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Logistics Everywhere:

Can a Logistical Approach


help Tackle the Majority
of Managerial Problems?
Charles Tresser It is now an accepted fact that logistics management aims to provide
Mathematical Sciences Department service quality, cost reduction and efficient after-sales support through
IBM Thomas J. Watson Research Center, USA
tresser@us.ibm.com an effective monitoring of supply chain operations. In order to achieve
these goals, logisticians have learned to define clearly the problems they
Gilles Paché have to manage in terms of product flows optimization and to use
Centre de Recherche sur le Transport
methods that are both rigorous and rational in order to solve them.
et la Logistique
Université de la Méditerranée In this paper, we propose that it should be possible to apply and to
Aix – Marseille II, France generalize the logistical approach to other fields, including those as
pache@iut.univ-aix.fr
improbable as advertising and knowledge management

Since it began to be used by certain More precisely, we claim that there


large US manufacturing firms after are several examples of disciplines
World War II, logistics management which could each be reformulated,
has become increasingly effective. at least in part, and which should
After the initial attempts which met be reexamined as problems in
with varying degrees of success, logistics management. In this first
both the definition and applications paper devoted to expounding this
of logistics management now seem thesis, we focus for the most part
to be quite settled: “Logistics refers on two aspects of management
to the systematic management of the sciences chosen essentially
various activities required to move at random: advertising and
benefits from their point of knowledge management. These
production to the customer…The disciplines, or domains of activity,
concept of benefits is a multifaceted are usually considered to be
one that goes beyond the product or quite far removed from logistics as
service itself to include issues regarding well as from each other. However,
timing, quantity, supporting services, we claim that the basic problems
location and cost. So a basic definition in these disciplines can be
of logistics is the continuous process represented as instances of a quite
of meeting customer needs by ensuring basic and general formulation of
the availability of the right benefits logistics management, where one
for the right customer, in the quantity can focus even more than usual on
and condition required by that the basic concepts of optimization
customer, at the time and place the and flows. Defending such a thesis
customer wants them” (Gourdin, requires two components: one
2001:2). Our aim is therefore not to analytic and the other synthetic.
try to question the traditional For the whole approach to make
approach of logistics management, sense, the analysis needs to reduce
but rather to expound the thesis logistics management to its very
that it is possible to significantly core, and this core needs to be
enlarge the scope of logistics expressed in a way that is universal
management in order to include enough for it to be detected as an
other fields. These comprise some essential part of the make-up of
(and probably many) issues that other disciplines. At this very
have an important bearing on the early stage of our thinking, the
management sciences as a whole. synthetic part is limited to the

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case study of the two examples rooted in the military sciences, the Product flows optimization
that have been previously transition happening when the
mentioned. soldiers who had been working on Historians have recently shown
its development as a modern that supplying cities with food from
This paper examines the science came back to civilian distant lands in order to avoid
foundations of logistics management, business life after World War II. famine is a problem with a clear
starting with the original aims Until quite recently, it was founded “logistical” nature, which arose in
and continuing up to the on product flows optimization, a Europe at least as far back as the
most recent approaches and perspective that has been Middle Ages (see, for instance,
strategies (including supply chain challenged by the new trends Abad [2002]). Should we take this,
process integration). More than towards supply chain process therefore, as the first step towards
just reviewing the subject, we will integration advanced by some the development of a logistical
explain our belief that, despite its researchers. We take the view that approach? Certainly not, as it is
obvious evolution and the progress this challenge is not motivated by impossible to identify any real
that has been made, logistics global thinking aiming towards the
management has not changed in a betterment of the means of
fundamental way, and has not distribution of provisions: mankind
undergone any radical change since When considering was at that time most often
it began to be considered as powerless in the face of random
belonging to the management disciplines where the factors over which it had no
sciences. A typical MBA course control. So, while it is certain that
on logistics management would methods of logistics logistical problems existed, and to
profess “to increase the some extent were routinely solved
manufacturing firm’s profitability, locally through necessity, the very
thus responding to the
(supply chain) idea of “logistics management” was
expectations of the shareholders” still to be born. It appears much
but this motivation hides the basic management have not later and its origins are
thinking behind it. In other words, undoubtedly military. Any
logistics (supply chain) previously been encyclopedia would refer to it
management, which today is still primarily as the combination of
limited to playing a supporting role applied, it is transportation, provisioning, and
in helping to improve accommodation designed to ensure
manufacturing and selling, is in necessary to identify the success of troops in combat. If
essence organized around the detailed enough, the encyclopedia
concepts of optimization and flows. would probably add that the father
One must also identify the
the entities that need of military logistics is the
objectives that are to be optimized Napoleonic General Antoine-Henri
and under what constraints such to flow, to where they Jomini, the author of the famous
an optimization must be performed Précis de l’art de la guerre, ou
(or approximated). We would like must flow and to nouveau tableau analytique des
to emphasize that the two principales combinaisons de la
disciplines which are taken as what benefit. stratégie, de la grande tactique et de
examples have been chosen at la politique militaire, published in
random. We simply wanted one 1838, in which he presents logistics
unusual example to discuss briefly
and one example which we could any serious breakdown in the role 1. After a first version of the paper had been
circulated, we received very encouraging
discuss at greater length at this of logistics management, as its comments from Alan Hoffman, Bill Grey,
early stage of the research and evolution over recent years has Nicholas Zissos, and from an anonymous
which would provoke a debate. As confirmed the presence of one reviewer of Supply Chain Forum: An
International Journal. We also received useful
this paper is interdisciplinary, we major objective: to optimize information from Naoki Abe, John Forrest, and
have made an effort to spell out all inbound and outbound logistical John Tomlin about various uses of the methods
technical acronyms, even those operations in order to increase the of logistics in aspects of advertising operations.
What these colleagues, now all from IBM’s
that are standard in logistics firm’s profitability and thus Research Center, have taught us is that several
management. 1 respond to the shareholders’ authors have, for instance, used optimization
techniques to make a better choice in the
expectations. In fact, the distribution of advertisements, in classical
commonalities of the problem settings and more recently on the World Wide
An “orthodox” view solving methods of logistics Web. However, it seems that here we are
postulating a new approach, which in the case
of logistics management are so broad that not of advertising aims to reformulate the
only do they apply to both recent discipline in a holistic way as a problem of
Logistics management, which has and historical trends, but they also logistics management. On the other hand,
these comments given to us on the applications
been subjected to a slow apply to fields quite distant from of optimization methods in advertising lead us
maturation process, firstly in the product flows optimization. to expect that the approach developed here
should bear fruit at some stage in the future and
USA and then in Europe, is deeply not just remain a philosophical perspective.

