Chapter 1: The contex of Logistics (Waters,2003:3)
Objections
1.
Define logistcs and associated terms.
2.
Explain the role and structure of supply chains.
3.
Describe the activities of logistics and the relationship between them.
4.
Eplain how logistics contributes to customer satsfaction
5.
Discuss the importance of logistics to organisations.
Definitions
Logistics is the function responsible for the transport and storage of materials on their journey between suppliers and customers (Waters, 2003:4). It is the function that ensures the flow of materials from suppliers into an organisation, through operations within an organisation and then outward to customers. Products can be either physical, tangible goods or invisible services e.g. the Namibian Diaries delivers tangible goods such as milk, cheese and cream to the country. Cell
One and Telecom provide invisible services to their customers or a combination of goods and services.
Operations are the function in each organisation that creates and deliver value
(products/services) to the customer. Operations use inputs (raw materials, components, equipment, information, money and minerals) to process or manufacture the required outputs.
Operations include the following activities: manufacturing, serving, transporting, training, processing, designing etc.
Fig 1.1 Operations creating value
INPUT OPERATIONS OUTPUTS
© People
© Buildings
©Raw materials
©Equipment
©Information
©Information
©Investment
©etc
©Manufactur e
©Serve
©Supply
©Transport
©Sell
©Train
©etc
©Goods
©Services
©Profit
©Waste
©Wages
©etc

Source: Waters, D. (2003:5)
Goods and services produced by an organisation in the operations process is generally referred to as the value or offerings. This is what they sell to their clients. Value is what sat the tastes and preferences (demand) of your clients.it is interesting to note logistics is entirely responsible for moving the materials from one stage to the other, from source to end user.
Figure 1.2 The Cycle Supply and Demand
Passed to
Supply of products
arrange
Other outputs
Customers
Operations
Source: Waters, D. (2003:6).
create
Demand for products
Other inputs passed to

Figure 1.3 The Role of Logistics
External supplier
Operations within the organisation
Internal Internal
supplier customer
Inbound logistics
Logistics
Source: Waters, D. (2003:6).
External customer
Outbound logistics
The Role of Logistics
The role of logistics is to ensure the smooth and efficient flow of materials from the point of origin through the manufacturing process (operations) right up to the end user. Moving materials into the organisation from source suppliers is the activity known as in-bound logistics (inward logistics) . Moving materials within the organisation is the activity we call materials management. On the other hand, moving materials out to customers is the activity known as out-bound logistics (outward logistics). In practice, logistics is used to move both tangible and intangible products such as information, messages, programmes transmission, entertainment, finished products, work in progress, people, paperwork, energy, money and minerals. The term materials is used to describe all of the above put together. Waters, D. (2003:7) assets that

materials are all things that an organisation moves to create its value (products/services). The materials can be both tangible and intangible.
Question 1: With aid of a diagram, briefly explain the role of logistics in business today. (15).
The Supply Chain (movement of materials)
A supply chain consists of a series of activities and organisations that materials move through on their journey from initial suppliers to final customers. Farm Fresh milk from Namibia Dairies is sourced from the farms, taken by the tanker from collection points to the processing plant, bottled or packed and packaged by Namibia Dairies, dispatched to distributors, distributed to supermarkets like Pick’nPay, Shoprite, Spar and we buy it as final consumers. Thus, supply chain is the total journey of materials as they move from point of origin to the final consumer.
During the movement, materials pass through suppliers, processors, manufacturers, operators, logistics centres, warehouses, 3 rd
party operators, transporters, wholesalers, retailers etc.

Fig 1.4 Outline the supply chain of sugar

Processed
Transport
Retail
Wholesaler
Purchase
Seeding
Grown by nurseries
Young cane Planted by estates
Mature cane
Chipped cane harves ted
Processed
Pulp cane
Raw sugar unrefined sugar
Finishing refined sugar at refineries white/brown sugar distributors
Transport
Packers
Transport
Final customer
Felled by estates

