Table Of Content

Praise for Logistics and Supply Chain Management ‘Major world events in recent years – ranging from the Covid-19 pandemic, blockage of the Suez Canal and war in Ukraine – have highlighted the critical role played by logistics and supply chain management in the global economy and have brought these subjects to the forefront of public interest. This important book by one of the leading thinkers in the field is essential reading, not just for practitioners and students of these subjects, but for everyone with a keen interest in how logistics activities and supply chain designs shape our everyday lives. The clear text and logical flow of chapters, augmented by a range of interesting and diverse case examples, take the reader on a journey of discov- ery into how today’s supply chains should be structured and managed.’ Professor John Mangan, Chair in Marine Transport and Logistics, School of Engineering, Newcastle University, UK ‘It should not have needed a global pandemic and a war in Europe to raise the importance of building and managing resilient supply chains. The techniques to achieve this are not new; achieving value has always been the goal, and the latest edition of this excellent book lays these out in a clear and compelling manner. It is updated to embrace digitisation, and to address the sustainability imperative, and is set in today’s context of volatility and disruption. Procurement and supply chain professionals can learn from this book as part of their continuing professional development.’ Malcolm Harrison, CEO, Chartered Institute of Procurement and Supply ‘Since the first edition was published thirty years ago, this book has become one of the leading texts on logistics and supply chain management, providing guidance both to students and practitioners. The author provides valuable insights into how performance in these vital business processes can be improved and sustained.’ Yossi Sheffi, Eliza Gray II Professor of Engineering Systems, MIT, USA ‘Martin Christopher’s latest book captures the entire evolution of logistics and supply chain thinking and associated concepts through to current times, including digitisation, new business models, sustainability, and perspectives on what we can expect to see in the years ahead. It is comprehensive and beautifully illustrated with examples and short case studies. A must-read for students and managers alike.’ Dr John Gattorna, global supply chain ‘thought leader’ and author ‘Excellence in supply chain management is imperative in today’s commercial environment. It is the heartbeat of the enterprise, significantly influencing its success / failure and, when orchestrated correctly, will assure the right balance of growth, cash and cost. The utopia of supply chain excellence requires transparency, real time visibility, collaboration and digital integration end to end to empower relationships with customers and suppliers, thus facilitating optimal fulfilment and perfect order achievement. In this valuable guide the author addresses how end-to-end processes, systems, tools and competencies must be designed and managed to achieve success in the marketplace.’ Stuart Whiting, Senior Vice President, Logistics and Planning, Global Supply Chain, Schneider Electric F01_Logistics_and_Supply_Chain_Management_16182.indd 1 09/11/2022 11:47 F01_Logistics_and_Supply_Chain_Management_16182.indd 2 09/11/2022 11:47 Logistics & Supply Chain Management F01_Logistics_and_Supply_Chain_Management_16182.indd 3 09/11/2022 11:47 At Pearson, we believe in learning – all kinds of learning for all kinds of people. Whether it’s at home, in the classroom or in the workplace, learning is the key to improving our life chances. That’s why we’re working with leading authors to bring you the latest thinking and best practices, so you can get better at the things that are important to you. You can learn on the page or on the move, and with content that’s always crafted to help you understand quickly and apply what you’ve learned. If you want to upgrade your personal skills or accelerate your career, become a more effective leader or more powerful communicator, discover new opportunities or simply find more inspiration, we can help you make progress in your work and life. Every day our work helps learning flourish, and wherever learning flourishes, so do people. To learn more, please visit us at www.pearson.com/uk The Financial Times With a worldwide network of highly respected journalists, The Financial Times provides global business news, insightful opinion and expert analysis of business, finance and politics. With over 500 journalists reporting from 50 countries worldwide, our in-depth coverage of international news is objectively reported and analysed from an independent, global perspective. To find out more, visit www.ft.com F01_Logistics_and_Supply_Chain_Management_16182.indd 4 09/11/2022 11:47 MARTIN CHRISTOPHER Logistics & Supply Chain Management Sixth Edition Harlow, England • London • New York • Boston • San Francisco • Toronto • Sydney Dubai • Singapore • Hong Kong • Tokyo • Seoul • Taipei • New Delhi Cape Town • São Paulo • Mexico City • Madrid • Amsterdam • Munich • Paris • Milan F01_Logistics_and_Supply_Chain_Management_16182.indd 5 09/11/2022 11:47 PEARSON EDUCATION LIMITED KAO Two KAO Park Harlow CM17 9NA United Kingdom Tel: +44 (0)1279 623623 Web: www.pearson.com/uk Previously published 1992, 1998, 2005, 2011 (print), 2016 (print and electronic) Sixth edition published 2023 (print and electronic) This sixth edition © Martin Christopher 2023 (print