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as being one of the six parts of the This explains why logistics remains based upon product
art of war (Jomini, 2001). management was first perceived flows optimization. Magee’s (1968)
Throughout the twentieth century, by the American Marketing fundamentally important contribution
the field of military logistics Association (1948) as the planning is to stop limiting the role
underwent spectacular developments, of the operations linked to the of logistics management to
culminating in Operation Overlord, dispatch of goods from the factory that of a physical distribution
the landing of the Allied troops on to the consumer (transport, system. Contradicting the former
the occupied European Continent handling and warehousing). The reductionist views, he argued that
on June 6, 1944. The French goal was to adapt and apply the the manufacturing firm must also
coastline was fortified and tools from Operational Research, optimize product flows inside the
defended by particularly well- tools that had initially been production cycle (work in
equipped German troops, therefore conceptualized in a military progress [WIP] management) and,
it was essential to plan the different context. We will refrain from downstream to the operating
stages of the invasion meticulously delving further into the history of system, inside the physical supply
in order to avoid a repeat of the logistics management (see for cycle (materials management), if it
cruel failure of Operation Jubilee, instance Lambert et al. [1998]), but wants the total logistics system – or
which was attempted on the we want to stress that its military pipeline – to function correctly. But
beaches of Dieppe in March 1942. origins strongly influenced its is it possible to view this as a truly
To this effect, the Anglo-American development until the 1970s. radical departure when, for Magee
Joint Command assembled the During that time span, the main (1968), the issue remains the
organizational and logistical means questions continued to revolve optimum planning of logistical
necessary to anticipate and around the implementation of operations using increasingly
overcome the constraints of the constrained optimization methods sophisticated tools, such as
terrain. More recently, during to help in the dispatching of goods program evaluation and review
Operation Desert Storm in 1991, the from their origination points to techniques (PERT) and material
media referred frequently to the their destinations. One of the best requirement planning (MRP)? By
importance of the role played known examples of such a problem the time his book appeared, the
by logistics as an essential is the design of the delivery round world had grown more complex
complement to the firepower of the that minimizes the total distance and the markets where goods were
Allied armies in the successful covered as a function of the consumed had become larger and
outcome of the military operation. stores to be served in a given more distant, creating the need
What is more, the quality of geographical area. This is an for an even more effective
logistics improved dramatically example of the Traveling Salesman coordination of transport, production
during the 2003 Iraq war. In a Problem, simple to formulate but and warehousing activities. More
recent study for the Institute of which quickly becomes too difficult than ever before, logistics
Comparative Strategy, Richardot for any computer to solve when management experienced an urgent
(2002) also referred to the crucially the number of stores increases! need for managerial procedures
important role played today by the Logistics management was thus that would use mathematical
Combat Logistics Force (CLEF) in limited to the “one best way” in algorithms to bring about the best
the organization and efficiency of terms of product flows monitoring. solution at the right moment.
the US Navy. Therefore, the link
between logistics and the success This focus was justified, as markets In fact, even a few years later,
of military operations remains that were previously local and and despite its revolutionary
particularly strong; even if today it national became progressively contributions, the way Heskett
is widely acknowledged that global for multinational corporations, (1977) envisions logistics
logistics is also (and mainly?) a a fact which accentuated the management remains captive to the
part of management. We must problem of dispatching goods at same “product flows optimization”
remember, however, that the low cost and with high service paradigm. The economic landscape
application of logistics in quality. As well informed observers has changed since the beginning
manufacturing firms just after of logistics management will know, of the recession in the Western
World War II was a direct result of Magee (1968) made a significant countries, and in the particularly
what had been learned from step forward by introducing the difficult context of price competition,
Operation Overlord and the overall concept of logistical processes and firms must adjust their logistics (in
process of winning the war. The the three systems: the physical distribution system,
distances which had to be covered (1) the procurement system; the operating system and the
in the liberation of Europe obliged (2) the operating system; and procurement system) to adhere as
the formalization of re-supply and (3) the physical distribution system. closely as possible to the
transport processes, which were downstream demand in order to
recognized as being applicable to However, we believe that a reduce costs. Long before such
American firms needing to supply continuity exists between the reasoning became fashionable,
customers located hundreds or approaches of the American Heskett (1977) indirectly introduced
thousands of miles from the Marketing Association (1948) and the idea that efficiency depended
factories. of Magee (1968), as the analysis on a double paradigm: lean

