Contents: Logistics and Control Introduction What is Logistics? What world-class producers do: Control Systems. The Role of Planning in Logistics: A Systems Perspective. Logistics and The Value Chain. Logistics Competency Managing Strategic Lead Times Cycle Capability JIT Logistics Strategy Supply Chain Relationships Supply Chain Management & Competitive Success Material Logistics Management Logistics in a Global Economy Logistics and a Global Competitive Strategy International Supply Chain Management Logistics in a European Context Logistics Administration & the Dimensions of Change Benchmarking the Supply Chain Managing the Supply Chain of the Future The Role of Information in the Supply Chain

Introduction: Welcome to this course in logistics management. This workbook is intended to assist you develop an appreciation of the subject and will outline all the material required for this module. The workbook will include a number of case studies as well as various exercises to help develop your understanding of the subject in a practical context. Aim of the Module This module will give an outline of logisitcs in an international context. On completing the module you will have developed an integrated knowledge of the subject and have an understanding of the various theoretical approaches to the subject. In addition you will have had some experience of applying the theory in practical situations through the medium of case study analysis. Objectives: To provide students with an appreciation of the role of logistics and supply chain management in the international commercial world. To evaluate and discuss the role of logistics in global competition and the importance of effective supply chain management in developing and sustaining competitive advantage. On completion of this module students will be able to:

• Appreciate the principles of control and complexity and their relationship to effective supply management.

• Apply the principles of control and a systems perspective to assist the evaluation of

logistical problems.

• Explain the work of logistics in an international context and understand the forces driving an increasingly borderless world as well as barriers to global logistics.

Contents: Logistics and Control. Understanding the basic principles of control and the problems associated with the control of human systems. Developing approaches to the design and evaluation of control systems. The law of requisite variety. Logistics Competency. The logistical mission; service, total cost. The logistical renaissance; regulatory change, the information revolution, quality initiatives.

Supply Chain Relationships. Channel Structure, the Value Chain and channel relationships, supply chain competitiveness. Logistical service alliances and factors affecting service based alliances. Integrated logistics service providers. Logistics in a Global Economy. Forces driving the borderless world, barriers to global logistics, importing and exporting. The interlinked global economy; the stages of regional integration. Logistics Administration and the Dimensions of Change: Performance measurement; benchmarking; balanced scorecard. A view towards the next decade in international logistics and challenges to effective logistics in a global economy. The state of the global logistics infrastructure. Indicative Reading: Bowersox, D. J. & Closs, D. J., (1998), “Logistical Management; The Integrated Supply Chain Process”, McGraw-Hill, New York. Christopher, M., (1995), “Logistics. The Strategic Issues”, Chapman Hall, London. Christopher, M., (1998), “Logistics and Supply Chain Management. Strategies for Reducing Cost and Improving Service”, Financial Times Pitman Publishing, London. Taylor, D. (1997),“Global Cases in Logistics and Supply Chain Management”, Thomson International Business Press, London. Assessment Requirements: Class Test (30 % of total grade) Investigative management Report (70 % of total grade) Teaching & Learning Modes: The delivery philosophy will be to maximise opportunities for interaction and participation, through the use of case studies simulations, participation and discussion. These will be used as a vehicle to give students the opportunity to demonstrate understanding of key issues through mini presentations and informal group discussions. Students will be given assignments and will be expected to research and report back on findings and understanding of issues raised. This work will be carried out on both an individual and group basis.

What is Logistics? "Having the right thing, at the right place, at the right time." “Logistics is the process of strategically managing the procurement, movement and storage of materials, parts and finishing inventory (and the related flows of information) through the organisation and its marketing channel in such a way that current & future profitability are maximised through the cost-effective fulfilment of orders.” . (Christopher, M. 1998). Logistics and Supply Chain Management are inextricably linked and broadly speaking logistics applies inside the organisation and supply chain management outside the organisation Supply Chain Management: “The management of upstream and downstream relationships with suppliers & customers to deliver superior customer value at less cost to the supply chain as a whole.” (Christopher, M. 1998). “A network of connected & interdependent organisations mutually & cooperatively working together to control, manage and improve the flow of materials and information from suppliers to end users.” (Aitken, J., 1998) Logistics has been recognised throughout history as being of critical importance. You will not find it difficult to prove that battles, campaigns, and even wars have been won or lost primarily because of logistics. - General Dwight D. Eisenhower. “The supreme excellence is not to win a hundred victories. The supreme excellence is to subdue the armies of your enemies without even having to fight them.” - Sun Tzu, The Art of War. “Logistics comprises the means and arrangements which work out the plans of strategy and tactics. Strategy decides where to act; logistics brings the troops to this point.” - General Antoine Henri Jomini, Precis de l'Art de la Guerre (The Art of War), 1838

What world-class producers do: World-class producers see supply chain management as a key element in capturing increased shares of world markets. They have given the executives in charge expanded and new responsibilities. These supply chain managers plan and control all the activities related to materials that move from suppliers, through the production processes, and to customers. The authority for the materials system residing in a single organizational function provides focus and avoids the former situation in which everyone blamed everyone else when difficulties related to materials developed. Whether or not world-class producers centralize materials management, the way that materials are managed has changed.

World-class producers are forming partnerships with suppliers to quickly produce products of near-perfect quality precisely when needed and with little inventory. Providing suppliers with information about when customer orders are needed and training them in quality control and manufacturing techniques are becoming more common. Suppliers are selected and developed with a long-term view toward improving product quality, fast deliveries, and responsiveness to customers' needs. Although price is important, being able to deliver enough materials when needed, producing materials of exceptional quality, and being trustworthy and cooperative are even more important. Long-term, multiyear contracts are used to guarantee suppliers security and to provide incentives for developing trust and cooperation.

Nearby suppliers are preferred. Even if suppliers are located at great distances, they are often clustered together for combined shipments or are able to devise other innovative ways to deliver materials on a just-in-time (JIT) basis. This may take some imagination because of great geographic distances, but the payoff is found in shorter and more dependable lead times and in reduced inventories. All the materials in the system are geared to be produced and arrive just when needed by production so that products can be delivered just when needed by customers. Company-owned shipping equipment tends to be preferred because of greater dependability, which leads to more certain lead times. Suppliers are even encouraged to extend JIT methods to their suppliers. World-class producers use computers extensively to determine the most efficient routes for trucks, to find the best way to load and unload trucks, and to provide close communications between drivers and central offices. This use of computers not only holds down costs, but, of at least equal importance, it enables management to know where each order in the entire system is and when it is expected to arrive at its destination. World-class companies use computer models to develop shipping plans for manufacturing and service operations. Of particular value is linear programming. With this technique, developing shipping plans that require the least amount of travel can minimize shipping costs between many sources and many destinations.

