3. Aims of the chapter
Relating strategy to lower decisions
Areas for decisions in implementation
Managing change
Case study-Passenger interchange.
4. AIMS OF THE CHAPTER
After listening us you should be able to:
■ SEE how a logistics strategy fits into an
organisation’s broader decisions
■ OUTLINE the strategic importance of logistics
■ DEFINE a logistics strategy and DISCUSS its
focus
■ DISCUSS alternative logistics strategies
■ APPROACH the design of a logistics strategy
5. STRATEGY IMPLEMENTATION
Is the process that turns
strategies and plans into
action in order to achieve
strategic objectives and goals
7. Strategies only become effective when
they are implemented. This means that the
long term aims are translated into lower
decision ,and the work is carried out to
achieve them.
8. Strategic are concerned with more detailed
tactical and operational decisions. The
distinction between strategic ,tactical and
operational decision are not really this clear.
9. When we talk about
implementing a logistic
strategy we mean making the
lower decision, and
translating the general aims
of the strategy positive
action. We actually do what
is necessary to achieve the
aims of the strategy.
10. Difficulties with implementation
It can be difficult to translate a logistic
strategy into lower decision. This is obviously
true when the strategy is poorly designed,
and lower managers have to translate vague
concepts like ‘‘global leadership’’ into actual
operations.
11. There are two options at this point;
First; managers can say that the strategy has
been carefully designed, and everyone must
work harder or find new, innovative ways of
achieving the target.
Second; managers can say that the practical
difficulties are too great, and that there was a
mistake in setting unrealistic target.
12. Some common problem with implementing
logistic strategy
Strategies are badly designed,perhaps with
the wrong aims or focus
They ignore key factors, or emphasise the
wrong feature.
People who design the strategies are not
responsible for their implementation
İt is imposible, or very difficult to implement
them properly
13. How we do solve these problem?
An organisational structure that is flexible
and allows innovation
Developing an organisational culture that
supports the strategy
Open communication which encourage the
free exchange of ideas
Effective systems to distribute information
and support management decision.
15. AREAS FOR DECISIONS IN
IMPLEMENTATION
- Types of decision
- Structure of the supply chain
- Location of facilities
- Ownership and outsourcing
- Enabling practices
- Capacity
16. Types of Decision
Implementation is convenient to describe
two types of strategic decision:
1- Sets out the principles we work with
2- Shows how the organisation will achieve
these principles
17. - These decisions have “Long Term”
consequences.
- The first decision type is concerned with
“aims and designs”
- The second decision type is concerned with
“practicalities and implementation”
19. Traditional Views
Ballou says that;
When moving to the implementation of a strategy,
we need to concentrate on four areas:
- Customer Service
- Facility Location
- Inventory Policy
- Trasnsport
20. Helming and Zonnenberg suggest
decisions in five areas:
- Supply Chain Configuration
- Enabling Practices
- Strategic Relationships
- Application of Information Technology
-Organisation
21. “ Companies hurl staggering sums of money and
human resource at their supply chain
infrastructure, only to fail at implementing their
supply chain strategy.”
22. A BROADER VIEW
A broader view of implementation says that;
we should consider decisions in every function of
logistics from procurement through to final
delivery.
23. Structure of The Supply Chain
The supply chain for a product consists of tiers
of suppliers feeding materials from original
sources into its operations, and then tiers of
customers moving materials out to the final
customers.
25. Some supply chains have few tiers of
customers and suppliers,while others have
many; some chains have very simple flows of
materials, while others have complex and
convoluted networks.
29. Some factors that affect the structure
of supply chain:
- Type of customer demand
- Economic climate
- Availability of logistics services
- Culture
- Rate of innovation
- Competition
- Market and financial arrangements
30. Supply chain length;
is the number of tiers or intermediaries, that
materials flow through between source and
destination.
Example: Exportes might use a series of
logistics centres, transport operators, agents,
freight forwarders, brokers and agents to move
materials through different parts of their
journey.
31. Supply chain breadth;
is the number of parallel routes that materials
can flow through.
Example: Thornton’s has a narrower chain,
and most of their chocolate sells through their
own shops; Pigalle rt Fils has a very narrow
chain and they only sell their chocolate in two
shops in Belgium.
33. The best choice of length and breadth
depends on;
- The amount of control that an organization
wants over its logistics
- The quality of the service
- The cost
34. Broadening the chain gives high customer
service, but it increases costs and reduces the
manufacturer’s control.
Making the supply chain long and narrow can use
intermediaries to reduce costs, but the
manufacturer loses some control and the
customer service does not improve.
35. We can illustrate some of the options for
a supply chain with a basic product,
such as shoes.
