Logistics Management and Strategy

343 Pages·2012·5.24 MB·English

Logistics Management and Strategy
Logistics Management
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Competing through the supply chain
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3rd edition i
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Alan Harrison and Remko van Hoek r ic
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A concise, applied and strategic introduction to the subject of logistics and supply chain management, perfect
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for modern managers and students of logistics and supply chain management. y a Competing through the supply chain
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Logistics and supply chain management continue to transform the competitive landscape and have become a
one of today’s key business issues. This third edition of Logistics Management and Strategy continues to take a g
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practical, integrated and international approach to logistics and includes the very latest research to reflect the 3rd edition
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innovative and exciting developments in this subject area.
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A clear framework guides the reader through the four parts of the book, covering:
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l an introduction to logistics and its contribution to competitiveness and value creation,
l leveraging logistics operations within the context of the customer,
l supplier partnerships, interfaces and the challenges of integration,
l leading-edge thinking in logistics and the future challenges ahead.
New to this edition… 3rd
l more on reverse logistics together with green, ethical and CSR issues, edition
l revised chapters on supply chain planning and control and on agility,
l fully revised final chapter ties in the future challenges facing logistics more closely
with the rest of the book. H
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Every chapter features case studies with study questions, activities and end of chapter discussion questions r
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to help students explore logistical concepts in operational detail. Teaching support notes and PowerPoint s
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slides for lecturers can be downloaded from the book’s website at www.pearsoned.co.uk/harrison
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‘Well written and contains a wealth of valuable ideas and concepts.’ n
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Dr Jan de Vries, University of Groningen

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‘Very up-to-date, both in terms of its conceptual framework and n
the topics covered. Remarkably clear and easy to read.’ H
Dr Tony Whiteing, University of Huddersfield
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Alan Harrison is Professor of Operations and Logistics at Cranfield School of Management, and Director of
Research at The Cranfield Centre for Logistics and Supply Chain Management.

Remko van Hoek is Professor of Supply Chain Management at The Cranfield Centre for Logistics and Supply
Chain Management. He is also Vice President Procurement at Nuon in the Netherlands.
Alan Harrison and
Remko van Hoek
www.pearson-books.com
9780273712763_03_COVER.indd 1 18/10/07 13:56:29
LOGI_A01.QXP 3/17/08 9:35 AM Page i
Logistics Management
and Strategy
Competing through the supply chain
LOGI_A01.QXP 3/17/08 9:35 AM Page ii
We work with leading authors to develop the
strongest educational materials in logistics,
bringing cutting-edge thinking and best
learning practice to a global market.
Under a range of well-known imprints, including
Financial Times Prentice Hall, we craft high quality print and
electronic publications which help readers to understand
and apply their content, whether studying or at work.
To find out more about the complete range of our
publishing, please visit us on the World Wide Web at:
www.pearsoned.co.uk
LOGI_A01.QXP 3/17/08 9:35 AM Page iii
Logistics Management
and Strategy
Competing through the supply chain
Third Edition
Alan Harrison
Remko van Hoek
LOGI_A01.QXP 3/17/08 9:35 AM Page iv
Pearson Education Limited
Edinburgh Gate
Harlow
Essex CM20 2JE
England
and Associated Companies throughout the world
Visit us on the World Wide Web at:
www.pearsoned.co.uk
First published 2002
Second edition published 2005
Third edition published 2008
© Pearson Education Limited 2002, 2005
© Alan Harrison and Remko van Hoek 2008
The rights of Alan Harrison and Remko van Hoek to be identified as authors
of this work have been asserted by them in accordance with the Copyright,
Designs and Patents Act 1988.
All rights reserved. No part of this publication may be reproduced, stored in
a retrieval system, or transmitted in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without either the prior
written permission of the publisher or a licence permitting restricted copying
in the United Kingdom issued by the Copyright Licensing Agency Ltd,
Saffron House, 6–10 Kirby Street, London EC1N 8TS.
All trademarks used herein are the property of their respective owners. The use of
any trademark in this text does not vest in the author or publisher any trademark
ownership rights in such trademarks, nor does the use of such trademarks imply any
affliliation with or endorsement of this book by such owners.
ISBN: 978-0-273-71276-3
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Harrison, Alan, 1944–
Logistics management and strategy : competing through the supply chain / Alan Harrison,
Remko van Hoek.— 3rd ed.
p. cm.
Includes bibliographical references and index.
ISBN-13: 978-0-273-71276-3 (pbk. : alk. paper) 1. Business logistics. 2. Industrial
management. I. Hoek, Remko I. van. II. Title.
HD38.5.H367 2008
658.5—dc22
2007046447
10 9 8 7 6 5 4 3 2
11 10 09 08
Typeset in 9.5pt Stone Sans by 3
Printed and bound in Malaysia
The publisher’s policy is to use paper manufactured from sustainable forests.
LOGI_A01.QXP 3/17/08 9:35 AM Page v
To Nick, Katie, Maryl and Ticho, with love.
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Contents
Foreword xv
Preface xvii
Author’s acknowledgements xix
Publisher’s acknowledgements xx
How to use this book xxiii
Plan of the book xxv
Part One COMPETING THROUGH LOGISTICS
1 Logistics and the supply chain 3
Introduction 3
1.1 Logistics and the supply chain 4
1.1.1 Definitions and concepts 6
1.1.2 Supply chain: structure and tiering 8
1.2 Material flow and information flow 12
1.2.1 Material flow 12
1.2.2 Information flow 14
1.3 Competing through logistics 15
1.3.1 Hard objectives 16
1.3.2 Supportive capabilities 18
1.3.3 Soft objectives 22
1.3.4 Order winners and qualifiers 23
1.4 Logistics strategy 25
1.4.1 Defining ‘strategy’ 26
1.4.2 Aligning strategies 27

