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 Infrastructure
Human Resource Management
Secondary
Activities
Margin
Technology Development
Procurement
Outbound
Logistics
Inbound
Logistics
Marketing
& Sales
Operations
Service
Margin
Primary Activities

4. Overview External Factors Organisational Strategic Plan Marketing
Social
Ecological
Political
Technological
Economic
Marketing
Manufacturing
Physical Distribution
Finance
Adapted from Capacito, W., & Rosenfield, D.B., (1984), “Analytical Tools for Strategic Planning”, 15(3), pp47-61, Council of Logistics Management USA.
Logistics
Functional Strategic Plans

5. Key Issues in Logistics Planning
Customer Service:
Demand for improved service, quality a major element in competitive advantage
Logistics costs:
Physical distribution, up to 30% of sales value
External pressures
Regulatory change pressures, competitive pressures of globalisation
Trade offs:
Response to change requires complex adjustment.
Organisational conflicts:
Often no clear responsibility for logistics

6. Strategic Logistics Planning
Business goals & strategies
Quality of Individual
link of logistics system
Customer service requirements
Facility location
Operations strategy
Inventory management
Information systems
Material handling
Traffic & transportation
Planning & control
Organisation
Integrating logistics planning
Design of integrated logistics
management system
Overall performance
Adapted 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 customer
Service requirements
Changing costs
Pressure for
financial
performance
Logistics
System
Regulatory
change
Constantly improving
IT availability
Pressure to
reduce inventory
Requirement for
innovation and efficiency
Adapted 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 &
Marketing
Higher
Customer
Service
 High levels of
availability
 Rapid introduction
of new products
Lower
Logistics
Cost effective production:
Production
More
Disrupting
factors in
production
High constant capacity
utilisation
Longer production runs,
Fewer set up costs
Fewer
Logistics
Tight budgets for:
Higher
Stocks
Finance
& Control
Stocks
Cost
Lower
Adapted 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 framework
Breadth of product line
Cost Service Curves
Narrow
Broad
Decentralised
Inventory
Logistics
costs
Service costs
or Delivery Time, etc
Centralised
Inventory
Elbows create concentration
away from elbow large increases in delivery time and only moderate decrease in costs
Straight steep curves variation and niches
more room for differentiators
Service consists of a range of dimensions
A basis for competitor comparison on two dimensions

11. References
Capacito, 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, travel
Global corporations which operate with resolute consistency at low relative cost using the entire world as a single market.

14. Trade Offs in Global Logistics
Costs
Localised
Inventory
Material
Production
Transport
Source to User
Important 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 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

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 strategies
Logistics 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 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.

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 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?

24. 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.