.,

 8. Logistics Service Providers
LSP Type Activities
1PL Business that handles its own logistics in-house

2PL Provides shipping and transportation

·Provides inbound and outbound logistics services including transportation and
warehousing, and related services
·Establishes a long-term logistics partnership in formal or informal manner with firms,
3PL ·Also handles information needs, freight payments and accounting, transportation
planning and optimization, international documentation, and warehouse management
systems
·Aims to offer ‘one-stop shopping’
·Higher level in outsourcing that combines the capabilities, resources and technology
of its own organization with those of its complementary service providers
4PL ·Manages and oversees supply chain and contracts with companies to provide
logistics services
·Leverages the combined capabilities of management consulting, technology solutions
and 3PL service providers
5PL Contracts with and oversees multiple 3PLs to create a large supply network
LTO Studies
 9. Logistics Strategies

• Logistics strategies are a set of rules, processes, and policies that help a
business distribute goods in an efficient and cost-effective way. (AI Overview)

• A logistics strategy is a set of principles, attitudes and driving forces that

guide the coordination of plans, goals, and policies between the partners
across a supply chain. (University of Lincoln, August 27, 2021/by Ruth Brooks)

• The principle of a generic logistics strategy should be interpreted as a

common decision pattern for a range of logistics-related activities. In
order to effectively and efficiently satisfy the logistics system
requirements of consumers, one or a blend of generic logistics strategies
should be introduced and adopted (Fabbe-Costes, & Colin, 2007-ResearchGate).
 9. Logistics Strategies

• The implementation of a logistics strategy is driven by several key goals like cost
reduction, streamlining the supply chain for greater efficiency, achieving more
transparency within logistic operations, bolstering agility to adapt swiftly to
change, and fostering customer contentment (KODIS)

• A comprehensive logistics strategy prioritizes the need to

maintain a certain level of business performance and
customer service. This strategy allows a company to
become more flexible, where changes to functions or
procedures can shift if necessary, to maintain high levels
of business performance and customer service (Intertek Inform)

• Logistics Strategy at Micro/Company and Macro/National level

 9. Logistics Strategies

National Logistics Strategy (NLS)

of Ethiopia

Objective of the NLS

The overall objective of the NLS is to transform the
existing logistic system so that the sector will play its
key role as enabler of the national economy in general
and the import and export trade performance in
particular.
 9. Logistics Strategies

Purpose of the NLS

1 Enable National 3 Provide Systemic Logistics

Development Solutions

2 Control Avoidable Logistics Provide Direction and

4 Leadership
Costs

03/21/2025 31
 9. Logistics Strategies

Transform Develop and Institute an

logistics strength efficient and NLS Six Major
service logistics reliable transit
delivery and sector policies and customs Strategies
operators system
efficiency and legal
Strategy
Strategy 1 frameworks Strategy 3
2
Implement trade Strengthen
and finance Develop regulators
system to logistics institutional
enhance infrastructure capacity,
logistics s qualifications of
facilitation role human capital
Strategy 4 Strategy 5 Strategy 6

22 Sub-Strategies and 98
Interventions
 9. Logistics Strategies

#94 GOVERNANACE
National Logistics Council

(Hamle2012 EC .
Per Logistics Policy)
coordinate the activities of
institutions with key roles in the sector

• Controls overall implementation of NLS

• Provides policy directions on the
LTO
implementation of the NLS
• coordinate the activities of institutions
with key roles in the sector
33
 9. Logistics Strategies

GOVERNANACE
# 95 Logistics Transformation Office (LTO)

NLC Expertise arm and provides technical and professional

support
(Planning, design, analysis, implementation, performance
evaluation & follow-up, etc.)

