LOGISTICS

CHAPTER 1 – INTRODUCTION
1. LOGISTICS DEFINITION
- Logistics is responsible for the movement of raw materials, work-in-process,
finished inventories from suppliers through an organization to customers.
- “Logistics management is that part of supply chain management that plans,
implements, 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.” (CSCMP)

2. AIMS OF LOGISTICS
- Source
- Materials
- Place
- Time
- Quality/Quantity
- Price
3. LOGISTICS IN VIETNAM’S COMMERCIAL LAW
“Điều 233. Dịch vụ logistics
Dịch vụ logistics là hoạt động thương mại, theo đó thương nhân tổ chức thực hiện
một hoặc nhiều công việc bao gồm nhận hàng, vận chuyển, lưu kho, lưu bãi, làm
thủ tục hải quan, các thủ tục giấy tờ khác, tư vấn khách hàng, đóng gói bao bì, ghi
ký mã hiệu, giao hàng hoặc các dịch vụ khác có liên quan đến hàng hóa theo thỏa
thuận với khách hàng để hưởng thù lao. Dịch vụ logistics được phiên âm theo tiếng
Việt là dịch vụ lô-gi-stíc.”
 Further detailed in Decree No. 163/2017/NĐ-CP
4. MAIN ACTIVITIES OF LOGISTICS
- Customer service
- Demand forecasting
- Inventory management
- Facility location decisions
- Warehousing management
- Packaging
- Material handling
- Transportation management
- Reverse logistics
- Communication
5. SYSTEMS AND TOTAL COST APPROACHES TO LOGISTICS
- Systems approach: The systems approach indictes that a company’s obkectives
can be realized by recognizing mutual interdependence of the major functional
areas of the firm, such as marketing, production, finance, and logistics. One
implication of the systems approach is that the goals and objectives of major
functional areas compatible with company’s goals and objectives.
- Total cost approach: all logistics cost items considered simultaneously when
making a decision.
Total logistics cost = transport cost + warehouse cost + stock holding cost +
packaging cost + information processing cost + other logistics overheads
6. INTEGRATED LOGISTICS

7. LOGISTICS CONCEPTS
7.1. OMNI-CHANNEL RETAILING
Omni-channel retailing is a strategy that focuses on providing customers a
seamless shopping experience regardless of sales channel.

- Physical and online channels are interchangeable and seamless

- Changes of purchasing models

7.2. POSTPONEMENT
- The delay of final activities until the latest possible time
+ Risk is minimized in meeting various customer demands.
+ Total inventory can be reduced by using inventory of the base product.
- Types
+ Manufacturing postponement.
+ Geographic postponement.
8. LOGISTICS VS SUPPLY CHAIN MANAGEMENT
Supply chain consists of all links/stages involved directly or indirectly in fulfilling
customer’s request/order.
8.1. DETERGENT SUPPLY CHAIN
8.2. SUPPLY CHAIN MANAGEMENT
“The planning and management of all activities involved in sourcing and
procurement, conversion and all logistics management activities. Importantly, it
also includes coordination and collaboration with channel partners, which can be
suppliers, intermediaries, third-party service providers and customers.” (CSCMP)
8.3. LOGISTICS VS SUPPLY CHAIN MANAGEMENT
Logistics management Supply chain management
Logistics management basically SCM refers to network among
consists of activities within an organizations coordinating to deliver
organization (intra-organization). products to markets (inter-
organization).
Logisitcs management focuses on SCM consists of procurement, logistics
transport, inventory management, activities, distribution, sales and
warehousing, etc. operations, etc.
9. FREIGHT FORWARDING
- Function by a freight forwarder on behalf of shippers/consignees to arrange and
ship the merchandise.
- Focusing on specific areas e.g., negotiating freight charges, booking cargo space,
cargo insurance, preparation of shipping and export documents, filing of insurance
claims, tracking transportation.
CHAPTER 2 – DEMAND FORECASTING
FORECASTING CHARACTERISTICS
- Forecast are always inaccurate  should include expected value and measure of
error. Even if the demand forecast are generated from demand forecasting
software, you should expected to see some level of error within the forecasts. This
is because year-to-year there will always be a variation in demand forecasts, no
matter what company that you are. You have to take into account seasonality,
macroeconomic factors, if you are running marketing campaigns, etc. All of these
factors and more will greatly affect your demand and therefore leave you unable to
accurately forecast what your demand will be.
- Long-term forecasts are less accurate than short-term forecasts. This is because as
you stretch your demand forecast further and further, the harder it is to accurately
predict what it could be. Once again this is because of all of the factors associated
with demand forecasting and any unforeseen events that may occur. Therefore, it is
a must to attempt to only utilize short-term demand forecast and develop an idea of
what demand may be.

