Logistics Management and Strategy Logistics Management

1 Logistics Managementand Strategy3rd editionCompeting through the supply chainAlan Harrison and Remko van HoekLogistics Managementand Strategy3rd editionHarrison and van HoekLogistics Management and StrategyCompeting through the supply chain3rd editionAlan Harrison and Remko van HoekA 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 and supply chain Management continue to transform the competitive landscape and have become one of today s key business issues. This third 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 clear framework guides the reader through the four parts of the book, covering.

2 L an introduction to Logistics and its contribution to competitiveness and value creation, l leveraging Logistics operations within the context of the customer, l supplier partnerships, interfaces and the challenges of integration, l leading-edge thinking in Logistics and the future challenges to this more on reverse Logistics together with green, ethical and CSR issues, l revised chapters on supply chain planning and control and on agility, l fully revised final chapter ties in the future challenges facing Logistics more closely with the rest of the book. Well written and contains a wealth of valuable ideas and concepts. Dr Jan de Vries, University of GroningenEvery chapter features case studies with study questions, activities and end of chapter discussion questionsto help students explore logistical concepts in operational detail.

3 Teaching support notes and PowerPoint slides for lecturers can be downloaded from the book s website at 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 HuddersfieldAlan Harrison is Professor of Operations and Logistics at Cranfield School of Management , and Director ofResearch at The Cranfield Centre for Logistics and Supply Chain Management . Remko van Hoek is Professor of Supply Chain Management at The Cranfield Centre for Logistics and SupplyChain Management . He is also Vice President Procurement at Nuon in the 118/10/07 13:56:29 Logistics Managementand StrategyCompeting through the supply 3/17/08 9:35 AM Page i We work with leading authors to develop thestrongest educational materials in Logistics ,bringing cutting-edge thinking and best learning practice to a global a range of well-known imprints, includingFinancial Times Prentice Hall, we craft high quality print andelectronic publications which help readers to understandand apply their content, whether studying or at find out more about the complete range of ourpublishing, please visit us on the World Wide Web 3/17/08 9:35 AM Page ii Logistics Managementand StrategyCompeting through the supply chainThird EditionAlan HarrisonRemko van 3/17/08 9.

4 35 AM Page iii Pearson Education LimitedEdinburgh GateHarlowEssex CM20 2 JEEnglandand Associated Companies throughout the worldVisit us on the World Wide Web published 2002 Second edition published 2005 Third edition published 2008 Pearson Education Limited 2002, 2005 Alan Harrison and Remko van Hoek 2008 The rights of Alan Harrison and Remko van Hoek to be identified as authorsof this work have been asserted by them in accordance with the Copyright,Designs and Patents Act rights reserved. No part of this publication may be reproduced, stored ina retrieval system, or transmitted in any form or by any means, electronic,mechanical, photocopying, recording or otherwise, without either the priorwritten permission of the publisher or a licence permitting restricted copyingin the United Kingdom issued by the Copyright Licensing Agency Ltd,Saffron House, 6 10 Kirby Street, London EC1N trademarks used herein are the property of their respective owners.

5 The use ofany trademark in this text does not vest in the author or publisher any trademarkownership rights in such trademarks, nor does the use of such trademarks imply anyaffliliation with or endorsement of this book by such : 978-0-273-71276-3 British Library Cataloguing-in-Publication DataA catalogue record for this book is available from the British LibraryLibrary of Congress Cataloging-in-Publication DataHarrison, Alan, 1944 Logistics Management and Strategy : competing through the supply chain / Alan Harrison,Remko van Hoek. 3rd bibliographical references and : 978-0-273-71276-3 (pbk. : alk. paper) 1. Business Logistics . 2. Industrialmanagement. I. Hoek, Remko I. van. II. dc222007046447109876543211 10 09 08 Typeset in Stone Sans by 3 Printed and bound in MalaysiaThe publisher s policy is to use paper manufactured from sustainable 3/17/08 9:35 AM Page iv To Nick, Katie, Maryl and Ticho, with 3/17/08 9:35 AM Page v 3/17/08 9:35 AM Page vi ContentsForewordxvPrefacexviiAuthor s acknowledgementsxixPublisher s acknowledgementsxxHow to use this bookxxiiiPlan of the bookxxvPart One COMPETING THROUGH LOGISTICS1 Logistics and the supply Logistics and the supply Definitions and Supply chain.