Increasingly, some world-class producers are starting to rely on third-party logistics management firms as they outsource some of their business functions to become more focused on their core competencies. The main theme of this workbook and the lectures will be to discuss and evaluate the role of logistics in developing and sustaining competitive advantage. Finding and developing competitive advantage is a matter of survival for every competitive organisation. Increasingly, public sector organisations are subject to competitive pressures and have to demonstrate how they add value for their stakeholders and for this reason the study of logistics is likely to continue to grow in importance.

Control Systems. In order to develop a solid understanding of Logistics Management in an organisational context, it is important that we investigate the concept of control, which is one of the important underlying principles on which the subject is based.

Definitions:

Control: There are numerous different definitions, many with emotional connotations; e.g. dominate, command, exert control over, etc. Cybernetics: The science of systems of control and communications in animals and machines. Law of Requisite Variety: The complexity and speed of responses from the control system must match the complexity and speed of the changes to which it must respond.

A simple Control System:

DesiredTemperature

Actual -desired

Applianceswitched on

Appliance switched off

ActualTemperature

+Temperature

-Temperature

Figure 1

Study the above diagram and consider the requirements for effective control. In a temperature control system we might expect to produce a system that will regulate the temperature in a room with a high degree of success, and reasonably result in a situation of near perfect control as illustrated in Figure 2.

Standard CorrectiveAction

PerformanceIn balance

perfect control?

Figure 2

Organisational control.

Preoccupation with management control sets organisations apart from other forms of social arrangements.

Economically necessary:

Control: No control:

Efficiency, effectiveness, best use of resources.

Wasted resources & inefficiency.

Psychologically necessary:

• Stable & predictable conditions. • Psychological well being of individuals. • Maximum work performance.

Control can also be a political process: • Powerful individuals dominate others. • Decisions are taken by managers, no interference, particularly from subordinates. • A means of perpetuating inequalities of power & other resources within an

organisation.

Techniques for Organisational Control.

Use of Job Descriptions:

• Establish & prescribe communication flows, who reports to whom. • Location of decision-making responsibility. • Position in the organisational hierarchy.

Control through recruitment & training:

• What criteria are used in selection? • Attitudes & values taken into consideration as well as skills.

Control through expert power: • Appeal to people's professional commitment. • People achieve performance level because it is the right thing.

Control through reward & punishment:

Extrinsic rewards: • Pay, company car, free meals. Intrinsic rewards: • Satisfying work, responsibility, and autonomy. • Employee’s behaviour controlled by offers to provide or withdraw these rewards. • Psychology suggests punishment or threat of punishment is not an effective means

of controlling behaviour.

Control through policies & rules: • Rules for behaviour & levels of performance. Control through budgets: • Individuals & sections given financial targets.

Effective control: • Controls must be set according to the nature of the job. • Deviations should be reported immediately. • Controls must conform to the pattern of the organisation. • If the organisational structure is clear & responsibility well defined it is simpler to

isolate responsibility. • Controls should highlight exceptions. • Highlighting exceptions to the standard is often more effective. • Great care must be taken in setting the standard. • Controls should be flexible & economical in operation. • Controls should be simple to understand & where possible indicate corrective

action.

From an organisational performance perspective it is important to recognise the possibility of both too much and too little control:

Over Control: • Limiting individual autonomy so that it seriously inhibits effective performance.

Under Control: • Too much autonomy to such an extent the organisation loses direction.

Activity 1: 1. Complete the blank control flow chart so that it outlines the basic steps required for the

control of a business's inventory level. (You might like to refer to the earlier diagram for a simple control system to refresh your memory.)

Feedback: Activity 1: You might have come up with a variety of actions to do with control of business profit. An example is shown to the left. You can see that control in a business process uses exactly the same logic as the control of an engineering process.

Inventorytargets

Actual -desired- + Corrective

action, e.g. Reduce order quantity

Actualinventory

Inventory levelincreases

Reduced inventory level

Correctiveaction, e.g. Increase order quantity

Activity 2: Think about the steps of the control process you have outlined. What could go wrong?

Feedback: Activity 2: There are plenty of things that can and do go wrong with control systems. Many businesses have failed because of over trading, in other words sales exceed the business's ability to fund them and the firm runs out of cash. This could occur because of problems in the control system itself, for example because of failure to measure accurately or often enough, or because the corrective action in terms of increased sales effort is too great. Obviously the opposite could occur with too little effort put into sales. In reality the system will often oscillate from one side to the other. So long as the oscillations are not too great the business can continue to be successful. The trick is to make sure that the control system is sensitive enough to achieve the desired result for the least effort. Much of day-to-day management is concerned with getting this balance right. Having completed the last exercise you should have a good idea of how managers might use the basic principles of control. When it comes to applying control to human beings there may be some devastating side effects from misapplication of control. Consider the case of Henry Ford's attempt to maintain control of decision making during the early years of the Ford Motor Company.

Activity 3: Read the information below with regard to Henry Ford’s approach to management control. In terms of the basic principles of control outlined in this section what went wrong?

Henry Ford’s Attempt To Do Without Managers: The Ford Motor Company is well known for its early moves towards mass production. What is less well known is that it went from unparalleled success to virtual collapse. In a period of 15 years Ford’s market share had gone from 66% to 20%. The US government seriously considered nationalising the company to avoid serious damage to the US’s economy and strategic position. Henry Ford had a “secret police” (headed by Harry Burnett) whose main function was to report back to him if any of his executives tried to make a decision. Any executive found guilty was immediately fired. Harry Burnett rose to a position of almost supreme power, but was widely recognised to be incapable of making any decisions and to be totally under the influence of Henry Ford. Henry Ford's character, even in the early days, showed through. He would, for example, insist that first line supervisors were demoted every few years to prevent them from “becoming uppity”. Henry Ford wanted technicians and he sought after and paid them well. However he saw management as the personal prerogative of the owner. He wanted executives to be his personal assistants and to only do what he directed. Ford’s fear of conspiracy was one of his main driving forces. Just as in his early career he decided not to share ownership with anyone, later he decided not to share management with any one. The early Bolshevik’s were fervent admirers of Ford, as his ideas seem to make possible the idea of industrialisation without management.

Feedback: In order to be able to control any process, measurability is an absolute necessity. Consider the question of managers making decisions outside the remit of their authority. How easily might this idea be measured? It is often very difficult to quantify factors such as this, which tend to be very subjective in nature. Imposing control or attempting to impose control on factors, which are difficult to measure, is unlikely to be successful. The process of control requires a logical process of measurement followed by comparison, which is in turn followed by corrective action. If you can't measure both the standard and the performance, the control process is futile and any corrective action taken can only be arbitrary and just as likely to make performance move further away from the standard as towards it. Henry Ford's managers must have been very frightened and confused people, never knowing when Burnett might target them. The other major factor that Ford failed to consider was human nature. When people are unfairly treated they tend to seek retribution. This retribution can take many forms from direct sabotage to simply minimising the effort they put into their job, whilst still attending work and collecting a wage. When you consider all the ways in which people in an organisation can take revenge on the organisation there are plenty of opportunities, all difficult to measure and control. Perhaps this was a significant contributory factor in Ford's decline during this period.