Source: Hill (2004:509)
Activity 2: With aid of a fully labeled diagram, explain the supply chain of any product/service of your own choice. (20 marks)
Structure of the Supply Chain.
In theory, every supply chain has a single product passing through a series of stages/organisation which add-value to the product/service. All activities moving materials into an organisation are called upstream activities (in front or before the organisation).
On the other hand, all activities moving goods out of the organisation are called downstream activities.
Upstream activities can be broken into tiers of suppliers. A supplier who sends materials directly to the factory is a 1 st tier supplier. A supply who sends materials to a 1 st
tier supplier is a 2 nd tier supplier. A supplier who sends materials to a 2 nd
tier supplier is a 3 rd tier supplier etc. Customers are also divided into tiers. If you get products directly from the factory, you are a first tier customer. One that gets a product from a 1 st
tier customer, is a 2 nd tier customer etc. As your organisation gets materials from many different suppliers, they supply chain converges as raw materials moves inwards through tiers of suppliers. Since the organisation has many customers too, the chain diverges as products move out through tiers of customers.

Fig 1.5 Activities in a Supply Chain
Upstream activity
Initial supplier
Third
Tier supplier
Second
Tier
First
Tier supplier supplier
ORGANISATION
Downstream activity
First Tier
Customer
Second
Tier
Customer
Third
Tier
Customer
Final
Supplier
Source: Waters, D. (2003:9)

Fig 1.6 Supply Chain of a Manufacturer
Third
Tier supplier
Materials
Suppliers
Second
Tier
Component
Makers
First
Tier supplier supplier
Sub-assembly providers
First Tier
Customer
Second
Tier
Customer
Wholesalers
Retailers
Third
Tier
Customer
End Users
MANUFACTURER
Source: Waters, D. (2003:9)
If you are a manufacturer, sub-assembly providers will be your first tier suppliers, component makes will act as your 2 nd
tier suppliers and materials suppliers will be your 3 rd
tier suppliers.
Activity 3: With the aid of diagrams, describe the acts in a supply chain and the structure of a supply chain (40 marks)

Benefits of supply chains

Centrality

Storage

Convenience

Preparation/processing

Larger market

Producers locate operations in the best location, regardless of the location of their customers.
 By concentrating operations in large facilities, producers can achieve economies of scale.

Producers do not keep large stocks of finished goods, as these are held further downstream nearer to customers.

Wholesalers place large orders and producers pass on lower unit costs in price discounts.

Wholesalers keep stocks from many suppliers, giving retailers a variety of goods.

Wholesalers are nearer to retailers and have shorter lead times.

Retailers carry fewer stocks as wholesalers provide reliable deliveries.

Retailers can have small operations, giving a responsive service near the customers.

Transport is simpler, with fewer larger deliveries thereby reducing costs.

Organisations can develop expertise in specific types of operations.
 Supply chain may overcome gaps created by distance

It allows operations to be done at the best locations.

Constant supplies throughout the year

Movement of goods between separate geographical locations.

Buffer stocks for use during off-season.
Activity 4: According to Waters (2003:12) there are 12 activities involved in logistics and these are as follows:
1.
Purchasing /procurement
2.
Inward transport/traffic
3.
Receiving
4.
Warehousing
5.
Stock Control
6.
Order processing
7.
Materials handling
8.
Outward transport
9.
Physical distribution

10.
Recycling, returns and waste disposal
11.
Location
12.
Communications (Waters, 2003:13).
However, other authors may includes sales forecasting, production schedule, customer service management, overseas liaison, 3 rd
party operations etc. All these functions work together for the efficient flow of materials throughout the supply chain.
Logistics is the process of planning, implementing and controlling the efficient, cost effective flow of materials and storage of raw materials, in-process inventory, finished goods and related information from the point of origin to point of consumption for the purpose of conforming to customer requirements (Waters, 2003:14).
The Institute of Logistics and Transport defines logistics as the time-related positioning of resources and the strategic management of the total supply chain; while the supply chain is a sequence of events intended to satisfy a customer
The main objectives/aims of Logistics are:

To move materials into, through and out of the organisation as efficiently as possible.

