Distribution Planning and Control: Managing in the Era of Supply Chain Management

834 Pages·2004·24.904 MB·English

by  David Frederick Ross (auth.)

Distribution
Planning and Control
Distribution
Planning and Control
Managing In The Era Of Supply
Chain Management
Second Edition
David Frederick Ross
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Distribution: Planningand Control
Managing in theEra of Supply Chain Management
Second Edition
byDavid FrederickRoss
ISBN: 1-4020-7686-X
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TABLE OF CONTENTS
PREFACE I xi
UNIT 1. DEFINING THE SUPPLY CHAIN MANAGEMENT
ENVIRONMENT I 1
1. The RiseOf Supply Chain Management I 3
Advent ofSupply Chain Management / 4
Evolution ofSupply Chain Management / 10
Defining e-SCM / 23
SCM and Logistics / 36
Summary / 51
Questions for Review / 55
References / 56
2. Components Of Distribution Management I 59
Definingthe Term "Distributor" / 60
Characteristics ofthe WholesaleDistributor / 65
Role ofthe Distribution Function / 75
Understanding the Wholesale Distribution Industry / 79
Summary / 92
Questions for Review / 94
References / 95
UNIT 2. TOP MANAGEMENT PLANNING I 97
3. BusinessAnd Strategic Planning I 101
DefiningBusiness Goals and Strategies / 102
Developingthe Business Plan / 114
Summary / 129
Questions for Review / 131
References / 132
4. Forecasting In The Supply Chain Environment I 133
Forecasting- An Overview / 134
vi CONTENTS
ForecastingTypes / 140
Managingthe Forecast / 160
Summary / 169
Questions forReview / 171
Problems / 171
References / 173
5. Demand, Operations, And Channel Planning I 175
Demand,Operations, and Channel Planning- Overview / 176
Elements ofMarketingPlanning / 181
Elements ofSales Planning / 195
Elements ofProductionPlanning / 202
Elements ofLogisticsPlanning / 210
Elements ofSupply Channel Planning / 223
IntegratingDemand, Operations,and Channel Plans / 236
Summary / 238
Questions forReview / 241
References / 242
UNIT 3. DISTRIBUTION OPERATIONS PLANNING / 243
6. Managing Supply Chain Inventories I 245
Elements ofSupply Chain InventoryManagement / 246
Principles ofSupply Chain InventoryManagement / 255
The InventoryManagementProcess / 262
InventoryCosts / 266
InventoryControl / 281
Summary / 292
Questions forreview / 294
Problems / 294
References / 296
7. Replenishment Inventory Planning I 297
InventoryPlanningTechniques / 298
InventoryReplenishmentTechniques- An Overview / 305
Definingthe Order Point / 310
OrderQuantity Techniques / 328
Just-In-Time / 335
InventoryReplenishmentPlanningProcess / 341
InventoryOperations inthe Supply Chain Environment / 343
Summary / 353
Questions forReview / 355
Problems / 355
CONTENTS vii
References / 357
8. Distribution Requirements Planning I 359
Problems with Statistical Techniques / 360
Historical View / 366
DRP Processing / 374
DRP in a SupplyChain Environment / 383
DRP PlanningProcess / 389
DetailedLogistics CapacityPlanning / 393
DRP and SupplyChain Management Systems / 401
Summary / 412
Questions for Review / 414
Problems / 414
References / 416
UNIT 4. DISTRIBUTION OPERATIONS EXECUTION I 417
9. Customer Relationship Management I 419
DefiningCustomerRelationship Management / 421
DemandManagement / 429
OrderManagement and Fulfillment / 437
CustomerCare Management / 447
The Internet-EnabledCRM Environment / 465
Summary / 470
Questions for Review / 472
References / 472
10. Supplier Relationship Management I 475
DefiningPurchasing / 477
Defining SupplierRelationship Management / 486
AnatomyofPurchasing Strategy / 492
Purchase OrderManagementProcess / 501
PerformanceMeasurement / 515
Impact ofe-Business on SRM / 522
Summary / 529
Questions for Review / 531
Problems / 531
References / 533
viii CONTENTS
11. Warehousing / 535
DefiningWarehousing / 537
DevelopingWarehouse Strategies / 550
TheWarehouseManagementProcess / 557
TrendsinModern Warehousing / 571
Designingthe WarehouseNetwork / 577
WarehouseLayout and Equipment / 585
Summary / 604
Questions forReview / 606
References / 607
12. Transportation / 609
The Scope ofTransportation / 610
ModesofTransportation / 620
Types ofTransportation / 630
TransportationManagementProcess / 636
Issues ConfrontingTransportation / 652
Logistics Service Providers / 658
Summary / 670
Appendix / 673
Questions forReview / 676
References / 677
UNIT 5. INTERNATIONAL DISTRIBUTION AND DISTRIBUTION
INFORMATION TECHNOLOGY / 679
13. International Distribution / 679
Forces Driving Globalization / 683
DevelopingGlobal Strategies / 693
Channel Strategies / 699
ManagingGlobal DistributionNetworks / 705
InternationalTransportationand Warehousing / 718
InternationalPurchasing / 726
Today's Global Trade Environment / 737
Summary / 742
Questions forReview / 744
References / 745
14. Information Technology and Supply Chain Management
/ 747
Foundations ofEnterpriseInformationTechnologies / 748
Configuringthe EIS Solution / 756
InformationTechnology Solutions / 772
CONTENTS ix
ImplementationIssues / 782
Summary / 791
Questions for Review / 793
References / 794
BIBLIOGRAPHY / 795
INDEX / 803
PREFACE
When work began on the first volume ofthis text in 1992,the science of dis
tribution management was still very much a backwater of general manage
ment and academic thought. While most ofthe body ofknowledge associated