The Role of Planning in Logistics: Having developed an understanding of the basic principles of control and some of the problems associated with controlling things in a management situation we will now turn our attention to another control process, namely planning. Many of the issues raised by a study of Logistics and Supply Chain management will require a sound understanding of the planning process. Principles of Planning

Involves decisions making. Four steps: 1. GOALS:

What are you trying to achieve? What are your priorities?

2. ANALYSIS OF PROGRESS:

How far are you from reaching your goals? What resources do you have available?

3. ANALYSIS OF AIDS & HINDRANCES:

What factors can help to achieve the goals? What factors may cause problems?

4. THE PLAN:

Alternative series or programmes of action

Business Planning Vs Strategic Planning

Language:

Business Planning Strategic Planning. • Financial

forecasts & targets.

• Emphasis on figures

• Future visions • Milestones not

always in figures.

Accountability:

Business Planning Strategic Planning. • Financial

forecasts & targets.

• Simple to measure.

• Future visions & milestones

• Difficult to measure.

Nature:

Business Planning Strategic Planning. • Short term. • Environment

more predictable

• Long term. • Speculative.

Conflict of Interest:

Business Planning Strategic Planning. • Managers

assessed on short-term results.

• May require sacrifice of short-term results.

Why should planning help? 1. If the organisation’s environment and future is better understood, it is less likely to be

caught off guard. 2. The process of planning sensitises managers to a variety of problems. 3. The organisation as a whole is moved towards increased rationality, reducing

arbitrary actions by individuals. 4. Planning contributes to better performance of other management functions.

Problems with implementation.

1. Failure to understand what planning is. 2. Failure to accept balance between intuition, judgement, and formal planning methods. 3. Failure to use an appropriate method of planning. 4. Failure to modify plan as situation develops.

5. Failure to keep the planning method simple and to constantly look at cost benefit analysis.

6. Failure to link the major elements of the plan with the method of implementation.

Read Read the following case study and then answer the questions at the end.

Planning at Canon. When the Precision Optics Laboratory (the original name for Japan-based Canon) was founded in 1933, there was little ‘advance’ planning. The company had a single production facility that manufactured cameras for local sale on the basis of rough assessments of likely demand. Today $80 thousand million Canon produces an array of image, information, and communication products. Production in its numerous world-wide facilities is based on carefully developed plans that include specific goals. Currently, about 75 per cent of sales are in business machines, 20 per cent in cameras, and 6 per cent in optical products. The Canon planning process began in 1962 with the company’s first long-range plan, covering 5 years. At that point, 95 per cent of Canon’s sales came from cameras but the company was concerned that market growth for cameras was levelling off. Therefore, its initial plan focused on diversification into other products, mainly business machines. The specific goal was to achieve 20 per cent of its sales from products other than cameras in 5 years. The next two 5-year plans included other critical goals, such as furthering diversification, boosting production capacity to meet anticipated demand, establishing a world-wide distribution system for Canon products, and expanding into the image information industry.

In 1975, the company experienced serious difficulties. It had expanded into producing hand-held electronic calculators. Unfortunately, more than 10 major competitors emerged who aggressively marketed new technologies and/or lowered prices. Moreover, a serious defect in a critical calculator part Canon had bought from an outside supplier led to massive returns from customers. Excessively optimistic estimations of market demand also led to an excessive inventory of products that soon became obsolete. An oil crisis, fluctuations in foreign exchange, and a recession added to the company’s woes, causing major losses. Canon was determined never to get in a situation like that again. From then on, Canon launched a campaign to become a leading global company that would be better able to deal effectively with environmental forces. The company reorganised to provide separate divisions for each major product area, stressed the development of innovative products, and greatly expanded the planning process. Today the planning system consists of long-range (strategic), medium-range (tactical), and short-range (operational) plans. A central planning staff helps with the planning process. The long-range (strategic) plan (with a horizon of up to 10 years) outlines broad major directions and goals for the company within the context of the rapidly changing environment. Goals are normally set for the final year of the plan and may include such factors as sales volumes, pre-tax income, and capital investment. Other parts of the plan are revised annually as necessary. These parts focus mainly on the orientation of the company, changes of structure, and employee motivation and revitalisation. The medium-range (tactical) plans address shorter-term issues that amplify long-range plans and goals. They are normally 3-year plans that are revised annually depending on current business considerations. Tactical plans guide the allocation of resources, such as personnel facilities, equipment, and funding, to achieve tactical goals. They also centre on what must be done by the various product divisions to meet overall strategic directives. Contingency plans are also developed to deal with potential serious threats, even when the probabilities of such circumstances are relatively low. Canon’s short-range (operational) goals and plans are oriented to the maximum use of all resources to obtain planned results during the current fiscal year. Operational reports are compared with previously established goals to determine the effectiveness of individual units and the overall company.

Activity Answer the following questions with respect to the Canon case study. Activity 9: Highlight examples of short term planning in the Canon case study and comment on the way in which they might operate. Activity 10: Highlight examples of long term planning in the Canon case study and comment on any problems that might be associated with this process.

A Systems Perspective. The strategic challenge framework argues that successful strategy requires that organisations develop the capability to achieve some balance between competing and ever changing issues and dilemmas. A study by the Royal Dutch Shell group that looked into organisational longevity came to the conclusion that the average life expectancy for large organisations is around 40 years. However there are companies that have “lived” for a lot longer than this. The oldest firm in Europe is Stora, a Swedish company that was formed in the 12th century and is now more than seven hundred years old. During the decade of the 1980’s nearly half of the companies listed in the fortune 500 list at the beginning of the decade had disappeared by the end of it. This approach highlights the in-built paradox in Logistics and Supply Chain management. In order to remain successful, organisations need to continuously improve the way they carry out their day-to-day activities whilst at the same time, in order to survive in the long run, they need to be able to question the logic of their current recipe for success. This is inherently difficult for people to do. How can you expect people to be really committed to improving a current process if at the same time you are expecting them to come up with radically new ways of doing things? Interestingly, increasing parallels are being drawn between what happens in nature and the workings of organisations. “The flapping of a single butterfly’s wing today produces a tiny change in the state of the atmosphere. Over a period of time, what the atmosphere actually does diverges from what it would have done. So in a months time a Tornado that would have devastated the Indonesian coast doesn’t happen.” (Lorenz, E.N.,1993) Obviously parallels can also be drawn between the turbulence and unpredictability of the general environment and the ability to forecast the weather. The Strange attractor for the weather system:

