Logistics

Management
MSc. Dang Thuy Long Chau
Course Assessment Methods
Attendance 1
Evaluation of students' regular participation in
class, including arriving on time and engaging in
class activities. 2 Short Tests
Students will have 7 short tests, each with 20
theory questions and 10 selft-thinking
questions in multiple choice. The test duration is
Presentations 3 from 30 to 40 minutes at the end of the self-
Starting from Chapter 3, students will be divided study session (based on the duration of chapter).
into groups of 5 to give 30-minute presentations.
1-2 groups will present per session.
4 Final Exam
The final exam will consist of 30 theory
questions and 30 selft-thinking questions, with a
test duration of 60 minutes.
Course Content
This course will provide students with basic knowledge and skills in Logistics management. The main content includes:

1. Basic concepts of Logistics

2. Fundamentals of Logistics system management

3. Logistics cost and efficiency management
4. Procurement management
5. Transportation and freight management
6. Warehouse management and cargo handling
7. Inventory and supply management
8. Trends in technology application in logistics management
Chapter 1. Basic
Concepts of
Logistics
MSc. Dang Thuy Long Chau
Basic Concept of Supply Chain
1.1. Concept of Logistics

"What role does logistics play and at what stage in the supply chain?"
1.1. Concept of Logistics

Logistics plays a crucial role in the supply chain, ensuring smooth operation from raw materials to the final product. In the
supply chain, logistics is present in the stages from raw materials to the final product, including the distribution process to
the customer.
1.1. Concept of Logistics
Definition Objectives Scope
Logistics is the process of The main objective of logistics is Logistics includes various
managing and optimizing the to ensure the right product, the activities such as transportation,
processes related to the right quantity, the right condition, warehousing, packaging, order
movement and storage of goods, at the right place, at the right time processing, inventory
services, or information from the and at the most reasonable cost management, and customer
point of origin to the final for right customer. service.
destination.
Stages of Logistics Service Development
Stage 1: Physical Distribution (1960s 1
- 1970s)
In this stage, logistics services focused on the
movement and distribution of goods efficiently, 2 Stage 2: Logistics Systems (1980s -
aiming to meet customer demand. 1990s)
This stage witnessed the development of
logistics systems with the integration of
Stage 3: Supply Chain Management 3 activities such as transportation, warehousing,
(21st Century) inventory management, and order processing.
In the new era, logistics has become a critical
part of supply chain management, connecting all
the stages from suppliers to end customers.
Phase 1: Distribution
Transportation
1
Timely and efficient transportation of goods

Distribution
2
Optimized distribution of products and goods to customers

Warehousing
3
Safe and efficient storage and preservation of goods

Packaging
4
Attractive packaging and labeling to protect goods

In the Distribution phase, the related activities such as transportation, distribution, storage, and packaging are closely
coordinated to ensure the effective and timely delivery of products and goods to customers. The purpose is to meet
customer needs in the most optimal way.
Activities in Phase 1
The first phase of the logistics service focuses on physical distribution, moving products efficiently from the manufacturer
to the customer's hands. This is a period when businesses recognize that optimizing distribution is a competitive
advantage.

Transportation: Optimize transportation modes such as road, rail, and sea to ensure goods are delivered on time at the
lowest cost.

Storage: Manage warehouses to maintain a continuous flow of goods, reduce waiting time, and increase efficiency.
Inventory management: Includes activities such as receiving, inspecting, storing, packaging, and distributing goods.

Although more scientifically organized, the logistics processes in this phase still operate in silos between different
departments.
Phase 2: Logistics System

In this phase, logistics activities such as inventory management, transportation, and order processing are integrated into a
complete logistics system. This helps optimize operations, meet customer needs in a timely and efficient manner.
Activities in Phase 2
Phase 2 marks the transition from simple distribution to an integrated logistics system. This system combines various
activities to optimize the supply chain.

Warehouse Management
1 Storage, handling, and control of goods.

Transportation
2
Moving goods from origin to destination.

Inventory Management
3
Tracking, forecasting, and adjusting inventory levels.

Order Processing
4
Receiving, processing, and delivering orders to customers.

Information
5
Collecting, processing, and sharing logistics information.

