1. B200 SEMESTER 2 PROCESSES Module
Prepared by Iman El Sabaa

2. Logistics and Competitive strategy
Chapter Eleven
By Martin Christopher

3. What is logistics
Logistics is the process of strategically managing the procurement, movement and storage of materials, parts and finished inventory (and the related information flows)
through the organization and its marketing channels
in such a way that current and future profitability are maximized through the cost-effective fulfillment of orders.

4. Logistics and competitive advantage
Firms can achieve competitive advantage through:
Differentiation, in the eyes of the customer, from its competition
And
By operating at a lower cost and hence at greater profit.

5. Competitive advantage and the 3Cs
CUSTOMER
Needs seeking benefits
At acceptable prices
VALUE
VALUE
Assets and
Utilisation
Assets and
Utilisation
Cost differentials
COMPANY
COMPETITOR

6. Logistics and competitive advantage
A position of enduring superiority over competitors in terms of customer preference may be achieved through logistics.
Successful companies either have productivity advantage or they have a ‘value’ advantage or a combination of the two.

7. Logistics and competitive advantage
Productivity
Lower cost profile
Differential plus
Value

8. Productivity advantage
There is substantial evidence to suggest that big is beautiful when it comes to cost advantage. This is partly due:
to economies of scale
to the impact of the "Experience Curve". See p 151

9. Productivity advantage
In this regard Logistics management can provide a multitude of ways to increase efficiency and productivity and hence contribute significantly to reduced unit costs.

10. Value advantage
Customers don’t buy products, they buy benefits, these benefits may be intangible (image or reputation)
In other words
Products are purchased for the promise of what they will “deliver”.

11. Value advantage
Adding value through differentiation is a powerful means of achieving a defensible advantage in the market.
But How it could be achieved?
Value segments approach
Services augmented offers

12. Productivity and Value advantage
Successful companies will often seek both productivity and a value advantage. Available options are:

13. Productivity and Value advantage
Marketing logistics’ strategic goal would be

14. Gaining competitive advantage through logistics
Competitive advantage cannot be understood by looking at a firm as a whole. It stems from the many discrete activities a firm performs.
In this regard; we can use the value chain analysis to disaggregates a firm in to its strategically relevant activities

15. Gaining competitive advantage through logistics
Margin

16. Gaining competitive advantage through logistics
Competitive advantage grows out of the way in which firms organize and perform these discrete activities within the value chain. (More cheaply or better than its competitors)

17. Gaining competitive advantage through logistics
Productivity advantage:
Capacity utilization, inventory reduction, closer integration with suppliers.
Value advantage:
Superior customer services

18. Gaining competitive advantage through logistics

19. The mission of logistics management
It is to plan and co-ordinate all activities necessary to achieve the desired levels of delivered service and quality at lowest possible cost.
Logistics must therefore be seen as the link between the market place and the operating activity of the business.

20. The fig illustrates total system concept

21. The mission of logistics management
The previous fig suggests that the needs of customers are satisfied through:
The co-ordination of the materials and information flows that extend from the market place, through the firm and its operations and beyond that to supplier.

22. The supply chain and competitive advantage
The supply chain is the network of organizations that are involved( through upstream and downstream linkages) in the different processes and activities that produce value (goods or/and services).
Recall the value system in Ch 5
Buyer VC
Supplier VC
Firm VC
Channel VC

23. The supply chain and competitive advantage
Supply chain management in this regard should be after integrating outside boundaries of the firm to include both suppliers and consumers

24. The supply chain and competitive advantage
The main challenge would be:
Integrating and coordinating the flow of materials from suppliers (often off shore) and managing the distribution of final products through multiple intermediaries.

25. The supply chain and competitive advantage
The difference between logistics and supply chain management p157
Achieving an integrating supply chain p fig 11.9
Scope of supply chain management fig 11.8 p158
Very important

26. Fundamentals of supply chain management
Views the supply chain as a single entity
It calls for strategic decision making because of its impact on overall costs and market share
provides a different perspective on inventories which are used as a balancing mechanism of last not first resort.
Requires high level of integration

27. The changing logistics environment
The customer service explosion (Services excellence, appropriate delivery systems, committed employees)
Time compression (logistics lead time)
ORDER CASH
Globalization of industry (offshore)
Organizational integration (Material, production, and marketing managers)

28. The challenge of logistics management
To achieve the goal of competitive advantage through both cost reduction and service enhancement.
Organizations need to accelerate the movement through the supply chain and to have more flexible Logistics systems and this could be achieved through:

29. The challenge of logistics management
- Cutting short the pipeline (Unneeded inventory)
- Improve the pipeline visibility (Organizational barriers removals, better coordination)
- Managing logistics as a system

30. We covered so far Definition of logistics
Logistics and competitive advantage (Productivity and Value advantage)
Competitive advantage and value chain management
The mission of logistics management
The supply chain and competitive advantage
The changing logistics environment
The challenge of logistics management

31. Activities
Identify the fundamentals of supply chain management, and how they do function.
Explain the characteristics of the most challenging factors, in the area of logistics.
How can we use logistics to add value and obtain competitive advantage

32. End of chapter Eleven

33. Reverse Logistics
Chapter Twelve
By Richard A.Lancioni

34. Introduction
Why organizations might need to organize the flow of materials back from customers?
A requirement to reclaim material for recycling (Waste management)
Recall the defective product.

35. Introduction The trend will continue for the following reasons:
Fast-changing technology necessitating frequent changes in product design.
New laws being enacted worldwide, requiring the recall of defective products and the recycling of solid waste.

36. The concept of backward distribution
What is backward distribution?
What are its major obstacles?
The lack of an orderly reverse distribution system
Absence of needed information
The high cost of collection and transportation.

37. Urgency, scope and effectiveness of the recall process
Urgency Classes of recalls could be:
Imminently hazardous(100% recall)
Dangerous nature, possible of causing illness and possible be life-threatening
Conscious or unconscious violation of regulations (Mislabeled or misbranded) or Quality failures

38. Urgency, scope and effectiveness of the recall process
Scope and Effectiveness of recalls depends on:
The nature of the product and the level of penetration in the distribution system.
Number of units manufactured and length of the product life.
The ability to locate and notify consumers.

39. Locating the product
Where we can find the product in the distribution system?
Manufacturer’s or Primary distributor's warehouse
Middlemen (wholesalers -Retailers)
Hand of consumers
Level of complications and cost

40. Mechanism for locating products
There are different ways of locating the products:
Durable products (invoices, bills or warranty cards)
Nondurable products ( Record keeping- Recall advertisement)

41. Retrieval of products Process of retrieving could be through:
The company’s field salesforce.
The retailer or other middlemen.
Outside collection specialists.

42. Retrieval of products Effective retrievals require:
Motivated customer (Incentives, education, legislations)
Good relationships with participants in the distribution process (needed information and guidelines)

43. Read Pages
Reverse distribution as a part of logistics strategy
Facility network
Communications and order processing
Transportation and traffic management
Logistics costing

44. A reverse distribution model P171-172
Transportation
Warehousing
Inventory control
Material handling
Order processing
See fig 12.2

45. We covered so far The need for it?
The concept of backward distribution
Urgency, scope and effectiveness of the recall process
Mechanism for locating products
Retrieval of products
A reverse distribution model

46. Activities
Discuss the major elements which are involved in a product recall
Explain why the concept of Reverse Logistics is important for the firms in the future
Solve activity 15 in your study guide p52

47. End of Chapter Twelve

48. Thank You