Presentation on theme: "Strategic Logistics Planning"— Presentation transcript:
1 Strategic Logistics Planning Compiled by Rulzion Rattray
2 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
3 The Resource Environment The Value Chain Michael Porter (1985) Firm’s InfrastructureHuman Resource ManagementSecondaryActivitiesMarginTechnology DevelopmentProcurementOutboundLogisticsInboundLogisticsMarketing& SalesOperationsServiceMarginPrimary Activities
4 Overview External Factors Organisational Strategic Plan Marketing SocialEcologicalPoliticalTechnologicalEconomicMarketingManufacturingPhysical DistributionFinanceAdapted from Capacito, W., & Rosenfield, D.B., (1984), “Analytical Tools for Strategic Planning”, 15(3), pp47-61, Council of Logistics Management USA.LogisticsFunctional Strategic Plans
5 Key Issues in Logistics Planning Customer Service:Demand for improved service, quality a major element in competitive advantageLogistics costs:Physical distribution, up to 30% of sales valueExternal pressuresRegulatory change pressures, competitive pressures of globalisationTrade offs:Response to change requires complex adjustment.Organisational conflicts:Often no clear responsibility for logistics
6 Strategic Logistics Planning Business goals & strategiesQuality of Individuallink of logistics systemCustomer service requirementsFacility locationOperations strategyInventory managementInformation systemsMaterial handlingTraffic & transportationPlanning & controlOrganisationIntegrating logistics planningDesign of integrated logisticsmanagement systemOverall performanceAdapted from Capacito, W., & Rosenfield, D.B., (1984), “Analytical Tools for Strategic Planning”, 15(3), pp47-61, Council of Logistics Management USA.
7 Pressures Influencing System New customerService requirementsChanging costsPressure forfinancialperformanceLogisticsSystemRegulatorychangeConstantly improvingIT availabilityPressure toreduce inventoryRequirement forinnovation and efficiencyAdapted from Capacito, W., & Rosenfield, D.B., (1984), “Analytical Tools for Strategic Planning”, 15(3), pp47-61, Council of Logistics Management USA.
8 Conflicts of Interest Sales & Marketing Higher Customer Service Lower High revenue through:Sales &MarketingHigherCustomerService High levels ofavailability Rapid introductionof new productsLowerLogisticsCost effective production:ProductionMoreDisruptingfactors inproductionHigh constant capacityutilisationLonger production runs,Fewer set up costsFewerLogisticsTight budgets for:HigherStocksFinance& ControlStocksCostLowerAdapted from Capacito, W., & Rosenfield, D.B., (1984), “Analytical Tools for Strategic Planning”, 15(3), pp47-61, Council of Logistics Management USA.
9 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
10 Service consists of a range of dimensions Shapiro Grid frameworkBreadth of product lineCost Service CurvesNarrowBroadDecentralisedInventoryLogisticscostsService costsor Delivery Time, etcCentralisedInventoryElbows create concentrationaway from elbow large increases in delivery time and only moderate decrease in costsStraight steep curves variation and nichesmore room for differentiatorsService consists of a range of dimensionsA basis for competitor comparison on two dimensions
11 ReferencesCapacito, W., & Rosenfield, D.B., (1984), “Analytical Tools for Strategic Planning”, 15(3), pp47-61, Council of Logistics Management USA.Christopher, M., (1995), “Logistics the Strategic Issues”, Chapman Hall, London.Aitken, J., “Supply Chain Integration within the Context of a Supplier Association”, Cranfield University PHD Thesis, Cited in Christopher, M., (1998), “Logistics and Supply Chain Management. Strategies for Reducing Cost and Improving Service”, Financial Times Pitman Publishing, London.
12 Managing the Global Pipeline Compiled by Rulzion Rattray
13 The Globalisation of Markets. Levitt, T. (1983). Advances in Technology Driving the world to a converging commonality.Proletarianisation of:Communication, transport, travelGlobal corporations which operate with resolute consistency at low relative cost using the entire world as a single market.
14 Trade Offs in Global Logistics CostsLocalisedInventoryMaterialProductionTransportSource to UserImportant to recognise trade offs.Key to recognise the service needs of the market
15 Globalisation in Supply Chains Liberalisation effect of WTO, etc.No longer have to set up in target country, instead can concentrate on developing economies of scale.Emergence of new manufacturing economies has resulted in increased competition and oversupply.Companies will have to find new ways of remaining competitive by lowering costs in other ways.Supply chain efficiency will become even more important
16 The Myth of Globalisation. Susan Douglas & Yoram Wind. Attacks Levitt's view of global standardisation as naive and over simplistic. Homogenisation not a clear & universal trend.Contra Evidence of homogenisation:Food firms adapt to national characteristics.Growth of intra-country segmentation:growing demand for differentiated products.The myth of economies of scale:Technical developments lowering scale requirements.cost of production often only small part of total costs.
17 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 packagingCentralised Inventories:Centralising Inventory = less total inventory.Square root rule25to45:2 i.e. 60% reductionChristopher, M., (1998),However may overlook benefit of local to customer
18 Postponement & 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.
19 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 strategiesLogistics of service delivery crucial!
20 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
21 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 generalistsIntegration 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.
22 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.
23 Globalisation Move to commodity markets and component specialisation: firms shop freely amongst the nations of the worldSinger Sewing machines: Shells from US, motors from Brazil, drive shafts from Italy, machine assembled in TaiwanIncreasing need for local customisationWashing machines: Germans want fast spin & Italians slow, British front loaders, French top loaders, etcChallenge how to achieve benefit of standardisation at the same time?
24 ReferencesChristopher, M., (1998), “Logistics and Supply Chain Management. Strategies for Reducing Cost and Improving Service”, Financial Times Pitman Publishing, LondonLevitt, 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.