Republic of the Philippines
UNIVERSITY OF RIZAL SYSTEM
Province of Rizal
[Link]
Email Address: ursmain@[Link] /[Link]@[Link]
Main Campus: URS Tanay Tel. (02) 8401-4900; 8401-4910; 8401-4911; 8539-9957 to 58
INTRODUCTION TO LOGISTICS AND DISTRIBUTION
Objectives:
1. To be able to define and understand what Logistics and Distribution is
2. To know the basic function and major roles of Distribution in the Industry
Logistics is a dynamic and flexible function that adapts to constraints and environmental
demands.
• Defined broadly as:
o Logistics = Materials Management + Distribution
o Supply Chain = Suppliers + Logistics + Customers
• Concerned with both physical flows (goods, storage, distribution) and information flows,
including reverse logistics (returns, packaging).
Key Definitions of Logistics
• Hesket et al. (1973): Logistics is... the management of all activities which facilitate
movement and the co- ordination of supply and demand in the creation of time and place
utility.
• Wikipedia (2012): Logistics is the management of the flow of goods and services
between the point of origin and the point of consumption in order to meet the
requirements of customers.
• CSCMP (2012): Logistics management is that part of supply chain management that
plans, imple- ments, and controls the efficient, effective forward and reverse flow and
storage of goods, services and related information between the point of origin and the
point of consumption in order to meet customers’ requirements.
• CILT UK (2012): Logistics is... the positioning of resource at the right time, in the right
place, at the right cost, at the right quality.
• Modern View: The efficient transfer of goods from the source of supply through the
place of manufacture to the point of consumption in a cost-effective way while providing
an acceptable service to the customer.
Components of Logistics and Distribution
• Core areas: transport, warehousing, inventory, packaging, and information.
• These components interact to form a systematic flow of products from origin to end-user.
Republic of the Philippines
UNIVERSITY OF RIZAL SYSTEM
Province of Rizal
[Link]
Email Address: ursmain@[Link] /[Link]@[Link]
Main Campus: URS Tanay Tel. (02) 8401-4900; 8401-4910; 8401-4911; 8539-9957 to 58
Historical Development
• 1950s–60s: Unplanned distribution, limited control.
• 1960s–70s: Emergence of physical distribution and systems approach.
• 1970s: Distribution included in management; retail power grew.
• 1980s: Rising costs led to professionalism, centralized distribution, IT adoption, 3PLs
(third-party logistics).
• Late 1980s–90s: Integration of inbound and outbound flows → Logistics.
• 1990s: Expansion into supply chain management with partnerships across
organizations.
• 2000–2010: Logistics recognized as a value-adding function and key to business
competitiveness.
• 2010 onward: Emphasis on strategic role, innovation, and integration of logistics in
business success.
Economic and Industry Importance
• Logistics is a major national economic activity, utilizing significant human and material
resources.
• Cost breakdowns (2011, Establish/Herbert Davis survey – US):
o Transport: 49%
o Warehousing: 23%
o Inventory carrying: 22%
o Customer service/order entry: 4%
o Administration: 2%
• European breakdown (2008): Transport 40%, Warehousing 32%, Inventory 18%,
Customer service 5%, Administration 5%.
• Transport is consistently the largest cost driver, especially in the US due to distance.
Logistics and supply chain structure
• Logistics flow alternates between transport and storage/processing.
• Functions include transport, production, storage, packing, assembly, break-bulk.
• Each stage adds costs that affect final product price.
• Costs vary by system efficiency and product value.
• Logistics can provide added value (availability, service) beyond just cost.
• Added value differs across products.
Republic of the Philippines
UNIVERSITY OF RIZAL SYSTEM
Province of Rizal
[Link]
Email Address: ursmain@[Link] /[Link]@[Link]
Main Campus: URS Tanay Tel. (02) 8401-4900; 8401-4910; 8401-4911; 8539-9957 to 58
WAREHOUSING & STORAGE
Objectives:
1. To be able to define and understand what Warehousing & Storage is
2. To know the importance and impact of Warehousing & Storage to the business and what
roles does it play in the channels of distribution.
3. To learn the different types of Warehousing, its benefits, functions and significant impact
in the business industry.
Warehouses are essential nodes in the supply chain. Their main role is to facilitate the smooth
movement of goods from suppliers to customers. Goods do not always move directly from
production to consumption because of timing gaps between supply and demand.
• When demand is continuous, but production or supply lead times are longer, inventory
must be stored to meet customer needs on time.
• Warehousing enables businesses to:
o Balance supply and demand fluctuations.
o Take advantage of economies of scale in production and transport.
o Stockpile seasonal goods ahead of demand.
o Benefit from bulk discounts or supplier deals.
o Provide a buffer against supply chain disruptions.