- Aggregate forecasts are more accurate than disaggregate forecasts  Law of

Large Number: As volume increases, relative variability decreases. This is because
as you stretch your demand forecast further and further, the harder it is to
accurately predict what it could be. Once again this is because of all of the factors
associated with demand forecasting and any unforeseen events that may occur.
Therefore, it is a must to attempt to only utilize short-term demand forecast and
develop an idea of what demand may be.
- The farther up the supply chain, the greater the distortion of information.

CHAPTER 3 – INVENTORY MANAGEMENT

INVENTORY MODELS
1. FIXED-ORDER QUANTITY MODEL
Fixed-order quantity models (Continuous system): inventory is continuously
tracked and an order is placed when the inventory declines to a reorder point.
1.1. EOQ MODEL
- Assumptions
+ A continuous, constant, and known rate of demand
+ A constant and known lead time
+ A constant purchase price, independent of the order quantity
+ All demand is satisfied
+ Inventory holding cost is based on average inventory
+ A constant ordering cost
 Determine order quantity that the total cost (include purchase cost, ordering
cost, holding cost) is minimized.
1.2. EPQ MODEL – ECONOMIC PRODUCTION QUANTITY
- Assumptions
+ Only one product involved
+ Annual demand is known
+ The usage rate is constant
+ Usage occurs continually
+ Production occurs periodically
+ The production rate is constant
+ Lead time is known and constant
+ There are no quality discounts
- Little’s law: the average amount of inventory in a system is proportional to the
time it takes for inventory to flow through the system
I=DxT
- Reorder point: the level of inventory at which a replenishment order is placed.

- Safety stock: the amount of inventory carried in addition to the expected demand
to reduce risk of stock-out during lead time.

- Service level: the probability of not having a stock-out in a replenishment cycle.

2. FIXED-TIME PERIOD MODEL
- Fixed-time period models (periodic system): inventory is checked at regular
periodic intervals and an order is placed to raise the inventory level to a specified
threshold.
3. SINGLE-PERIOD MODEL
- Based on one-time purchasing decision.

CHAPTER 4 – FACILITY LOCATION

- Centre of gravity: using a grid system to locate a single facility to minimize
distances to existing facilities.
CHAPTER 5 – WAREHOUSING MANAGEMENT
1. DEFINITION
- Warehousing facility is part of a firm’s logistics system that stores products at
and between points of origin and points of consumption.
- Warehousing facility = transportation at zero miles per hour!
- Major trade-offs in warehousing management
+ Storage capacity vs speed of retrieval
+ Speed versus accuracy
+ Lower inventory vs availability
+ Volume purchases vs storage cost & availability
2. TYPES OF WAREHOUSES
- By locations
+ Production warehouse
+ Distribution warehouse
Central warehouse
Local warehouse
- By ownership
+ Private warehouse
- Third-party warehouse
Dedicated warehouse
Multi-client warehouse
* By functions
- Warehouses
- Intermediate, postponement, customization, sub-assembly facilities
- Trans-shipment or break-bulk facilities
- Sortation centers
- Distribution centers
- Fulfilment centers
- Reverse logistics centers
- Cross-dock centers:

3. WAREHOUSE PROCESSES
3.1. RECEIVING
- Unload the goods from the truck
- Check and count the goods
- Update the goods into the WMS
- Re-pack or re-stack on the pallets (if any)
- Attach the LP label to the pallet or container
3.2. PALLETS

3.3. PUTAWAY
Moving the goods from the receipt lane to the designated storage location
- Assign a storage location to the goods
- Take the goods to the destination location
- Update the inventory level in the location
- Put-away rules:
+ ABC classification
+ Separation
+ Balancing
+ Weight
+ Close to pick locations
3.4. STORAGE
- Cycle count: count the inventory to verify the administrative quantity and the
physical quantity
- Internal movements: not driven by orders
3.5. WAVE PLANNING
A wave includes orders scheduled to depart during the same period
- Order information: orders, departure time, delivery sequence
- Wave selection: select orders released to the warehouse operation
+ Inventory allocation: determine the locations for picking or replenishing
+ Pick-tour design
+ Tasks for replenishing pick locations with insufficient inventory
+ Tasks for order-picking
3.6. DESIGNS OF PICK TOUR
- Single-order picking: only one order is picked in a tour
- Bath-picking: multiple orders are picked simultaneously
- Zone-picking: pick tours are restricted to respective zones in a pick area
- Pick sequence: each location has a unique sequence number

