MGT 322 Saudi Electronic University Logistics Management Paper The Answer should be 3- 4 pages in length including the cover page and reference.
The Answer must follow the Key word/ outline points below:
Outsourcing ,offshoring ,Third Party logistics
Their Main functions
Motivational Factors /Drivers
Any local example
Reasons with suitable Examples
Reference
Note: You can support your answer by reading chapter 4 of your book.
You can use secondary source available on internet. Please use APA-style referencing Logistics
Management
& Strategy
Competing Through
the Supply Chain
Fourth Edition
Alan Harrison &
Remko van Hoek
Logistics Management
and Strategy
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Logistics Management
and Strategy
Competing through the supply chain
Fourth Edition
Alan Harrison
Remko van Hoek
Pearson Education Limited
Edinburgh Gate
Harlow
Essex CM20 2JE
England
and Associated Companies throughout the world
Visit us on the World Wide Web at:
www.pearsoned.co.uk
First published 2002
Second edition published 2005
Third edition published 2008
Fourth edition published 2011
© Pearson Education Limited 2002, 2005
© Alan Harrison and Remko van Hoek 2008, 2011
The rights of Alan Harrison and Remko van Hoek to be identified as authors of this work
have been asserted by them in accordance with the Copyright, Designs and Patents Act
1988.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval
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photocopying, recording or otherwise, without either the prior written permission of the
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ISBN: 978-0-273-73022-4
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Harrison, Alan, 1944–
Logistics management and strategy : competing through the supply chain
/ Alan Harrison, Remko van Hoek. — 4th ed.
p. cm.
Includes bibliographical references and index.
ISBN 978-0-273-73022-4 (pearson : alk. paper) 1. Business logistics.
2. Industrial management. I. Hoek, Remko I. van. II. Title.
HD38.5.H367 2010
658.5–dc22
2010041143
10 9 8 7 6 5 4 3 2 1
14 13 12 11
Typeset in 9.5pt Stone Serif by 73
Printed by Ashford Colour Press Ltd., Gosport
The publisher’s policy is to use paper manufactured from sustainable forests.
To Cathi, Nick, Katie, Maryl and Ticho, with love.
Contents
Foreword
Preface
Authors’ acknowledgements
Publisher’s acknowledgements
How to use this book
Plan of the book
xiii
xv
xvii
xix
xxi
xxiii
Part One COMPETING THROUGH LOGISTICS
1 Logistics and the supply chain
Introduction
1.1 Logistics and the supply chain
1.1.1 Definitions and concepts
1.1.2 Supply chain: structure and tiering
1.2 Material flow and information flow
1.2.1 Material flow
1.2.2 Information flow
1.3 Competing through logistics
1.3.1 Hard objectives
1.3.2 Supportive capabilities
1.3.3 Soft objectives
1.3.4 Order winners and qualifiers
1.4 Logistics strategy
1.4.1 Defining ‘strategy’
1.4.2 Aligning strategies
1.4.3 Differentiating strategies
1.4.4 Trade-offs in logistics
Summary
Discussion questions
References
Suggested further reading
2 Putting the end-customer first
Introduction
2.1 The marketing perspective
2.1.1 Rising customer expectations
2.1.2 The information revolution
2.2 Segmentation
2.3 Demand profiling
2.4 Quality of service
2.4.1 Customer loyalty
2.4.2 Value disciplines
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viii Contents
2.4.3
Relationship marketing and customer relationship
management (CRM)