(Adapted from Stacey, R, 1996 pp 320) Like the weather, “organisations appear to be in a state that has characteristics of stability and instability, a state away from equilibrium that seems to be in the borders between stability and instability” (Stacey, R, 1996 pp 315 (Adapted from Stacey, R, 1996 pp 320)

Logistics and The Value Chain. Igor Ansoff, (Ansoff, I. 1987) said that most decisions are made in terms of the practical limitations of limited resources. Ansoff argued that the firm's resources, (both present & future) modify a firm's strategy. In practice this means that limited resources will inevitably result in restricted choice. For this reason it is vital that organisational managers are very clear about the resources that are available to them both in the present and potentially in the future. A common criticism of managers and investors in organisations is that they are overly concerned with tangible resources. Obviously the great attraction of this is the ease of quantifying tangible resources. They are easily measurable! This has often meant that internal analyses of firms have meant little more than a listing and quantification of the firm from a financial accounting perspective with the objective of giving a financial valuation. The importance of resources and resource valuation should not be underestimated, particularly where shareholders are powerful stakeholders in the organisation (see Unit 5). In this section we will try to develop a more in depth understanding of the concept of value and value creation using Porter's (Porter, M.E., 1985) concept of the value chain. The value chain traces a product or service from the raw material right through to the final product. The argument is that if managers understand the value chain of the firm they may find opportunities for changing it to the benefit of their firm. Value: What is meant by value? The dictionary synonyms for the word value include; "worth, desirability, utility" and one description puts the meaning as; "worth as estimated by the buyer". One way of thinking about the concept of value, in the context of this course, would be to ask yourself how you would go about setting a price for a new product that you had developed. This might be relatively easy if your product is a variation of other products already in the market. However consider the situation where you have developed a completely new product or service. You might simply work out what the product or service would cost you and simply mark the price up to give yourself an adequate return. The danger of this approach is that the resultant price may not be attractive to consumers, either because it is too expensive or perhaps too cheap. Ultimately, however the consumer will only purchase your offering if they estimate that they will get value from it. In other words; the ultimate consumer of the product determines its value. A consumer who wishes to purchase a product enters a negotiation with the seller. In this negotiation, both the buyer and the seller strive to maintain as much value as possible for themselves. Successful businesses are those that can produce a valuable offering to the market and package it in a way that allows them to retain a significant amount of the value that they have created. Think back to unit 4 section 2, two of Porter's five forces (Porter, M.E., 1980) refer to bargaining power. The Value Chain:

Before looking in more detail at Porter's value chain concept it is worth remembering that in terms of Whittington's framework (Whittington, R. 1993) [see unit 2 section 4] Porter is placed in the Classical quadrant of the grid. This implies that the profit maximisation is the primary outcome of a successful strategy. It should be no surprise, therefore, to see that margin is given an important place in the diagrammatic representation of the value chain. (See diagram). A key aspect of the value chain concept is that successful organisations are those that can deploy their resources in such a way as to be able to produce offerings that are valued by consumers. In addition to this, the firm must be able to create value for its consumers whilst

at the same time being able to retain some of this value for itself in the form of margin. The Value Chain is a useful way of conceptualising the various activities that any firm performs in order to create

value for its customers and margin or profit for itself. In particular it should be borne in mind that a firm is only likely to be able to produce a valuable product and retain a significant proportion of this value for itself if it can link all the value activities together more effectively than its competitors.

Margin

Margin

Firm’s Infrastructure

Human Resource Management

Technology Development

Procurement

Inbound

LogisticsOperations Marketing

& Sales

Outbound

LogisticsService

Primary Activities

SecondaryActivities

Adapted from Porter, M.E. (1985), Competitive Advantage: Creating and SustainingSuperior Performance, Free Press.

Value System: In today's world there are very few if any firms that produce all the value in a product for the ultimate consumer by themselves. Different aspects of the value creation process may take place within different firms. If this is the case the firm needs to be able to link its value chain effectively with other firms in the value creation system. In fact there are many examples of firms that have competed very successfully by specialising in one small part of the value creation process.

Firm’s Valuechain

Suppliervaluechains

Channelvaluechains

Customervaluechains

Adapted from Porter, M.E. (1985), Competitive Advantage: Creating and SustainingSuperior Performance, Free Press.

Activity 1: Question 1

Define value chain analysis and explain the awareness, which should arise from it.

Question 2

Summarise each activity in the value chain.

Question 3

Explain why linkages within the value chain are important.

Feedback: Activity 1: Question 1 Define value chain analysis and explain the awareness which should arise from it. Answer 1 Value chain analysis is a systematic way of studying the direct and support activities undertaken by a firm. Such analysis should create greater awareness of costs, the potential for lower costs and the potential for differentiation. Question 2 Summarise each activity in the value chain. Answer 2 Primary Activities 1. Inbound Logistics are activities relating to the receiving, storing and internal

distribution of the inputs to the products or service. 2. Operations are activities relating to the transformation of inputs into finished products

and services. 3. Outbound Logistics are activities relating to the distribution of finished goods and

services to customers. 4. Marketing and Sales Activities relate to the advertising, promotion, pricing and

salesforce activity. 5. Service relates to the provision of any necessary service relating to the product. Support Activities 1. Procurement refers to the activity or function of purchasing inputs to the system. 2. Technology Development covers technology in a very broad sense, covering

knowhow, research and development, product design and process improvement. 3. Human Resource Management involves all activities relating to recruiting, training,

developing and rewarding people throughout the organization. 4. The Firm's Infrastructure includes the structure of the organization, planning,

financial controls and quality management, designed to support the whole value chain. Question 3

Explain why linkages within the value chain are important? Answer 3 Linkages in the value chain are important as they clearly indicate that the value chain activities are a series of related interdependent activities. The linkages/relationship between different value chain activities are a source of competitive advantage. Linkages are also to do with the management and people in the organisation, Porter (1985) suggests that competitive advantage is most likely to come from linkages between value activities. Linkages, because they are to do with management and people, are inherently difficult to measure. Anything that is difficult to measure, as we know (See unit 1) is difficult to control. In the competitive battle between players in an industry having competitive abilities that are difficult to measure is a distinct advantage because this means it is also likely to be difficult to copy.

