Economic Impact Of Logistics

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Logistics affect economy from two point of view, micro and macro environment.First, logistics has an important impact on and a relationship to the overall economy (the macro level), and inventories are not the only relevant economic factor. Second, important interaction occurs between micro-level and macro-level economic activities. This section examines some macroeconomic data showing the importance of logistics in the economy and also, demonstrates the impact of improved logistics and transportation systems.

1. Value-Added Role of Logistics. The four principal types of economic utility that add value to a product or service are: form, time, place, and possession. Form utility is created by manufacturing activities, time and place utility
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Economic Impacts. The economic impacts of logistics are described in highlights of four major areas: economic development and specialization, variety of goods, effects on prices, and land values. Logistics contributes to economic development by allowing firms to capitalize on comparative cost advantages in the production of goods and services by efficiently transporting goods to the market. The volume and variety of goods produced by firms is made available to consumers at places far from production points, frequently long after the goods have been produced. The availability of goods depends on the effective logistics performance of all firms in movement and storage functions. The creation of time and place utility by logistics activities may also contribute to lower prices. Improvement of logistics systems by firms, both technically and managerially, leads to many benefits on prices and the availability of goods. Transportation can affect land values when technical improvements occur. Improved transportation facilities increase the accessibility of the land, making it more useful and…show more content…
Logistics Interfaces with Operations/Manufacturing. Length of the production run is a classic interface area between logistics and manufacturing management. Other operational areas of interface include the effects of product seasonal demand, supply-side interfaces, protective packaging, and foreign and third-party alternative sources of production inputs.

2. Logistics Interfaces with Marketing. Logistics is often referred to as the other half of marketing and plays an important role through the physical movement and storage of goods in selling a product. Interfaces with marketing are discussed in terms of price, product, promotion, and place elements of the marketing mix. Logistics pricing decisions concern carrier pricing, matching discount schedules to transportation rates, and volume relationships affecting the ability to move and store products.

3. Logistics product decisions involve size, shape, weight, packaging, and other physical dimensions affecting the ability to move and store products. Promotion decisions affect logistics in terms of pushing or pulling the product through the distribution channels, and the storage effects on channel

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