2.4.4 Measuring service quality
2.5 Setting priorities for logistics strategy
2.5.1 Step 1: Diagnose current approach to market segmentation
2.5.2 Step 2a: Understand buying behaviour
2.5.3 Step 2b: Customer value analysis
2.5.4 Step 3: Measure logistics strategy drivers
2.5.5 Step 4: Specify future approach to market segmentation
Summary
Discussion questions
References
Suggested further reading
3 Value and logistics costs
Introduction
3.1 Where does value come from?
3.1.1 Return on investment (ROI)
3.1.2 Financial ratios and ROI drivers
3.2 How can logistics costs be represented?
3.2.1 Fixed/variable
3.2.2 Direct/indirect
3.2.3 Engineered/discretionary
3.3 Activity-based costing (ABC)
3.3.1 ABC example
3.3.2 Cost–time profile (CTP)
3.3.3 Cost-to-serve (CTS)
3.4 A balanced measurement portfolio
3.4.1 Balanced measures
3.4.2 Supply chain management and the balanced scorecard
3.4.3 Supply chain financial model
3.5 Supply chain operations reference model (SCOR)
Summary
Discussion questions
References
Suggested further reading
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Part Two LEVERAGING LOGISTICS OPERATIONS
4 Managing logistics internationally
Introduction
4.1 Drivers and logistics implications of internationalisation
4.1.1 Logistical implications of internationalisation
4.1.2 Time-to-market
4.1.3 Global consolidation
4.1.4 Risk in international logistics
4.2 The tendency towards internationalisation
4.2.1 Focused factories: from geographical
to product segmentation
4.2.2 Centralised inventories
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Contents
4.3
The challenges of international logistics and location
4.3.1 Extended lead time of supply
4.3.2 Extended and unreliable transit times
4.3.3 Multiple consolidation and break points
4.3.4 Multiple freight modes and cost options
4.3.5 Price and currency fluctuations
4.3.6 Location analysis
4.4 Organising for international logistics
4.4.1 Layering and tiering
4.4.2 The evolving role of individual plants
4.4.3 Reconfiguration processes
4.5 Reverse logistics
4.6 Managing for risk readiness
4.6.1 Immediate risk readiness
4.6.2 Structural risk readiness
4.7 Corporate social responsibility in the supply chain
Summary
Discussion questions
References
Suggested further reading
5 Managing the lead-time frontier
Introduction
5.1 The role of time in competitive advantage
5.1.1 Time-based competition: definition and concepts
5.1.2 Variety and complexity
5.1.3 Time-based initiatives
5.1.4 Time-based opportunities to add value
5.1.5 Time-based opportunities to reduce cost
5.1.6 Limitations to time-based approaches
5.2 P:D ratios and differences
5.2.1 Using time as a performance measure
5.2.2 Using time to measure supply pipeline performance
5.2.3 Consequences when P-time is greater than D-time
5.3 Time-based process mapping
5.3.1 Stage 1: Create a task force
5.3.2 Stage 2: Select the process to map
5.3.3 Stage 3: Collect data
5.3.4 Stage 4: Flow chart the process
5.3.5 Stage 5: Distinguish between value-adding
and non-value-adding time
5.3.6 Stage 6: Construct the time-based process map
5.3.7 Stage 7: Solution generation
5.4 Managing timeliness in the logistics pipeline
5.4.1 Strategies to cope when P-time is greater than D-time
5.4.2 Practices to cope when P-time is greater than D-time
5.5 A method for implementing time-based practices
5.5.1 Step 1: Understand your need to change
5.5.2 Step 2: Understand your processes
5.5.3 Step 3: Identify unnecessary process steps and large
amounts of wasted time
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x Contents
5.5.4 Step 4: Understand the causes of waste
5.5.5 Step 5: Change the process
5.5.6 Step 6: Review changes
5.5.7 Results
5.6 When, where and how?
Summary
Discussion questions
References
Suggested further reading
6 Supply chain planning and control
Introduction
6.1 The supply chain ‘game plan’
6.1.1 Planning and control within manufacturing
6.1.2 Managing inventory in the supply chain
6.1.3 Planning and control in retailing
6.1.4 Inter-firm planning and control
6.2 Overcoming poor coordination in retail supply chains
6.2.1 Efficient consumer response (ECR)
6.2.2 Collaborative planning, forecasting
and replenishment (CPFR)
6.2.3 Vendor-managed inventory (VMI)
6.2.4 Quick response (QR)
Summary
Discussion questions
References
Suggested further reading
7 Just-in-time and the agile supply chain
Introduction
7.1 Just-in-time and lean thinking
7.1.1 The just-in-time system
7.1.2 The seven wastes
7.1.3 JIT and material requirements planning
7.1.4 Lean thinking
7.1.5 Application of lean thinking to business processes
7.1.6 Role of lean practices
7.2 The concept of agility
7.2.1 Classifying operating environments
7.2.2 Preconditions for successful agile practice
7.2.3 Developing measures that put the end-customer first
to improve market sensitivity
7.2.4 Shared goals to improve virtual integration