37. Best location for facilities;
For example Warehouse;
-areas with development grants
-factories
-customers
-transport
38. Location effect on logistics
performance ;
Fast delivery →→use local warehouses
Low cost →→stocks in large,centralised
warehouses
Import and export →→warehouses near to
ports or rail terminals
Manufactures goods →→stock of finished
products near the factory
39. Qestions of location?
It should be tackled very carefully,as they
have a considerable impact over the long
term.
Once a facility is open it is difficult to close it
down or move it.
40. Location is not an isolated
decision.WHY?
It leads to a series of related decisions about
the work done in each location,
For example;
- size of each facility
- level of technology used
- layout of resources
- customers to serve from each location…
41. Ownership and Outsourcing
One organisation does not have to own a
supply chain to get the benefits of integration.
Suppliers and customers can get mutual benefits
by working together, typically in a strategic
alliance.
42. Supplier–customer partnerships
→→ easiest to imagine and they have most
effect on the supply chain.
A similar arrangement can cover a whole
range of services,such as:
-electricity supply,banking service and office
cleaning
43. A common form of partnership for logistics
has a specialised company looking after all
of an organisation’s transport.
This arrangement has the advantages of an
efficient and experienced specialist to look
after the transport, while the organisation can
concentrate on its core operations.
44.
45. Why stop at transport
An organisation can form partnerships with
other companies to look after warehousing,
purchase of materials, materials handling,
and many of the other functions of logistics.
When one company uses other companies to
run its logistics, it is called third party or
contract logistics.
The use of third party logistics is a special
type of ‘make-or-buy’ decision
46. A fuller list of potential benefits includes:
Lower fixed costs, with customers only paying for services
they use
Specialist suppliers who have expertise and use the best
systems and practices
Suppliers can combine work from several customers to get
economies of scale
Guaranteed high, and agreed, levels of customer service
Flexible capacity, dealing effectively with peaks and
troughs in demand
Lower exposure to risk from, say, varying demand
Increased geographical coverage and local knowledge
A convenient way of entering new markets
47. Rowley summarises the benefits by saying
‘The results of successful outsourcing are
service improvement, cost reduction and
quality enhancement’
48. There are disadvantages:
Reduced control
Inability to respond to unusual circumstances
More complicated communications
Conflicting objectives,
Less control over costs…
49. European contract logistics
Huge business in Europe
Total cost of logistics was $ 150 billion in 1999
(26%→third party suppliers)
4 years later it’s increase 30% higher
Germany (28%)- France(20%)- UK(17%)
Because each of the economies has developed differently,
and different logistics requirements, the use of third parties
varies quite widely.
Germany, France and the UK each spend about $10
billion a year on third party logistics(grow at 8%)
But growth will be faster in Italy and Spain but low levels of
outsourcing.
50. Enabling Practices
Enabling practices are the activities
associated with the supply chain that allow it
to work efficiently
For example; reliable information processing
is an enabling practice that allows logistics to
function properly
51. Organisation has designed the structure of
its supply chain, and found the best locations
for facilities
For example; use just-in-time methods to
reduce stocks, EDI (Electronic Data
Interchange) to link with partners, or
procurement via websites
52. The idea of the enabling practices as
supporters of logistics can be important
If we look at ; series of organisations in the
same business → envolved in similar ways
(whisky distillers or detergent manufacturers)
53. Capacity
The capacity of a supply chain is the largest
amount of materials that can flow through it in a
given time.
(lorry→25 tonnes, airline→450 passengers etc.)
54. Bottleneck → not all parts of a chain have the
same capacity, so the overall capacity is set by
the part with the smallest individual capacity
If wholesaling forms the bottleneck with a
capacity of 200 units of a product an hour, this
sets the capacity of the whole supply chain –
even if other parts have a much higher capacity
55. The only way of increasing the capacity of the
supply chain is to increase the capacity of the
bottleneck; adding more resources elsewhere
has no effect, it only increases the amount of
spare facilities and reduces the utilisation.
56. The solution:
To get a smooth flow of materials through the
supply chain, we have to make sure that each
part has an appropriate capacity. This means
that the overall capacity matches total demand,
and the capacity of each part is matched, so
that there are no restrictive bottlenecks
57. Ralston Energy Systems(RES)
affiliate of Eveready Battery Company (EBC)
manufacturing plants in America, Europe and Asia
leading brand range of batteries and torches
Until 1998 RES ran two warehouses within the Czech
Republic
-The first was a bonded warehouse used to store imported
materials-second warehouse was a ‘sales warehouse’ run
by RES on its main site
Two other trucking companies were involved in export and
import operations.The sales warehouse was about three
times the size of the bonded warehouse
59. This structure had a number of weaknesses:
The sales warehouse was leased from a
competitor of RES.It was not appropriate to store
finished goods in a competitor’s facilities.
