logi

• Strategic decisions


  Most important, set the overall direction of the organisation, have effects over the long term, involve many resources, are the most risky
• Tactical decisions


  Concerned with implementing the strategies over the medium term, look at more detail, involve fewer resources, some risk
• Operational decisions


  The most detailed, concern activities over the short term, involve few resources, little risk
• Most common types of strategic decisions


  • Mission - statement to give the overall aims of the organisation
  • Corporate strategy - how a diversified corporation will achieve its mission
  • Business strategy - how each business within a diversified corporation will contribute to the corporate strategy
  • Functional strategies - describe the strategic direction of each function, including logistics

  
• Logistics strategy


  All the long-term decisions about logistics

  
• Logistics strategy of an organisation


  Consists of all the strategic decisions, policies, plans and culture relating to the management of its supply chains

  
• Aspects a logistics strategy is likely to emphasise

  • Cost
  • Customer service
  • Timing
  • Quality
  • Product flexibility
  • Volume flexibility
  • Technology
  • Location

  
• Cost leadership strategy


  Makes the same, or comparable, products more cheaply
• Product differentiation strategy


  Makes products that customers cannot get from other suppliers
• Lean strategy


  To do every operation using less of each resource - people, space, stock, equipment, time, and so on. It organises the efficient flow of materials to eliminate waste, give the shortest lead time, minimum stocks and minimum total cost.
• Five main principles of lean strategy


  • Value - designing a product that has value from a customer's perspective
  • Value stream - designing the best process to make the product
  • Value flow - managing the flow of materials through the supply chain
  • Pull - only making products when there is customer demand
  • Aim of perfection - looking for continuous improvements to get closer to the aim of perfect operations
• Areas of the supply chain where waste is most likely to occur

  • Quality - too poor to satisfy customers
  • Wrong production level or capacity - making products, or having capacity, that is not currently needed
  • Poor process - having unnecessary, too complicated or time-consuming operations
  • Waiting - for operations to start or finish, for materials to arrive, for equipment to be repaired
  • Movement - with products making unnecessary, long, or inconvenient movements during operations
  • Stock - holding too much stock, increasing complexity and raising costs
• Agile strategy


  Concentrates on giving a high customer service by responding quickly to different or changing circumstances
• Two aspects of agility

  • Speed of reaction
  • Ability to tailor logistics to demands from individual customers
• Characteristics of organisations with a customer focus

  • Aim for complete customer satisfaction
  • Allow customers easy access to the organisation
  • Find exactly what they want
  • Design logistics to meet, or exceed, these demands
  • Be flexible and respond quickly to changing customer demands
  • Get a reputation for outstanding quality and value
  • Do after-sales checks to make sure the customers remain satisfied
  • Look outwards so that they are always in touch with customers, potential customers, competitors, and so on
• 7 ways to reduce time in time-based strategies

  • Simplification - making operations simpler
  • Integration - improving information and material flows
  • Standardisation - using standard procedures and materials
  • Concurrent operations - moving away from serial operations and towards parallel working
  • Variance control - ensuring high quality and avoiding waste
  • Automation - to improve effectiveness and efficiency
  • Resource planning - to remove bottlenecks and ensure a smooth flow of materials
• A small, but increasing, number of organisations are developing strategies based around environmental protection
• Increased productivity strategies use available resources as fully as possible
• Value-added strategies look at the series of activities in the supply chain, each of which adds value to the final product
• Diversification or specialisation strategies

  • Diversification - offering the widest range of services and satisfying as many customers
  • Specialisation - focusing on a narrower range of services
• Growth strategies aim to achieve economies of scale and give both lower costs and better service
• Logistics mission


  To contribute to corporate aims by moving the materials needed by production into the company, moving work in progress through the company, and moving finished products out to customers. To give a flexible, reliable and cost effective service that completely satisfies customers, both internal and external.
• Three factors managers must consider when designing a logistics strategy

  • Higher strategies - the organisation's goals and context for logistics decisions
  • The business environment - factors that affect logistics but over which it has no control
  • The organisation's distinctive competence - assets that set it apart from competitors

  
• Logistics audit


  To collect relevant information about existing practices and performance of logistics. It gives a systematic review of current operations, describing the procedures, costs, resources, utilisation, performance, products, and all other relevant details.

  
• SWOT analysis


  • Strengths - what the organisation does well, features it should build on
  • Weaknesses - problems the organisation has, areas it should improve
  • Opportunities - openings that can help the organisation
  • Threats - hazards that can damage it
• 8 steps to build logistics analyses

  • Do a logistics audit
  • Analyse higher strategies from a logistics viewpoint
  • Design the general features of supply chains
  • Set specific goals for logistics activities
  • Design the organisational structure, controls and systems
  • Benchmark logistics
  • Implement the strategy
  • Monitor actual performance and look for improvements
• The strategic importance of logistics is clear from its role as an essential function, its inclusion in mission statements, its involvement in important decisions, its effect on long-term performance

  
• A logistics strategy describes the long-term decisions, plans, policies and culture for logistics. It is a functional strategy that shows how logistics will contribute to an organisation's success.

  
• The focus of the logistics strategy shows which aspects are considered most important, and we can use this to describe some generic logistics strategies such as lean or agile.

  
• Implementing the strategy


  1. Translate long-term aims into lower decisions

  2. Carry out work to achieve them
• Common problems with implementing logistics strategies

  • People who design the strategies are not responsible for their implementation
  • Strategies are badly designed, perhaps with the wrong aims or focus
  • It is impossible, or very difficult, to implement them properly
  • They do not take enough account of actual operations, perhaps because there were not broad enough discussions
  • They are over-ambitious, or somehow not realistic
  • They ignore key factors, or emphasise the wrong features
  • People only pay lip-service to supporting the strategies
  • Enthusiasm for the strategies declines over time
• Factors that help devise a strategy that can be used

  • Flexible and innovative organisational structure
  • Formal procedures for translating strategy into lower-level decisions
  • Effective systems to distribute information and support management decisions
  • Open communications which encourage free exchange of ideas
  • Acceptance that strategies are not fixed, but continue to evolve over time
  • Control systems to monitor progress
  • Convincing everyone that the strategy is beneficial
  • Developing an organisational culture that supports the strategy
• Supply chain length


  Number of tiers, or intermediaries, that materials flow through between source and destination
• Supply chain breadth


  Number of parallel routes that materials can flow through
• Factors affecting location of facilities


  • Location of customers
  • Location of suppliers and materials
  • Culture
  • Government attitudes
  • Direct costs
  • Indirect costs
  • Exchange rates
  • Social attitudes
  • Organisation
  • Operations
• Approaches to location decisions

  • Infinite set approach
  • Feasible set approach
• Total variable cost of a facility


  Operating cost + Inward transport cost + Outward transport cost

  
• Scoring model for location decisions


  1. Decide relevant factors

  2. Give each factor a maximum possible score

  3. Consider each location and give an actual score for each factor

  4. Add the total score for each location and find the highest

  5. Discuss the result and make a final decision
• Location planning


  1. Identify the features needed in a new location

  2. Use an infinite set approach to find the best area for locations

  3. Search around this area to find a feasible set of available locations

  4. Use a feasible set approach to compare these alternatives

  5. Discuss all available information and come to a decision
• Specific procedure for location planning

  1. Examine the overall aims, looking at the logistics strategy and other plans

  2. Do a logistics audit, describing the details of the current logistics system