Chapter III Introduction to logistics

Introduction :

Logistics is an essential function for the company, as it encompasses the entire

activities in place to ensure the availability of a good or a service, at a location where the
need exists, ensuring optimal management of the combination 'quantities, deadlines, and
But logistics is not limited to the organization of transportation and materials.
premises and goods, it is actually about management control techniques, of flows of
raw materials and products from their sources of supply to their point
of consumption. And several actors said that the supply chain appeared following
the evolution of logistics which it includes: industrial logistics (purchasing of materials
firsts, transport… etc.), the storage logistics (transport of finished products and their
storage), distribution logistics (transport of orders to the distribution point,
storage; and stock management in the retail store). One can also add to it.
support logistics, that is to say, it is implemented as part of after-sales services.

1-Origin of logistics:

Logistics comes from military engineering, responsible for supplying troops in order to
that they maintain their operational capabilities over time. The two core professions of
Logistics are therefore the management of stock of goods and weapons and their transport.
This explains why modern logistics was born with carriers and wholesalers.
However, before addressing it in its modern aspect, it is first necessary to bring out
its origins.

2- Definition of logistics:

Logistics is traditionally defined as the technology of controlling flows.

merchandise and materials that a company ships to its clients, transfers or enters into
in its production units and receives from its suppliers. The triggering decisions
operations (removing from stock, putting into production, etc.) must be coordinated in such a way
ensuring that continuity and fluidity of flows are guaranteed in all circumstances,
translating through a simultaneous absence of disruptions and overcapacities. As an approach
Transversal, logistics is obviously closely related to other functions.
main or support.
Chapter III Introduction to logistics

Today the term logistics encompasses very diverse interpretations. This ranges from the simple
transport to an interdisciplinary science combining engineering, microeconomics and
theory of organization.

3- The distribution:

The distribution aims to make goods available to requesters (households,

companies, administrations, foreign agents), it is an intermediation activity between the
offerors and applicants; In this section we have provided the different definitions of
the distribution, as well as the different strategies and its role.

3-1- Definition of distribution:

In order to fully grasp the meaning of distribution, we are led to provide some
definitions of this notion.
Distribution (or marketing) refers to the set of operations
necessary for the produced goods to be made available to consumers or
companies that constitute the target clientele and for them to be encouraged to
buy them.
According to KOTLER and DUBOIS, "distribution is the set of activities that are carried out.
from the moment the product in its form of use enters the store
commercial of the producer or the last transformer, until the moment when the
consumer takes possession. "In other words, distribution is a process
which ends at the time of purchase.

According to Marc VENDERCAMMEN and Nelly Jospin-PERNET, they also defined: "the
distribution is the set of activities carried out by the manufacturer with or without resorting to
other institutions, from the moment the products are finished until they are
in the possession of the end consumer and ready to be consumed, in the forms and in
the quantities corresponding to the needs of the users.
Among the roles of distribution:
Transfer the product from the producer to the consumer
Ensure handling operations
Store the merchandise
Store, sort the products and make them available to the public
Chapter III Introduction to logistics

Break down the producers' batches into portions and sizes suitable for the needs of the
clients Negotiate with suppliers and place orders
Inform and communicate
Inform about the access modalities of the point of sale (opening hours and days)
- communicate about the availability of products regarding their price and promotion -
exchange with suppliers on the evolution of needs and sales as well as on the state
stocks thanks in particular to electronic tools such as EDI or automation
invoicing orders.
3-2- Definition of distribution logistics:
It is possible to define distribution logistics in the strict sense as 'a set of
interconnected activities aimed at the physical transfer of finished products from
the manufacturer to its clients. The goal is to ensure that the product desired by the
client should be in the right place, at the agreed time, in the expected quantity and at the best
cost. These activities include the transportation of products (from the production centers
up to storage, sales or consumption points), warehousing, the
handling, protective packaging, or compliance checks. Logistics
also manages all activities related to the information flows that drive and control
these physical operations, such as demand forecasting, operations of
planning or the administrative processing of orders and inventory management.
3-3- the activities of distribution logistics:
Transport:
Transport has an impact on the sale price, delivery times, and the good condition of the
merchandise delivered, as many factors affecting customer satisfaction. In a way
In general, five means of transport are available: rail, water, road, pipeline and
air freight. When choosing a mode of transport, the company takes into account the requirements
of speed, frequency, reliability, availability, and cost. Transportation by
the container has considerably facilitated the successive use of several modes of
transport.
Transportation-related decisions are generally complex due to their impact on
warehousing and storage. The company must also regularly reassess its
logistics options.
Storage The storage policy is another element affecting the
satisfaction of demand. The marketing manager would promise his clients a
Chapter III Introduction to logistics

