Cranfield School of Management
Interview: Professor Martin Christopher
Logistics and Supply Chain Management: Creating
Value Added Networks
SM
Hello – this is Steve Macaulay from the Learning Services Team at
Cranfield. I am here today to talk to Professor Martin Christopher
about his book Logistics and Supply Chain Management: Creating
Value Added Networks. Professor Martin Christopher, first of all what
is the background to you writing this book and what has been the
reaction to it?
MC
Well the book is now in its third edition, so when I originally wrote the
first edition there was quite a significant gap in the market, certainly
then because logistics and supply chain is a relatively new field at
least in the way it is currently looked at and managed and there were
relatively few books which were really looking at the strategic
dimension of logistics and supply chain. There were lots of books on
specifics to do with transport management, running your warehouse –
all that sort of thing, but little attention I think, certainly back when I
wrote that first edition which is well over ten years ago now, I think
that was the real motivation initially and of course, it actually seems to
have struck a number of chords, not just here in this country, because
it has now been published in at least ten different languages from
Chinese to Spanish to Portuguese and even Russian. I think I was
fortunate in the timing in that it sort of coincided with a fairly
widespread growth in interest in this whole area – both at a corporate
level and an academic level, so I guess I was just lucky in the timing in
that respect.
SM
If you were to pick out a key message that you would like people to
remember from the book, what would it be?
MC
Well, I think probably because my interests have always overlapped
between logistics and marketing, my title Professor of Marketing and
Logistics gives the game away there, the thing that I really do believe
in is that increasingly the supply chain has become a key part of our
competitive capability. I argue in the book and elsewhere that we no
longer compete as individual companies, we compete as supply
chains, you know, so it is not Ford competing with General Motors or
Toyota, its Ford’s supply chain competing with General Motors’ or
Toyota’s supply chain and that means I think that we have to place a
much greater emphasis on how we manage these interfaces in the
supply chain. That I think is the message that I have sought to
Knowledge Interchange Podcasts
Page 1
Cranfield School of Management
Professor Martin Christopher
develop in the book and to look at some of the things which can help
and some of the things which might stop us in moving in that direction.
SM
You talk about supply chain agility and how that is important in the
volatile competitive environment we now live in, can you say a bit
more about that?
MC
Yes, I think for whatever reason most markets have become a lot
more turbulent, the sort of spikes in demand that many companies
experience be it in consumer products or in industrial markets, it
seems that markets are getting harder and harder to predict, so that
means that the traditional methods that we have used in the past
which have been largely forecast based – you know, traditionally what
we have sought to do is to sort of plan ahead, make inventory and
then just sit back and wait for demand to happen, that is really getting
less and less viable for many companies today. The level of
uncertainty is greater, the risk is a lot higher – as I say you could write
a PhD as to the reasons for this, but I think it is just apparent. It's
happening, it's happened. And so what that means basically is that
we have got to move away from being forecast driven to being
demand driven – in other words, responding to events as they
happen. And that then of course, immediately raises the sort of
question of what we now call agility because to be able to respond to
events, to respond to demand means you have got to be able to move
an awful lot more quickly. It also means that you have got to have
access to the resources that you are going to need, be it capacity, be
it even inventory because I think the interesting thing about agility is
that it is not the same as lean. Conventionally we have been looking
at how we can lean down our supply chains, strip out inventory and so
on. I think there is a subtle difference with agility because what it is
saying is yeah, we would also like to be efficient in our use of
resources, but we also recognise that to give me that flexibility at
certain key points in my supply chain, I need to have access to
additional resources – be it capacity, be it inventory, be it people,
whatever. So I think this is a very interesting development that we
are starting to see now in the way that people think about their
business and their supply chain because I make the point that agility
is a supply chain wide notion and to sort of explain that as an
individual business you could be as slick as you like, but if you are
dependent, for instance, on suppliers of key components or materials
where you have got long lead times and little flexibility that
significantly impedes your ability to move from one level to another
quickly. If for whatever reason demand increased by a factor of 50%,
how quickly could you meet that and that I think brings us back to this
idea of competing as a supply chain. So it has wider implications for
instance for your choice of supplier, even their location because one
of the paradoxes of modern business practice is that with this move to
offshore sourcing in many cases we have actually extended the lead
Knowledge Interchange Podcasts
Page 2
Cranfield School of Management
Professor Martin Christopher
times in our supply chains, meaning in effect that sometimes – not
always, but sometimes – we are actually less agile, not more agile.