Beyond storage, warehouses take on specialized roles:
• Inventory holding point: stock reserve between supply and demand.
• Consolidation centre: combine products from different sources for distribution.
• Cross-dock centre: incoming goods are sorted and quickly dispatched with little/no
storage.
• Sortation centre: goods are grouped or separated based on customer orders.
• Assembly facility: final assembly, kitting, or packaging done before dispatch.
• Trans-shipment point: transfer goods from one transport mode to another.
• Returned goods centre: manage product returns and reverse logistics.
Types of Warehouses:
1. Public warehouses. They offer warehousing and logistics services to a variety of
businesses. These facilities are owned and operated by third-party companies and are
suitable for small and medium-sized businesses that don’t have the opportunity to invest in
their own warehouse but have storage needs nonetheless.
2. Private warehouse. This is the most common warehousing solution. It’s a warehouse that
is owned and operated by the company that uses it. It’s usually in close proximity to their
manufacturing facility or retail store.
3. Distribution centers. These warehouses usually have a high turnover rate. Goods are
stored there for a short period of time. That’s why efficiency is very important for distribution
centers. They can be both private and public.
4. Fulfillment centers. The main difference between this type of warehousing solution and
distribution centers is that they are operated by a third-party logistics provider. Small and
medium-sized eCommerce retailers use fulfillment centers to outsource storage and
shipping costs.
5. On-demand warehouses. These are flexible warehousing solutions that both individuals
and companies can hire. They are usually used for short-term storage.
6. Cold storage and climate-controlled warehouses. As their names suggest, these
facilities offer temperatures that are suitable for perishable foods or for other goods that
require special conditions such as electronics or artwork.
Republic of the Philippines
UNIVERSITY OF RIZAL SYSTEM
Province of Rizal
[Link]
Email Address: ursmain@[Link] /[Link]@[Link]
Main Campus: URS Tanay Tel. (02) 8401-4900; 8401-4910; 8401-4911; 8539-9957 to 58
Strategic Issues Affecting Warehousing
Decisions about warehouses are not only operational but also strategic, affecting
competitiveness:
• Market and industry trends: e.g., rise of e-commerce → more cross-docking and
fulfillment centres.
• Corporate objectives: warehouses must align with goals like customer service,
environmental sustainability, or shareholder expectations.
• Business plan: decisions depend on sales forecasts, product demand growth, and
whether the company plans to expand or diversify.
• Supply chain strategy: determines the number, size, and location of warehouses.
• Related departmental strategies: operations (batch sizes), IT (automation systems),
finance (budget).
• Customer service levels: demand for faster delivery and higher accuracy directly
influences warehouse design.
• External factors: legal compliance, safety regulations, environmental concerns, and
land-use planning.
Warehouse Operations
Warehouses operate through a sequence of processes:
1. Receiving – goods are unloaded, checked against orders, quality inspected, and
recorded.
2. Reserve storage – bulk inventory held in racks, floor storage, or automated systems.
3. Order picking – items retrieved from storage; can be full pallet loads or individual
pieces. This is often the most costly and labor-intensive task.
4. Sortation – grouping items into customer-specific batches or splitting large shipments.
5. Collation, packing, and added value – activities such as repacking, labeling, kitting,
and even postponement (final product differentiation done in warehouse to meet specific
customer requirements).
6. Marshalling & dispatch – picked orders are consolidated, staged, and loaded onto
outbound vehicles.
• In cross-docking, intermediate storage is skipped: goods go directly from receiving
→ sortation → dispatch.
Republic of the Philippines
UNIVERSITY OF RIZAL SYSTEM
Province of Rizal
[Link]
Email Address: ursmain@[Link] /[Link]@[Link]
Main Campus: URS Tanay Tel. (02) 8401-4900; 8401-4910; 8401-4911; 8539-9957 to 58
Warehouse Costs
Warehousing involves significant costs, typically 20–30% of total logistics costs, while inventory
carrying adds another 20–25%.
Typical warehouse cost structure (conventional operations):
• Staff (45–50%) – with half devoted to order picking and packing.
• Building (25%) – rent, depreciation, or construction cost.
• Building services (15%) – utilities, maintenance, insurance.
• Equipment (10–15%) – forklifts, conveyors, racking systems.
• IT systems (5–10%) – warehouse management systems (WMS), barcoding,
automation.
