CHAPTER 18

Measuring and
Selling the Value of
Logistics
 18-2 a
Government (political and legal environment)
Inadequate Possible target Possible target
New product
performance markets (market grid) markets (market grid)

Evaluation of consumer
Corporate Marketing
Company strengths Possible target objectives and objectives and
and weaknesses markets (market grid) strategy strategy

A Evaluation of target
market(s) Distortion

Selection of target
market(s) Manager’s
Product perceptual
Formulate supply chain screen
Competitive

Social and
economic
Price objectives and strategy
Motivation
Determine supply chain
Promotion Perception
structure alternatives Evaluative Learning
and evaluate criteria Personal
Place Select supply chain Background
structure -specialized
education
Figure -role orientation
Formulate a strategic Program other marketing
-lifestyle
18-1 logistics plan Mix components

McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
 18-3b
18-2

Generate alternatives re
specific supply chain
members
Evaluate/select individual
B supply chain members
Measure and evaluate
performance

Yes
Satisfactory?
D
C
No
Yes
Can performance
be improved?

No
No
Is supply chain
structure change required?

Yes
Yes Will a change in
supply chain structure Figure 18-1
suffice?
No
cont.
Technological
McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
 Components of the 18-4
18-3

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
McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
 Four Categories of Variables 18-5
18-4

Must Be Identified

1. Customer service effectiveness

2. Logistics efficiency
3. Utilization of assets
4. Competitive practices

McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
 Making Logistics Decisions 18-6
18-5

•Corporate objectives and strategy

•Marketing objectives and strategy
Strategic •Supply chain objectives and strategy
•Customer service requirements

•Make/buy
•Number/location/size of facilities
•Transport modes
Structural •Degree of automation
•Facility layout/design
•Organization
•Supplier/customer linkage
•Site selection Logistics decisions
•Inventory deployment are generally made
Functional •Carrier/vendor selection hierarchically, but in
•Systems capabilities iterative manner.
•Roles and responsibilities

•Operating policies
•Operating control rules
Operational •Operating procedures
•Routing and scheduling

McGraw-Hill/Irwin Copyright
Source: William © 2001 Andersen
C. Copacino, by The McGraw-Hill Companies,
Consulting, 2000. All rightsInc. All rights
reserved by the reserved.
author..
 Logistics Strategy Integrates 18-7
18-6

Eight Key Areas

Customer
service

Channel Network
design strategy

Warehouse
Transportation Materials
design and
management management
operations

Organization and
Information technology
change management

McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
 Corresponding Questions 18-8aa
18-7

Representing Each of the Key Areas

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?
McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
 Corresponding Questions 18-9bb
18-7

Representing Each of the Key Areas (cont.)

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?

McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.