7.2.5 Boundary spanning S&OP process to improve
process integration
Summary
Discussion questions
References
Suggested further reading
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Contents
xi
Part Three WORKING TOGETHER
8 Integrating the supply chain
Introduction
8.1 Integration in the supply chain
8.1.1 Internal integration: function to function
8.1.2 Inter-company integration: a manual approach
8.1.3 Electronic integration
8.2 Choosing the right supply relationships
8.3 Partnerships in the supply chain
8.3.1 Economic justification for partnerships
8.3.2 Advantages of partnerships
8.3.3 Disadvantages of partnerships
8.4 Supply base rationalisation
8.4.1 Supplier management
8.4.2 Lead suppliers
8.5 Supplier networks
8.5.1 Supplier associations
8.5.2 Japanese keiretsu
8.5.3 Italian districts
8.5.4 Chinese industrial areas
8.6 Supplier development
8.6.1 Integrated processes
8.6.2 Synchronous production
8.7 Implementing strategic partnerships
8.8 Managing supply chain relationships
8.8.1 Creating closer relationships
8.8.2 Factors in forming supply chain relationships
Summary
Discussion questions
References
Suggested further reading
9 Sourcing and supply management
Introduction
9.1 What does procurement do?
9.1.1 Drivers of procurement value
9.2 Rationalising the supply base
9.3 Segmenting the supply base
9.3.1 Preferred suppliers
9.3.2 Strategic relationships
9.3.3 Establishing policies per supplier segment
9.3.4 Vendor rating
9.3.5 Executive ownership of supply relationships
9.3.6 Migrating towards customer of choice status
9.4 Procurement technology
9.5 Markers of boardroom value
9.6 What does top procurement talent look like?
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xii Contents
Summary
Discussion questions
References
Suggested further reading
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Part Four CHANGING THE FUTURE
10 Logistics future challenges and opportunities
Introduction
10.1 Changing economics?
10.2 Internal alignment
10.3 Selecting collaborative opportunities upstream and downstream
10.4 Managing with cost-to-serve to support growth and profitability
10.5 The supply chain manager of the future
10.6 Changing chains
Summary
Discussion questions
References
Suggested further reading
Index
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Supporting resources
Visit www.pearsoned.co.uk/harrison to find valuable online resources
For instructors
● Complete, downloadable Instructor’s Manual, containing teaching notes, notes on case
studies and teaching tips, objectives and discussion points for each chapter
● Downloadable PowerPoint slides of all figures from the book
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www.pearsoned.co.uk/harrison
Foreword
I am delighted to introduce Logistics Management and Strategy, now in its fourth
edition – a further aid in our ability to drive our understanding of such a critical
part of the business environment. In Bausch and Lomb logistics remains a key
area of management attention, given its central role in customer service and the
opportunities it provides for cost control, two fundamental essentials for any
global business today.
Bausch and Lomb is built on a tradition of developing state of the art Optical
products – from contact lenses to cataract surgery and the fast-growing optical
pharmaceutical markets. These complex supply chains cover five continents and
serve varying types of customers including hospitals, opticians and multiple
retailers. They involve stock-keeping units (skus) requiring temperature control,
serial traceability and sterility, and make for a diverse and challenging set of
logistics demands.
When you then add these challenges to a range of over 100,000 skus – with
some products being offered in over 7,000 different refractive powers/pack sizes –
then you can understand why utilising the very latest approaches to logistics
management and strategy is absolutely crucial.
In recent years we have invested heavily in automated warehouses, such as
at our site in Amsterdam, recently recognised as one of the ‘top ten’ logistics
facilities in the Netherlands. We have also developed our utilisation of agile
logistics. This has been addressed by reducing the number of base products
produced in our 17 factories, whilst increasing our customer responsiveness
through postponement of labelling, bundling, promotional artwork and language compliance. In this regard, being a member of the Agile Supply Chain
Research Club at Cranfield and working with Alan has been a rewarding and
beneficial experience. I note that some of our experience has been invested in
Chapter 7.
In the last two years Bausch and Lomb has greatly reduced inventory holdings
through a number of logistics initiatives – improving working capital whilst
maintaining, and even improving, customer service levels.
