Handbook Integral Logistics Management: Operations and Supply Chain Management Within and Across Companies

901 Pages·2022·16.294 MB·English

by  Paul Schönsleben

Paul Schönsleben
Handbook Integral
Logistics Management
Operations and Supply Chain Management
Within and Across Companies
6th Edition
Handbook Integral Logistics Management
Paul Schönsleben
Handbook Integral Logistics
Management
Operations and Supply Chain Management
Within and Across Companies

Sixth Edition
Prof. Dr. Paul Schönsleben
Professor Emeritus ETH Zürich
Zürich, Switzerland
This 6th English language edition is an extended translation of the 8th German language edition.

ISBN 978-3-662-65624-2 ISBN 978-3-662-65625-9 (eBook )
https://doi.org/10.1007/978-3-662-65625-9

Originally published by CRC Press/Taylor & Francis Group, Boca Raton, 2016
© Springer-Verlag GmbH Germany, part of Springer Nature 2023
This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is
concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction
on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation,
computer software, or by similar or dissimilar methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not
imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and
regulations and therefore free for general use.
The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed
to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty,
expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been
made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

This Springer imprint is published by the registered company Springer-Verlag GmbH, DE, part of Springer Nature.
The registered company address is: Heidelberger Platz 3, 14197 Berlin, Germany
Foreword to the Sixth Edition
With great pleasure I’m able to release this sixth edition of Integral Logistics Management
— Operations and Supply Chain Management Within and Across Companies, from now on
published by Springer. The new sections contain material that kept me busy during the past
years in both my research and in the practical application.
First, Integral Logistics Management applies to the classical industry as well as in service
industry. A new section shows how in up-to-date product-service systems both tangibles and
intangibles together make up the offer that meets the demand of the customer. Second, the
chapter on location planning contains a new section which allows to systematically elaborate
the already introduced integrated design of production, distribution, retail, service and
transportation networks. Third, the chapter on sustainability in supply chains newly presents
some examples of frameworks, standards and indices used by firms today to practically
demonstrate their social and environmental performance in their integration with the
economic performance. Fourth, The chapter on product families and one-of-a-kind
production contains a new section on different types of cooperation between the R&D and
Engineering departments in companies with an “engineer-to-order” production environment
(i.e. if at least some design or engineering work occurs during delivery lead time, according
to customer specification). Fifth, for long-term planning, sometimes the action principles are
little or not at all know, e.g. if influence factors of the surrounding systems play a role in an
unknown manner. For this, scenario forecasts, based on scenario planning apply. This is
discussed in a new section of the chapter of demand planning and demand forecasting.
Furthermore, each section now contains its intended learning outcomes (ILO). Still, working
over and tightening of all the other chapters resulted in an only slightly higher number of
pages for the sixth edition compared to the previous edition. The interactive elements were
newly designed to be run by different end-user devices. You can download them from the
website www.intlogman.ethz.ch. In addition, on www.opess.ethz.ch, a case study for some
of the chapters is available, both in English and in German.
The material covers most of the key terms in the five CPIM modules contained in the ASCM
/ APICS CPIM Exam Content Manual, as well as in the CSCP program. Also, previously to
this sixth English edition of the book, Springer has published the eight edition in German,
Integrales Logistikmanagement — Operations- und Supply Chain Management innerhalb
von Unternehmen und unternehmensübergreifend (ISBN 9783-662-60672-8).
Being now professor emeritus from ETH Zürich, I continue to act as chairman of the board
of the A. Vogel group (www.avogel.com). The requirements on a supply chain that processes
fresh plants to remedies and food supplements and distributes them globally are continuously
increasing and will keep on giving me to a great extent insight in the practical applications
and limits of the integral logistics management. Finally yet importantly, I invite readers to
send suggestions and comments to me at [email protected].
Zurich, July 2022 Prof. Dr. Paul Schönsleben
VI Forewords and Acknowledgments
Foreword to the First Edition
Changes in the world outside the company alter the way that we look at problems and
priorities in the company itself. This presents new challenges to company logistics and to
planning & control of corresponding business processes.
While logistics was once understood as storing and transport, today — in the course of the
reorganization of business processes — an integral perspective on company logistics is
making headway. Naturally, products must still be stored and transported. But now these