3.7. REPLENISH
Move the goods from the bulk location to the pick location
- Pick location assignment
+ Static pick location: assign a product to the same pick location
+ Dynamic pick location: assign the product to a new empty pick location
3.8. PICK
- Pallet picking, case picking, piece picking
- Pick verification
3.9. ORDER PICKING VS STOCK REPLENISHING
- Same time and/or same area for workers who pick orders and those who replenish
stocks?
+ Fewer managerial personnel
+ Increasing congestion
 Determine different aisles in picking and replenishing
3.10. SORTATION
- Manual or automatic sortation
3.11. UNITIZING AND SHIPPING
- Individual pieces are packed together in a carton
- Cases are packed in a box
- Boxes are loaded into a container  Loading sequence!
- Shipping documents are generated
- Update shipping goods in WMS
4. WAREHOUSE LAYOUT
- It is the physical arrangement of storage racks, loading/unloading areas,
equipment, offices, etc.
- Essential elements:
+ An arravial bay/dock
+ A storage area
+ A departure bay/dock
+ A material handling system
+ An information system
5. TRADE-OFFS
- It is cheaper to build up than build out!
+ Build out: more land
+ Build up: increasing warehouse equipment costs
- Two docks vs single dock
+ Single dock: less space; specific times for receiving and shipping
- Standard aisle vs narrow/very narriow aisle
+ Increasing aisle space  decreasing space capacity
+ Narrower aisles require specialized storage and handling equipment
 Aisle size = head length of lift truck + load length + space of maneuverability &
pallet overhang
6. WAREHOUSE MANAGEMENT SYSTEM
6.1. WAREHOUSE PROCESSES WITH WMS
- Pre-receiving: receivin files from supplier, download files to scanner
- Receiving and put-away: scan & verify incoming cargo, scan & update put-away
location
- Picking and delivery: receiving D/O, generate pick list, generate transport plan,
delivery instructions
6.2. TASKS COMMUNICATION
- Batch communication: tasks are communicated group by group with a certain
time delay
- Real-time communication: tasks are communicated in the real time
7. TEMPERATURE-CONTROLLED WAREHOUSE
Types of temperature control
CHAPTER 6 – PACKAGING AND MATERIAL HANDLING
PACKAGING ISSUE – ENVIRONMENTAL PROTECTION
- Reduce the amount of packing materials
- Use environmentally friendly packaging materials
- Use reusable containers
- Retain/Support services to collect used packaging and recycle it

