CHAPTER15OrganizingforEffectiveLogisticsCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin15-2TraditionalLogisticsManagementVPMarketingVPProductionVPFinancialCEO•Salesservice•Channelsofdistribution•Productreturnsandwarranties•Manufacturing•Purchasing/procurement•Traffic•Warehousing•Informationsystems•Budgeting•Inventory•DataprocessingResponsibilitiesObjectivesLargeinventoriesLowinventoriesSmallandfrequentproductionrunsLargerandinfrequentproductionrunsDecentralizedwarehousingPlantwarehousingCentralizedwarehousingLargeproductassortmentFewerproductsaCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin15-3TraditionalLogisticsManagementcont.b•Salesservice•Channelsofdistribution•Productreturnsandwarranties•Manufacturing•Purchasing/procurement•Traffic•Warehousing•Informationsystems•Budgeting•Inventory•DataprocessingResponsibilitiesObjectivesRapidorderprocessingInexpensiveorderprocessingGenerousreturnedgoodspoliciesFasttransportationExpeditedshipmentsMorerigidreturnedgoodspoliciesLowcosttransportationVPMarketingVPProductionVPFinancialCEO15-2bCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin15-4ControlExercisedByLogisticsExecutivesOverSelectedLogisticsFunctionsTransportationWarehousingInventorycontrolOrderprocessingPackagingPurchasingandprocurement89%94%97%98%90%7093959788558381797443766761558703748391558445141Activities19661976198519901999PercentofReportingCompanies15-3Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin15-5OptimalOrganizationalForms•Hollowcorporation–Asmallorganizationofmanagersand“ideapeople”whohireexternalcompaniestoperformvarioustypesofactivities,includingmanufacturing,logistics,distribution,billing,sales,andmarketing.•Virtualcorporation–Anumberofcompaniescometogethertodevelop,produce,sell,anddistributeaproductoraserviceoflimitedscope.15-4Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin15-6OrganizationalStrategiesusedbyManufacturers•Process-based•Market-based•Channel-based15-5Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin15-7OrganizationDesignforLogisticsasaFunctionEngineeringManufacturingMarketing/SalesFinance/AccountingPresidentHumanResourcesLogistics15-6Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin15-8OrganizationDesignforLogisticsasaProgramPresidentLogisticsManufacturingEngineeringHumanResourcesMarketing/SalesFinance/Accounting15-7Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin15-9ComponentsofCorporateandLogisticsMissionStatements•Targetedcustomersandmarkets•Principalproducts/services•Geographicdomain•Coretechnologies15-8aCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin15-10ComponentsofCorporateandLogisticsMissionStatements(cont.)•Survival,growth,andprofitability•Companyphilosophy•Companyself-concept•Firm’sdesiredpublicimageb15-8bCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin15-11ComponentsofanOptimalLogisticsOrganization•Organizational–Structure–Technology•Environmental–Internal–External•Employee–Organizationalattachment–Jobperformance•Managerial–Macro–Micro15-9Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin15-12WaysofImprovingLogisticsOrganizationalEffectiveness•Strategicgoalsetting•Resourceacquisitionandutilization•Performanceenvironment•Communicationprocess•Leadershipanddecisionmaking•Organizationaladaptationandinnovation15-10Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin15-13LogisticsManagementEvaluationMeasures•Logisticscostasapercentofsales•Costofspecificlogisticsfunctions(asapercentofsalesoroflogisticscost)•Performance15-11