Supply Chain Relationships Supply Chain Management & Competitive Success: Business success will be derived from companies managing to enhance the total performance of the supply chain, so that it can deliver improved value to customers. Thus waste is normally seen as the major enemy, and closer and long-term working relationships - even partnerships - with suppliers at all levels in the chain are recommended, in order to deliver exceptional value to customers. Companies are, therefore, instructed to construct ever more efficient and responsive supply chains because it will no longer be company competing with company, but supply chain competing against supply chain. Today's practitioners have to pay particular attention to the operational aspects of supply chain management is because we are currently in the midst of a major technological revolution associated with information processing and the Internet. This information processing revolution, in the form of e-commerce and e-business, is offering opportunities to fundamentally transform existing supply chains through the erosion of dis-intermediation and the speeding up of the information linkage between ultimate customers and all stages of the supply chain. This will provide companies that embrace the new technology with opportunities to eliminate many aspects of waste, by delivering more value to customers through speeding up the process of supply chain communication. Key issues in Effective Supply Chain Management: (1) Strive for perfection in delivering value to customers. (2) Only produce what is pulled from the customer just-in-time and concentrate only on those

actions that create value flow. (3) Focus on the elimination of waste in all operational processes, internally and externally, that

arise from overproduction, waiting, transportation, inappropriate processing, defects and unnecessary inventory and motion.

(4) Recognise that all participants in the supply chain are stakeholders and that we must add value for everyone in the business.

(5) Develop close, collaborative, reciprocal and trusting (win-win), rather than arms-length and adversarial (win-lose), relationships with suppliers.

(6) Work with suppliers to create a lean and demand-driven logistics process. (7) Reduce the number of suppliers and work more intensively with those given a preferred long-

term relationship. (8) Create a network of suppliers to build common understanding and learning about waste

reduction and operational efficiency in the delivery of existing products and services.

Logistics Administration & the Dimensions of Change Benchmarking: What is benchmarking? Benchmarking is a practice that rigorously examines and compares business practices with the 'best in the class', aimed at creating and sustaining excellence. As quality improvement programmes have taken root, managers have started using tools such as total quality management (TQM), quality function deployment (QFD), statistical process control (SPC) and continuous improvement (CI). These tools help in the process of discovering the systemic flaws in the product or service delivery process. The next step in enhancing the conversion process and improving the value-added component involves the determination of how to fix these inadequacies. The answers are often being found by way of another quality improvement process known as benchmarking. Benchmarking is a systematic management process, which helps managers to search and monitor the best practices and/or processes. The search for the best practices may not be limited to direct competitors. The goal is to emulate and exceed the "best in class". Therefore, the search goes beyond the practices of direct competitors, and encompasses all leading organizations regardless of industry affiliation. Companies have always benchmarked themselves with competitors and other companies in an informal way. However, as a formal and rigorous process, benchmarking only started to be applied by companies in the last decade. It requires an open attitude and a high willingness to learn from others. This benchmarking methodology consists of the following steps: The project begins by selecting a business process to improve. Typically, companies start the benchmarking initiative with a pilot project to learn about the methodology and to overcome possible lack of credibility within the organisation. As with re-engineering, the bigger opportunities for improvement are in processes that cross function and departments. A team is selected. Ideally, the leader of the benchmarking team should be the 'process owner'. That is, the person responsible for the process in the organisation. Additionally, to ensure the success of this team, top management should actively and visibly support the initiative. The project team studies and documents in detail the company process. Often, on understanding the current process, the team improves it substantially by applying process analysis techniques. Simultaneously, the team develops a set of key process measures to compare with other companies' processes. These measures are not the main objective of benchmarking, but a way later on to identify best practices. Afterwards, the team looks for organisations to benchmark with. This search should include (if appropriate) other companies within the same corporation, competitors and the best companies in other industries. Often, managers are hesitant about the value of comparing themselves with companies outside their industry. For example, it could be argued that selling cars is different from selling fast-food. However, companies outside the industry are usually the best source for new processes and ideas. For example, the need for a consistent service quality and 'offer' from dealers or franchisees has striking similarities in the car and fast-food industries. Obtaining collaboration from the target companies to benchmark is not as difficult as some managers believe. Many companies are willing to be benchmarked provided that there is a quid pro quo and confidentiality issues are clearly spelled out. The benefit for the benchmarked company should be a discussion about the findings. In short, how the benchmarked company itself can improve. A visit to the benchmarked company is obviously essential. To make it efficient, the benchmarking company should send a well-prepared list of questions in advance. This should help identify areas of excellence for further detailed investigation. The investigation should result in revealing a set of gaps between the company's process and the best practices, and lead to a much better process. These differences in measures and processes

should be made public within the organisation to obtain a momentum for change. Subsequently the team develops an action plan to implement the new process. Having the process owner as the leader or a member of the project team proves to be a critical factor for implementation. Finally, the improvements obtained should be communicated to the benchmarking partners. That is, the benchmarked companies should learn from the benchmarking company's experience. Benchmarking practices have the advantages of overcoming a natural disbelief in the feasibility of big improvements, of making sure that improvement targets are high enough, and of helping to create a learning and outward-looking culture in the company. There are many success stories about benchmarking. At the beginning of the 1980s Xerox found that its Japanese competitors were selling photocopy machines for a price lower than Xerox's product cost. Through benchmarking, Xerox improved sharply its product development process and was able to beat back the Japanese competition. While the risk involved in benchmarking projects is not high, the tendency to justify 'why our company is different' and the 'not invented here syndrome can hamper the success of these projects. Also, a lack of focus and attention to the selection of the processes to benchmark can prove an obstacle. When years ago, IBM executives tried to benchmark 300 processes they found it overwhelmingly difficult. Candidates for benchmarking are those processes known to be inefficient or where there is some evidence that competitors or companies in other industries have better processes. Many companies have benchmarked critical processes, making important and, sometimes, big improvements. Benchmarking in Logistics &Supply Chain Management: Early benchmarking efforts in the areas of distribution and warehousing were focused on discrete, easily measured task components, such as cubic capacity utilisation of warehouses and the cost of the movement of goods per tonne/kilometre of cargo. However, as discrete departmental activities were replaced by integrated logistics practices, also known as supply chain management, the established cost comparison approach to benchmarking was supplemented or replaced by a focus on service level comparisons. The focus can be said to have changed from lowest cost as benchmark to best value for money as benchmark. Even more recently, with the emergence of continuous supply-line process management, the focus of benchmarking activities has moved on again. Process efficiency, effectiveness and reliability are now seen as the keys to competitiveness, and it therefore follows that supply-line process performance should be the comparator in benchmarking exercises. In an attempt to achieve world-class levels of supply-line management, the most advanced companies now see process improvement as the key. A combination of process-related output measures such as customer satisfaction results and in-process measures such as schedule flexibility are therefore emerging as the likely foci for future benchmarking activity in logistics. Interestingly, these process metrics are identical in nature to the input factors used in modelling exercises. By combining benchmarking and modelling the possibility is therefore emerging of creating a "theoretical benchmark" of performance beyond the level of even the best current practitioners. In theory, even the best companies can use this approach to identify avenues for further improvement, and there is no reason to believe that this approach cannot apply to other business processes beyond supply-line management. In effect, modelling, business process analysis and benchmarking may all be merging into a single, highly powerful tool set, capable of yielding significant performance improvement across a wide range of business activities.