6 Structure and Material flow and information Material Information Competing through Hard Supportive Soft objectives Order winners and Logistics Defining Strategy Aligning Differentiating strategies28 Summary30 Discussion questions31 References31 Suggested further reading322 Putting the end-customer The marketing Rising customer The information Quality of Customer 3/17/08 9:35 AM Page vii Value Customer relationship Management (CRM) Measuring service Setting priorities for Logistics Step 1: Diagnose current approach to market segmentation Step 2a: Understand buying Step 2b: Customer value Step 3: Measure Logistics Strategy Step 4: Specify future approach to market segmentation54 Summary57 Discussion questions58 References63 Suggested further reading643 Value and Logistics Where does value come from?

7 Return on investment (ROI) Financial ratios and ROI How can Logistics costs be represented? Activity-based costing (ABC) ABC Cost time profile (CTP) A balanced measurement Balanced Supply chain Management and the balanced Supply chain financial Supply chain operations reference model (SCOR)89 Summary93 Discussion questions94 References95 Part Two LEVERAGING Logistics OPERATIONS4 Managing Logistics Drivers and Logistics implications of Logistical implications of Global Risk in international 3/17/08 9:35 AM Page viii The tendency towards Focused factories: from geographical to product Centralised The challenges of international Logistics and Extended lead time of Extended and unreliable transit Multiple consolidation and break Multiple freight modes and cost Location Organising for international Layering and The evolving role of individual Reconfiguration Reverse Managing for risk Immediate risk Structural risk Corporate social responsibility in the supply chain132 Summary136 Discussion questions137 References137 Suggested further reading1375 Managing the lead-time The role of time in competitive Time-based competition: definition and Time-based Time-based opportunities to add Time-based opportunities to reduce Limitations to time-based P.

8 D ratios and Using time as a performance Using time to measure supply pipeline Consequences when P-time is greater than Time-based process Stage 1: Create a task Stage 2: Select the process to Stage 3: Collect Stage 4: Flow chart the Stage 5: Distinguish between value-adding and non-value-adding Stage 6: Construct the time-based process Stage 7: Solution 3/17/08 9:35 AM Page ix Managing timeliness in the Logistics Strategies to cope when P-time is greater than Practices to cope when P-time is greater than A method for implementing time-based Step 1: Understand your need to Step 2: Understand your Step 3: Identify unnecessary process steps and large amounts of wasted Step 4: Understand the causes of Step 5: Change the Step 6: Review When, where and how?

9 167 Summary168 Discussion questions169 References169 Suggested further reading1696 Supply chain planning and The supply chain game plan Planning and control within the focal Managing inventory in the supply Inter-firm planning and Just-in-time (JIT) The just-in-time JIT and material requirements planning (MRP) Lean The seven Application of lean thinking to business Role of lean Design Lean product Lean facility Lean thinking summary198 Summary198 Discussion questions199 References200 Suggested further reading2017 The agile supply The concept of Demand characteristics and supply Classifying operating 3/17/08 9:35 AM Page x Preconditions for successful agile Agile drivers and Joint decision making to improve external network Developing measures to put the end-customer Shared goals to improve virtual Boundary-spanning SOP to improve process integration225 Summary226 Discussion questions227 References228 Suggested further reading229 Part Three WORKING TOGETHER8 Integrating the supply Integration in the supply Internal integration: function to Inter-company integration.

10 A manual Electronic Efficient consumer response (ECR) Category Continuous Enabling Collaborative planning, forecasting and replenishment (CPFR) Benefits of electronic Vendor-managed inventory (VMI) How VMI Potential Potential problems in setting up a VMI Quick response (QR) JIT/QR Role of enabling Managing supply chain Creating closer Factors in forming supply chain relationships258 Summary260 Discussion questions261 References262 Suggested further reading2639 Purchasing and supply 3/17/08 9:35 AM Page xi Choosing the right supply Partnerships in the supply Economic justification for Advantages of Disadvantages of Supply base Supplier Lead Supplier Supplier Japanese Italian Supplier Integrated Synchronous Implementing strategic partnerships286 Summary290 Discussion questions291 References292 Suggested further reading293 Part Four CHANGING THE FUTURE10 Logistics future challenges and Internal Selecting collaborative opportunities upstream and Managing with cost-to-serve to support growth and The supply chain manager of the future308 Summary310 Discussion questions310 References310 Suggested further 3/17/08 9.