Logistics Management and Strategy 5th edition Competing through the Supply Chain

Listed as one of the top ten supply chain books of all time on www.supplychainopz.com!

A concise, applied and strategic introduction to the subject of logistics and supply chain management, perfect for modern managers and students of logistics and supply chain management.

Logistics and supply chain management continue to transform the competitive landscape and have become one of today’s key business issues. This fifth edition of Logistics Management and Strategy continues to take a practical, integrated and international approach to logistics, and includes the very latest research to reflect the innovative and exciting developments in this subject area.

A clear framework guides the reader through the four parts of the book, covering;

• an introduction to logistics and its contribution to competitiveness and value creation,
• leveraging logistics operations within the context of the customer
• supplier partnerships, interfaces and the challenges of integration
• leading-edge thinking in logistics and the future challenges ahead

This new edition contains;

·    15+ new cases (including Heineken, Unilever and Johnson and Johnson)
- coverage of disaster logistics and Corporate Social Responsibility from the supply chain perspective
- discussion of global governance of the supply chain
- even more coverage on value and logistics costs and segmented supply chain strategy, equipping the reader with the latest thinking

'Well written and contains a wealth of valuable ideas and concepts.' – Dr Jan de Vries, University of Groningen

'Very up-to-date, both in terms of its conceptual framework and the topics covered.  Remarkably clear and easy to read.' – Dr Tony Whiteing, University of Huddersfield

Alan Harrison was Professor of Operations and Logistics at Cranfield School of Management, and Director of Research at The Cranfield Centre for Logistics and Supply Chain Management.

Remko van Hoek is visiting Professor of Supply Chain Management at The Cranfield Centre for Logistics and Supply Chain Management. He is also Chief Procurement Officer at GDF SUEZ/Cofely the Netherlands.

Heather Skipworth is Senior Research Fellow at Cranfield School of Management, The Cranfield Centre for Logistics and Supply Chain Management.