processes are seen as disturbing factors that should be reduced as greatly as possible. The
current focus lies on that part of the logistics chain that adds value. This chain, from sales
logistics to research and design logistics, production and procurement logistics, distribution
logistics, service and maintenance logistics, and — a recent development — disposal
logistics, now stands as a whole as the subject for discussion. We seek improvements at the
level of the comprehensive, coordinated business process. Moreover, more and more
networks of companies arise that develop and manufacture products in cooperation. The
logistics of these coupled companies must work together closely and rapidly. This also
demands integral management of logistics.
These recent tendencies do not only affect the logistics of the flow of goods itself, but rather
also its planning & control, or, in other words, administrative and planning logistics. The
term PPC (for production planning & control) has in reality long since been expanded to
become planning & control of the entire logistics network.
Changing requirements in the world of practice often call for new theories and methods,
particularly if earlier theories seem to have lost their connection to that world. This
impression indeed often arises when we look at what is happening in company logistics.
Close examination reveals that behind the methods and techniques that are sold on today’s
market with new and rousing catchwords, there is seldom anything that is really new. It
seems reasonable to assume that the attempt to match existing knowledge against the rapidly
changing reality and — in the sense of continual improvement — to expand and adapt it has
met with failure. Here lies the crux of the challenge to company logistics today.
The methods and techniques implemented in planning & control are, interestingly enough,
not dependent on classification of the tasks and competencies in the organization of the
company. For example, techniques of capacity planning do not change according to whether
control tasks are executed by central operations planning and scheduling or, in a decentrali-
zed fashion, by the job shops. The algorithms also remain in principle the same despite being
either realized manually or with the aid of software. The algorithms in a comprehensive
software package are also the same as those of a locally implemented planning board. In
contrast, methods and techniques do indeed change in dependency on the entrepreneurial
objectives, which the choice of logistics should support. These objectives relate to key areas
such as quality, costs, delivery, or various aspects of flexibility.
The present volume aims to present the differing characteristics, tasks, methods, and
techniques of planning & control in company logistics as comprehensively as possible.
Development and change in operational management for company performance should
Forewords and Acknowledgments VII
become transparent. However, we will not be content with a wide-ranging, general treatment
of the subject at the cost of depth and scientific elucidation of the matter at hand. Because
of logistics and planning & control take place at the operational level of a company,
competency in the details is absolutely necessary. Effective plans at the strategic level should
not lead to contradictions and inconsistency at the operational level.
Consultants and the software industry, as well as widespread circles in educational instituti-
ons, produce constant pressure for novelty — which should not be confused with innovation.
There is no need to allow ourselves to be irritated by such influences, which are often just
short-lived trends. As always, after all, broad, detailed, methodological, and operational
knowledge continues to lead to competency. It is this competency that makes it possible to
classify and relate the various business processes and the tasks people in companies carry
out and to continuously adapt this system of relations and categorizations to changing
entrepreneurial objectives, market situations, product ranges, and employee qualifications.
Today, IT-supported planning & control enjoys a very high status in small- to medium-sized
companies. And this is usually rightly so, for the large amounts of data can often not be
handled quickly enough by another means. For this reason, presentation of the methods of
planning & control in detail will include references to possible IT support.
The present volume is a textbook for industrial engineers, business managers, engineers and
practitioners, and computer scientists as part of their studies. It also aims to serve the further
education of professionals in business practice in industry, including the service industries.
The book is a translation of my book Integrales Logistikmanagement — Planung &
Steuerung umfassender Geschäftsprozesse, published in 1998 by Springer. The first edition
has sold out. The second edition will appear simultaneously and with the same content as
the English version.
You will find a part of the bibliography referring to German books or papers. This means
that I am still looking for English literature on the specific topic. I would be grateful for any
additional English sources for the specific topic. In parts, the book reflects the work of my
esteemed colleague Prof. Dr. Alfred Büchel, to whom I am greatly obliged. This is the case
particularly with regard to the area of his great interest, statistical methods in planning &
control. These are treated mainly in Chapter 10 and Sections 11.3, 11.4, and 13.2.
Zurich, January 2000 Prof. Dr. Paul Schönsleben