Benchmarking the supply line as a business process From a process management perspective, the supply line can be thought of as a transformation process, using resources to convert selected inputs into required outputs. The process can be delineated either as an intracompany multifunctional pipeline, connecting one company's suppliers to its customers through a series of internal subprocesses, or as an interconnected multicompany supply line which transforms base raw materials into consumable end products. Companies wishing to develop a measure of process performance need to assess both the efficiency and the effectiveness of their supply lines. One method, derived from the physical sciences, is to base the performance assessment on the concepts of energy conservation and process predictability in terms of target accuracy. In measuring effectiveness with this approach, energy is measured at both the input and output stages of the transformation process. Input energy might include staff, warehouse requirements, IT support systems and transportation. Energy output is expressed in terms of the outcome of the supply-line process activities, in other words the yield in terms of the added-value items at the customer interface. Summary of the Main Issues. Purposes of Benchmarking: * To enhance the effectiveness of the organisation & therefore its value to stakeholders. * To enhance organisational performance. * To achieve world-class status. Benchmarking Relates to: * Benchmarks. * Competitive Analysis. * Strategy formulation. * Change implementation. * Culture Change. * Cost reduction * Business Process Re-engineering. * Total Quality Management. It is important to understand how these management initiatives can support each other for a coherent understanding of strategic management The three forms of benchmarking: Internal Benchmarking: * Comparing between groups or branches within the same organisation. External Benchmarking: * Comparing key metrics against direct competition. * Comparing with organisations in the same industry sector but not in direct competition. Best Practice Benchmarking:

* Comparing with the best that can be found anywhere. Where to begin * Don't wait for a crisis * Tackle realistically implementable areas * Don't try to benchmark everything at once. * Prepare thoroughly. * Tackle strategically significant subjects. * Select core processes. Start with simple questions: 1. Why is this service provided at all? 2. Why is it provided in this way? Processes. Links with the value chain processes. Benchmarking is best analysed for separate value activities. This facilitates best practice evaluation. Four dimensions to process measurement: * Productivity * Quality * Delivery/timeliness * Innovation. Keys to successful benchmarking: Planning * Understanding of existing operations and targets for improvement. Analysis * Researching the practice of others * Identifying performance gaps and redesigning the process Action * Planning & implementing change * Analysing the impact of changes and planning how to improve. Why share? * Best practice organisations share openly * Sharing supports culture change * Benchmarking partners must abide by guidelines of good behaviour * Obligation as corporate citizen to help improve overall competitiveness * But don't share secrets.

Finding best practice * Published information * Annual reports * Conferences * Professional benchmarking organisations * Customers and suppliers * Benchmarking databases * Professional associations * Trade associations * Professional journals, magazines and newspapers * Exchanges * Face to face interviews * Direct information exchange * Groups * Intermediaries. Supporting Organisations * Benchmarking clubs * Industry-related organisations * Professional associations * Networking organisations * Data providers * Specialist support. Who to involve Employees * Know the process best and can evaluate potential improvements. Managers * Can provide leadership and support, and are responsible for the strategy &

communication process. External support * Can provide expert facilitation, transferring skills into the organisation and aiding

organisational learning.

Strategic Control & Measurement. The traditional measures of performance used by firms are heavily linked to financial measurement and are based, in the main, on historical information. This has resulted in a still often out of balance approach to measurement and control.

The Balanced Score Card.

Adapted from R. Kaplan & D. Norton, The Balanced Score Card, Harvard Business Review no 92105 Jan-Feb 1992.Drawn by Rulzion Rattray

Financial Perspective.

How do we look toshareholders?

What mustwe

excel at?

Customer Perspective

Can we continue to improve &

create value?

How do customers see

us?

Innovation & Learning Perspective

MeasuresGoals

Internal Business PerspectiveMeasuresGoals

MeasuresSTRATEGY. Goals

MeasuresGoals

Philosophy:

• Focus on the measures and controls that are the most important to the strategy of the firm.

• Helps managers to look at the whole picture and reduces the chance of bias. • Managers must articulate goals and then develop measurement and control

systems.

Customer Perspective: How do customers see us? • Forces managers to seek to control the things that really matter to the customer:

Time, Quality, Performance and Service.

• How to make it work:

Must ensure the measures are important to the customer. Regular contact with the customer to define and redefine measures. To ensure there is no bias, some firms use outside consultants. Benchmarking.

Can help highlight important area for differentiation:

Customers may be happy to pay a premium price for JIT Zero Defect Products, etc. Internal Business Perspective What Must We Excel At?

Customer perspective must be translated into internal measures. Allows production managers to focus on critical internal measures that help the firm satisfy customer needs. Close parallel with the idea of the Value Chain. Use of information systems can be of critical importance in success using real time information on production and quality. Innovation & Learning Perspective. Can we continue to improve and create value? The importance of developing new levels of service is often a key to continued corporate success and logistics and supply chain management are increasingly important targets for this type of improvement.

Creating new competitive space. Leading customers by expeditionary marketing, focussing service on areas

that provides unique unasked for advantages. Creating new standards in supply chain management

Developing measures in this area might include:

Percentage of sales resulting from new levels of service and delivery capabilities.

Design development cycle time. Number of new developments on service or delivery arrangements. New ways of delivering service.

Financial Perspective: How do we look to our shareholders?

Financial performance measures should concentrate on strategy. Historically Financial Managers have concentrated on: Is it contributing to bottom line improvements?

Important measures:

Profitability Growth Shareholder Value.

⇒ Critics have argued that over emphasis on short term goals are counter-

productive. ⇒ As part of the balanced approach it is important to ensure that improvements in

performance in other areas are reflected in financial terms. ⇒ Failure to do so should lead to fundamental questions about the logic of the

strategy being pursued. ⇒ Improvements in methods might make certain activities redundant. Financial

measures can help highlight these and result in significant cost savings. Measure should concentrate on:

• Market Share. • Operating Margins • Asset turnover. • Operating Expenses.

The challenge should be to make explicit linkages between operations and finance.

Overview:

This approach is a dynamic one and is therefore iterative in that failure to achieve strategic objectives must raise questions about the nature of the strategic objectives themselves.

Balanced Score Card Overview.

Adapted from R. Kaplan & D. Norton, The Balanced Score Card, Harvard Business Review no 92105 Jan-Feb 1992.Drawn by Rulzion Rattray.

Financial Perspective.

Customer Perspective

Innovation & Learning Perspective

MeasuresGoals

Measures

Internal Business Perspective

Goals

MeasuresGoals

MeasuresGoals

MissionServiceInnovationEmployee QualityShareholder Expectations

ROCECash FlowProfitability

Strategic Objectives.

Value for moneyReliable ServiceJIT

Quality ServiceProject ManagementSafety

Step ImprovementService InnovationEmpowered.

Results influence corporate strategy.