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production and agility. From a procurement of materials in a could also quote the example of an
concrete standpoint, it is the actual network of first-tier and second-tier automotive manufacturer and its
sales, and no longer the sales providers; (2) the transformation of main suppliers deciding to
forecast, that must trigger the materials into semi-finished or implement a common “milk-round
operations of the supply of raw finished goods; and (3) the physical delivery system”: a collection of
materials, production, transport, distribution of the finished goods vehicles that visit suppliers in a
etc. Thus, Heskett (1977) implicitly to customers. The basic idea is predetermined and negotiated
conceptualized the just-in-time that these activities and operations order, at pre-agreed times during
(JIT) strategy, at the very same must be perfectly synchronized the night, from which there follows
time as it first began to be applied within the framework of supply a reduction of congestion at the
in Japan by Toyota! But while that chain management (SCM), so that assembly plant (Lamming, 1983).
vision was incontestably an customers can benefit from the
innovative one, it remained best possible service quality at the In hindsight, and while
centered on manufacturing firms, lowest possible cost. Stevens acknowledging the progress made
whose survival depended on the (1989) suggested the existence of in logistics management over the
optimization of their own logistics four steps leading to the emergence last fifteen years or so up until now
systems. A good JIT strategy will of genuine SCM: in 2003, it is clearly appears that
first induce a reduction in the stock ● Step 1 is distinguished by SCM does not represent a radical
levels of goods and materials, while complete functional independence departure. Of course, SCM
it may also be the case that stock in so far as each function emphasizes the importance of the
levels abruptly increase at the operates quite separately from indispensable collaboration
retailer or wholesaler locations. all the others, protected by between supply chain members in
“bricks” (stocks) allowing for an extended enterprise (Naccarato
Supply chain process differences between their et al., 2000), but the object of
integration operating rhythms. analysis still remains the product –
● In step 2, manufacturing firms and information – flows. On
Do the recent trends in logistical recognize the urgent need for a the other hand, thanks to
thinking challenge the orthodox minimum coordination between technological progress, and
vision in terms of flows related functions, e.g. marketing notably computer technologies
optimization? It is possible to and physical distribution, so as (from core hardware to software
answer “yes” and “no” at the same to eliminate a number of and algorithms, and more recently,
time. According to the majority of malfunctions. pervasive computing, which
authors (see, for example, ● Next, step 3 is there to improve considerably enhances reach and
Underhill [1996], and Mentzer et al. the process of coordination by communication), it is now much
[2000]), all of the firms involved in implementing the comprehensive easier to optimize under constraint
vertical exchange relationships planning of internal flows from than it was, for example, fifteen
insist on the importance of the new downstream to upstream, years ago, and this is where the
integrative dimension of the leading to: essential change resides. For
logistical processes: specifically, ● Step 4, when supply chain instance, a small and medium-sized
that in order to bring the right members finally become aware enterprise (SME) can now in real
product at the right time and at the that they are merely part of a time tackle certain optimization
right place to the consumer, it is whole. problems that would have been too
necessary to coordinate all of the complex for most large companies
logistical operations along the The virtue of this evolutionary in the 1980s. Thanks to these new
supply chain. Effective logistics approach is to highlight the fact technologies, the supply chain
management thus becomes the that SCM refers to a succession of members can adapt faster to all
means to generate a close and trade-offs (Lambert et al., 1998). sorts of environmental changes and
durable collaboration between Trade-offs occur within a firm (e.g., execute effective time-based
suppliers, manufacturers, retailers, between purchasing and materials strategies, where the object is to
and third party logistics (TPL) management, materials management conceive new products faster than
service providers, so that together and production, etc.). The purpose the competition and then to
they create value for the customer is to find overall solutions, which, manufacture and deliver them to
(Grey et al., 2003). However, we through intra and inter-organizational the customer more quickly and
must also admit that the aim of a collaboration, will avoid a waste with no mistakes. For over half a
supply chain process integration of resources and will increase century, logistics management has
remains to create value for the the profitability of supply chain thus proven its capacity to improve
shareholders, which in turn members. An interesting example the performance of manufacturing
requires enforcing product flows is that of convenience goods firms and, on a more global level, of
optimization. manufacturers, where large networks of firms, by relying on a
At a fundamental level, even if this retailers and TPL service providers logistical approach with a universal
vision is sometimes disputed, a work together to create the ambition. From this point of view,
supply chain corresponds to a packaging for a new product to might logistics management
set of operations supporting: (1) reduce logistical costs from the become the means to help resolve
the logistical activities of the factory to the store shelves. One managerial problems in areas far