To contribute to an efficient flow of materials through the whole supply chain.
Logistics is meant to ensure efficient movement of materials, fast deliveries, low stocks, no damage/rejects, few mistakes, high staff morale, high quality and customer satisfaction. This in turn guarantee long term survival of the firm, high returns on assets, shareholder value, return on investment (ROI) and economic value-added (EVA). Logistics is, therefore, meant to organise the movement of materials in the best way, to achieve maximum customer satisfaction, providing a high quality product/service low, acceptable costs. If a product is available at the place it is needed, logistics has added place utility; if it is delivered at the right time, logistics has added time utility. This helps to maximise the difference between perceived value and actual costs.
Effects of logistics on financial performance of the organisation

Organising logistics properly gives a huge competitive advantage and has a positive impact on the overall performance of the firm. This can affect customer satisfaction, perceived value, operating costs, profit and every other measure of performance. For the purpose of this study, I will briefly discuss the impact of logistics on return on assets (ROA).
ROA is the pre-tax e by an organisation divided by the value of the assets employed (current and fixed assets) The idea is to explain how well available resources are used. It is generally agreed that, the higher the value the better the performance of the organisation, hence equally viceversa. A better flow of material reduces the levels of stock and l current assets,fixed assets and
Formular for ROA = profits earned assets employed

Fig. 1.7 Influence of logistics on ROA
Stocks Current assets
Assets
Property, equipment, plant, etc
Customer satisfaction
Operating
Costs
Fixed assets
Sales
Profit margin
Profit
Return on assets
Product features
Price
Source: Waters, D. (2003:21).
Current Assets (CA) – more efficient logistics reduces the CA through lower stocks, can also free up cash for other more productive purposes and reduce the need for borrowing.
Fixed Assets (FA) – logistics in a heavy user of fixed assets

Sales – by making products more attractive, readily available, logistics can increase salkes and give higher market share
Margin – more efficient logistics gives lower operating costs margins. This in turn leads to higher profit margins.
Price – logistics can improve the perceived value of products e.g. BMW has managed to make its products more readily available, giving faster delivery, shortening lead time, making more attractive products almost everywhere beating Mercedes to the market. In turn, this gave BMW premium pricing and higher sales, thereby gaining market share and achieving higher ROA gains than Mercedes in Europe, Africa and Asia in 2005/6.
Importance of Logistics
The importance of logistics is discussed below:
1.
All organisations rely on of materials, hence it is essential.
2.
Directly affects profitability and every other measure of performance
3.
Has strategic importance in the long term
4.
Forms links with suppliers, developing mutually beneficial, long-term business relationships
5.
Forms links with customers, thereby achieving customer satisfaction through value– addition.
6.
Has great impact on lead time, reliability and customer service.
7.
Determines the best size and locations for facilities.
8.
Gives public exposure with visible locations and advertisements on trucks can encourage growth of other organisations such as suppliers and intermediaries offering specialist services.
Disadvantages of Logistics
1.
Expensive
2.
Can be risk because of safety, health and concerns of pressure/interests group such as communities and environmentalists.
3.
Prohibits some operations such as the movement of dangerous, hazardous goods and excessive loads.

Chapter 2: Integrating the Supply Chain
Objectives:
1.
To outline how logistics has developed over time
2.
Explain changes which have taken place over time
3.
Explain the benefits of having a single, integrated Logistics function
4.
Discuss way of achieving internal integration
5.
Describe the benefits of further integration downstream
6.
Discuss approaches to integration.
Pressures to Improve Logistics
Discussed below are the pressures/reasons that have forced organizations to improve logistics and pay more attention to materials movements:
1.
Customers are more knowledgeable and demand higher quality, lower costs and better service.
2.
Fierce competition and organizations must look at every opportunity for competitive advantage.
3.
The demand for customization in logistics from suppliers in the supply chain
4.
Globalisation and liberalisation (easy and fast flow of information and communications)
5.
Innovative manufacturing e.g. computer aided designs (CAD), computer aided manufacturing (CAM), IT, virtual operations, mass customization, flexible manufacturing.
6.
Changes in the markets e.g. 24 hr service, retail parks, out–of–town malls, online shopping and home deliveries.
7.
Process focus with a view to improving operations for logistics.
8.
Best practices in communications e.g. electronic data interchange (EDI), item coding, electronic funds transfer (EFT), e-Commerce, e-Business and shared knowledge systems
9.
Outsourcing of non-core operations.
10.
Strategic alliances to enhance logistics
11.
Ethics of logistics
12.
Strategic importance of logistics (supply chain).