with calculating EOQs, fair-shares inventory deployment, productivity
curves, and other operations management techniques had long been solidly
established, new thinking about distribution management had taken a definite
back-seat to the then dominant interest inLeanthinking, quality management,
and business process reengineering and their impact on manufacturing and
service organizations. For the most part, discussion relating to the distri
bution function centered on a fairly recent concept called Logistics Manage
ment. But, despite talk ofhow logistics could be used to integrate internal
and external business functions and even be considered a source of com
petitive advantage on its own, most of the focus remained on how companies
could utilize operations management techniques to optimize the traditional
day-to-day shipping and receiving functions in order to achieve cost contain
ment and customer fulfillment objectives. In the end, distribution manage
ment was, for the most part, still considered a dreary science, concerned with
expediting and thetedious calculus oftransportation rates andcosttrade-offs.
Today, the science ofdistribution has become perhaps one of the most im
portant and exciting disciplines in the management ofbusiness. In the space
of a decade or so the management of supply and distribution channels has
catapulted to world-wide prominence as the central fulcrum in the search for
competitive advantage. Since the early 1990s, a host of critical trends,
events, and ideas have intervened that have dramatically altered the theory
and practice oflogistics management and opened fresh areas for research and
practicalapplication. Much ofthedialogue isthe result ofthe maturation ofa
number of radically new marketplace dynamics such as the growth in power
of the "voice ofthe customer," demands for the mass customization of prod
ucts and services, a veritable explosion in globalization and outsourcing, a
heavy focus on reengineering, cost control, and cash conservation, the end of
the vertically integrated enterprise, and several order-of-magnitude break
throughs in information and communications technologies. But of allthe dy
namics impacting today's business environment, perhaps the two most im-
xii PREFACE
portant are the rise ofthe concept ofSupply Chain Management (SCM) and
the birthofthe Internet.
In 1992 SCM and the Internet were not even on the radar screen oflogis
tics practitioners and theorists. Simply put, the Internet did not exist and was
totally in the realm of odd pockets of"computer geeks" and very academic
scientists. As for SCM, while a few visionaries began talking about it as
early as 1990, it was really not until the middle ofthe decade that the concept
began to gain traction as a new management science evolving out of the
logistics concept.
Today, SCM and the Internet have come to dominate all thinkingand it has
become hard to talk about one without reference to the other. The literature
on the topic has grown astronomically. Literally hundreds of articles and
books have generated countless pages ofperspectives on SCM/Internettheory
and practiceoverthe last few years. The discipline has its ownjournal -Sup
ply Chain Management Review (founded 1996) - and trade magazines with
evocativetitles, such as e-Supply Chain Management, Supply Chain Technol
ogy News, and others, continue to emerge. College courses and business
seminars discussingjust about every aspect ofchannel management abound.
Most consulting firms have whole practice areas devoted to SCM. The con
cept has actuallyengendereda whole genus ofcomputersoftware.
The rise to dominance ofthe convergence ofSCM and the Internet has not
happened by chance. It has evolved as a response to the very real require
ments that companies must now act through theirsupply chains ifthey expect
to be capable ofproviding the market-winning value demanded by the cus
tomer; they must be agile and scalableto bringnew products to market faster,
flexible in the design ofproduction and distributionprocesses, and capable of
quick supply channel redesign; and they must be capable ofengineering daz
zlingly fast flow order-to-delivery cycles utilizing Internet technologies that
eliminate channel costs and redundancies while increasing customer con
venience. While the rise and fall ofthe Internet economygave witness to the
relative immaturity ofthe dot-com e-business revolution, the dramatics were
an unfortunate side-show to the slow, but real changes being engineered by
savvy executives who were coming to understand that the emerging ver
nacular ofidioms like connectivity, interoperability, networking, e-business,
and collaboration were more thanjust the newest management buzzwordsbut
were, in reality, the kernels ofnew paradigms ofhow business in the twenty
first centurywouldbe conducted.
The changes to the concept and practice of distribution management
brought about by the SCM/Internet manifold (termed e-SCMin the pages to
follow) is the main driver forthe redraftingofthis text. While the word "sup
ply chain management" appeared in the original 1996 edition, it was given
scant attention. In its place, the concept ofIntegrated Enterprise Manage-