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06 Planning framework for logistics

Rushton, Alan Kogan Page ePub

06

Planning framework for logistics

Introduction

The need for a positive approach to planning was discussed in Chapter 2, together with the concept of a logistics planning hierarchy. In this chapter a more detailed planning framework for logistics is described, and some key strategic considerations are introduced. A generalized approach to corporate strategic planning is outlined, and this is linked to a specific logistics design strategy. The main elements of this design strategy are described. Finally, some of the fundamental influences on logistics network planning and design are detailed, in particular, product characteristics, the product life cycle, packaging and unit loads.

Pressures for change

Historically, many organizations have adopted a piecemeal and incomplete approach to their strategic planning. This is particularly true in the context of logistics, where individual functions within the logistics or supply chain have often been sub-optimized to the detriment of the logistics chain as a whole. One of the reasons for this incomplete approach is the pressure for change exerted on companies from a wide variety of sources. Figure 6.1 provides an illustration of some of these pressures. They include:

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04 Channels of distribution

Rushton, Alan Kogan Page ePub

04

Channels of distribution

Introduction

This chapter considers the alternative ways in which products can reach their market. Different types of distribution channel are discussed, and an approach to channel selection is described. Finally, the key decision of whether to run an own-account distribution operation or whether to outsource to a third party is introduced.

Physical distribution channel is the term used to describe the method and means by which a product or a group of products are physically transferred, or distributed, from their point of production to the point at which they are made available to the final customer. For consumer products the end point is, generally, a retail outlet but, increasingly, it may also be the customers house, because some channels bypass the shop and go direct to the consumer. For industrial products the end point is likely to be a factory.

In addition to the physical distribution channel, another type of channel exists. This is known as the trading or transaction channel. The trading channel is also concerned with the product, and with the fact that it is being transferred from the point of production to the point of consumption. The trading channel, however, is concerned with the non-physical aspects of this transfer. These aspects concern the sequence of negotiation, the buying and selling of the product, and the ownership of the goods as they are transferred through the various distribution systems.

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05 Key issues and challenges for logistics and the supply chain

Rushton, Alan Kogan Page ePub

05

Key issues and challenges for logistics and the supply chain

Introduction

In this chapter, many issues are raised and discussed with the aim of highlighting the most important challenges that need to be addressed by logistics and supply chain professionals. In recent years there have been very significant developments in the structure, organization and operation of logistics, notably in the interpretation of logistics within the broader supply chain. Major changes have included the increase in customer service expectations (Chapter 3), the concept of compressing time within the supply chain (Chapter 14), the globalization of industry in terms of both global brands and global markets (Chapter 2) and the integration of organizational structures (Chapter 10). These and other key developments are discussed in greater detail elsewhere in this book, but others are reviewed below. Issues may be external to logistics, such as deregulation, or may indeed derive from changes within logistics, such as improved handling or information technology.

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35 Outsourcing management

Rushton, Alan Kogan Page ePub

35

Outsourcing management

Introduction

The management of outsourcing arrangements is fundamental to the success of the relationship between the third-party logistics (3PL) provider and the customer. All too often both the service provider and/or their client do not fully appreciate the need for sound management. Their roles in ensuring a successful relationship are essential. Although it is, of course, the responsibility of both parties to make the relationship work, each organization must play its own part.

This chapter discusses the need for managing an outsourced contract, including the causes and implications of failure, looking at the responsibilities of each party. The key factors required in managing a successful relationship are then examined, including partnership and collaboration, active engagement between the 3PL and the client, continuous improvement, the sharing of benefits and communications. For almost all new outsourcing arrangements, the initial issue after the contract has been successfully negotiated is the successful implementation of the operation. This process is discussed.

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08 Supply chain segmentation

Rushton, Alan Kogan Page ePub

08

Supply chain segmentation

Introduction

As noted in Chapter 2, a one-size-fits-all approach to logistics is not appropriate in most instances. Some form of supply chain segmentation is therefore necessary for a company to satisfy the various service and cost needs of its customers. In addition to the channel options discussed in Chapter 4, this raises the question of exactly how a companys own supply chain should be segmented. For example, one type of supply chain may be appropriate for large bulky items and another for small parcels. Similarly, a supply chain may be necessary for highly demanding customers separate to that generally available to the market. There are many different ways in which supply chains may be segmented and this chapter explores some of the more common segmentation bases that are available.

Product segmentation

It may be necessary to have different supply chains because of the very nature of the products. For example, when delivering to petrol stations the fuel may be delivered in large road tankers whereas the food and other items for the petrol forecourt shop would need to be delivered in clean, enclosed vans or trucks. Some key product characteristics were described in Chapter 6. Such product characteristics are often an important basis for supply chain segmentation. Examples include:

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