These activities are connected through an information system, allowing businesses to effectively control the entire logistics
process.
Stage 3: Supply Chain Management (21st
Century)

Comprehensive Supply Chain Technology & Data Global Connectivity

Connectivity Optimization ERP, WMS, TMS, Big Data, Logistics must meet the
Logistics has become an The goal is to create a AI, and IoT play a crucial need for global connectivity,
indispensable part of supply flexible, efficient, and role in optimizing logistics with the movement of
chain management, responsive supply chain operations and the supply goods across multiple
connecting all stages from that can quickly adapt to chain. countries and regions.
suppliers to the final market changes.
customers.
Activities in Phase 3
Phase 3 is the phase of supply chain management. This is the highest stage of logistics development. In this phase,
companies not only focus on managing logistics activities within the company, but also expand the scope of management
to the entire supply chain. This means that the company needs to coordinate and manage the activities of all partners in the
supply chain, including suppliers, manufacturers, distributors, and the final customers.

The main activities in Phase 3 include:

Planning and managing the supply chain

Controlling and optimizing the flow of goods
Managing partner relationships in the supply chain
Building a supply chain management information system
Implementing sustainable logistics activities
The Importance of Logistics in Business
Trends in the Development
of the Logistics Service
System
Green Logistics and Sustainable Development
Focusing on minimizing environmental impact through the use of electric
vehicles, route optimization, and waste reduction.

Urban Logistics
Developing efficient transportation and distribution solutions in dense
urban environments, utilizing small distribution centers and flexible
delivery vehicles.

Digitalization in Logistics - Smart Logistics

Digitalization helps automate processes, enhance transparency, improve
tracking and data analysis, enabling businesses to optimize operational
efficiency and reduce costs.
1.2. Logistics Service System
The logistics service system has various different system components. The core logistics services such as order
processing, storage, and transportation are directly supported by logistics information services and additional services
necessary for the logistics process.
Components in the Logistics Service System
Components of the Logistics Service System
Information Services 1
Includes information and communication
technology systems that support supply chain
management, cargo tracking, and optimization of 2 Logistical Core Services
logistics processes. Services such as order processing, storage, and
cargo transportation, which are fundamental and
essential activities in the logistics chain.
Additional Services 3
Includes supporting services such as packaging,
delivery, insurance, customs, etc. to complete
and optimize the provision of logistics services.
Logistical Core
Services
Logistical core services such as order processing, storage, and goods
transportation are fundamental and essential activities within the supply
chain. These services provide the foundation for an efficient logistics system
to operate.
Order Processing

1 Order Data Management 2 Payment Process

Process and track order information from receipt to Includes invoicing, payment collection, and effective
delivery completion, ensuring accuracy and management of payment transactions.
transparency.

3 Shipment Tracking 4 Feedback Information Processing

Monitor the transportation and delivery process to Receive and process customer feedback, which
ensure goods reach customers on time. serves as a basis for improving service quality.
Warehouse Management
Warehouse Management
When goods are produced or imported, they need to be stored in warehouses before being distributed to
1
customers. The Warehouse Management System (WMS) plays a crucial role in organizing, arranging, and
preserving the goods.

Space Optimization
2 Modern storage systems not only help save space, but also optimize the time for searching and processing
goods.

Classification and Arrangement

3 Goods are classified and arranged according to criteria such as product type, storage time, and priority level.

Supporting Technologies
4 In some cases, technologies such as robots and Automated Storage/Retrieval Systems (AS/RS) are applied
to enhance efficiency.

Risk Minimization
5 Effective storage management ensures that goods are always ready when needed and minimizes the risk of
shortages or damage.
Warehouse Operations Process
Warehouse Operations Process
Receiving 1
Receive and inspect incoming goods to ensure
accurate quality and quantity.

2 Put away
Classify and arrange goods in optimal storage
locations based on their characteristics and
Picking 3 usage frequency.
Search for and retrieve the correct items
according to order requirements, ensuring
accuracy and efficiency. 4 Packing
Pack goods safely, attractively, and appropriately
for each product type.
Inventory 5
Monitor and update inventory status to forecast
demand and adjust replenishment plans in a
timely manner. 6 Kitting
Assemble related products into complete
product kits to meet special customer
requirements.
Transshipment Hubs in Logistics Services

Multiple Application Areas Efficient Distribution Storage and Management

Transshipment hubs are widely used Transshipment hubs support the Transshipment hubs help store and
in industries such as retail, distribution of goods to retail stores or systematically manage inventory,
manufacturing, food, pharmaceuticals, direct delivery to customers, ensuring meeting the standards and storage
etc. They meet the need for fast and timeliness and flexibility. requirements of different types of
efficient movement of goods. goods.
Goods Transportation
Transportation Methods Transportation Management
There are various transportation methods, including Transportation Management Systems (TMS) help track
road, rail, sea, and air. The choice of method depends routes, optimize routes, and ensure on-time delivery at
on the distance, delivery time, and type of goods. reasonable costs.