and electronic) The right of Martin Christopher to be identified as author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. The print publication is protected by copyright. Prior to any prohibited reproduction, storage in a retrieval sys- tem, distribution or transmission in any form or by any means, electronic, mechanical, recording or otherwise, permission should be obtained from the publisher or, where applicable, a licence permitting restricted copying in the United Kingdom should be obtained from the Copyright Licensing Agency Ltd, Barnard’s Inn, 86 Fetter Lane, London EC4A 1EN. The ePublication is protected by copyright and must not be copied, reproduced, transferred, distributed, leased, licensed or publicly performed or used in any way except as specifically permitted in writing by the publishers, as allowed under the terms and conditions under which it was purchased, or as strictly permitted by applicable copyright law. Any unauthorised distribution or use of this text may be a direct infringement of the author’s and the publisher’s rights and those responsible may be liable in law accordingly. 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 affiliation with or endorsement of this book by such owners. Pearson Education is not responsible for the content of third-party internet sites. ISBN: 978-1-292-41618-2 (print) 978-1-292-41619-9 (PDF) 978-1-292-41620-5 (ePub) British Library Cataloguing-in-Publication Data A catalogue record for the print edition is available from the British Library Library of Congress Cataloging-in-Publication Data Names: Christopher, Martin, author. Title: Logistics and supply chain management / Martin Christopher. Other titles: Logistics and supply chain management Description: Sixth Edition. | Hoboken, NJ : Pearson, [2023] | Revised edition of the author’s Logistics & supply chain management, [2016] Identifiers: LCCN 2022042551 | ISBN 9781292416182 (paperback) | ISBN 9781292416205 (epub) | ISBN 9781292416199 (pdf) Subjects: LCSH: Business logistics--Cost effectiveness. | Delivery of goods--Management. Classification: LCC HD38.5 .C46 2023 | DDC 658.5--dc23/eng/20220919 LC record available at https://lccn.loc.gov/2022042551 10 9 8 7 6 5 4 3 2 1 26 25 24 23 22 Cover designed by Michelle Morgan, At the Pop, Ltd Front cover image © Toria/Shutterstock Print edition typeset in Helvetica Neue LT W1G 9.25/12 by Straive Printed by Ashford Colour Press Ltd, Gosport NOTE THAT ANY PAGE CROSS REFERENCES REFER TO THE PRINT EDITION F01_Logistics_and_Supply_Chain_Management_16182.indd 6 09/11/2022 11:47 To Margaret vii F01_Logistics_and_Supply_Chain_Management_16182.indd 7 09/11/2022 11:47 Contents About the author xiii Preface xiv Publisher’s acknowledgements xv 1 Logistics, the supply chain and competitive strategy 1 Supply chain management is a wider concept than logistics 2 Competitive advantage 4 The supply chain becomes the value chain 9 The mission of logistics management 10 The supply chain and competitive performance 12 The changing competitive environment 13 2 Delivering customer value 25 The marketing and logistics interface 26 Delivering customer value 27 What is customer service? 28 The impact of out-of-stock 30 Customer service and customer retention 32 Market-driven supply chains 35 Defining customer service objectives 39 Setting customer service priorities 43 Setting service standards 47 3 Going to market 51 Distribution channels are value delivery systems 52 One size doesn’t fit all 55 Innovation in the distribution channel 56 The omni-channel revolution 58 The personalised supply chain 62 4 The financial impact of logistics 65 Logistics and the bottom line 66 Logistics and the balance sheet 67 Logistics and shareholder value 69 Logistics cost analysis 74 The concept of total cost analysis 75 Understanding the cost-to-serve 78 Customer profitability analysis 79 Direct product profitability 84 Cost drivers and activity-based costing 86 viii F01_Logistics_and_Supply_Chain_Management_16182.indd 8 09/11/2022 11:47 5 Matching supply and demand 89 The lead-time gap 90 Improving visibility of demand 91 The decoupling point 93 The supply chain fulcrum 94 Forecast for capacity, execute against demand 96 Demand management and planning 96 Collaborative planning, forecasting and replenishment 100 6 Creating the responsive supply chain 105 Using the volume/variability matrix 108 Product ‘push’ versus demand ‘pull’ 111 The Japanese philosophy 116 The agile supply chain 117 The foundations of agility 120 A routemap to responsiveness 125 7 Strategic lead-time management 129 Time-based competition 129 The concept of lead-time 133 Logistics pipeline management 137 Reducing logistics lead-time 141 8 The synchronous supply chain 149 The extended enterprise and the virtual supply chain 150 The role of information in the virtual supply chain 152 Laying the foundations for synchronisation 155 ‘Quick response’ logistics 157 Production strategies for QR 160 Logistics systems dynamics 161 9 Developing and managing the supply network 167 The transition from purchasing to strategic sourcing 169 Segmenting the supply base 172 Category management 174 Agile procurement in an uncertain world 179 10 Complexity and the supply chain 181 The sources of supply chain complexity 182 The cost of complexity 188 Product design and supply chain complexity 189 Mastering complexity 190 11 Managing the global pipeline 195 The globalisation of supply chains 197 Gaining visibility in the global pipeline 201 CONTENTS ix F01_Logistics_and_Supply_Chain_Management_16182.indd 9 09/11/2022 11:47