Current Trends in Logistics
1.
Increasing use of technology e.g. electronic identification of packages/products, satellite tracking and automatic guidance systems, GPS etc.
2.
Electronic Data Interchange (EDI) – supermarkets link stock control systems directly to suppliers order processing systems, automatic payments, security surveillance etc.
3.
Electronic Point of Sale Data is now integrated and linked to order processing systems.
4.
IT/ICT brought about internet banking and online services in likes of the business and e- commerce.
5.
E-purchasing and E-procurement B2B (business to business, where one business buys materials from another business) B2C(business to customer, where a final customer buys from a business)
6.
EDI has a two tier system namely: (i) items coding place orders and track movement and (ii) Electronic Funds Transfer – debit client and credit supplier, arrange and effect payment immediately.
7.
LeadTime – refers to the total time between ordering materials and having them delivered and available for use. Lead time can be reduced to near zero through synchronized materials movement
8.
Mass customisation – allows ordering and supply of personalized products/services, giving exact customer specifications. This is possible courtesy of innovative manufacturing concepts such mass production and flexible manufacturing e.g. Dell manufactures as per order, meeting client specifications, get materials from suppliers as per requirements, manufactures and deliver with speed and efficiency (virtual integration).
9.
Globalisation
10.
Reduce number of suppliers to few with long term relationships
11.
Concentration of ownership
12.
Outsourcing
13.
Cross-docking
14.
Postponement – package to order where a company keeps products in stock, only packs in boxes written in proper, exact language of customer at the time of shipping.
15.
Direct delivery
16.
Stock Reduction Methods – IT and vendor managed inventory
17.
Increasing environment concerns –
18.
More collaboration along the supply chain – logistics is underpinned by leanness, agility and integration.
19.
Agility – more flexible and responsive, focusing on customer satisfaction.

20.
Leanness – efficient flow of materials, fast deliveries, reduce stock levels, handling and give lower costs and remove all waste from the supply chain.
21.
Integration – co-operation, not working in isolation.
Fig 2.1 Integrated Logistics within an Organisation (Internal Integration)
Procurement inward transport
Receiving
Warehousing control
Materials handling
Picking consolidating
Physical distribution outward transport Returns
Suppliers Operations Customers
Communications
Location
Source: Waters, D. (2003:35)

Integrated logistics within an organization show how a series of related activities add value to the final product. Historically, these functions have been treated as separate, independent and isolated departments. This results in a number of disadvantages which include the following:
1.
More frequent shortages of raw materials.
2.
Increase in cost of purchasing and emergency deliveries for transport
3.
Increase in stock levels, storage and refrigeration costs
4.
Increased investment in warehousing, security and materials handling
5.
Delays in supply chain and logistics hiccups.
6.
High stocks of finished goods
7.
Locations near suppliers and customers.
When logistics are not integrated within an organization, there is conflict of priorities and each function move in a different direction altogether. Efforts are duplicated, resources are wasted and the organization cannot achieve goal congruency. It will be difficult for managers to co-ordinate the flow of information and materials within the supply chain.
Disadvantage of an Integrated Logistic within an organization
 different, conflicting objectives within an organization
 duplicating efforts and disrupting production
 disrupting the flow of information and materials between the functions

Reducing co-ordination between departments thereby resulting in inefficiency, higher costs and worse customer service.
 Increasing the need for butter stocks.
Given the above arguments, it is important to integrate logistics within an organization into a single function. Logistics will be responsible for sourcing, storage and movement of material through the organization. This will enhance strategic planning and ensure the greatest overall speed and efficiency. Priority will be given core-activities and the rest would be outsourced to be best vendors, outside the organisation. By so doing, emphasis must be given to:
1.
Materials management catering for production and taking care of all inwards flow of supplies and their movement through the operations, processing and manufacturing.

2.
Physical distributioncatering for all marketing which involves all outward flow of finished goods, returns, after sales service and customer satisfaction.
Meanwhile, distinction is only made in theory for study purposes. In practice, the systems must run as one smooth function with no bridges or interruptions within the supply chain.
Management should oversee the total logistics cost of an integrated supply chain.
Total logistics cost = function ( transport cost + warehouse cost + handling cost + packaging cost + information cost + logistics overheads.)
Therefore, modern day logistics have moved from fragmented, isolated and dysfunctional activities to a well co-coordinated, strategic and integrated holistic approach to logistics, running as a smooth, single function.
Stages in Internal Integration
There are seven stages towards integration of logistics function. Integration within an organisation typically goes the following stages:
Stage1 - separate logistics activities are not given much attention or considered important.
Stage2 - recognizing that the separate activities of logistics are important for the success of the company.
Stage3 - making improvements of the separate functions, making sure that each one is efficient as possible.
Stage4 - internal integration (recognizing the benefits of the internal co-operation and combining the separate functions into one).
Stage5 - developing a logistic strategy, to set the long term direction of logistics.