Supporting Technologies Coordination

Technologies help track and monitor transportation in Transportation requires close coordination between the
real-time, minimizing the risk of lost or damaged goods manufacturer, transportation service providers, and
during transit. customers.
Logistics Information
Services
Logistics information services create and utilize data about
goods transported within the system. This data includes
important information such as the shipper, receiver, type of
goods, order number, quantity, weight, and volume.

Logistics information is the key to planning, tracking, and

monitoring the provision of actual logistics services.
Logistics operations based on data are closely related to
core services such as transportation, warehousing, and
order processing.
Benefits of Implementing a Logistics
Information System

Reduced Operational Costs

Visibility and Tracking
Smart Automation
Efficient Delivery Orchestration

Improved Delivery Tracking & Management

Improve Customer Experience
Lack of NDR Standardization
4-Level Model of a Logistics Information
System
4-Level Model of a Logistics Information
System
The logistics information system consists of 4 main levels: Operating Level, Tactical Level, Strategic Level, and Control
Level. Each level plays an important role in managing and operating logistics activities effectively.

Operating Level includes activities such as order registration, order processing, inventory planning, warehousing and
distribution, transportation and delivery. These are the daily tasks that need to be performed to maintain a seamless and
timely logistics operation.

Tactical Level involves issues such as inventory management, facility planning, channel integration, vehicle routing and
scheduling, as well as outsourcing services. These tasks help optimize operational efficiency in the short and medium
term.

Strategic Level includes capacity and capability planning, alliances and collaborations, as well as system customization to
meet long-term business objectives.

Control Level focuses on monitoring and evaluating the performance of the system, including customer service, system
productivity, cost control, and effective asset utilization.
Workflow of the Logistics Management
System
Logistics Management System Workflow
Order Placement 1
Customers place orders, generating information
about products, quantities, and delivery times.

2 Planning
The logistics management system plans the
order processing, including scheduling
transportation, arranging goods, and allocating
Execution 3 resources.
Activities such as receiving goods, inspecting,
warehousing, packaging, and transportation are
carried out to fulfill the order.
4 Monitoring
The system tracks the order processing, updates
the status, and provides information to the
Evaluation 5 customers.
Based on KPIs such as delivery time, cost, and
customer satisfaction, the system's
effectiveness is evaluated.
Additional Services in Logistics

1 2 3

Information Services Advertising Services Flexibility

Additional information services Additional services such as Additional services can be provided
such as data analysis and reporting promotions and advertising can be at different locations, not just at the
can be integrated into the core provided at various points along the point of delivery, but also at the
logistics process, providing valuable supply chain, optimizing the contractor's or third-party's
information for marketing purposes. effectiveness of customer reach. premises, increasing flexibility and
efficiency in the transportation
process.
1.3. Classification of
Logistics Activities
Logistics is an important field in supply chain management. There are many
ways to classify logistics activities, including by form, process, and
commodity.
Logistics Activity Classification by Service
Level
First Party Logistics (1PL)
Self-organization Dedicated Resources Direct Management
The business owner organizes and Use the company's own vehicles, Directly manage and operate the
carries out logistics activities. warehouses, information systems, entire logistics process.
and workforce.
Advantages and Disadvantages of the 1PL
Model

Advantages
High Proactivity: The owner of the goods can independently provide Logistics at any time.
Tight Control: The company has tight control over the transportation process and service quality.
Long-term Cost Reduction: For large companies, investing in Logistics infrastructure can reduce long-term costs
compared to outsourcing.

Disadvantages
High Initial Investment: Investing in infrastructure, transportation, and human resources requires a large initial
investment.
Management and Operation Capability: For companies without sufficient scale, experience, expertise, and quality
of personnel, the 1PL model can pose many difficulties, reduce efficiency, increase risks, and be quite costly.
Limited Scope: Small companies have a limited transportation scope and cannot expand to a large or
international scale like other Logistics models.

Who is it suitable for?

