Logistics: managing economies of scale

Published on January 30, 2022   20 min
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Logistics, managing economies of scale, presented by Dr. Darren Prokop, Professor of Logistics, University of Alaska Anchorage.
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What is logistics? It is the art and the science of managing three constraints. Time, physical space, and location. Every organization relies on logistics to some degree in order to conduct business. Organizations across the world may link up in a supply chain in order to meet some strategic goal. But it is logistics that will make or break that strategy.
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Logistics is about getting seven things right. Get the right item, in the right quantity and in the right condition, delivered to the right customer at the right time, in the right location, and do all of this at the right price.
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Logistics management is about flow, while supply chain management is about structure. For supply chain linkages to be viable, logistical flows are necessary. Think of it like a skeleton with a circulatory system. One without the other is not life-sustaining. The skeleton gives the body strength and the circulatory system gives it vitality. In this way, logistics and supply chain management have a symbiotic relationship. You simply cannot have one without the other. It is akin to tactical support for strategic goals.
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Logistical flows involve transporting raw materials, sub-assemblies, and final goods. Even people move in their role as operators, passengers, or travelers. Transportation of intangible items include data and information, financial capital such as money, credit, stocks, and bonds, and property rights such as transfers of land titles and intellectual property rights like patents, copyrights, and trademarks. What is meant by the term economies of scale?
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Logistics: managing economies of scale

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