Stage6 - benchmarking, comparing logistics’ performance with other organizations, learning from their experiences, identifying areas that need improvements and finding ways of achieving this.
Stage7 - continuous improvement, accepting that further changes are inevitable and always searching for better ways of organizing logistics.
External Integration
It is not enough to only integrate internally and end there. For increased efficiency and organizational success, there is need for integration within the industry along the supply chain. In as much as we can integrate internally, we also need to integrate externally.
External integration removes boundaries, eliminates disruptions and achieves cost reduction through value addition and enhancing co-operation at every interface between supply chain partners (Christopher, 2000:44). This effectively gives us 3 levels of integration as shown below in Fig. 2.2.

Fig. 2.2
Three Levels of Logistics Integration
(a) Separate functions within an organization an organization chain
Logistics activity
Suppliers Customers
Operations
Suppliers
Suppliers
(b) Integration within the organization
Logistics with internal integration
Operations
(c) Integration along the supply chain
Logistics with external integration
Operations
Customers
Customers

Source: Waters, D. (2003:40).
Benefits of External Integration
1.
Genuine co-operation between all parties of supply chain with shared information and resources.
2.
Lower costs due to balanced operations, lower stocks, less expediting, economics of scale, elimination of acts which waste time and do not add value.
3.
Improved performance due to more accurate, better planning, higher productivity and prioritization.
4.
Improved material flow and handling, with better co-ordination giving faster and more reliable movements.
5.
Better customer service with shorter lead times, faster deliveries and more customization.
6.
More flexibility with organizations reacting faster to changing conditions.
7.
More standardized procedures, becoming routine and well practiced with less duplication of effort, information and planning.
8.
Reliable quality and few inspections, with integrated quality management programs.
Challenges of External Integration
1. Firms do not trust other members of the supply chain.
2. Reluctance to share information
3. Differences in priorities
4. Competing with other members
5. Unwillingness to exchange data.
6. Incompatible systems

7. Unwillingness to share skills
8. Sensitivity of security issues/features
9. Complexity of systems
10. The cost of external integration
11. Adversarial attitude among supply chain members
12. Fear and suspicion of other supply chain members.
Areas of Co-Operation
1.
Doing business together and develop valuable working relationships.
2.
Joint purchases to benefit from trade and cash discounts
3.
EDI links to share information
4.
Combing loads to reduce transport costs
5.
standard packaging sizes for convenient materials handling
6.
Preferential treatment with suppliers.
All the above approaches result in the supply chain where groups of organizations work together without any binding formalities. This is called keiretsu in Japanese business management philosophy. The arrangement is very informal, flexible and not rigid. However, informal relationships are characterized by the sudden departure of supply chain members without any notice to their convenience. This hurts other supply chain members and poses them severe risks.
Thus, there is an increasing need for strategic alliances and partnerships.
Strategic Alliances, Water, D (2003:45)
Strategic alliance/supplier partnerships is an ongoing relationship between and among firms, which involves commitment over a long period of time and a mutual sharing of information, the risks and rewards of the relationship. There are many positive gains that flow from strategic

alliances. According to Tom Peters (1999:96), the following are some of the main features of strategic alliances:
 organizations working closely together at all levels

 senior managers and everyone in the organization supporting the alliances
 shared business culture, goals and objectives openness and mutual trust

 long term commitment
 shared information, expertise, planning and systems flexibility and willingness to solve shared problems

 continuous improvements in all aspects of operations
 joint development of products and processes guaranteed reliable and high quality goods and services
 agreement on costs and profits to give fair and competitive pricing
 increasing business between partners
Strategic alliance is also a term that grew from Japanese philosophy business management. For example, in the 80s, Toyota formed partnerships with its 250 suppliers while at the same time,
GM (American) was still working independently with over 4 000 suppliers. In the 90s, Toyota
SA even invested heavily in suppliers system with a view to increase deliveries, reduce lead times, improve quality, better service, eliminate risks and guarantee long term sustainability and customer satisfaction. Your firm must not commit it to strategic partnerships if:
1.
not sure about future plans
2.
it only buys few/little materials
3.
always changing its base
4.
very sensitive about confidentiality
5.
Suppliers are not reliable.
The best approach to look into possibilities of business partnerships is to:
1.
form a project team, to identify potential partners
2.
define objectives
3.
set timetables
4.
state the implications
5.
negotiate terms
6.
clarify parameters