The 1PL model is more suitable for large companies with large transportation needs and strong financial
capabilities, as they can invest in infrastructure and manage logistics effectively. However, this model is not optimal
for small businesses, due to the high initial investment and limited transportation scope, making it difficult for them
to expand or compete with external logistics services.
Second Party Logistics (2PL)
1 Provision of Individual 2 Not Integrated 3 Flexible
Services The services provided are not Businesses can choose the
The second party provides yet integrated as a system. necessary services from
individual logistics services various different providers.
such as transportation,
warehousing, customs
procedures, etc.
Advantages and Disadvantages of the 2PL
Model
Advantages Disadvantages
Reduced initial investment: Businesses do not need Dependence on the provider: Loss of control and
to invest in logistics infrastructure and risk of service quality issues.
transportation equipment. High service costs: Outsourcing costs can increase,
Access to professional services: 2PL providers especially for large shipping volumes.
have experience and ensure quality transportation. Limited scalability: Not suitable for large-scale or
Optimized transportation process: Providers have a international logistics expansion needs.
wide network, helping to reduce costs and optimize Lack of supply chain integration: Only addresses
routes. transportation, other processes still need to be self-
High flexibility: Businesses can choose different managed.
service providers for various transportation needs.

Who is it suitable for?

The 2PL model is a reasonable choice for businesses that want to reduce initial investments and leverage the
expertise of transportation providers. This model is particularly suitable for businesses with medium-scale
transportation needs, but not optimal for large-scale logistics operations or those requiring comprehensive supply
chain management.
Third-Party Logistics (3PL)
1 Comprehensive 2 Diverse Services 3 Integrated Systems
Management Handles import/export Integrates with the customer's
Manages the execution of procedures, freight system, resulting in higher
logistics services for each transportation, combined efficiency.
functional department on behalf circulation, inventory storage,
of the business owner. and information processing.
Advantages and Disadvantages of the 3PL
Model
Advantages Disadvantages
Optimize logistics processes: Professional Loss of direct control: Dependent on the provider
providers manage all logistics activities. for logistics operations.
Cost savings: No need to invest in logistics Service costs: Can be high, especially for complex
infrastructure or personnel. services.
High expertise: Utilize expertise and wide networks Quality risks: Quality depends on the provider, which
to improve efficiency. can impact service.
Flexible scalability: Services can be easily adjusted Complex relationship management: Requires close
to business needs. coordination with the provider.
Data security: Risks of information security when
sharing with a third party.

Who is it suitable for?

The 3PL model is a reasonable choice for businesses that want to optimize logistics processes and leverage the deep
expertise of logistics service providers. This model is particularly suitable for businesses with large or international
transportation needs.
Dropshipping - A New Product Delivery
Method
No Need to Manage Inventory Expanded Product Catalog
In the Dropshipping model, the seller does not have to With the Dropshipping model, sellers can expand their
manage, store or ship the goods themselves. Instead, product catalog without additional investment. This
the Dropshipping service provider will take care of these helps increase business opportunities and attract more
tasks. customers.

1 2 3

Reduced Investment Costs

Businesses do not need to spend money on purchasing
inventory, building warehouses or hiring staff. This
significantly reduces the operating costs.
Dropshipping
Dropshipping vs. Third-Party Logistics (3PL)

1 2

Dropshipping Third-Party Logistics (3PL)

Retailers do not stock inventory. Instead, they transfer Comprehensive logistics services including
orders directly to the manufacturer or supplier, who is transportation, warehousing, order processing, etc. The
responsible for fulfillment and shipping. 3PL provider will manage the entire process on behalf of
the client.
Dropshipping vs. Third-Party Logistics (3PL)
Criteria Dropshipping Third-Party Logistics (3PL)

Inventory Management No need to store inventory, suppliers Merchants own the inventory, but
hold and manage the inventory. the warehouse and management
are handled by 3PL.

Initial Costs Lower, as there is no need to invest Higher costs due to the need to
in warehousing and inventory. invest in inventory and 3PL service
fees.

Process Control Lower control, as the supplier is Higher control, can customize and
responsible from production to manage the quality of the delivery
delivery. service.

Delivery Speed Depends on the supplier and their Faster delivery speed as the goods
location, often slower as the goods are stored domestically or in
may be shipped from overseas. warehouses closer to the
customers.

Product Quality Cannot be directly controlled, Can control the product quality
depends on the supplier. before delivery.
Dropshipping vs. Third-Party Logistics (3PL)
Criteria Dropshipping Third-Party Logistics (3PL)

Customer Experience May be inferior due to longer Improves customer experience with
delivery times and difficulty faster delivery and easier returns
handling returns or warranties. management.