Contents

Foreword xiii

Preface   xv

Authors’ acknowledgements xvii

Publisher’s acknowledgements xix

How to use this book xxi

Plan of the book xxiii

Part One COMPETING THROUGH LOGISTICS

1   Logistics and the supply chain    3

Introduction 3

1.1 Logistics and the supply chain    4

   1.1.1  Definitions and concepts 6

   1.1.2  Supply chain: structure and tiering   8

1.2 Material flow and information flow 12

   1.2.1  Material flow 12

   1.2.2  Information flow 15

1.3 Competing through logistics 16

   1.3.1  Hard objectives 17

   1.3.2  Supportive capabilities   19

   1.3.3  Soft objectives   25

   1.3.4  Order winners and qualifiers   26

1.4 Logistics strategy    27

   1.4.1  Defining ‘strategy’   28

   1.4.2  Aligning strategies    29

   1.4.3  Differentiating strategies   30

   1.4.4  Trade-offs in logistics    31

Summary    32

Discussion questions    33

References    33

Suggested further reading   34

2   Putting the end-customer first   35

Introduction   35

2.1 The marketing perspective    36

   2.1.1  Rising customer expectations 37

   2.1.2  The information revolution 37

2.2 Segmentation   38

2.3 Demand profiling   46

2.4 Quality of service 50

   2.4.1  Customer loyalty   51

   2.4.2  Value disciplines   53

   2.4.3  Relationship marketing and customer relationship management (CRM)    53

   2.4.4  Measuring service quality    56

2.5 Setting priorities for logistics strategy   56

   2.5.1  Step 1: Diagnose current approach to market segmentation    58

   2.5.2  Step 2a: Understand buying behaviour 59

   2.5.3  Step 2b: Customer value analysis 60

   2.5.4  Step 3: Measure logistics strategy drivers 60

   2.5.5  Step 4: Specify future approach to market segmentation 63

Summary    68

Discussion questions    69

References    70

Suggested further reading   71

3   Value and logistics costs   73

Introduction 73

3.1 Where does value come from?   74

   3.1.1  Return on investment (ROI)    75

   3.1.2  Financial ratios and ROI drivers    77

3.2 How can logistics costs be represented? 79

   3.2.1  Fixed/variable    81

   3.2.2  Direct/indirect    85

   3.2.3  Engineered/discretionary   87

3.3 Activity-based costing (ABC) 89

   3.3.1  ABC example    91

   3.3.2  Cost–time profile (CTP)    92

   3.3.3  Cost-to-serve (CTS)    94

3.4 A balanced measurement portfolio   95

   3.4.1  Balanced measures 96

   3.4.2  Supply chain management and the balanced scorecard 97

   3.4.3  Supply chain financial model    99

3.5 Supply chain operations reference model (SCOR)    101

Summary    105

Discussion questions    105

References    106

Suggested further reading   106

Part Two LEVERAGING LOGISTICS OPERATIONS

4   Managing logistics internationally    109

Introduction 109

4.1 Drivers and logistics implications of internationalisation   111

   4.1.1  Logistical implications of internationalisation    114

   4.1.2  Time-to-market 115

   4.1.3  Global consolidation   116

   4.1.4  Risk in international logistics 119

4.2 The tendency towards internationalisation    120

   4.2.1  Focused factories: from geographical to product segmentation 120

   4.2.2  Centralised inventories   121

4.3 The challenges of international logistics and location 124

   4.3.1  Extended lead time of supply    125

   4.3.2  Extended and unreliable transit times 125

   4.3.3    Multiple consolidation and break points   125

   4.3.4  Multiple freight modes and cost options   126

   4.3.5  Price and currency fluctuations 126

   4.3.6  Location analysis 128

4.4 Organising for international logistics    130

   4.4.1  Layering and tiering    130

   4.4.2  The evolving role of individual plants   131

   4.4.3  Reconfiguration processes   132

4.5 Reverse logistics    141

4.6 Managing for risk readiness 143

   4.6.1  Immediate risk readiness   143

   4.6.2  Structural risk readiness    144

4.7 Corporate social responsibility in the supply chain   145

Summary    150

Discussion questions    150

References    151

Suggested further reading   151

5   Managing the lead-time frontier    153

Introduction 153

5.1 The role of time in competitive advantage    154

   5.1.1  Time-based competition: definition and concepts    154

   5.1.2  Variety and complexity 155

   5.1.3  Time-based initiatives    156

   5.1.4  Time-based opportunities to add value 157

   5.1.5  Time-based opportunities to reduce cost   159

   5.1.6  Limitations to time-based approaches    161

5.2 P:D ratios and differences 162

   5.2.1  Using time as a performance measure    162

   5.2.2  Using time to measure supply pipeline performance   163

   5.2.3  Consequences when P-time is greater than D-time   165

5.3 Time-based process mapping   168

   5.3.1  Stage 1: Create a task force 169

   5.3.2  Stage 2: Select the process to map    169

   5.3.3  Stage 3: Collect data    170

   5.3.4  Stage 4: Flow chart the process 170