Republic of the Philippines
UNIVERSITY OF RIZAL SYSTEM
Province of Rizal
[Link]
Email Address: ursmain@[Link] /[Link]@[Link]
Main Campus: URS Tanay Tel. (02) 8401-4900; 8401-4910; 8401-4911; 8539-9957 to 58
INVENTORY, PACKAGING & DELIVERY
Objectives:
1. To be able to define and understand what Inventory is, Packaging & Delivery
2. To know the importance and impact of Packaging in Inventory & Delivery
3. To learn how does delivery schedule impacts the business
4. To understand how proper Inventory saves time and costs for the business
5. Describe the various uses of product packaging within a branding context
Inventory: the stock of goods held to meet future demand (finished goods, raw materials, work-
in-progress).
Packaging: designing and producing the container/wrapper for a product; serves logistics and
marketing purposes.
Delivery: the distribution process that ensures products reach customers in the right quantity,
place, and time.
• Role in Marketing Mix (4Ps)
o Inventory → supports Product & Place.
o Packaging → part of Product & Promotion.
o Delivery → central to Place (distribution).
Packaging and Unit Loads
Packaging is a critical logistics function because it impacts storage, handling, transport, and
even customer service.
• Functions: protect goods, make them easy to store and transport, simplify handling, and
provide information (labels, barcodes).
• Levels of packaging:
o Primary packaging – direct product container (bottle, can, box).
o Secondary packaging – grouped items for handling (cartons, cases).
o Outer packaging/unit loads – bulk handling units (pallets, containers).
• Common unit loads:
o Pallets (two-way or four-way, made of wood, plastic, or metal).
o Cage/box pallets for secure storage.
o Roll-cages for moving goods in retail and grocery.
o Tote bins for smaller items.
o Dollies for flexible movement of heavy loads.
o Intermediate Bulk Containers (IBCs) for liquids or powders.
Importance and Impact of Packaging in Inventory & Delivery
(Reference: Kotler & Keller, Bowersox et al., Supply Chain Logistics Management)
1. Functional Role of Packaging
o Protection from damage/spoilage.
o Facilitates handling, storage, and transportation.
o Provides convenience for distributors and customers.
2. Informational Role
o Identifies contents, instructions, safety, barcodes/RFID.
o Supports inventory visibility and tracking.
3. Impact on Supply Chain
o Inventory: Efficient packaging reduces space and handling costs.
o Delivery: Optimized unit loads speed up transport and reduce breakages.
4. Strategic Role
o Differentiates the brand and enables sustainability (eco-packaging).
Republic of the Philippines
UNIVERSITY OF RIZAL SYSTEM
Province of Rizal
[Link]
Email Address: ursmain@[Link] /[Link]@[Link]
Main Campus: URS Tanay Tel. (02) 8401-4900; 8401-4910; 8401-4911; 8539-9957 to 58
Delivery Scheduling and Its Impact on Business
(Reference: Kotler, Marketing Channels; Chopra & Meindl, Supply Chain Management)
1. Concept of Delivery Scheduling
o Planning timing, routing, and frequency of deliveries.
o Linked to Just-in-Time (JIT), Efficient Consumer Response (ECR), and
Collaborative Planning, Forecasting & Replenishment (CPFR).
2. Impacts
o Customer satisfaction: On-time, reliable delivery = loyalty.
o Cost efficiency: Reduces transport, fuel, and labor expenses.
o Inventory optimization: Prevents both overstock and stockouts.
o Competitive advantage: Faster and more reliable delivery = stronger
positioning.
Inventory Management for Time and Cost Savings
(Reference: Kotler, Marketing Management; Ballou, Business Logistics)
1. Role of Inventory
o Buffer between supply and demand.
o Supports consistent production and sales.
2. Types of Inventory
o Raw materials, Work-in-progress (WIP), Finished goods, Safety stock.
3. Benefits of Proper Inventory Management
o Minimizes holding costs (storage, insurance, obsolescence).
o Reduces operational disruptions.
o Improves order fulfillment speed.
o Enhances cash flow.
4. Modern Approaches
o JIT (Just-in-Time).
o Lean Inventory Management.
o Use of ERP systems for tracking.
Packaging in Branding Context
(Reference: Kotler, Principles of Marketing; Keller, Strategic Brand Management)
1. Packaging as the “Silent Salesman”
o Attracts attention, communicates brand identity, and influences purchase.
2. Roles in Branding
o Differentiation: Stands out on shelves.
o Communication: Delivers brand values (eco-friendly, luxury, affordable).
o Experience: Enhances unboxing and customer delight.
o Consistency: Reinforces brand recognition across markets.
3. Examples
o Coca-Cola’s iconic contour bottle.
o Apple’s minimalist packaging reinforcing premium image.
o Eco-brands using biodegradable packaging.
Integration: How Inventory, Packaging, and Delivery Work Together
• Inventory ensures availability.
• Packaging ensures protection + branding.
• Delivery ensures timely fulfillment.
• Together they influence:
o Customer satisfaction.
o Operational efficiency.
o Overall profitability.