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removed from product flows rather than just to “product flows” for the time being to providing two
optimization? with regard to what needed to be examples that will hopefully shown
analyzed and then optimized. This the broad community of people
The central thesis and is where the “yes” and “no” interested in all aspects of
a first example answers to the question of whether management an illustration of the
or not SCM has brought a radical sound basis for our ambitious
Clearly, the goal we have set to change to the field of logistics program. Our aim for now is to
ourselves is quite ambitious and management converge. If one represent certain classical problems
challenging, but the rewards could believes that the flows referring to as examples of logistics. A wide
be enormous for most of the products in pre-logistics management range of expertise may be needed
management sciences. The process are essential, then one has to to describe how to manage these
began with a strong hunch that consider SCM as a revolution. logistical problems by themselves,
logistics was extremely prevalent, Otherwise, it becomes more of a even before the grand unification
with possible examples to be found quantitative progress, where one across the board takes place. It may
in most of the sciences, from the optimizes over as many parameters be the case that the logistical
Principle of Least Action in physics, as the available technologies approach only brings qualitative
to the way a cell works in biology. permit and as far as the efforts of changes to certain problems. We
We will refrain from formulating our optimization provide returns that believe that this may still be quite
thesis on such general grounds and benefit the shareholders. valuable, and we will begin with the
instead, we will concentrate before field of advertising that may
hand on a formulation that focuses The point of view we have adopted provide one of the toughest challenges
on the management sciences. The and pushed to its limits as the basis to our thesis. We expect that if we
formulation we provide is still quite of our thesis is that to some extent, could stimulate even the possibility
brief but we expect that many the logistics management approach of a discussion about advertising as
people will join us in the coming can be omnipresent in the way one an example of logistics, it would
adventure, and will help us to tackles all sort of problems, from provide some justification for the
develop the fundamentals as well those found in the sciences to validity of our proposal.
as the applications of the ambitious those encountered in management.
program implicitly outlined in our Moreover, while restricting ourselves Before we get to the first example,
thesis. We have randomly picked a to the issues covered in this paper, we want to state our belief that it
discipline from within or close to we believe that most, if not all, of would be unfair to condemn our
the field of management that would the issues relating to decision support, approach just because a discipline
be as improbable a subject as organization, processes and indeed only permits a qualitative discourse,
possible to use, namely advertising, everything pertaining to the and for instance, only qualitative
which will be considered as the running of the manufacturing firm, optimization after being reinterpreted
very first example, albeit quite both as an individual entity and as as a form of logistics. In fact, even
superficially at this stage. However, part of a wider web of networks, in the most traditional applications
the reader may already see a can benefit from the language and of logistics management, to reduce
possible benefit of the logistical methods of logistics management. its impact to optimization in the
approach, such as the generation of In particular, we believe that the most mathematical and formal
a logistical language, a formulation transition to SCM was mostly due senses would be an important
of goals that would permeate all to the emergence of technologies mistake. Thinking about using
divisions of the manufacturing firm, permitting the processing of bigger empty trucks for new services on
and the provision of qualitative and bigger optimization problems
frameworks. We are among those and the collection of more and
2. This is the idea defended notably by
who believe that qualitative more information that could help in Williams (1986, 1990), where he indicates that
analysis is important when it is not the optimization process. But we when confronted with combinatorial problems
that are too complex, mathematical
done merely as a gesture. After all, intend to go much further and, in optimization fails because the computing
aren’t qualitative improvements what we think is a natural next power that would be needed is way beyond our
often far superior to quantitative conceptual step, we propose to reach, and in some cases will be forever so
(the computation would last many times the
ones? 2 tackle most other problems in life of the universe with the fastest machine
management as if they were that could ever be built). Mathematical
problems in logistics management. optimization must then give way to some form
Logistics everywhere : of heuristics (which may then possibly use
analysis and the thesis in mathematics). Williams (1986, 1990) illustrates
a nutshell Once the other aspects of the life of this point in the context of the Traveling
Salesman Problem already mentioned. We are
a firm, or of networks of firms, have indebted to John Tomlin for telling us about the
Having taken a vaguely reductionist been dealt with in this way, we work of Paul Williams after this paper was first
expect that a large scale integration circulated, and to Paul Williams for helping us
approach, which, loosely gain access to his work so quickly. Some of
speaking, condenses logistics to of the scope of logistics Paul Williams’ theses do indeed seem rather
the optimization of certain flows, management will take place, but we similar to ours, but he promotes a perspective
will refrain from making any of “optimization everywhere,” a point of
we had to alter our approach when view that now has many supporters, rather
passing from pre-SCM to SCM. attempt to do that here: the bricks than our position of “logistics management
Considering SCM forced us to refer must be made before a wall can be everywhere”, which might assume a smaller
“everywhere” but seems to not have been
to “product and information flows” built. In fact, we will limit ourselves explicitly advocated before.