So this I think is for me what it is all about. Its responsiveness, its
being able to move more quickly.
SM
You worked with a lot of organisations over a good number of years.
Can you identify some things that have struck you from the successful
ones, the ones where you say the supply chain is working well? And
have you got an example, say, that you would particularly pick out?
MC
Yeah, I think that companies that are generally rated as being leaders
in supply chain practice do have a number of things in common. One
is that typically they are big users of information. There is a phrase
that says we have got to substitute information for inventory. As I
said earlier, conventional businesses tend to be forecast driven – they
build inventory. These players, and we talk about the Dells obviously
and the Zaras in Spain, these players tend to be much more
information driven, meaning they are capturing information on demand
as it happens, almost in real time, they are converting that into action
rapidly. They have obviously invested significantly in their process
development, by which I mean seeking to squeeze non value adding
time at every step of the way. Working, again picking up a previous
theme, working very closely with their suppliers and other partners in
that supply chain. It’s a different sort of business model and I think
the company that I know perhaps as well as any is Nokia. They have
done some remarkable things in developing global supply chain
capability to enable them to compete in what has become a very fast
moving market place. Mobile phones, as we know, are almost now
like a fashion item. Very short lead times. Companies being forced
to compete as much through design of the product as they are
through its technology paradoxically. And this, I think, was a
realisation at Nokia some years ago, the then chief executive I recall
in the annual report – we are looking back a few years now – came up
with a very telling phrase and I am quoting this from memory, he said
in the future Nokia will compete not so much through what we do, but
how we do it. Nokia will compete not through what we do, but how
we do it. And what he was referring to was things like time to
market, how quickly can we get this idea into the market place and so
that is all about processes and basically what Nokia have been doing
and other successful companies like them, is really looking hard at
how we can better manage across functions – so it is a horizontal sort
of concept which is all about how we are able to capture customer
requirements and convert this into product to ramp up quickly, to ramp
down equally quickly too because these lifecycles tend to be pretty
short and that the only way we are going to be able to do that is by
being a lot faster on our feet and so this even boils down into how we
organise, how people work much more as teams, cross functional
teams. It has a lot of implications obviously for how we share
Knowledge Interchange Podcasts
Page 3
Cranfield School of Management
Professor Martin Christopher
information across organisations and between organisations. So,
yeah, I think there are a number of distinguishing features that when
you look at these companies who are really good at responding
quickly, because that is really what we are talking about – there are a
number of common elements that shine through.
SM
Your book describes a lot of tools, core processes, even mindsets that
you need to create the kind of supply chain that you have talked about
– without going into too much detail, can you give me some
highlights?
MC
Yeah, I mean there are many things which obviously we need to be
able to do to improve the responsiveness of our supply chains, but I
think to me one of the fundamental requirements is what we might call
supply chain understanding – do I actually understand what my supply
chain looks like? I mean that may sound like a rather stupid sort of
statement, but we are not really looking at a supply chain, it’s a
network. If any organisation were to try to map where it sits against
its upstream suppliers and their suppliers, what we call first and
second tier – and also even third tier suppliers, and likewise look
downstream across all the channels that it serves, the intermediaries
through which its products may pass and through which information
flows, it is a very complex network and I think the first step in better
management of that supply chain is really to take a hard look at the
supply chain and say which parts of it am I managing and which parts
are just sort of left to themselves or manage me? And this I think is
the challenge for many companies. They know pretty well perhaps
their first tier, suppliers and their first tier downstream, but not always
do they understand what is lying beyond that and it is particularly
relevant today when we talk a lot more today about managing risk in
the supply chain. We have done a lot of work at Cranfield over the
years in this area of supply chain vulnerability and we are all aware, I
think much more than ever before now, of how fragile some of our
supply chains can be and how quickly they can be brought almost to a
halt if there is a rupture at some particular point. And it is, I think,
understanding where those sort of vulnerabilities – where the pinch
points, so to speak in a supply chain are – which to me would be the
starting point of an attempt to really take control of the supply chain.