In the same way measures are assessed and if ineffective they should be questioned. Measured improvements in other areas should ultimately affect the "bottom line" in

financial terms and if not should be questioned. Conclusions:

1. Great improvement as it forces managers to look at interactions between activities.

2. If linked to the ideas of systems thinking can greatly improve manager's ability to understand the complex interactions that take place inside and outside their organisations.

3. Important to bear in mind the requirements for a good control system when thinking about measurement and feedback:

Ensure measurement and feedback is in balance. Recognise motivational factors of well-delivered feedback.

The Beer Game. A Supply Chain Simulation This simulation was made famous by the Massachusetts Institute of Technology and is widely used both in Industry and at Business Schools around the world. Simulation Rules: Minimum of two people are assigned to each position, one of whom is responsible for keeping the score. Function of Score Keeper: Keep account of the inventory level, the cumulative back order-position and the number of cases ordered at each stage of the game, as well as keeping a view of the costs. Player Instructions: 1. The main aim is to minimise costs. 2. The team at each position must decide how many cases to order and are free to

order any number of cases. 3. The players at each position should collaborate on decisions and act as a team. 4. Players at one position must not communicate with players at other positions except

by means of the ordering process. Costs incurred: 1. Carrying Inventory Euro0.50 per case per period. 2. Back ordering costs Euro1.00 per case per period Orders and Sales 1. Orders are always fulfilled i.e. no sales are ever lost. This means that all back orders

are filled when stocks allow. 2. Customer orders are predetermined but are only revealed period by period. This

information is only revealed to the retailer. 3. Each position places an order with the next position up the supply chain. It takes two

time periods before the order reaches the supplier and is fulfilled, during this time the supplier is not aware of the extent of the order.

4. Orders must be written onto a piece of paper and folded then placed into the system.

The supplier may only read the order when it arrives with them after two time periods (i.e. orders placed in time period 1 are delivered in time period 5.).

Starting Position:

4 Cases in each leg of the order route. 4 Cases in each leg of the delivery route. 12 Cases at each position as stock.

MManufacturer

DDistributer

WWholesaler

RRetailer

Order

Supply

O1 O2 O1 O2 O1 O2 O1 O2

S2 S1 S2 S1 S2 S1 S2 S1

O

S

Decision

Inventory

CCustomer

Developing Critical Evaluation. Rulzion Rattray

Dundee Graduate School of Management

In order to develop a sound critical evaluation it is important to remember that what you are doing is developing an argument and, as in any argument, if you are to be successful, you need to have sound support for any comments that you make. In order to do this effectively it is important that you spend some time considering the construction of your argument. Key elements in the construction of an effective argument include: • Remaining focussed on relevant issues. • Use of supporting evidence for the points you make. • Adopting a questioning or critical approach. Stephen Toulmin (1958) developed a model that set out the structure of an argument along the lines shown in the diagram below:

Data(Evidence)

Data used to support the claim

Claim(So)

An arguable statement

Warrant(Since)

An expectation that links evidence & the claim

Backing(because)

Context & assumptions used to support the validity of the warrant and the evidence

Toulmin, S. (1958), Cited in Hart, C, (1998) Doing a

Literature Review, London, Sage Publications, pp 88-89. Make sure that your arguments are firmly focussed on the question. Most questions have more than one element and therefore require some thought. In many instances it is useful to break the question down so that you can examine each part of the question separately. Having broken the question down you will need to consider how to evaluate each aspect in turn. A logical first step in this process is to go through the data that you have available in the case study (or from practical situation), highlighting issues that are relevant to each component of the question in turn. Each time you highlight an issue make a note as to why it is relevant. Academic theory can be extremely useful in helping you to formulate an argument and can be used as part of your thought process when you

consider why issues highlighted in the case are important. So having highlighted evidence from the case relevant to each aspect of the question, make a note of which academic theories or approaches might be relevant to your analysis of each of these issues. An important aspect to the development of a sound analysis is to develop a questioning approach. Your critical analysis should highlight both things that are working well, with supporting evidence as to why you consider them to be working well, as well as things that are not working well once again with evidence as to why they are problems. The process outlined above highlights a number of important stages, which are an expansion of the key elements of an argument. 1 Make sure you answer the question.

Analyse the question and break it down into its component parts. This process might be thought of as a process of differentiation. There is always a danger when you do this that you might lose sight of the overall requirements of the question, so don’t forget that you will need to think about how you can reintegrate the components of the question to address the overall issues required by the question. By doing this you help to demonstrate that your arguments are focussed on relevant issues.

2 Gather relevant material from the case.

This process is important because you can refer to this “data” in the defence of your argument. This is the first part of your supporting evidence.

3 Think about pertinent academic theory.

Theories can be considered to be the second part of your supporting evidence. You need to be clear what academic theory1 is. In management generally and in strategic management in particular, there are a large number of competing theories. This means that most academic theories are claims and therefore open

1Theory: 1. a. Systematically organized knowledge applicable in a relatively wide variety of circumstances, especially

a system of assumptions, accepted principles, and rules of procedure devised to analyze, predict, or

otherwise explain the nature or behavior of a specified set of phenomena. b. Such knowledge or such a

system.

2. Abstract reasoning; speculation.

3. A belief that guides action or assists comprehension or judgment: rose early, on the theory that

morning efforts are best; the modern architectural theory that less is more.

4. An assumption based on limited information or knowledge; a conjecture.

[Late Latin theōria, from Greek, from theōros, spectator : probably thea, a viewing + -oros, seeing.]1

to debate; consequently someone seeking to argue against you could use another academic theory as the basis for his or her counter argument. In order to strengthen your argument and to pre-empt criticism, it can be useful to use more than one theory to support your argument. Use of more than one approach, sometimes referred to as triangulation2, can also be a useful spur to the development of critical comment. In order to be able to establish the relevance of the academic theory you need to highlight which aspect of the theory is pertinent to the point under consideration. Remember it is not necessary to spend a great deal of effort explaining the theory. It is important, however, to reference the theory correctly using the university standard referencing system. Once you have referenced the theory you can assume that any reader can familiarise themselves with it and therefore do not include long detailed explanations of the logic of the theory. The next stage is to highlight which aspect of the theory you consider to be relevant and why this is important. This should form the foundation of any claims or critical comment you might wish to make.

4 Develop Critical Comment. Critical or questioning comment can be developed logically from the previous three steps. In the previous two points we have discussed the gathering or relevant supporting data. As pointed out in the introductory paragraph, critical evaluation in this context should be trying to highlight where things are working as well as where they are not. In both cases you need to justify why they are, or are not working. This process can logically develop from the justification of the use of a particular theory or theories as part of your supporting evidence. The process should combine and link all the previous points discussed in point 1.1 to 1.3. It is by combining and linking these stages that opportunities for critical comment and the development of an argument occur. Typically this can occur where the evidence from the case suggests that practice has followed a particular theory successfully or where it has failed to. In both cases this can be commented on and further opportunities for discussion can come from a process of triangulation. By looking at the problem from a different perspective (theory or model) new issues can be highlighted. In addition, the questioning discussion can be expanded to include comment as to the usefulness or otherwise of the academic theories cited.