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the return journey, or imagining new constitute the problem and for need metrics to even start viewing
shapes of parts to improve packaging the ways they are dealt with. One advertising as a case for
by allowing much better weight-to- should remember that in complex optimization.
volume ratios are just some logistical problems: those that are
examples of how qualitative inputs, not examples of simple linear Arriving at a point where metrics can
that are facilitated by formulating the optimization problems, substantial be used may be the hardest task each
right problems, can have dramatic changes in approach are sometimes time one wants to seriously apply
impacts. Therefore, the strategy necessary before one can proceed logistics management methods to a
which we propose to use in order to with any form of systematic new discipline. If performances of
show the benefits of our thesis in optimization. For instance, building a the whole system are the only
new disciplines is to map the very expensive new road may be the metrics that are easy to apply, then
principles of logistics management best solution in certain typical empirical trials are a possible means
as completely as possible to the new logistical problems. We leave the to derive benefit from the
discipline (or vice-versa), and in description of any novel advertising logistical/optimization approach. For
particular, to try to make an early solutions to the experts, but existing instance, the methods found in
identification of the quantities that practices such as advertising during experimental economics could be
need to be optimized and of the the Super Bowl or the World Series used, permitting the measurement of
constraints that are to be found. might be considered as the the performances of logistics
advertising equivalent of that sort of management methods in a new
Advertising as an example expensive road building. We will discipline. Then, the correlation of
of logistics devote the next few lines to these measurements to accepted
examining whether one can identify signs of success could be evaluated.
In order to represent advertising as a constraints and objective functions However, there might be cases, with
logistics problem, one needs to think which would permit a more effective advertising being possibly one of
of: (1) the message as the equivalent mapping of advertising to the them, where one should not be too
of the product to be transported; (2) logistics framework. Essentially, we ambitious to begin with, and instead
the minds of the people who are the have shown so far that the parallels be content with using a logistical
potential customers as the points of exist, but to little commercial or even perspective to help teach and
delivery (e.g., for certain products conceptual advantage. Further otherwise communicate about
consideration reveals that we may certain fields of human thought or
Conjecture: A fundamental activity, (although Remark 1, below,
reinterpretation of a problem as is much more optimistic). We may
Remark 1: As mentioned
a logistical issue should often also find that in cases where tasks
previously, we have learned of
necessitate a rethinking of are accomplished instinctively, but
work that uses optimization
its definition in order to map the where hard decisions also have to be
techniques to improve the
discipline in question to a made at times, the language of
distribution of advertisements on
framework of logistics logistics might allow experts and
the World Wide Web (see, for
management. Such attention professionals to better formulate
instance, Langheinrich et al. their responses to the questions
devoted to the mapping of the
[1999], and Tomlin [2000]). John which confront them. It also seems
problem would improve the
Forrest told us that he was involved reasonable to expect that unifying
benefits of the logistical
in trying to use optimization the language will help communication
approach.
techniques to distribute advertising within the firm as well as between
for which a recognition is sought in the UK as early as 1967. firms.
beyond the existing customer base), Magazines were the vehicles used
and (3) the advertising media as the for the advertisements in question, From knowledge management
vehicles of transportation. Of course, but the results were unsatisfactory, to logistics
it may be appropriate to distinguish probably because of the limited
between the message that was power of the computers available Knowledge management (or KM), as
intended and the message that was it is known, at least in the circles of
at that time. This work was not
received. This is good news for us! In information technology (IT), where
preceded by a full reformulation of
fact, we interpret this example of everything of any importance is
the advertising problem in terms of
discovering a natural distinction referred to by an acronym, is an
logistics management, but it interesting field. Facilitating access
between messages as being an
certainly helps support the idea to knowledge when it is needed
instance of a phenomenon that we
expect to encounter quite often. that our proposed approach most for the good of the firm or to
In the case at hand, thanks to such a probably has a direct commercial benefit humankind, or even more
rethinking, the intended message value in addition to its ambitiously, to help generate the
becomes the product to be delivered, philosophical implications and to knowledge needed to solve
while the slogans, trademarks, etc., the way it may facilitate previously unsolvable problems
become the package. This may have communication inside the firm and sounds like an impossible dream.
implications regarding the relative between firms. Who would not want the
importance of the elements which management of knowledge to work