SM
Now, I would like to talk about customer orientation. Lots of people
talk about it, yet the practice often falls short. How do you actually
get genuine customer responsiveness throughout the organisation?
MC
Yes, I think that is a very good point that you make about people talking
more about it than they do it. I say that, particularly in the context of
supply chain management because if you look, even now, at many
Knowledge Interchange Podcasts
Page 4
Cranfield School of Management
Professor Martin Christopher
companies their supply chains are actually designed from the factory
outwards – they are not designed from the customer backwards.
Now what does that mean? What it means basically is those supply
chains are there to better enable us to meet our own internal
objectives. Like, if I seek to gain efficiencies in my factory, perhaps
looking for economies of scale, so I produce things in big batches, I
need somewhere to store that product and that is the original reason
we had warehouses, it was a place to store things. The customer
didn’t come into this – I mean that’s a little bit of an extreme viewpoint.
Today, however, with the major shift in the balance of power that we
are seeing in supply chains where it has moved from very much a sort
of sellers' market to a buyers' market, we see the emergence of big
and powerful customers – obviously in retail that is pretty apparent
and the demands now that these customers are placing on their
suppliers are requiring us to fundamentally rethink our supply chain
strategy and that is what I mean when I talk about designing the
supply chain from the customer backwards, because to be truly
customer focused means I have got to be able to serve the customer
the way they want to be served and when I talk about serving the
customer, I am not necessarily talking about you and I as individuals,
as consumers, I am talking about large corporate accounts because
for most companies that is their market – they sell to other
organisations. And so to me this notion of being customer driven
goes all the way down to this idea which says maybe I even need
different supply chain solutions for different customers, for different
segments. We used to have this idea that one size fits all, you know
that is my supply chain, take it or leave it. We can no longer afford to
do that today.
SM
You have touched several times on areas of research – I would like to
kind of draw that together a bit and project ahead and say can you
see any trends that you are picking up in your research – where is it
heading?
MC
Well, we started about two years ago on a major project which has
been funded by the Department for Transport on looking at the true
costs of global sourcing and the idea behind that project, which we
just produced a report on now, was to look not just at the costs that
the company themselves were incurring, because even many of those
costs are not well recognised by organisations – you know, I am
talking about the costs associated with the risk of extending your
supply chain. The further you have to move products, typically the
longer it is going to take you and the vulnerabilities increase. But we
also went way beyond that because we were actually looking at the
carbon footprint which is left behind those global supply chains. And
it was really quite interesting, again it was just good fortune in a way,
that about the time we were bringing this to a conclusion, we
developed a model that enabled us to map the carbon footprint, that
Knowledge Interchange Podcasts
Page 5
Cranfield School of Management
Professor Martin Christopher
all of a sudden this whole thing has risen right to the top of the
agenda, which it should do – absolutely right, and this has I think
further encouraged us to develop our work in what we now call the
sustainable supply chain because I think these are issues which
companies, whether they like it or not, are going to have to face and
contend with and so we really do need, I think, to spend a lot more
time thinking through how we make those supply chains, not just
greener, but actually more profitable because they are making better
use of resources generally. So, this I think is going to keep us going
for quite a while now and I truly believe there is an awful lot of things
that we here in the University can do in this field to help organisations
create the more sustainable supply chain.
SM
Interesting – Professor Martin Christopher, we have covered a wide
area, but some very relevant ones. Thank you very much.
MC
Thank you.
Transcript prepared by Learning Services for the Knowledge Interchange
www.cranfield.ac.uk/som
Knowledge Interchange Podcasts
Page 6
Cranfield School of Management
Produced by the Learning Services Team
Cranfield School of Management
© Cranfield University 2007