   5.3.5  Stage 5: Distinguish between value-adding
and non-value-adding time    170

   5.3.6  Stage 6: Construct the time-based process map 171

   5.3.7  Stage 7: Solution generation    171

5.4 Managing timeliness in the logistics pipeline    176

   5.4.1  Strategies to cope when P-time is greater than D-time    177

   5.4.2  Practices to cope when P-time is greater than D-time 178

5.5 A method for implementing time-based practices 179

   5.5.1  Step 1: Understand your need to change   179

   5.5.2  Step 2: Understand your processes 180

   5.5.3  Step 3: Identify unnecessary process steps and large amounts of wasted time   181

   5.5.4  Step 4: Understand the causes of waste    181

   5.5.5  Step 5: Change the process 181

   5.5.6  Step 6: Review changes    181

   5.5.7  Results   182

5.6 When, where and how? 183

Summary    183

Discussion questions    184

References    184

Suggested further reading   184

6   Supply chain planning and control    185

Introduction   185

6.1 The supply chain ‘game plan’ 187

   6.1.1  Planning and control within manufacturing 187

   6.1.2  Managing inventory in the supply chain   193

   6.1.3  Planning and control in retailing    198

   6.1.4  Inter-firm planning and control 201

6.2 Overcoming poor coordination in retail supply chains    203

   6.2.1  Efficient consumer response (ECR)    204

   6.2.2  Collaborative planning, forecasting and replenishment (CPFR)    210

   6.2.3  Vendor-managed inventory (VMI)   214

   6.2.4  Quick response (QR) 217

Summary    218

Discussion questions    219

References    219

Suggested further reading   220

7   Just-in-time and the agile supply chain 221

Introduction 221

7.1 Just-in-time and lean thinking 223

   7.1.1  The just-in-time system 224

   7.1.2  The seven wastes 228

   7.1.3  JIT and material requirements planning    229

   7.1.4  Lean thinking 232

   7.1.5  Application of lean thinking to business processes 234

   7.1.6  Role of lean practices    235

7.2 The concept of agility 236

   7.2.1  Classifying operating environments    241

   7.2.2  Preconditions for successful agile practice   242

   7.2.3  Developing measures that put the end-customer first to improve market sensitivity   246

   7.2.4  Shared goals to improve virtual integration 247

   7.2.5  ‑Boundary spanning S&OP process to improve process integration    248

Summary    249

Discussion questions    250

References    251

Suggested further reading   252

Part Three WORKING TOGETHER

8   Integrating the supply chain    255

Introduction   255

8.1 Integration in the supply chain    257

   8.1.1  Internal integration: function to function 258

   8.1.2  Inter-company integration: a manual approach 259

   8.1.3  Electronic integration 260

8.2 Choosing the right supply relationships   264

8.3 Partnerships in the supply chain 270

   8.3.1  Economic justification for partnerships    271

   8.3.2  Advantages of partnerships 271

   8.3.3  Disadvantages of partnerships   271

8.4 Supply base rationalisation   272

   8.4.1  Supplier management 272

   8.4.2  Lead suppliers    272

8.5 Supplier networks 273

   8.5.1  Supplier associations   273

   8.5.2  Japanese keiretsu 276

   8.5.3  Italian districts    278

   8.5.4  Chinese industrial areas    280

8.6 Supplier development 284

   8.6.1  Integrated processes    284

   8.6.2  Synchronous production   285

8.7 Implementing strategic partnerships 285

8.8 Managing supply chain relationships   290

   8.8.1  Creating closer relationships   290

   8.8.2  Factors in forming supply chain relationships    291

Summary    292

Discussion questions    294

References    295

Suggested further reading   297

9   Sourcing and supply management    299

Introduction 299

9.1 What does procurement do?    301

   9.1.1  Drivers of procurement value    302

9.2 Rationalising the supply base   314

9.3 Segmenting the supply base 316

   9.3.1  Preferred suppliers   319

   9.3.2  Strategic relationships    320

   9.3.3  Establishing policies per supplier segment   320

   9.3.4  Vendor rating 321

   9.3.5  Executive ownership of supply relationships 322

   9.3.6  Migrating towards customer of choice status   324

9.4 Procurement technology    326

9.5 Markers of boardroom value   326

9.6 What does top procurement talent look like? 327

Summary    328

Discussion questions    329

References    329

Suggested further reading   330

Part Four CHANGING THE FUTURE

10   Logistics future challenges and opportunities    333

Introduction 333

10.1   Changing economics? 334

10.2   Internal alignment 336

10.3   Selecting collaborative opportunities upstream and downstream    340

10.4   Managing with cost-to-serve to support growth and profitability    343

10.5   The supply chain manager of the future    345

10.6   Changing chains 347

Summary    349

Discussion questions    350

References    350

Suggested further reading   350

Index     351