CHAPTER 7 – TRANSPORTATION
MODES OF TRANSPORT
1. AIR
- Air freight is the shipment of goods through an air carrier. Air transport services
are the most valuable when it comes to moving express shipments around the
globe. Just like the commercial or passenger airlines, air freight flies in the same
gateways.
- Advantages: Quick. Air freight is generally the fastest mode of transportation for
shipments exceeding 600 miles, best suited to high-value, lower-volume products
that are of a perishable nature or otherwise require urgent or time-specific delivery.
Air freight does not depend on the topography of the ground, water surface, does
not have to invest in construction; high transport speed and short transit time; safe
compared to other modes of transport; least loss.
- Disadvantages: Expensive and limited. High fixed costs, high variable costs;
highest freight charges; restricted for the carriage of bulky goods; depends more or
less on the geographical and meteorological conditions of each region. The great
majority of airfreight is carried in the freight compartments of passenger airplanes
(so called belly freight). This belly freight limits the capacity available for air
shipments.
- Ưu điểm: không phụ thuộc vào địa hình mặt đất, mặt nước, không phải đầu tư xât
dựng; tốc độ vận tải cao và thời gian vận chuyển ngắn; an toàn so với các phương
thức vận tải khác; ít tổn thất nhất.
- Nhược điểm: chi phí cố định cao, chi phí biến đổi cao; cước phí cao nhất; bị hạn
chế đối với việc chuyên chở hàng hóa khối lượng lớn, hàng cồng kềnh; phụ thuộc
ít nhiều vào điều kiện địa lí, đặc thù khí tượng của từng vùng.
2. ROAD
- Vận tải đường bộ là phương thức vận chuyển hàng hóa bằng các phương tiện di
chuyển trên bộ như ô tô, xe khách, xe tải, xe bồn, xe fooc, xe container, rơ-mooc,
sơ-mi rơ-mooc kéo theo ô tô…
- Ưu điểm: Chi phí cố định thấp và chi phí biến đổi trung bình; nhanh chóng; đáng
tin cậy cho các lô hàng vừa và nhỏ với quãng đường ngắn và trung bình; hình thức
chuyển hàng linh động.
- Nhược điểm: cước phí cao; vận chuyển hàng hóa quốc tế cần phải kết hợp với các
phương thức khác như đường biển, đường hàng không…
- Road transport is a method of transporting goods by means of land transport such
as cars, passenger cars, trucks, tank trucks, trailers, container trucks, trailers, and
semi-trailers. by car…
- Advantages: Low fixed costs and average variable costs; fast; reliable for small
and medium shipments of short and medium distances; Flexible shipping method.
- Disadvantages: high freight charges; International freight needs to be combined
with other modes such as sea, air...
3. RAIL
- Vận tải đường sắt là loại hình vận chuyển người/hàng hóa bằng phương tiện có
bánh được thiết kế để chạy trên loại đường đặc biệt là đường ray.
- Ưu điểm: chi phí biến đổi thấp. Có thể vận chuyển lượng hàng hóa lớn, sử dụng
diện tích và không gian hiệu quả, ít bị hư hỏng và sửa chữa.
- Nhược điểm: chi phí cố định cao. Giá cước vận chuyển không rẻ hơn vận tải
đường bộ là bao trong khi khâu vận chuyển rất phức tạp, tốn nhiều nhân công và
chi phí.
- Rail transport is a type of transport of people/goods by wheeled vehicles designed
to run on special types of roads, especially rails.
- Advantages: low variable costs. Can transport large quantities of goods, use area
and space efficiently, less prone to damage and repair.
- Disadvantages: high fixed costs. The freight rate is not much cheaper than road
transport while the transportation stage is very complicated, labor-intensive and
costly.
4. WATER
- Vận tải đường thủy là hình thức vận chuyển người/hàng hóa bằng các phương
tiện di chuyển trên nước như tàu, thuyền… trên các tuyến giao thông đường thủy.
- Ưu điểm: Phù hợp để chuyên chở tất cả các loại hàng hóa trong buôn bán nội địa
và quốc tế, các loại hàng hóa có trọng lượng lớn, các loại hàng chuyên chở trên cự
ly dài có trọng lượng lớn… Chi phí cố định trung bình và chi phí biến đổi thấp.
Năng lực chuyên chở rất lớn với cước phí vận tải khá thấp.
- Nhược điểm: phụ thuộc nhiều vào điều kiện tự nhiên, tốc độ chuyển hàng chậm,
dễ gặp rủi ro trong quá trình chuyên chở…
- Water transport is a form of transportation of people/goods by means of water
movement such as ships, boats, etc. on waterways.
- Advantages: Suitable for transporting all kinds of goods in domestic and
international trade, heavy goods, long distances with large weight... Average fixed
cost and low variable costs. The carrying capacity is very large with relatively low
freight charges.
- Disadvantages: depends a lot on natural conditions, slow shipping speed, easy to
face risks during transportation...
5. PIPELINE
- Vận tải đường ống là một phương thức vận tải khá mới mẻ, thường được sử dụng
trong vận chuyển các loại khí gas, chất lỏng, các sản phẩm dầu mỏ.
- Ưu điểm: chi phí biến đổi thấp nhất; chi phí vận hành rất thấp và độ hao hụt
không đáng kể; tiện lợi trong việc vận chuyển các chất lỏng và chất khí với chi phí
vận chuyển khá rẻ mà lại không mất mặt bằng để xây dựng.
- Nhược điểm: lệ thuộc vào địa hình và không thể chuyển được các chất rắn.
- Pipeline transport is a relatively new mode of transport, often used in the
transportation of gases, liquids, and petroleum products.
- Advantages: lowest variable costs; very low operating costs and negligible loss;
convenient in transporting liquids and gases with relatively cheap transportation
costs without losing space for construction.
- Disadvantages: depends on topography and cannot transport solids.
6. INTERMODAL – MULTI-MODAL TRANSPORT
- Intermodal transportation means moving large-sized goods in the same steel-
based containers through two or more modes of transport. It's a typical way of
moving goods in modern times. Intermodal transfer may involve truck, rail, ship,
and then truck again.
- Advantages: rapid services; lower costs; increased capacity; safety; eco-friendly
service.
- Disadvantages: structural costs; dealys; relability.