2 Triangulation: 1 The process by which the location of an unknown point, as in navigation, is ascertained, by the

formation of a triangle having the unknown point and two known points as the vertices.

2. In this context the notion is that you can get a better idea of a situation if you look at it from more than

one point of view.

Visualising and Building Analysis and Critical Comment. The problem of dealing with a wide range of often complicated and interwoven issues can be very confusing. It is particularly important therefore to make sure that your written explanation and discussion of these issues follows a very sound and clear structure. One way of achieving this is to represent your ideas graphically as a way of clarifying your thoughts before writing more formally. This can be achieved in a number of ways but perhaps the most straightforward is to divide the process up into the four stages discussed above and represent each of these stages by a separate column as illustrated below. Question Breakdown

Evidence from practice or from the case study.

Evidence from Academic Theory

Critical comment or analytical points

First part of question.

Evidence of good or bad practice or of things going well or badly, that is relevant to the question.

Reference for a relevant academic theory. (Use the university standard referencing system) comment on the particular aspect of the theory and its particular relevance. Think about how it explains or can be used to discuss the practice.

1. To what extent does the evidence from practice fit in with the theory?

2. Could practice have been improved by the application or

use of the theory you mentioned? 3. Would an alternative theory provide a better insight? If

so reference it and enter it into the next column. 4. Is there further evidence in the case that on reflection of

the above might help you develop a better insight into the issues you have developed? If so refer to it and enter it into the next available column space.

Use words such as thus, therefore, etc i.e. words that can be used to structure an argument and are useful linking words between the different factors being considered.

Additional relevant theory. Additional critical thought and comment. Does the logic of this argument fit in with your initial thoughts? If not is it relevant to the secondary thoughts?

Additional practical evidence. Is this evidence consistent with previous evidence?

Relevant to which theory? Further critical comment and discussion

Definitions:

Logistics - (business definition) Logistics is defined as a business planning framework for the management of material, service, information and capital flows. It includes the increasingly complex information, communication and control systems required in today's business environment. -- (Logistix Partners Oy, Helsinki, FI, 1996)

Logistics - (military definition) The science of planning and carrying out the movement and maintenance of forces.... those aspects of military operations that deal with the design and development, acquisition, storage, movement, distribution, maintenance, evacuation and disposition of material; movement, evacuation, and hospitalisation of personnel; acquisition of construction, maintenance, operation and disposition of facilities; and acquisition of furnishing of services. -- (JCS Pub 1-02 excerpt)

Logistics - The procurement, maintenance, distribution, and replacement of personnel and materiel. -- (Websters Dictionary)

Logistics - 1. The branch of military operations that deals with the procurement, distribution, maintenance, and replacement of materiel and personnel. 2. The management of the details of an operation. [French logistiques, from logistique, logic (perhaps influenced by loger, to quarter), from Medieval Latin logisticus, of calculation.] -- (American Heritage Dictionary)

Logistics - ...the process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements." Note that this definition includes inbound, outbound, internal, and external movements, and return of materials for environmental purposes. -- (Reference: Council of Logistics Management, http://www.clm1.org/mission.html, 12 Feb 98)

Logistics - The process of planning, implementing, and controlling the efficient, cost effective flow and storage of raw materials, in-process inventory, finished goods and related information from point of origin to point of consumption for the purpose of meeting customer requirements. -- (Reference: Canadian Association of Logistics Management, http://www.calm.org/calm/AboutCALM/AboutCALM.html, 12 Feb, 1998)

Logistics - The science of planning, organizing and managing activities that provide goods or services. -- (MDC, LogLink / LogisticsWorld, 1997)

Logistics - Logistics is the science of planning and implementing the acquisition and use of the resources necessary to sustain the operation of a system. -- (Reference: ECRC University of Scranton / Defense Logistics Agency Included with permission from: HUM - The Government Computer Magazine "Integrated Logistics" December 1993, Walter Cooke, Included with permission from: HUM - The Government Computer Magazine.)

Logist - To perform logistics functions or processes. The act of planning, organizing and managing activities that provide goods or services. (The verb "to logist." Eg. She logisted the last operation. I will logist the next operation. I am logisting the current operation. We logist the operations. The operations are well logisted.) -- (MDC, LogLink / LogisticsWorld, 1997)

Logistic - Of or pertaining to logistics. -- (MDC, LogLink / LogisticsWorld, 1997)

Logistical - Of or pertaining to logistics, logistics-like. -- (MDC, LogLink / LogisticsWorld, 1997)

Logistics Functions - (classical) planning, procurement, transportation, supply, and maintenance. -- (United States Department of Defense DOD)

Logistics Processes - (classical) requirements determination, acquisition, distribution, and conservation. -- (United States Department of Defence DOD)

Business Logistics - The science of planning, design, and support of business operations of procurement, purchasing, inventory, warehousing, distribution, transportation, customer support, financial and human resources. -- (MDC, LogLink / LogisticsWorld, 1997)

Cradle-to-Grave - Logistics planning, design, and support which takes into account logistics support throughout the entire system or product life cycle. -- (MDC, LogLink / LogisticsWorld, 1997)

Acquisition Logistics - Acquisition Logistics is everything involved in acquiring logistics, support, equipment and personnel for a new weapons system. The formal definition is "the process of systematically identifying, defining, designing, developing, producing, acquiring, delivering, installing, and upgrading logistics support capability requirements through the acquisition process for Air Force systems, subsystems, and equipment. -- (Reference: Air Force Institute of Technology, Graduate School of Acquisition and Logistics.)

Integrated Logistics Support (ILS) (1) - ILS is a management function that provides planning, funding, and functioning controls which help to assure that the system meets performance requirements, is developed at a reasonable price, and can be supported throughout its life cycle. -- (Reference: Air Force Institute of Technology, Graduate School of Acquisition and Logistics.)

Integrated Logistics Support (ILS) (2) - Encompasses the unified management of the technical logistics elements that plan and develop the support requirements for a system. This can include hardware, software, and the provisioning of training and maintenance resources. -- (Reference: ECRC University of Scranton / Defence Logistics Agency Included with permission from: HUM - The Government Computer Magazine "Integrated Logistics" December 1993, Walter Cooke.) Logistics Support Analysis (LSA) - Simply put, LSA is the iterative process of identifying support requirements for a new system, especially in the early stages of system design. The main goals of LSA are to ensure that the system will perform as intended and to influence the design for supportability and affordability. -- (Reference: Air Force Institute of Technology, Graduate School of Acquisition and Logistics.)

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