But the fight goes on, and it is with texts such as Logistics Management and
Strategy in your armoury that you can continue to drive further improvements in
your supply chain. The great aspect of this text is its readability – it does not seek
to lecture the reader, but imparts its wisdom in a straightforward and practical
manner. Fundamentally, I believe that is the essence of the science of logistics.
Every element of our complex logistical environment is captured in this book
with new sections covering sustainability, planning and control, and particularly
the strategic role of procurement – all adding to the rich content.
In introducing this collaboration between Alan and Remko my parentage
springs to mind. This was another Anglo-Dutch partnership – albeit with different outcomes!
xiv Foreword
I have spent the last twenty-five years in logistics, working in both British and
Dutch environments. The last ten of these years have been in a global role. The
output of Alan’s and Remko’s partnership rings true in so many areas – and offer
methods and approaches which will continue to drive our improvements in the
coming years.
Paul Mayhew MSc, MCILT
Vice President, Global Logistics
Bausch and Lomb.
Preface
Logistics has been emerging from Peter Drucker’s shadowy description as ‘the
economy’s dark continent’ for some years. From its largely military origins, logistics has accelerated into becoming one of the key business issues of the day, presenting formidable challenges for managers and occupying some of the best
minds. Its relatively slow route to this exalted position can be attributed to two
causes. First, logistics is a cross-functional subject. In the past, it has rightly
drawn on contributions from marketing, finance, operations and corporate strategy. Within the organisation, a more appropriate description would be a business
process, cutting across functional boundaries yet with a contribution from each.
Second, logistics extends beyond the boundaries of the organisation into the supply chain. Here, it engages with the complexities of synchronising the movement
of materials and information between many business processes. The systems nature of logistics has proved a particularly difficult lesson to learn, and individual
organisations still often think that they can optimise profit conditions for themselves by exploiting their partners in the supply chain. Often they can – in the
short term. But winners in one area are matched by losers in another, and the losers are unable to invest or develop the capabilities needed to keep the chain
healthy in the long term. The emergence of logistics has therefore been dependent on the development of a cross-functional model of the organisation, and on
an understanding of the need to integrate business processes across the supply
network.
While its maturity as a discipline in its own right is still far from complete, we
believe that it is time to take a current and fresh look at logistics management
and strategy. Tools and concepts to enable integration of the supply chain are
starting to work well. Competitive advantage in tomorrow’s world will come
from responding to end-customers better than competition. Logistics plays a vital
role in this response, and it is this role that we seek to describe in this book.
The globalisation of logistics assumes that quality can be duplicated anywhere,
that risks are relatively small, and that sustainability does not really matter. Case
study 4.2 quotes an environmental activist as saying ‘we are producing food in
one corner of the world, packing it in another and then shipping it somewhere
else. It’s mad.’ The reality is that 21st-century supply chains are developing very
different profiles from those developed by the mindsets of ten or 20 years ago.
Risk will become more important. Plans will need to be in place to prevent or
mitigate the impact of financial, operational and political uncertainty. It is both
environmentally and economically right to focus on sustainability. Logistics
stands at the heart of this debate.
This text has a clear European foundation (its currency is the euro) and an international appeal. In line with the globalisation of logistics, we have included
cases from other parts of the world than Europe – diverse though European logistics solutions are – including South Africa, the United States, Japan, China and
Australia.
xvi Preface
Accordingly, we start in Part One with the strategic role of logistics in the supply chain. We continue by developing the marketing perspective by explaining
our view of ‘putting the end-customer first’. Part One finishes by exploring the
concept of value and logistics costs. In Part Two, we review leveraging logistics
operations in terms of their global dimensions, and of the lead-time frontier. Part
Two continues by examining the challenges of coordinating manufacturing and
retail processes, and the impact on logistics of just-in-time and the agile supply
chain. Part Three reviews working together, first in terms of integrating the supply chain and second in terms of sourcing and supply management. Our book
ends with Part Four, in which we outline the logistics future challenge.
This text is intended for MSc students on logistics courses, and as an accompanying text for open learning courses such as global MSc degrees and virtual universities. It will also be attractive as a management textbook and as recommended
reading on MBA options in logistics and supply chain management.
In the second edition, we listened carefully to…
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