Acknowledgments (Third to Sixth Editions)
My thanks go first of all to you, my readers, for your numerous suggestions. And then to my
colleagues and fellow members of the APICS Curricula and Certification Council: You have
enriched my work through your many ideas. Here, special thanks go to Merle Thomas and
Roly White. I am grateful to the members of my staff at the BWI Center for Industrial Mana-
gement at the Swiss Federal Institute of Technology Zurich (ETH) and other colleagues, for
VIII Forewords and Acknowledgments
their valuable input to the new sections: Ingo Lange (Section 1.1), Matthias Baldinger,
Manuel Rippel and Stephan Verhasselt (Section 1.3), Oliver Schneider, Matthias Wandfluh
(1.7), Johannes Plehn (2.1.2), Philipp Bremen (2.1.3), Robert Alard (2.2), Arne Ziegenbein
(2.4), Gandolf Finke, Sören Günther, Philip Hertz, Nikolai Iliev, Johannes Plehn, Andreas
Radke (3.1), Kathatrina Bunse, Josef Oehmen, Johannes Plehn, Alexander Sproedt, and
Matthias Vodicka (3.3), Aldo Duchi, Olga Willner (7.4), and Alexander Verbeck (18). And
I thank my colleagues Hugo Tschirky (ETH Zurich), Masaru Nakano (Keio University and
Toyota), Hans-Peter Wiendahl (University of Hannover), and Markus Baertschi (ETH
Zurich) for their continuing support of my work. Roger Cruz, Dipl. Ing., and his team again
took on ready-to-print production of these editions. To them also I express my thanks.
Zurich, January 2007, March 2011, October 2015, July 2022 Prof. Dr. Paul Schönsleben