Scalability Easy to scale quickly without Scalable, but dependent on the 3PL's
worrying about warehousing or warehouse capacity and
inventory management. capabilities.

Returns More complex, as the seller needs Easier, as the 3PL can assist with
to work with the supplier to handle processing returns and warranties.
returns.

Profitability Lower profit margins due to high Potentially higher profit margins as
competition and the need to share the seller controls the entire supply
profits with the supplier. chain.

Suitable for Small businesses, startups, or those Larger businesses that want to
who don't want to invest heavily in optimize their logistics processes
warehousing and logistics but still maintain control over
management. inventory and customer service.
Fourth Party Logistics (4PL)
Comprehensive Integration Design and Operation Holistic Management
As an integrator: consolidating, Design, build, and operate a Responsible for managing the flow
connecting the resources, potential, complete Logistics chain. of logistics, providing solutions,
and scientific and technical facilities planning, logistics consulting, and
of its own with other organizations. transportation management. Manage
the entire logistics process.
Advantages and Disadvantages of the 4PL
Model
Advantages Disadvantages
Comprehensive management: Integrates the entire Loss of direct control: Completely dependent on the
supply chain, helping to optimize logistics. provider.
Resource savings: Businesses can focus on core High costs: Service costs may be high due to
activities without having to manage logistics. complexity.
High expertise: Ensures efficiency with the Quality risks: Service quality depends on the
provider's advanced expertise and technology. provider.
Flexible scalability: Easy to adjust the scale of Dependence on a single partner: High risk if there
logistics according to needs. are issues with the provider.
Difficulty in partner selection: Need to choose a
suitable and reliable provider.

Who is it suitable for?

The 4PL model is a reasonable choice for businesses that want to outsource the entire logistics process and leverage
the comprehensive management of the service provider. This model is particularly suitable for businesses that need
to manage a complex supply chain and seek integrated resources from multiple sources, but not suitable for
businesses that want to maintain direct and detailed control over each logistics activity.
Fifth Party Logistics (5PL)
1 New Model 2 Advanced Technology 3 Comprehensive
5PL is an advanced logistics Using information technology Management
service model. It focuses on and data, 5PL efficiently 5PL providers have the
optimizing the entire supply manages logistics operations, capability to comprehensively
chain, from raw material optimizing transportation manage the supply chain,
procurement to delivery to the cycles, warehousing, and order including selecting other
end customer. processing. logistics service providers, such
as transportation, warehousing,
order processing, etc.
Advantages and Disadvantages of the 5PL
Model
Advantages Disadvantages
Integrates the entire supply chain: Comprehensive Technology dependence: Requires a complex
management of multiple resources and suppliers, technology system and large data management
leading to optimization across the entire chain. capabilities.
Cost optimization: Uses advanced technology and High costs: The sophisticated and technology-
data analysis to optimize logistics processes and integrated services can lead to higher costs.
reduce costs. Loss of control: Businesses are completely
Scalability: Suitable for large-scale, complex, or dependent on the 5PL provider to manage the
multinational transportation needs. supply chain.
High level of automation: Applies advanced Security risks: Sharing data with multiple third
technologies like artificial intelligence and process parties can increase the risk of information leaks.
automation to improve efficiency. Requires appropriate scale: Not suitable for small
Multi-supplier management: Ability to coordinate businesses with simple logistics needs.
and manage multiple different logistics suppliers
within a single system.

Who is it suitable for?

The 5PL model is a reasonable choice for businesses that want to automate the entire supply chain and integrate
digital logistics solutions through service providers. This model is particularly suitable for large-scale e-commerce
businesses that need to manage global supply chains with strong technological support. However, it is not suitable
for businesses that want to manually control each logistics step or are not ready to invest in advanced technology
solutions.
6PL - A New Stride in Supply Chain
Management
AI-Driven Management Advanced Automation
AI plays a central role in 6PL, supporting decision- Automation in 6PL goes beyond automating routine
making. By analyzing real-time data, AI predicts tasks. It is integrated into the decision-making process,
demand, detects disruptions, and optimizes the supply such as automatically triggering production when
chain. inventory reaches a threshold.

Seamless Integration Predictive and Prescriptive Analytics

6PL connects and communicates with all components 6PL provides forecasts and prescriptive solutions, such
in the supply chain, from raw material sourcing to final as predicting market trends and recommending
delivery. inventory adjustments.