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better? KM’s place in the toolkit of and knowledge. Then, in the third groups may also have divergent
the trend setting executive probably paragraph the logistics approach is interests, some supporting the
disappeared in 2001, after enjoying a explicitly invoked, although we group’s goals and some quite
period of tremendous popularity. consider that the approach has independent of them. There may
This followed the publication of two already been beneficial in the way be neutral entities, and groups or
books in 1995 whose titles signaled the logistical perspective conditions individual whose position is well
the initial hopes for the success of the whole problem (see Remark 5 established but unknown to some
the new field: The knowledge-creating below, in particular). or all of the other parties. Groups
company (Nonaka and Takeuchi, usually come with explicit
1995), and Wellsprings of knowledge Fundamental concepts structures that are partly or
(Leonard, 1995). completely hierarchical, although
The basic objectives of KM first need sometimes these may be hidden.
A snapshot of how the field evolved to be defined. The list can be ● Cultural models. These include
can be seen in the reprinted extended, but it has to contain the political trends, opinions, public or
collection of some major following three elements, to which secret agendas, etc., which directly
management articles on the subject we will restrict our analysis: data, condition the ways of thinking and
of KM (Harvard Business Review, information, and knowledge. Indeed,
1998), starting with an early article several authors also recognize that Remark 2: Already, the reader
by Drucker (1988). The author some classification of these three will probably detect some effects
claimed that within twenty years, the basic elements is a necessary of logistical thinking in the above
typical (large) business would prerequisite to any serious list of basic concepts: a reflection
be knowledge-based. Contemporary discussion. Our approach is to of the desire to describe the
with that review, let us also mention consider that these three elements problem in terms that facilitate its
the monograph Working knowledge are not fundamentals, but refer to mapping to the framework of
(Davenport and Prusak, 1998). Most some real – or also perhaps to some logistics.
contributors to the KM literature virtual or imaginary universe. We
were also the people who benefited also consider that these elements
most directly from KM, e.g., through depend on who attempts to describe, the actions of both the sending and
conferences, consulting, or teaching. understand, exploit, improve, or in receiving parties.
● Messages sent and received. It is the
This may explain why, during its few general transform such a universe,
years of intense success, KM and for what reasons. The underlying communication between parties
depended, not only, as was often that allows them to develop their
rationale for this is that we are
interests in a particular direction.
stated, on cultural factors, but also not only interested in the world
Messages should also be
on the models for national politics of business, but also in
distinguished according to their
and economics, the attitudes of Wall interdisciplinary issues (even if we
formal contents, intended contents
Street, on whether long term success are not considering the physical and
and perceived contents.
was expected from the firm, on natural sciences in this paper). The
● Scales. This refers to the scales,
whether or not the firms that paid importance of data, information and
precision levels, and/or granularity
most for KM consulting had a knowledge is not restricted to the
at which one expects to
strategy which looked beyond the business world and we want to
understand a problem.
end-of-quarter bottom line, the comprehend their wider significance.
morality in corporate board rooms Here are the elements we consider Revisiting data, information
and more factors of this kind, which necessary to define the basic and knowledge
were mostly hidden from view. concepts that need to be governed
by KM: At this early and fundamental stage
At least one other element that ● World elements. These comprise
of the logistical approach to KM, we
would have helped cement the place objects (including living entities feel that from the above list, the
of KM has been ignored: namely, an and people), or at least the world elements and scales are the
effective and authentic form of objective aspect of them, which in crucial dimensions on which to base
artificial intelligence (AI). As we will some cases may be all that is the analysis. This explains why we
see, this more than anything else accessible or necessary. Also place so much emphasis on the pair
explains KM’s fall from grace (while included are entities that allow a WeS (World element, Scale). A strong
less ambitious sub-disciplines such spatial description: (1) reports or indication of its importance is the
as unstructured data analysis began stories that need space-time fact that we believe it allowed us to
to flourish). A logistical approach descriptions, with a specific time arrive independently and quickly at
leads us to rethink what should be span, (2) events or records of concepts central to KM, while
the fundamental concepts of KM, as events which are essentially bringing to light ideas which may go
we shall describe in the first instantaneous, and (3) a mixture of beyond what has been done before.
paragraph. In the second paragraph, the above, which might be needed
in terms of what we consider to be to describe a personality, for The data set attached to a WeS is the
fundamental concepts, we shall re- example. collection of everything that is
examine the usual building bricks of ● People and groups. Groups have required to provide a full
the KM discourse: data, information, concurrent interests, but people in

