Megatrends in Logistics Management

• Megatrend refers to geo-strategic and macro economic forces that change and shape the world.
• Logistics management involves planning, implementing, and controlling the efficient flow and storage of goods, services, and data from origin to consumption to meet customer's requirements.
• Megatrends include:
  • Globalisation
  • Covid-19
  • Empowered customers
  • Climate change and resource scarcity
  • Rise in technology
  • Demographic shifts
  • Shifts in global economic power
• Globalisation is the movement towards a more integrated global economy, causing a more intense geopolitical and economic environment.
• Empowered customers are more educated and informed due to access to information.
• A shift in global economic power is rebalancing global economic and business activity, shifting focus from countries like China and Russia from being labor and production focused to more consumption-focused.
• A Demographic shift with explosive demographic growth and decline in countries contributes to resource scarcity and shifts in economic power, with impacts on societal norms.
• Rise of technology allows for collaboration and provides firms/consumers with access to unlimited information.

Types of Logistics

• Military logistics involves ensuring the right support at the right place and time.
• Engineering logistics provides integrated logistics support, including life cycle analysis and maintenance.
• Business logistics manages the supply and demand of raw materials and finished goods.
• Production logistics deals with the phase between raw materials and final goods, excluding distribution.
• Reverse logistics handles return loads, disposal of packing materials/obsolete products, and returns of appliances/components.
• Construction logistics focuses on delivering the right construction materials at the right time and place.
• City logistics involves moving freight from origin to destination in the most cost-effective way.

Supply Chain Management

• Supply Chain Management is planning and managing all activities in sourcing/procurement, conversion, and all logistics management activities.
• Supply Chain Management processes include:
  • Demand management
  • Customer relationships management
  • Supplier relationship management
  • Customer service management
  • Returns management
  • Order fulfillment
• Third-party logistics (3PL) is a management structure where a third party handles certain logistics roles/responsibilities between the supplier and customers.
• Fourth-Party Logistics (4PL) is an interface between the client company and multiple logistics service providers.

3PL Characteristics

• Transportation involves offering a transportation service with a comprehensive set of other logistics offerings.
• Warehouse and distribution offers comprehensive warehousing services.
• Finance-based 3PL provides freight and auditing services.
• Information-based 3PL shows growth/development in internet-based, business-to-business, electronic markets for transportation/logistics services.

3PL vs 4PL Differences

• A 4PL is often a separate entity, established as a joint venture or long-term contract between a primary client and one or more partners.
• A 4PL acts as a single interface between the client and multiple logistics service providers.
• A 4PL manages all aspects of the client's supply chain.
• A 3PL provider can potentially evolve into a 4PL organization.

4PL Operation Models

• Industry solution model: manages the distribution operations of its primary clients.
• Supply chain partners model: manages an integrated industry supply chain.

4PL Benefits

• Addresses strategic/financial failures of 3PL services with a single point of contact to manage all aspects of the client's supply chain.
• Improves accountability.
• Retains corporate supply chain knowledge.
• Realizes revenue opportunities by selling supply chain services to external clients.
• Competitive advantage involves creating and sustaining superior performance.
• Competitive advantage can be understood by looking at the firm as a whole.
• A Value Chain categorizes the generic value adding activities to an organization.

Primary Value Chain Activities

• Inbound logistics includes receiving storing listing and grouping inputs to the product.
• Operations involves machining packaging assembly, etc.
• Outbound logistics includes processing warehousing transportation.
• Marketing and Sales involves activities that convince buyers to buy products, including advertising, promotion, selling, and pricing.
• Service maintains the product after sale, guarantees quality, includes training, servicing, and after-purchase interaction.

Secondary Activities of the Value Chain

• Procurement includes purchasing raw materials, servicing, suppliers, etc.
• Tech development involves product improvement, such as design.
• Human resource management includes recruitment, education, and retention.
• Infrastructure includes general management planning procedures and finances.

Other Key Terms

• Customer value is to differentiate the product, allow organizations to respond to customer needs quickly, and lower costs.