CHAPTER 18 Measuring and Selling the Value of Logistics

18-2 a
Government (political and legal environment) New product Inadequate performance Possible target markets (market grid) Possible target markets (market grid)

Evaluation of consumer Company strengths and weaknesses Possible target markets (market grid) Evaluation of target market(s) Selection of target market(s) Formulate supply chain objectives and strategy Determine supply chain structure alternatives and evaluate Select supply chain structure Formulate a strategic logistics plan Program other marketing Mix components Corporate objectives and strategy Marketing objectives and strategy

A

Distortion Manager’s perceptual screen Motivation Perception Learning Personal Background -specialized education -role orientation -lifestyle

Product Competitive Price Promotion Place

Social and economic

Evaluative criteria

Figure 18-1
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18-3 18-2 b
Generate alternatives re specific supply chain members

B

Evaluate/select individual supply chain members Measure and evaluate performance Yes

D
Yes

Satisfactory?

No
Can performance be improved?

C

No
Is supply chain structure change required?

No

Yes Yes
Will a change in supply chain structure suffice?

No Technological
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Figure 18-1 cont.
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Components of the Strategic Logistics Plan
1. Management overview 2. Statement of the logistics objectives 3. Description of the individual customer service, inventory, warehousing, order processing and transportation strategies 4. Outline of the major logistics program or operational plans 5. Forecast 6. Logistics financial statement 7. Description of the business impact of the logistics strategy
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18-4 18-3

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Four Categories of Variables Must Be Identified
1. 2. 3. 4. Customer service effectiveness Logistics efficiency Utilization of assets Competitive practices

18-5 18-4

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Making Logistics Decisions
Strategic
•Corporate objectives and strategy •Marketing objectives and strategy •Supply chain objectives and strategy •Customer service requirements •Make/buy •Number/location/size of facilities •Transport modes •Degree of automation •Facility layout/design •Organization •Supplier/customer linkage •Site selection •Inventory deployment •Carrier/vendor selection •Systems capabilities •Roles and responsibilities •Operating policies •Operating control rules •Operating procedures •Routing and scheduling

18-6 18-5

Structural

Functional

Logistics decisions are generally made hierarchically, but in iterative manner.

Operational
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Logistics Strategy Integrates Eight Key Areas
Customer service Channel design Network strategy

18-7 18-6

Warehouse design and operations

Transportation management

Materials management

Information technology

Organization and change management

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Corresponding Questions Representing Each of the Key Areas

18-8 18-7 aa

1. What are the service requirements for each customer segment? 2. How can operational integration be achieved among the various supply chain members? 3. What is the supply chain structure that best minimizes costs and provides competitive levels of service? 4. What materials handling/storage technologies will facilitate attaining the service objectives with optimum levels of investment in facilities and equipment?
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Corresponding Questions Representing Each of the Key Areas (cont.)
18-9 18-7 bb

1. Are there opportunities to reduce transportation costs in both the short run and the long run? 2. Can current inventory management procedures support more stringent service demands? 3. What information technology is required to gain maximum efficiency in logistics operations? 4. How should resources be organized to best achieve service and operating objectives?

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