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1. The Definition of Logistics

After completing a commercial transaction, logistics will execute the transfer of goods from the supplier( seller) to the customer( buyer) in the most cost-effective manner. This is the definition of logistics. During the transfer process, hardware such as logistics facilities and equipment( logistics carriers) are needed, as well as information control and standardization. In addition, supports from the government and logistics association should be in place.

Three major functions of logistics

(1) Creating time value: same goods can be valued different at different times. Goods often stop during the transfer process, which is professionally called the storage of logistics. It creates the time value for goods.

(2) Creating location value: same goods can be valued differently at different locations. The value added during the transfer process is the location value of logistics. (3) Distribution processing value: sometimes logistics create distribution processing value, which changes the length, thickness and packages of the goods. Like popular saying, “ cutting into smaller parts” is the most commonly seen distribution processing within logistics create added value for goods.

2. Logistics is a new commercial area, developing from the traditional stage to a modern one. The main differences between these two stage include:

(1) Modern logistics adopts containerization techniques. The goods transfer process starts with packaging, followed by transportation, storage and distribution. The whole process is operated under logistics standards. Based on the logistics base module of 600×400mm, from the logistics module of 1,200×1,000mm, and enlarge to the size of 2,591×2,438mm-the size of high×wide of the container. It can be adjusted to the standard sizes of containers for trains, trucks and ships.

(2) Information technologies are most important for modern logistics. Bar Code, POS, EDI and GPS systems dramatically improve the efficiency and accuracy of the logistics activities. Internet further assists the market development, operation and management of the logistics industry.

3.International Logistics

An increasing number of companies are involving in international markets through exporting, licensing, joins ventures, and ownership. This trend should continue. With such expansion there is a need to develop worldwide logistics networks. Integrated logistics management and cost analysis will be more complex and difficult to manage. There are some future trends in internationalization:

(1) More logistics executives with international responsibilities (2) Expansion of the number and size of foreign trade zones.

(3) Reduction in the amount of international paperwork and documentation (4) More foreign warehousing is owned and controlled by the exporting firm

(5) Increasing number of smaller firm

(6) Foreign ownership of logistics service firms, e. g., public warehousing and transportation carriers.

(7) Increasing multiple distribution channels

The international transport and the international logistics are same things in some way. So, when the international trading involved, the firm must establish international logistics systems to provide the products and service demanded. The most significant development in international logistics will be the increasing sophistication information system adopted and independent departments to operate.

4.Packaging.

Packaging performs two basic functions–marketing and logistics. In marketing the packaging acts promotion and advertising. Its size, weight, color, and printed information attract customers and convey knowledge of the product. When firms are involved in international marketing, packaging becomes even more important. Products sold to foreign countries travel greater distances and undergo more handling operations. The logistics package is to protect the products during the process of logistics.

Scrap disposal. The logistics process must effectively and quickly handle, transport, and store waste products. If they can be reused or recycled, logistics company should arrange and move them to the re–production and re–processing locations.

Return goods handling. The handling of return goods is often called reverse distribution. Buyers may return items to the seller for a number of reasons. Most logistics systems are not good enough to handle such cases. In many industries, consumers return products for warranty repair, replacement, or recycling, reverse distribution costs may be very high. Reverse distribution will become more important as customers demand more flexible and favorable return policies.

5.Third Part Logistics ( TPL)

Third Part Logistics provides all the logistics services. They act as a bridge or facilitator between the first part( supplier or producer) and the second part( buyer or customer). The primary objectives of third part logistics providers are to lower the total cost of logistics for the supplier and improve the service level to the customer.

Third Part Logistics have been growing rapidly. Cost reduction and demands for batter and cheaper services are the main drives behind the growth. A third part logistics provider will be in a position to consolidate business from several companies and offer frequent pick–ups and deliveries, whereas in–house transportation cannot. Other reasons are as follows:

* The company does not specialize in logistics; * The company does not have sufficient resources;

* Eager to implement better logistics operation or does not have time to develop the required capabilities in–house;

* The company is venturing into a new business with totally different logistics requirements;

* Merger or acquisition may make outsourcing logistics operations more attractive than to integrate logistics operations.

6.Global Logistics

Developed countries often deal with globalization in two ways: to be more cost competitive with third world countries, and to look for new partners in other countries to manufacture components, subassemblies and even the final products. The second approach forces most developed countries to get into a new area called “ global logistics”.

Benefits of global operations include cheap raw materials and end products, lower labor cost, better quality, increased internal competition and better customer service. Some of the disadvantages are unreliable delivery, poor communication and longer time from design to finish production. Challenges are often cultural and linguistic differences, legal requirements, logistics suppliers or manufacturers, exchange rates.

There are three major flows involved in global logistics: material flow, document flow and cash flow.

7.Logistics into the Future

Logistics is changing at a rapid and acceleration rate. There are two reasons are its rapid growth:

Firstly, pressure to change by the development of the system itself

(1) High–speed computing and data transmission can instantly transmit and react to user demand

(2) More flexible and accurate logistic planning and control through computers and data processing

(3) Flexible computer facilities help problem solving and increase decisions accuracy (4) Awareness of total cost measurement and management accounting

Secondly, pressures for changes from the wider economy.

(1) Be flexible in handling markets of different sizes for better competition (2) There is increasing specialization in markets and growth in retailing.

(3) Life cycles for products are shortening. Logistics systems need to be more efficient, faster and more flexible

(4) Move from mass production towards flexible manufacturing system( FMS). These systems enable a company to switch production quickly from one product to another (5) Competitive pressures lead to more efforts to improve customer service.