execution and immediate delivery of orders. unfortunately, it is economically

unrealistic to maintain a stock level that would completely eliminate stockouts
Indeed, storage costs are increasing at an exponential rate as the
the risk of stockout approaches zero. Therefore, it is necessary to choose a stock level that

optimize overall profit. A storage policy involves determining when and

how much to order based on the level of stock reached, this is called the
order threshold, the order threshold generally includes a safety stock and is
determined to find a fair balance between overstocking and breaking.
Warehousing: Is the act of storing (or keeping) goods on a large scale.
quantity in a warehouse using sometimes mobile pallet jacks, by means of a cart
elevator. Nowadays, storage takes place everywhere before arriving at the customer (the
recipient); large warehouses exist on the outskirts of big cities, where are
centralized different products before sending to the stores: we also talk about
purchasing centers. Warehousing has a cost that is increasing day by day, which is why
goods, often on pallets, rarely stay more than a week in the "
storage rooms.
Order preparation: It is an operation that consists of picking and gathering.
the articles in the specific quantity by the order. It is to group everything
administrative and physical tasks aimed at making goods available
requested by the clients.

4- logistics in distribution:
4.1. Warehouse management: The number and location of warehouses depend on
of a certain number of constraints: importance of the flows of goods (quantity,
fragility, diversity of references and suppliers), the number and location of
points of sale to serve or customers to satisfy, the size of the orders, etc.
large retailers organize the supply of their sales points from
central, regional, and local warehouses. The decrease in transport costs, the management of
just-in-time stocks, the development of trade marketing has led distributors to
minimize inventory, and thus limit the size and number of warehouses.
Warehouses have four essential functions:
receive deliveries from suppliers,
manage the reserves,
Chapter III Introduction to logistics

prepare customer or point of sale orders,

ensure deliveries.

5- The supply chain:

5.1. Definition:

The supply chain is the set of interdependent companies (considered as the

different links in the chain) coordinating in the execution of activities
(supplies, production and distribution) to ensure the circulation of products or
services from their design to their end of life (after-sales service and withdrawal logistics).

Customer needs are changing; they increasingly expect a service that includes a mode
delivery, restocking, timeline, reliability, security
supply, data transfer, after-sales.

In retail, ECR (Efficient Consumer Response) brings all the

producers to integrate more and more directly into the sale to the end consumer,
concerning the modes of packaging, replenishment, forecasts by
the bias of data capture techniques and direct transfer.
The importance of logistics will continue to grow in the performance of the company:
increase in exchanges over increasingly long distances, increase in the
diversity of supply, speed of required deadlines, changes in production locations,
while at the same time, the leeway to gain competitiveness is
reduce in some sectors in terms of investments, differentiation
technological and productivity.

In this context, we will refer to the 'supply chain' as the consideration of a

maximum factors to streamline the flow of products and information and gain in
productivity.

The field of logistics is vast as it extends from product design to its

destruction.
However, we can distinguish the logistics activities concerning the flows:
Chapter III Introduction to logistics

the conception,
supply
the manufacturing,
the packaging
the packaging,
grouping/ungrouping
the conservation,
storage,
the movement.

The activities concerning support logistics are:

the controls,
the diagnoses,
repairs,
the disassembly/reassembly,
the exchange/trials,
the monitoring of operations,

the call for subcontracting

the maintenance.

All while taking into account the various external constraints (competition, standards,
regulations) and internal (technical possibilities, capacity).

Of course, depending on the company's activity, the supply chain will be different.
support logistics, for example, will be much more important in a company that
manufactures equipment goods (household appliances, cars, elevators) only in a
distribution company (PROMODES group).

As we saw in the first part, the activities of logistical flow are

also divisible depending on whether it concerns upstream production flows, flows of
production or downstream of it.

The logistics manager is responsible for the operational organization of procurement.