KSFs for Strategic Alliances/Partnerships
1.
management commitment
2.
contract specifying costs and responsibilities
3.
agreed performance indicators
4.
agreed objectives
5.
shared culture
6.
joint information systems
Walters (2003:48), highlights the following KFS
According to Rowley (2001:57), the following are KFSs for a successful partnership/ strategic alliance: a) High level of achieved service b) Real cost savings c) A growing amount of business
Lambert et al (2000:17) added the following as KSFs:
1.
Drivers which are compelling reasons for forming the partnership in the first place e.g. cost reduction, better customer service, shared information, security and better load times.
2.
Facilitators - which are the supportive corporate factors that encourage partnerships e.g. compatibility of operations and cultures, similar management styles, and common aims.
3.
Components which are joint activities and operations used to build and sustain the relationship e.g. communication channels, joint planning, shared risks and rewards, investment and joint supplies.
NB: Strategic partnerships/alliances are not ideal for every situation .The following conditions underline circumstances which do not warrant strategic alliances:
1.
when suppliers are very small

2.
when materials are very cheap
3.
when effort and cost is not worthwhile for the alliance
4.
when management do not share information
5.
when partners are not willing to make a commitment
6.
when organization cultures and structures are different
7.
when partners do not trust each other
8.
When potential partners may not have the necessary skills and enthusiasm.

Deaning’s 14 Points
Recently I came across Deming's 14 points for management. Deming is an American statistician who has been credited with the rise of Japan as a manufacturing nation. He set out his 14 points for management as follows:
1.
Create constancy of purpose.
2.
Adopt the new philosophy.
3.
Cease dependence on mass inspection to achieve quality.
4.
Minimize total cost, not initial price of supplies.
5.
Improve constantly the system of production and service.
6.
Institute training on the job.
7.
Institute leadership.
8.
Drive out fear.
9.
Break down barriers between departments.
10.
Eliminate slogans, exhortations and numerical targets.
11.
Eliminate work standards (quotas) and management by objective.
12.
Remove barriers that rob workers, engineers and managers of their right to pride of workmanship.
13.
Institute a vigorous program of education and self-improvement.
14.
Put everyone in the company to work to accomplish the transformation.
It is imperative to note that strategic alliance fosters the powerful combination of improved technology which can enable better partnering. There is a growing consensus that partnerships enables B2B connections and enhance business efficiency and customer satisfaction.

Vertical Integration
According to Waters (2003:49), vertical integration describes the amount of supply chain that is owned by one organization.
Fig. 2.5 Levels Vertical Integration
Suppliers Operations Customers
Type of Vertical
Integration
(a) little
(b) Backward
(c) Forward
(d) High
Parts owned by the organization
Source: Waters, D (2003:49)
Little Integration - the organization buys material from outside suppliers and sells its products to extend customers, it does not own much of the supply chain and has little vertical integration.

Backward Integration the organization owns a lot of supply, side suppliers of raw materials, components, parts, inputs, etc. This is backward integration/upstream integration.
Forward Integration the organization owns a lot of the distribution networks, wholesalers, agencies, distributors, retail, specialist outlets, mail order, etc. This is downstream/forward integration.
High Integration the organization owns initial suppliers and it does most of the value adding acts, distributes the products to find customers .It owns much of the supply chain and is highly integrated vertically e.g. Ford Motors at one time in the past owned iron and ore mines, still mills ,fabrication plants, coach works, distributor networks and repair shops.
Delta beverages used to own farms, processing plants, transport and logistics networks, distribution networks, wholesalers and retailers. Rossing used to own mines, processing plants, smelting plants, coachworks and coach builders, distribution networks etc.
However, empirical research has proved that integration may not desirable because of the following reasons:
1.
increases expenses
2.
compel organization operations difficult to manage
3.
resources stretched and spread too wide and thinly
4.
Need for specialized and experience which are difficult to find.
5.
difficult to respond to changes (inflexibility)
6.
capital tied in non-core acts

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