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description of the world element in veterinarian, etc., and the list is ● AK is knowledge that can help
question at a given scale. A data probably far from complete! decide, act on or generate new
element, data point, unit of data, or, Information has several meanings knowledge.
sometimes-just data, is an atom of that should be clearly differentiated.
description. For instance, a stock Firstly, it is possible to analyze it as The three concepts of data,
name, a time and a price –say a collection of data intended information, and knowledge as we
$102.23 of the Alpha stock at that (by those who select and/or have developed them so far are
time– forms a data set, in fact a data considered in a different way to the
set of a special kind, as it fully Remark 5: According to orthodox KM approach. Remember
defines a WeS. In this example, the Davenport and Prusak (1998:2), that we have taken the statement of
price ($102.23) is a data point. the remark that “information is Drucker (1988) to be a lemma,
However, the digit zero is not data, data endowed with relevance instead of a definition, which is a
while the collection (0, third digit in and purpose” can be traced at strong argument in favor of our
decimal notation) is data, of limited least as far back as the paper by approach. The following dichotomy
value, which is contained in the Drucker (Harvard Business between tacit and explicit
price. Review, 1998) that we have knowledge is, on the other hand,
A more ordinary data set, as it is pretty much central to the
mentioned previously. We fully
different form the WeS, is attached development of KM in the 1990s.
agree with Drucker’s statement
to a bottle of milk at a macroscopic The notions of tacit knowledge
(1988). However we consider it
scale. This data set comprises a versus explicit knowledge were
bottle’s shape, the volume it to be a lemma, instead of a introduced by Polanyi (1983) in the
contains, the volume it is supposed definition, as we think it fits in 1960s, and used by Nonaka (1991)
to contain, its condition and logically with the definitions of and Nonaka and Takeuchi (1994,
cleanliness, whether or not the data and information we have 1995) to formulate a theory of
closing device is intact, the provided. organizational learning around
production date and the expiry the theme of the conversion of
communicate it) to provide usually knowledge between these two
Remark 3: No one will partial, but sometimes full, forms. To us, these notions appear
probably ever need, nor ever knowledge about a WeS. Therein more obscure than but essentially
be able to determine the data lies a strong cultural dependence. parallel to AK and PK, although this
set of any WeS except for One can also see it as a collection of may not be the case for KM experts
simple ones such as those data that is thought (by those who who have worked with them for a
receive and/or use it) to provide long time.
given in the first example.
some, again usually partial, but
sometimes full, knowledge of a WeS; Calling logistics to the rescue
date. To this, one could add any and therein also resides a strong
description of the product (e.g., is it cultural dependence. In addition, We want to demonstrate that the
regular or low fat?), the quantities information is presented primarily logistical perspective helps gives
of nutrients, the nutrients listed on in the form of a message, or more KM some structure, and that this
the bottle, the region of provenance generally, in the form of a vehicle to point of view gives a clear
of the particular batch of milk in store or communicate knowledge indication as to why KM failed (or
question, the findings of the about a WeS. at least has failed so far). What we
veterinary examination of the Finally, when it becomes knowledge, really hope for is to help breathe
cows, an assessment of the information can be split into two new life into KM (whether or not its
veterinarian’s competence and of types, passive knowledge (PK) and name remains the same), as we
the competence of the person active knowledge (AK), a division believe (and everyone agrees) that
responsible for evaluating the that could be the first of further or the management of knowledge will
veterinarian, the historical basis for concomitant dichotomies as we will be essential in years to come, be it
trusting the judgment of the soon discuss: only because so many firms
accumulate massive quantities of
Remark 4: Receiving any ● The PK of an individual or of a data and information, often
information changes the degree group is the set of data and accompanied by massive quantities
of knowledge about a WeS, information that can be used by of knowledge. It is clear that those
possibly to the extent of this individual or group. Some of who are the most able to make use
revealing the previously it may be inaccessible to anyone, of some of these commodities will
unsuspected existence of that so long as its existence is known have a decisive advantage. So we
WeS, or of any type of that and provided it can be retrieved first need first to ask the
particular WeS. Information can when needed; fundamental question “What is
also change comprehension, ● Implicit PK is the knowledge that what?” in order to map standard
and further high functions of the could be generated from a given logistics to KM. Such a mapping
data and information set. This exercise should be a basic
brain, but we will make every
knowledge may be arrived at requirement for any new incursion
effort to avoid discussing such
very easily or possibly only after of logistics into the intellectual
matters here. very detailed analysis; world, and it will often be

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necessary to repeat the exercise, ● Does it operate in an environment data, information, and passive
sometimes frequently, when trying to of harsh, unadulterated capitalism, and/or explicit knowledge. In doing
intensify the logistical approach. As or in a more socially oriented so, the KM gurus have set impossibly
well as understanding the logistical environment? high expectations by prompting
equivalents in the KM field, it will ● Is the company only interested in people to expect much more from
also be necessary to do this for each the end-of-quarter bottom line? If the field than is realistically
new field. Here are some elements of not, what are the firm’s other achievable, given current constraints
the mapping: priorities? and limitations. This issue, which
● The goods: the data, the ● Are the long-term aims established stands as an obstacle to the success
information, and more generally only for the sake of credibility and of KM, is of course related to an issue
any element pertaining to to defend short-term stock price, mentioned previously, namely, the
knowledge (some have expiration or is there a genuine long-term lack of an explicit description of the
dates, others long-shelf lives); strategy?3 objectives of the companies
involved.5
Remark 6: Some firms (e.g., Depending on a combination of
technology companies) create choices and constraints, an obvious We believe that no serious
knowledge as value per se, others quantity to be optimized could be improvement can be made in the
create knowledge mostly as a something like the profit, the most significant aspects of KM before
means to improve the production efficiency, or the long-term averaged major progress is seen in the field of
of what the company manufactures profit of the company. However, a AI. This statement, in fact, seems
thorough consideration of the large- almost superfluous, as it is
or sells (e.g., know-how, work
scale components of the objectives is knowledge handling, and therefore
methods, controls, workflows,
not enough to help, or to justify the something similar in nature to
etc.). existence of KM: the personal intelligence that we are talking about.
● The shelves: the heads of objective functions of people in the However, before AI makes real
personnel, at various levels in the firm have to also be taken into progress, advances in KM can be
organization’s hierarchy; account. In fact, not everyone may achieved by lowering expectations,
● Other shelves (for goods with long
want all knowledge to circulate and this is happening right now
shelf-lives): the vehicles for the freely, especially if freely also means (often using dilute forms of AI such
transmission of knowledge, i.e., for free (i.e., free from benefits to the as automated text analysis to their
items that contain it; sources of knowledge). Let us now maximum effect given current
● The packages: the form in which
mention a fact that is worthy of capabilities. Another example is that
data, information, and knowledge consideration: everyone is happy to many tools have been developed that
will be stored, retrieved, and shared receive knowledge, if they are not allow the employee to find out useful
or used in some form or another; obliged to prove how that knowledge information about their own firm and
● The transport vectors: the various
was acquired. However, being a free about global issues (mostly using the
means to transport or transfer source of knowledge may be Internet). Most of this progress on
knowledge, from lectures to dangerous, besides being potentially the effective management of
videotapes and training, etc. painful and unrewarding. It will be knowledge is not made under the
Next, we shall look at the essential to figure out the right umbrella of KM.
optimization problem(s) that may metrics, rewards, related incentives
occur with the elements that are the and deterrence systems in order for The packaging of information has
equivalents of traditional logistical things to evolve properly.4 So we indeed begun to happen using
entities according to the mapping. believe that the merely thinking in technologies such as the extended
Then, if not sooner, we must terms of “logistics management” markup language (XML), and we
consider the objectives of the would bring considerable expect that the combination of XML
companies involved, the nature of improvements to the design of KM and modern search engines,
these companies, the economic strategies. combining basic search,
system to be used, etc. Some categorization and prioritization
What KM seems to have most
questions arise simply as a result of functions and substitutes with
seriously failed to fully acknowledge
trying to discover the company’s
is that the movement or transfer of
objectives – as in any logistical
some forms of knowledge, especially
problem; for instance: 3. One expects affordability to be a necessary
of the tacit or active kinds, either condition for the firm to seriously consider long
● Is the firm only working for the
from brain to brain, or from brain to term investments, but it should not be the sole
shareholders; is it a family factor.
machine (to brain), may range from
business built to last a few
difficult to impossible given current 4. This has certainly been understood by some,
generations or something in
capabilities and constraints. It also although it is, to say the least, often very well
between? hidden in the KM literature.
may be too costly (and cost becomes
● Are there any ambitious goals, or is
a more obvious issue when one deals 5. For instance, the more the firm cares only
there a non-financial/non-economic
explicitly with optimization issues). about its shareholders, the more it considers its
agenda that also needs to be part employees as commodities, and the more
Too much of the KM literature has anxious it is to extract tacit knowledge from
of the objective function design?
very strongly advocated that there is these employees, then the difficulty in
much more to knowledge than just managing this aspect of knowledge becomes
greater.