Chapter III Introduction to logistics

and distribution. It must ensure the best quality of service to the customer by optimizing the
logistics costs. The logistics manager organizes and manages the physical flows (of
supplier to the client) and information (orders, invoicing, production schedule,
purchase order) according to the industrial policy. Based on forecasts
commercial and in collaboration with the sales management, he supervises the customer service.
Then he checks the production plan, then the packaging, storage, and finally the
distribution proceeds without stockouts and in compliance with the rules (cold chain,
packaging, etc.). With client managers, he seeks to optimize the management of
stocks, the shipping costs and the collection of information on the quality of the service provided.
In the form of dashboards, it measures for example the rates of breakage, the punctuality of
deliveries, etc. In his work environment, the logistics manager is in contact
permanent with the managers of the services located at the interface: purchasing and production,
finance, marketing, sales, research and development, quality, IT.
The cross-functional organization of logistics is set to replace the traditional framework of
supplies overseen by the purchasing department, and the physical distribution covered
by the production management, or a logistics management solely focused on delivery.
5-2- The challenges of the supply chain:
Traditional strategy models have become more complex with the development of
global competition. From a dichotomous approach to competitive advantage: domination
through prices (and therefore costs) or differentiation, we have entered the era of price and
differentiation.
We must now be "good everywhere", in all areas such as price, quality, deadline, flexibility,
service level.

Prices / Costs

The constant pressure on prices forces producers to regularly improve their

productivity and to review their industrial organization. This trend has led them to act on
all costs whether direct factory (labor, machines, ...), indirect factory or expenses
general siege.

The quality of the products

Quality is no longer really a goal as it presents itself as a pre-

requirements to be competitive. The unit of measurement used reflects the progress made
Chapter III Introduction to logistics

in this field: from percent, the quality level has gone to 'per thousand' and then more
recently at PPM (defective parts per million). The question no longer arises under the
form of the quality level to be achieved but rather the cost to achieve it.

The deadline

The deadline is defined as the time elapsed between the customer's request and the receipt of
ordered product. In the company, whether industrial or not, for the user, it is more often
perceived as the time between identifying the need and the moment it can start to
use it. This gap includes operations performed by the supplier (preparation of the
order, shipping, etc.) but also internal tasks (identification of the need,
contact with the Purchasing department, placing the order, then receiving and checking.

Flexibility

Flexibility, or the ability to respond to variations in demand, comes in two

aspects: volume or product mix.
The first indicates the company's ability to adapt to variations in demand in
quantity. For example, a contract for 10,000 pieces per week will correspond to some
average daily deliveries of 2,000 pieces +/- 15% depending on the customer's request.
The second specifies the timeframe necessary when one has planned to manufacture a given product (or
a sequence of different products), to modify its manufacturing plan, reorganize its
process and move on to another article (or to another sequence).

The level of service

By service level, we mean the probability of meeting demand within a timeframe.

given. If the concept is easily understood, its application poses some difficulties, in
particularly in the choice of variables. Should we indeed compare the deliveries made to
total number of deliveries, or rather choose the number of order lines, the tons or
still the turnover? Naturally, 95% on the tons is not the same as 95% on the
number of command lines...

To the traditional criteria of price, quality, deadline, flexibility, and level of service, have come
more recently joining the risks and the potential for progress.
Chapter III Introduction to logistics

The risks

At a time when technology allows almost everything, we can no longer tolerate the slightest risk: the
delay, the error, the breakdown, the supplier's failure, etc. are becoming increasingly
unacceptable. The just-in-time operation of many companies has not made
that increases this fear of uncertainty.

The level or risk coefficient has then become one of the indicators to follow, for
the company itself but also for the client company, in the context of the selection and
the audit of its suppliers.
We successively analyze the potential external risks coming from the market, from the
competition, exchanges, legislation, etc., and the internal risks related to the organization,
technology used, the level of the workforce, the range of products and its
renewal.

Potential for progress

Potential incorporates subjective and objective elements, allowing for the assessment of possibilities.
improvement of the company's performance: social climate, average age of staff,
seniority, organization in technological workshops, communication in the company,
existence of working groups, etc.

After optimizing their various functions separately, production and then distribution.
more recently purchases), companies have become aware that improving their
performances necessarily involved the integration and overall vision of their processes.
The concept of logistics and more recently Supply Chain has made it possible to achieve this
objective.