Responsible to ensure the full implementation of the NLS

Conducts Studies and Researches

devise programs and crucial proposals/projects geared

towards transforming the logistics system

coordinate activities of regulatory institutions and service

providers in the sector
 10. Logistics Performance

 Logistics performance is a measure of how efficiently a country's trade supply

chain operates.
 Cost, Time and Service Reliability/Complexity are the three key indicators of
the logistics system performance.
 Globally, among the major Logistics performance measurement tools are, the
World Bank Logistics Performance Index (LPI), Logistics Performance Reports
of Landlocked Countries- Vienna Program of Action (VPOA), World Economic
Forum Global Competitiveness Index
 The World Bank Logistics Performance Index (LPI) is measuring performances
of more than 130 countries every two years, using its own criteria.
World bank has not included Ethiopia in its 2018 and 2023 Reports. Thus,
EMA-LTO has made National Self-Assessments in 2020, 2021 and 2023.
 10. Logistics Performance
World Bank logistics performance (LPI) is the weighted average of the
country scores on six key dimensions: Perception Based
1. The efficiency of the clearance process (i.e; speed, simplicity and predictability of
formalities) by border control agencies, including customs.

2. Quality of trade and transport-related infrastructure (e.g., ports, railroads, roads,

information technology);

3. Ease of arranging competitively priced shipments;

4. Competence and quality of logistics services (e.g., transport operators, customs brokers);

5. Ability to track and trace consignments;

6. Timeliness of shipments in reaching the destination within the scheduled or expected

delivery time.
 10. Logistics Performance

Ethiopia World Bank 2016

LPI Rank Criteria LPI Score
efficiency of the clearance process / Customs 2.60
transport-related infrastructure 2.12
arranging competitively priced shipments 2.56
quality of logistics services 2.37
track and trace consignments 2.18
Timeliness of shipments 2.37
Overall LPI Score 2.38

LPI Rank 126 out of

160 countries
10. Logistics Performance
Self Assessment Ethiopia
 11. Major Challenges of
Logistics
• Supply chain disruptions by ongoing wars, climate change, and the evolving
landscape of international logistics
• Sustainability and environmental concerns due to the industry's
heavy reliance on fossil fuels for shipping goods worldwide.
• Technology integration including artificial intelligence (AI), the Internet of Things
(IoT), blockchain, and Software as a Service (SaaS), presents both opportunities and challenges
• Regulatory and compliance changes with new laws and compliance
standards emerging that businesses must adhere to and avoid potential penalties and operational
disruptions
• Rising costs
• Offering segmented, personalized services/ fluctuating
customer demand
• Workforce Management
 12. Trends of Logistics & Logistics
Management
• Growth in world trade – shows a need for Integrated Transport
Logistics providers
• The demand will drive the development of bigger, faster &
more efficient integrated transport systems
• Work closely amongst Service Providers as Partners in
formulating a structured plan to compete with huge operators
(Collaborations)
• by joining forces, Service Providers can accelerate the pace to
compete & secure discerning Multinational Customers
• our choice is to anticipate & prepare for it, and to become the
flexible, Customer- responsive companies …and embrace
positive changes !
TOT Addis Ababa/Ethiopia 05th–18th
Prog Jul 2017 (Thomas SIM)
12. Trends of Logistics & Logistics Management
The future depends to a great extent, on our
Ability to fulfill our Customers’ NEEDS :
• On-time Pick-up & Delivery
• Overall Responsibility
• Competitive Pricing
• Transit-time
• Service territory
• Billing accuracy
• Correct equipment
• Degree of control
• Track & trace capability
• Claims processing
• Low performance failures
TOT Addis Ababa/Ethiopia 05th–18th
Prog Jul 2017 (Thomas SIM)
12. Trends of Logistics & Logistics Management
Continuous Transformation :
• End-to-End Product Visibility across the Supply
Chain (including Cost Components)
• Continuous Cost Reduction and Performance
Reliability
• Specialized Trade Content Knowledge
• Global Geographic Coverage
• Proactive Performance Measurement &
Reporting
• Value-Added Services due to Increase in
Globalization and
• Outsourcing

TOT Addis Ababa/Ethiopia 05th–18th

Prog Jul 2017 (Thomas SIM)