1.4.3 Differentiating strategies 28
Summary 30
Discussion questions 31
References 31
Suggested further reading 32
2 Putting the end-customer first 33
Introduction 33
2.1 The marketing perspective 34
2.1.1 Rising customer expectations 35
2.1.2 The information revolution 35
2.2 Segmentation 36
2.3 Quality of service 44
2.3.1 Customer loyalty 45
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viii Contents
2.3.2 Value disciplines 46
2.3.3 Customer relationship management (CRM) 47
2.3.4 Measuring service quality 50
2.4 Setting priorities for logistics strategy 50
2.4.1 Step 1: Diagnose current approach to market segmentation 50
2.4.2 Step 2a: Understand buying behaviour 52
2.4.3 Step 2b: Customer value analysis 53
2.4.4 Step 3: Measure logistics strategy driver 54
2.4.5 Step 4: Specify future approach to market segmentation 54
Summary 57
Discussion questions 58
References 63
Suggested further reading 64
3 Value and logistics costs 65
Introduction 65
3.1 Where does value come from? 66
3.1.1 Return on investment (ROI) 67
3.1.2 Financial ratios and ROI drivers 69
3.2 How can logistics costs be represented? 71
3.2.1 Fixed/variable 71
3.2.2 Direct/indirect 76
3.2.3 Engineered/discretionary 78
3.3 Activity-based costing (ABC) 81
3.3.1 ABC example 82
3.3.2 Cost–time profile (CTP) 83
3.4 A balanced measurement portfolio 85
3.4.1 Balanced measures 86
3.4.2 Supply chain management and the balanced scorecard 87
3.4.3 Supply chain financial model 88
3.5 Supply chain operations reference model (SCOR) 89

Summary 93
Discussion questions 94
References 95
Part Two LEVERAGING LOGISTICS OPERATIONS
4 Managing logistics internationally 99
Introduction 99
4.1 Drivers and logistics implications of internationalisation 101
4.1.1 Logistical implications of internationalisation 102
4.1.2 Time-to-market 105
4.1.3 Global consolidation 106
4.1.4 Risk in international logistics 109
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Contents ix
4.2 The tendency towards internationalisation 111
4.2.1 Focused factories: from geographical to product
segmentation 111
4.2.2 Centralised inventories 112
4.3 The challenges of international logistics and location 115
4.3.1 Extended lead time of supply 116
4.3.2 Extended and unreliable transit times 116
4.3.3 Multiple consolidation and break points 116
4.3.4 Multiple freight modes and cost options 117
4.3.5 Location analysis 118
4.4 Organising for international logistics 120
4.4.1 Layering and tiering 120
4.4.2 The evolving role of individual plants 121
4.4.3 Reconfiguration processes 122
4.5 Reverse logistics 129
4.6 Managing for risk readiness 130
4.6.1 Immediate risk readiness 130
4.6.2 Structural risk readiness 131
4.7 Corporate social responsibility in the supply chain 132
Summary 136
Discussion questions 137
References 137
Suggested further reading 137
5 Managing the lead-time frontier 139
Introduction 139
5.1 The role of time in competitive advantage 140
5.1.1 Time-based competition: definition and concepts 140
5.1.2 Time-based initiatives 141
5.1.3 Time-based opportunities to add value 141
5.1.4 Time-based opportunities to reduce cost 144

5.1.5 Limitations to time-based approaches 146
5.2 P:D ratios and differences 146
5.2.1 Using time as a performance measure 147
5.2.2 Using time to measure supply pipeline performance 148
5.2.3 Consequences when P-time is greater than D-time 150
5.3 Time-based process mapping 153
5.3.1 Stage 1: Create a task force 154
5.3.2 Stage 2: Select the process to map 154
5.3.3 Stage 3: Collect data 155
5.3.4 Stage 4: Flow chart the process 155
5.3.5 Stage 5: Distinguish between value-adding and
non-value-adding time 155
5.3.6 Stage 6: Construct the time-based process map 156
5.3.7 Stage 7: Solution generation 156