Professional Documents
Culture Documents
Lecture 5 Strategic Logistics Planning
Lecture 5 Strategic Logistics Planning
1
Strategic Logistics Planning
• Understand & assess the macro
environment.
• Analyse & understand the internal
capabilities.
• Combines these to set objectives in
consultation & with the support of major
elements of the organisation
2
The Resource Environment
The Value Chain Michael Porter (1985)
Firm’s Infrastructure
Procurement
Outbound
Inbound Operations Marketing Service
Logistics
Logistics & Sales
Primary Activities
3
Overview
External Factors Organisational
•Social
•Ecological Strategic Plan
•Political
•Technological
•Economic
Manufacturing Marketing
Overall performance
Adapted from Capacito, W., & Rosenfield,
D.B., (1984), “Analytical Tools for
Strategic Planning”, 15(3), pp47-61,
Council of Logistics Management USA.
6
Pressures Influencing System
New customer Changing costs
Service requirements
Pressure for
financial
Logistics performance
Regulatory
System
change
8
Adapted from Capacito, W., & Rosenfield, D.B., (1984), “Analytical Tools for Strategic Planning”, 15(3), pp47-61, Council of Logistics Management USA.
Analytical Methods
• Decisions support systems
– Advantage of quick analysis, & can incorporate
the complex trade offs.
• Logistics cost analysis by:
– Channel, Product, type of customer, geographic
area, logistics function, etc.
• Use of simulations:
– What if simulations, (I.think)
– Optimisation
9
Shapiro Grid framework
Breadth of product line
Decentralised
Logistics Inventory
costs
11
Managing the Global Pipeline
12
The Globalisation of Markets.
Levitt, T. (1983).
Transport
Costs Source to User
Inventory
Material
Production
Localised Global
16
Global Manufacture & Supply
• Focussed factories:
– Economies of scale, one factory for the world?
– May overlook crucial logistics trade offs:
• Transport costs & delivery times.
• Requirement for local packaging
• Centralised Inventories:
– Centralising Inventory = less total inventory.
Square root rule 25 to 4 5:2 i.e. 60% reduction
Christopher, M., (1998),
– However may overlook benefit of local to
customer 17
Postponement & Localisation
• Localisation:
– Even in relatively homogeneous markets like
Europe their can be considerable variety of
local taste. This may be better catered for in a
local assembly operation.
• Postponement:
– Design products using simple common
platforms, using common components.
Assembly does not take place until required.
18
Customer Service Explosion
• Increasing perception that there is little
technical difference between products.
• Service crucial source of differentiation and
competitive advantage.
– Requirements:
• Closely integrated marketing, manufacturing and
supply strategies
• Logistics of service delivery crucial!
19
Strategic Lead time Management
• Product and technology life cycles getting
shorter.
• Requirements for success:
– Ability to innovate.
– Ability to bring new products to market.
• Logistical Lead time becomes crucial.
– Time from sourcing and procurement though to
recovery of investment by selling
20
Organisational Integration
• Recognition of the importance of taking a systems
view of business.
– Difficulty of achieving integration in functionally fixated
organisations.
• Move towards a requirement for generalists
– Integration of all the different aspects of the organisation.
– Philosophy of integration beyond the confines of the
organisation.
• Supply Chain Management.
– Requires that all the players in the value system work
together.
21
Throughput Management
• The process of linking manufacturing and
procurement to the needs of the market.
• Requirement for reducing the length of the
supply chain pipeline!
• Target:
– Lower cost, higher quality, greater variety,
more flexibility, faster response times.
22
Globalisation
• Move to commodity markets and component
specialisation:
– firms shop freely amongst the nations of the world
• Singer Sewing machines: Shells from US, motors from
Brazil, drive shafts from Italy, machine assembled in
Taiwan
– Increasing need for local customisation
• Washing machines: Germans want fast spin & Italians
slow, British front loaders, French top loaders, etc
– Challenge how to achieve benefit of standardisation
at the same time?
23
References
• Christopher, M., (1998), “Logistics and Supply
Chain Management. Strategies for Reducing Cost
and Improving Service”, Financial Times Pitman
Publishing, London
• Levitt, T. (1983), “The Globalisation of Markets”,
Harvard Business Review May/Jun.
• Douglas, S., & Wind, Y., (1987), “The Myth of
Globalisation”, Columbia Journal of World
Business, Winter.
24