Customizable and Flexible Solutions Sustainable and Responsible

6PL has the capability to be customized and scaled, 6PL emphasizes sustainability and environmental
allowing businesses to adapt the model to their specific responsibility, such as optimizing delivery routes and
needs. minimizing fuel consumption.
Types of Logistics by Process
Inbound Logistics Reverse Logistics
The process of transporting, storing, and controlling raw The process of recovering, recycling, or disposing of
materials from suppliers to the business. The goal is to used products. The aim is to optimize value and/or
ensure a ready supply to meet production needs. ensure safe and environmentally responsible handling.

1 2 3

Outbound Logistics
The process of transporting, storing, and controlling
finished products from the business to the customer.
The purpose is to meet customer needs in a timely and
efficient manner.
Inbound Logistics

Inbound Supply Time Management Cost Optimization

The process of procuring, transporting, Closely managing and controlling the Managing and optimizing the costs
and storing input resources and raw location and timing of inbound associated with the inbound logistics
materials to meet production needs. material deliveries to ensure a ready process, such as transportation,
This includes finding, negotiating with, and timely supply for the production storage, inventory control, etc. The
and managing suppliers. process. goal is to minimize costs across the
supply chain.
Inbound Logistics Process
Step 1: Purchasing and Sourcing: the company identifies, evaluates suppliers, negotiates prices, and purchases raw
materials.
Step 2: Recording and Receipts: the company records the purchase order and receives the receipt after payment.

Step 3: Notification: when transporting raw materials, the supplier will electronically declare the tracking information of
the shipment for the company.
Step 4: Load Arrival: move the received goods to the yard/warehouse or the designated recipient according to the
company's instructions.
Step 5: Receiving: employees unload the goods, scan the barcodes, and inventory the goods to ensure they match the
purchase order. After that, the goods will be transferred to the production warehouse at the factory or the production
facility to continue the production activities.
Step 6: Reverse Logistics: the team receives and transports the returns from customers due to defective goods, issues
in the delivery process, repairs, etc.
Outbound Logistics
Objectives Ensure products are delivered to customers quickly, in the right quantities, and at the right time
to effectively meet their needs.

Location Track and manage the location of products during transportation, ensuring products are
Management delivered to the correct customer address.

Time Develop detailed transportation plans, forecast demand and delivery times to ensure products
Management are delivered within the customer's required timeframe.

Cost Management Optimize transportation, storage, and delivery costs to minimize distribution expenses and
meet the company's profit objectives.
Outbound Logistics Process
Step 1: Customer Order: customers place orders through the company's sales channels.

Step 2: Order Processing: the company confirms the order, receives the requested quantity, and checks if the inventory
has enough to fulfill the order.
Step 3: Order Confirmation and Replenishment: at this stage, the reserved inventory will be transferred to the main
storage, replacing the products the customer has purchased. This process may trigger the production of more goods or
the procurement of raw materials from suppliers to maintain a stable inventory level.
Step 4: Picking: warehouse staff select the goods from the reserve inventory to complete the order.
Step 5: Packing, Staging & Loading: staff pack, label, and document the order according to internal and customer
requirements. They then proceed to load the goods onto the trucks.
Step 6: Shipping & Documenting: the order leaves the warehouse and is transported to distributors or partners. The
company's system will record the shipment and send detailed information to the customer for tracking.
Step 7: Last Mile Delivery: the order is transported from the distributor to the end consumer.
Inbound Logistics vs. Outbound Logistics

Criteria Inbound Logistics Outbound Logistics

Trend Input Output

Focus Supply Demand

Role Receiving Delivery

Process The process of searching, procuring, The process of planning the

and transporting raw materials to distribution of goods from the
the factory for processing and manufacturer to the final consumer.
production.

Relationship Between suppliers and Between distributors, retailers, and

manufacturers end customers

Workflow Handling of incoming raw materials Inventory management, order

(inward movement) processing, and delivery to end
customers (outward movement)

Key Activities Procurement, storage, and Packaging and distribution of goods

transportation of raw materials to to the final consumer.
the production site.

Optimization Optimize Just-in-time (JIT), which Optimize costs, meaning selecting

means the right product - the right the most cost-effective
quantity - the right place - at the transportation methods, ensuring
right time. goods are not damaged during
transit, and meeting delivery time
frames.