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semantics, could now permit the dared to propose so far. It offers a
efficient mapping of the way of thinking that, in terms of
management of routine but logistical language, vision and
essential knowledge to logistics. methods will allow us to
Examples of such knowledge could comprehend and solve managerial
be the identities of account problems that may be quite far
holders, how the damages on cars removed from the traditional field
rented for business are covered, of logistics management.
who in the company is qualified to
speak about a particular aspect of The position developed here might
strategy, etc. The basic have been operationally
classification of knowledge that we unworkable until a few years ago
have proposed, and the concept of before the computing revolution
WeS in particular, will help in this began, but it is hard to believe that
process. With the passing of time, it will not bear fruit in a world
AI or related concepts will continue where the handling of information
to develop, allowing, for instance, has evolved and improved to such
the better handling of unstructured an extent. Hopefully, the rigid
information.6 These improvements treelike organizations will be
allow complex mappings from rearranged into more reasonable
logistics management to KM to be and supple structures –or into
performed. It is also clear that the frameworks lacking rigid
issues in information handling have structures– using modern
already become so complex that communication methods to more
optimization of this handling has effectively perform the roles of
begun to help, and in fact is now communicating information,
vital. The issues we have knowledge, commands, and
expounded in this discourse have feelings. To some extent, logistics
certainly started being used may help to redesign the very
implicitly, as the recent progress in organization of the firm, if one
military logistics cannot be follows the practical implications of
explained in any other way. This our thesis. Of course, one does not
brings us back full circle to where it need to believe that “logistics is
all started from. everywhere” in order to hope for
this to happen (see, for instance
Conclusion Evans and Wurster [2000]), but we
do believe that this point of view
For about twenty years, logistics will help those involved by allowing
management has undergone them to consider from a fresh
important developments, both in perspective the challenges they
manufacturing and retailing firms. face today and will face in the
At the same time, it has benefited future.
from a universally acknowledged
academic recognition, as We cannot end without mentioning
corroborated by the proliferation of that the Integrated Supply Chain
international conferences and Management (ISCM) that IBM has
specialized journals. Europe has, in adopted, with earnings of $5 billion
part, caught up with the USA, in in the first year of implementation,
particular through the goes a long way beyond SCM, even
development of organizational if it still falls short of the ultra-
innovations regarding products and global vision of “logistics
information flows management. everywhere” that we advocate
Today, the leading logistical here. The new view of logistics that
strategies seem to be universalistic ISCM represents is now well
in nature and some authors are not accepted, assuming, in short, that
afraid to assert that there is logistics is almost everywhere and
undoubtedly “one best way” to in any event, is much more
develop a sustainable competitive important than ever before. After
advantage. Somewhat provocatively, sharing its experience with its
this paper is aimed at showing that major customers, IBM is already
6. Some observers argue that anything that
logistics management is even proposing a properly scaled-down resembles AI is AI, so that, for instance, speech
broader in its application than version of ISCM to SMEs under the recognition is AI. Although we have taken the
opposite point of view merely for the sake of
most, if not all, observers have name of Integrated Supply Chain clarity, we will not enter into this debate, whose
Solution. outcome has no impact on our thesis.

Supply Chain Forum An International Journal Vol. 4 - N°1 - 2003 45 www.supplychain-forum.com


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