2. Theory and Literature Reviews
2.1 Theoretical
In general, for an organization, customer services and cost reduction is the main key to gain competitive
advantage. To reform its services to fit customer desire, the organization has to improve its service level and
decrease its costs regularly. Consequently, logistics development program within the organization is necessary.
Logistics cost takes place from the activity of keeping and moving inventory. Therefore cost reduction is a search
for measure to make the activity conducted in maximum efficiency manner which conceptually composed of two
principles that are the activity must bring about expense as less as possible and the inventory must be kept in
lowest level. According to the principles for logistics cost reduction, following actions must be proceeded [6]
Improve logistics activities to be efficient
Explore no value activities in working processes
Analyze the difference of logistics cost of each suppliers and customers
Categorize supplier and customer types by actual logistics cost
Determine person in charge of logistics cost from the result of the logistics cost analysis
Identify responsible criteria of each work groups for logistics cost
Assign the cost reduction mission to the person in charge of the activity causing the expense
Apart from the previous act, the critical element of warehouse management is the design and layout which
influences on efficiency of the retail business significantly. Therefore, the desirable warehouse should have a
good layout planning of which objectives are as follows: