Location and Logistics Flashcards
What is logistics?
The activity of organising, obtaining, producing and distributing material and product in the right place at the right quantities
What are the 7Rs of logistics?
Right place, time, quantities, condition, customer, price, product
What does logistics involve?
- Order processing
- Warehousing
- Transportation
- Materials handling
- Packaging
What is distribution management?
The process of managing the movement of goods to the point of sale. How this is done, on which route, whether a service is used must be considered
What is logistics affected by?
- Warehousing availability and systems
- IT systems - within the firm and with other firms in supply chain
- Transportation
- Customer requirements
What is warehousing?
Used when goods are not on the move, related to receiving, storing and shipping materials to and from production and distribution locations
Why are IT systems essential for logistics?
To connect the departments of a business to co ordinate operations - internal IT systems
Important to communicate with customers to track requirements - external IT systems
How is transportation involved in logistics?
Goods need to be packaged, loaded, unloaded, warehoused and distributed and paid for whenever they change hands. Must choose right combo to keep costs down
What are third party logistics?
When an outsourced company provides one or more logistical services
What are fourth party logistics?
When the entire logistics functions are outsourced
When is it important to spend more time/effort focusing on logistics?
When a logistical failure has an impact on the overall time of the distribution it should be prioritised
What is outsourcing?
Getting a specialist firm to do what would otherwise been done in house
Pros of outsourcing
- Reduces overheads
- Passes on responsibility
- No need for expertise
- Now focus on core activities
- Solution to full capacity issues
Cons of outsourcing
- What if they fail
- Are they reliable
- Contingency plan needed
What is subcontracting?
Getting production done by someone else. Common in construction industry. Main company remains responsible
Pros of subcontracting
- Don’t need expertise
- Solution to full capacity
- Focus on core activities
- Reduces overheads
Cons of subcontracting
- You are responsible
- Never develop expertise
- Higher rates of pay than regular employees
What fixed costs affect location?
site costs, availability of grants/subsidies
What is bulk increasing?
Locate close to market, car manufactuerers, materials weigh less than final product
What is bulk decreasing?
Locate close to raw materials, raw materials weigh more than final product
What variable costs affect location?
Transport, labour, ability to achieve external EOS, currency costs
How does revenue affect location?
Accessibility by target customers, B2B must be near business, proximity of competitors - steal business, globalisation - offshoring
How does the type of business affect location?
Bank HQ- city of London
Jewellery manufactuer - Jewellery quarter
Coal mine by coal seam
How does the working environment affect location?
Google campus - hire a desk new other businesses, share ideas
How does ease of access to staff and suppliers affect location?
Good transport links
How does quality of infrastructure affect location?
Rail/road links
How does health and safety affect location?
Nuclear power plant must be near sea, opportunities for expansion require planning permission