Acknowledgments (First and Second Editions)
For the first and second editions, I wish to thank numerous scientific colleagues here and
abroad, for valuable discussions and suggestions. Special thanks are due to many of the
active and engaged experts in the APICS community. In particular, I would like to thank
 Barry Firth, CPIM, Melbourne, for his invaluable help in updating the classification
of fundamental concepts in logistics management
 Prof. Merle Thomas, CFPIM, Faimont State College, West Virginia, for his ongoing
support of my work.
 Prof. Dr. Alfred Büchel and Prof. Markus Bärtschi, my colleagues at the BWI
Institute for Industrial Engineering and Management at ETH Zurich.
 Paul Bernard, Rapistan Systems, Grand Rapids, Michigan.
 Prof. Dr. Hans-Peter Wiendahl, University of Hannover, Germany.
 Prof. Dr. Thomas M. Liebling, ETH Lausanne, Switzerland.
For help with the manuscript, particularly for their critical questions, I wish to thank all
previous and current scientific associates and postgraduate students of my chair of Logistics
and Information Management of the Department of Manufacturing, Industrial Engineering
and Management at the Swiss Federal Institute of Technology ETH in Zurich. They make
up far too great a number to list individually here. Instead, I am pleased to refer to many of
their doctoral theses and further scientific works in the text and bibliography of this book.
And for their untiring help in creating, translating, and correcting the manuscript, I give
hearty thanks to Dipl. Ing. Roger Cruz and all the many professionals and assistants that
participated in this undertaking.
Zurich, January 2000 and April 2003 Prof. Dr. Paul Schönsleben
Overview of Contents
Introduction ........................................................................................................................... 1 
1  Logistics, Operations, and Supply Chain Management ................................................ 7 
2  Supply Chain Design: Business Relations and Risks .................................................. 71 
3  Supply Chain Design: Location Planning and Sustainability .................................... 127 
4  Process Analysis and Concepts for Planning & Control ........................................... 183 
5  The MRP II / ERP Concept: Business Processes and Methods ................................ 235 
6  The Lean / Just-in-Time Concept and Repetitive Manufacturing ............................. 293 
7  The Concept for Product Families and One-of-a-Kind Production ........................... 335 
8  The Concept for the Process Industry ....................................................................... 369 
9  ERP and SCM Software ............................................................................................ 397 
10  Demand Planning and Demand Forecasting ............................................................. 423 
11  Inventory Management and Stochastic Materials Management ................................ 467 
12  Deterministic Materials Management ....................................................................... 513 
13  Time Management and Scheduling ........................................................................... 549 
14  Capacity Management ............................................................................................... 595 
15  Order Release and Control ........................................................................................ 635 
16  Cost Estimation, Job-Order Costing, and Activity-Based Costing ........................... 681 
17  Representation and System Management of Logistic Objects .................................. 715 
18  Quality Management — TQM and Six Sigma .......................................................... 759 
19  Systems Engineering and Project Management ........................................................ 789 
20  Selected Sections of Information Management ......................................................... 815 
Index ........................................................................................................................... 843
Contents
At a first reading of the book, some sections are optional in the sense that they are not
necessary to understand the material that follows. An asterisk (*) indicates these sections.
Introduction ......................................................................................................................... 1 
Structure of the Book...................................................................................................................................... 2 
Notes to the Reader and Additional Teaching Material ................................................................................ 6 
1  Logistics, Operations, and Supply Chain Management ........................................... 7 
1.1  Basic Concepts, Issues, and Challenges ............................................................................................ 7 
1.2  Business Objects .............................................................................................................................. 23 
1.3  Strategies in the Entrepreneurial Context ........................................................................................ 39 
1.4  Performance Measurement .............................................................................................................. 52 
1.5  Summary .......................................................................................................................................... 61 
1.6  Keywords ......................................................................................................................................... 61 
1.7  Scenarios and Exercises ................................................................................................................... 62 
1.8  References ........................................................................................................................................ 69 
2  Supply Chain Design: Business Relations and Risks ............................................. 71 
2.1  Ownership and Trade in a Supply Chain ........................................................................................ 71 
2.2  Strategic Procurement ...................................................................................................................... 83 
2.3  Designing a Partnership Relationship ............................................................................................. 96 
2.4  Supply Chain Risk Management ................................................................................................... 111 
2.5  Summary ........................................................................................................................................ 119 
2.6  Keywords ....................................................................................................................................... 119 
2.7  Scenarios and Exercises ................................................................................................................. 120 
2.8  References ...................................................................................................................................... 124 
3  Supply Chain Design: Location Planning and Sustainability ............................. 127 
3.1  Design Options for Integrated Production, Distribution, and Service Networks ......................... 128 
3.2  Location Selection and Location Configuration ........................................................................... 152 
3.3  Sustainable Supply Chains ............................................................................................................ 162 
3.4  Summary ........................................................................................................................................ 176 
3.5  Keywords ....................................................................................................................................... 177 
3.6  Scenarios and Exercises ................................................................................................................. 177 
3.7  References ...................................................................................................................................... 181 
4  Process Analysis and Concepts for Planning & Control ...................................... 183 
4.1  Elements of Business Process Management ................................................................................. 185 
4.2  Push and Pull in the Design of Business Processes ...................................................................... 188 
4.3  Important Techniques of Analysis in Business Process Engineering ........................................... 193 
4.4  Characteristic Features Relevant to Planning & Control in Supply Chains ................................. 200 
4.5  Branches, Production Types, and Concepts for Planning & Control ........................................... 220 
4.6  Summary ........................................................................................................................................ 229 
4.7  Keywords ....................................................................................................................................... 230 
4.8  Scenarios and Exercises ................................................................................................................. 230 
4.9  References ...................................................................................................................................... 234 
5  The MRP II / ERP Concept: Business Processes and Methods .......................... 235 
5.1  Business Processes and Tasks in Planning & Control .................................................................. 235 
5.2  Master Planning — Long-Term Planning ..................................................................................... 248 
5.3  Introduction to Detailed Planning and Execution ......................................................................... 262 
5.4  Logistics Business Methods in R&D (*) ....................................................................................... 277 
5.5  Summary ........................................................................................................................................ 283 
5.6  Keywords ....................................................................................................................................... 284