CHAPTER18MeasuringandSellingtheValueofLogisticsCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin18-2FormulateastrategiclogisticsplanDeterminesupplychainstructurealternativesandevaluateSelectsupplychainstructureFormulatesupplychainobjectivesandstrategyEvaluationofconsumerPossibletargetmarkets(marketgrid)Evaluationoftargetmarket(s)Selectionoftargetmarket(s)CompanystrengthsandweaknessesPossibletargetmarkets(marketgrid)Possibletargetmarkets(marketgrid)NewproductInadequateperformanceGovernment(politicalandlegalenvironment)CorporateobjectivesandstrategyMarketingobjectivesandstrategyCompetitiveMotivationPerceptionLearningPersonalBackground-specializededucation-roleorientation-lifestyleManager’sperceptualscreenEvaluativecriteriaProgramothermarketingMixcomponentsProductPricePromotionPlaceDistortionFigure18-1AaCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin18-3GeneratealternativesrespecificsupplychainmembersWillachangeinsupplychainstructuresuffice?Evaluate/selectindividualsupplychainmembersMeasureandevaluateperformanceIssupplychainstructurechangerequired?Canperformancebeimproved?Satisfactory?TechnologicalNoYesNoNoNoYesYesYesCBDFigure18-1cont.18-2bCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin18-4ComponentsoftheStrategicLogisticsPlan1.Managementoverview2.Statementofthelogisticsobjectives3.Descriptionoftheindividualcustomerservice,inventory,warehousing,orderprocessingandtransportationstrategies4.Outlineofthemajorlogisticsprogramoroperationalplans5.Forecast6.Logisticsfinancialstatement7.Descriptionofthebusinessimpactofthelogisticsstrategy18-3Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin18-5FourCategoriesofVariablesMustBeIdentified1.Customerserviceeffectiveness2.Logisticsefficiency3.Utilizationofassets4.Competitivepractices18-4Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin18-6MakingLogisticsDecisions•Corporateobjectivesandstrategy•Marketingobjectivesandstrategy•Supplychainobjectivesandstrategy•Customerservicerequirements•Make/buy•Number/location/sizeoffacilities•Transportmodes•Degreeofautomation•Facilitylayout/design•Organization•Supplier/customerlinkage•Siteselection•Inventorydeployment•Carrier/vendorselection•Systemscapabilities•RolesandresponsibilitiesStrategicStructuralFunctionalOperational•Operatingpolicies•Operatingcontrolrules•Operatingprocedures•RoutingandschedulingLogisticsdecisionsaregenerallymadehierarchically,butiniterativemanner.Source:WilliamC.Copacino,AndersenConsulting,2000.Allrightsreservedbytheauthor..18-5Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin18-7LogisticsStrategyIntegratesEightKeyAreasCustomerserviceInformationtechnologyOrganizationandchangemanagementWarehousedesignandoperationsTransportationmanagementMaterialsmanagementChanneldesignNetworkstrategy18-6Copyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin18-8CorrespondingQuestionsRepresentingEachoftheKeyAreas1.Whataretheservicerequirementsforeachcustomersegment?2.Howcanoperationalintegrationbeachievedamongthevarioussupplychainmembers?3.Whatisthesupplychainstructurethatbestminimizescostsandprovidescompetitivelevelsofservice?4.Whatmaterialshandling/storagetechnologieswillfacilitateattainingtheserviceobjectiveswithoptimumlevelsofinvestmentinfacilitiesandequipment?a18-7aCopyright©2001byTheMcGraw-HillCompanies,Inc.Allrightsreserved.McGraw-Hill/Irwin18-9CorrespondingQuestionsRepresentingEachoftheKeyAreas(cont.)5.Arethereopportunitiestoreducetransportationcostsinboththeshortrunandthelongrun?6.Cancurrentinventorymanagementproceduressupportmorestringentservicedemands?7.Whatinformationtechnologyisrequiredtogainmaximumefficiencyinlogisticsoperations?8.Howshouldresourcesbeorganizedtobestachieveserviceandoperatingobjectives?b18-7b