Strategic Planning Provide the necessary raw materials Meet customer demand, support
for the factory to produce the the sales process to increase
products. profitability.
Reverse Logistics
1 Reclamation 2 Reuse 3 Recycling
Reclaiming by-products, waste Processing and reusing used Recycling recyclable materials
materials, and elements that products. to minimize environmental
impact the environment. impact.

4 Environmental Protection
Contributing to environmental protection through effective waste management.
Foward Logistics & Reverse Logistics
Classification of Logistics Activities by
Commodity Object

FMCG Logistics Automotive Logistics Specialized Logistics

Logistics for fast-moving consumer Automotive industry logistics: serves Includes logistics for the chemical,
goods: serves for consumer goods for the manufacturing and distribution electronics, and oil and gas industries,
with short shelf life. of automobiles. meeting the specific needs of each
sector.
Logistics Activities Classification by Scope of
Operations

Humanitarian Logistics Business Logistics Military Logistics

Humanitarian logistics focuses on Business logistics serves production Military logistics ensures the supply of
providing relief goods and services to and commercial activities, including weapons, food, fuel, and other
victims of natural disasters, wars, inventory management, transportation, necessary materials for the armed
diseases, and other emergencies. order processing, and related services. forces during wartime or training
operations.
Classification of Logistics Activities by Scope

Logistics and Circular Community-based Logistics Sustainable Food Logistics

Economy Community-based logistics focuses Sustainable food logistics focuses on
The circular economy focuses on on supporting the activities of the ensuring a safe, quality, and
reusing and recycling resources. local community, such as providing sustainable food supply by optimizing
Circular economy logistics supports food, healthcare, education, and other the supply chain, minimizing waste,
these activities by optimizing the essential services. and protecting the environment.
supply chain to minimize waste and
maximize efficiency.
1.4. Distinguish the Types of Logistics by
Position in the Supply Chain
1.4. Distinguish the Types of Logistics by
Position in the Supply Chain
Procurement Logistics Distribution Logistics
Manage activities related to the procurement of raw Manage activities related to the distribution,
materials, components, and goods from suppliers until transportation, and delivery of products to the final
they are introduced into the production process. customers.

1 2 3

Production Logistics
Manage activities such as production planning, storage
arrangement, and transportation of products between
production stages.
a. Procurement Logistics
Supply Management Transportation & Delivery
Procurement logistics involves managing and Activities such as transportation planning, warehouse
organizing the processes related to the supply of management, order processing, and delivery are carried
necessary input factors for the production and business out to ensure that input factors are supplied in a timely
operations of the enterprise. and efficient manner.

Negotiation & Contracting

Procurement activities are carried out through contracts and market orientation, requiring negotiation skills and
management of relationships with suppliers.
a. Procurement Logistics
b. Production Logistics

1 Effective Production 2 Integrated Supply 3 Improved Production

Process Management Chain Efficiency
Production logistics plays a Production logistics connects By optimally managing material
crucial role in production the activities before and after flow, internal transportation
planning, material flow control, production, such as raw processes, and ensuring
warehouse management, and material procurement and adequate inventory, production
internal transportation. These product distribution. This helps logistics contributes to
activities ensure continuous optimize the flow of the entire increased productivity, reduced
production, minimize inventory, supply chain, from source to waste, and improved product
and reduce costs. customer. quality.
b. Production Logistics
c. Distribution Logistics

1 Process Coordination 2 Supply Chain Connection

Distribution logistics involves coordinating Distribution logistics creates interaction between
processes such as transportation and storage to activities in the Logistics system to distribute the
deliver goods to the end consumer. company's goods to customers.

3 Delivery Optimization 4 Enhance Customer Experience

Through optimal management of transportation and Distribution logistics plays a crucial role in improving
storage processes, distribution logistics helps ensure the customer experience by delivering goods on
timely and efficient delivery to consumers. time, to the right location, and in good condition.
c. Distribution Logistics
Chapter 1 Summary
This chapter provided an introduction to the fundamental concepts of logistics. We explored the evolution of logistics
services, from simple distribution to complex supply chain management. We also delved into the components of a logistics
service system, highlighting the importance of logistics in various business operations.

The classification of logistics activities, based on service levels, commodity objects, and scope of operations, was
discussed, emphasizing the multifaceted nature of the field. Finally, we examined the different types of logistics by position
in the supply chain, including purchasing, production, and distribution logistics.