The sales warehouse had become too small
The sales warehouse had poor arrangements for
loading and unloading trucks
All goods imported into the Czech republic were
sent to the bonded warehouse, moved by weekly
Local distributors charged high rates for each
truck load delivered.
60. Their solution was to outsource logistics
to a third party.
RES effectively closed its sales warehouse,
and moved these activities to the new
operator.
61. The new service brought the following
benefits:
Flexible warehousing space
Variable warehousing costs
Variable distribution costs
Increased service quality
Associated services from the operator
Saving overhead costs of management in the
warehouse
Extending opening times from 0700 to 1900
Removing the conflict of interest with a competitor-
owned warehouse
Managing remote stock in Slovenia from the same
facilities
62. MANAGING CHANGE
You’ll never
get me up on
one of those
butterfly
things!
63. Without accepting the fact that evrything
changes,we can not find perfect
compusure.But unfortunately, altough it is
true,it is diffucult for us to accept
it.Because we cannot accept the truth of
transience we suffer.(Shunryu Suzuki)
65. CHANGE;
Everywhere, it is constantly changing.
To survive organizations need to decide,not
whether to change,but when and how to
make it occurs most succesfully.
Change management tools are poorly
understood and/or hard to implement
To manage change, manage yourself first,
influence others later
66. As the strategy
evolves, the operations
of the whole logistics
function must adjust
and move forward. New
practices affect
everyone.
Unfortunately, this
presents a problem, as
most of us do not really
like changes.
68. What We Know About Change
Change will not stop- Complex change is
it will only go faster typically accepted if
No matter how well enough time is
planned, it will not be allowed
trouble free Rapid change can
Each of us is occur if it’s a small
accountable to adjustment
making change Most people initially
acceptable resist rapid, complex
change
69. People Respond to Change….
At different rates
At multiple levels:
personally,
professionally,
socially and
organizationally
By seeing it as
opportunity or danger
Successfully, by
being resilient
70. Many organisations prefer to stick to their
old practices. Unfortunately, this allows
more flexible competitors to gain an
advantage, and their performance
inevitably declines.
71. Some signs that an organisation is not
changing to meet new circumstances
include:
low sales and falling market share, as old
products are overtaken by competitors
old-fashioned attitudes and operations
poor communications within the
organisation and with trading partners
too much inflexible top management with
no new appointments
72. Change Can Be Perceived As Positive or Negative
Change is a normal part of
business and if we do not
respond we will fall behind
competitors.
To be more positive, we
should welcome change as
it creates opportunities,
improves work conditions,
gives better practices and
performance, and more
interesting, better-paid and
more secure jobs.
This new attitude does not
happen by chance, but it
needs careful management
73. Organisations typically move through
a series of stages:
1. Denial – where employees deny that there is
a need for change
2. Defence – defending the current way of doing
things and criticising new proposals
3. Discarding – beginning to move away from
the old ways and towards the new ones
4. Adoption – using the new ways and accepting
that they are beneficial
5. Integration – assuming the new ways are
normal and using them naturally.
74. RATE OF CHANGE
Rate of change is important .because some
organizations change very quickly , such as
Intel which works at the frontiers of
technology and is continually developing new
products.
Others change very slowly, and even make a
virtue out of stability, such as Morgan sports
cars whose basic design originated in the
1930s.
78. SUMMARY
Hasan Celal KÖK
The logistics strategy sets the overall direction
for logistics. Implementing the strategy translates
this into a series of lower decisions and actions.
Unless the strategy is designed properly,
implementation can be difficult or impossible.To
avoid these problems, managers should consider
implementation during the design of the strategy
79. Some strategic decisions are concerned with
principles, the first of these are considered
more in the design of a strategy, second are
considered more in the implementation.
The supply chain must continually evolve to
keep up with changing conditions.
An important question concerns the rate of
change.Business process re-engineering looks
for more radical changes.
80. CASE STUDY
PASSENGER INTERCHANGE
Congestion is increase on the roads,
especially in major cities. Some of this is due to
commerical vehicles, but by far the majority is
due to private cars.
83. Buses are the most flexible from of public
transport so many people use the bus for go to
another city
84. But there are some difficulties items
with the time for a journey these are:
Joining time
Waiting time
Journey time
Leaving time
85. In practise, most major cities such as London,
Paris have sucessful interchanges, and they are
spreading into smaller towns.
86. As a result there has been an increase in the
use of public transport a reduction in the number
of cars in the town centre and improved air
quality.
87. QUESTIONS OF CASE STUDY
What are the benefits of integrated
public transport systems?
Are the problems of moving people
significantly different from the problems of
moving goods or services?
What are the benefits of public transport
over private transport? Should public
transport be encouraged and, if so, how?
