Global Logistics Management
Shihyu Chou
National Taiwan Normal University
Unless noted, the course materials are licensed under Creative Commons
Attribution-NonCommercial-ShareAlike 3.0 Taiwan (CC BY-NC-SA 3.0)
1
Unit 1
Supply Chain Strategies
2
Learning objectives
 Highlight the role of logistics and supply chain strategy in
the context of firm strategy, and see how logistics and
supply chain strategy can actually sometimes drive firm
strategy
 Outline the evolution of manufacturing, from which
various logistics and supply chain strategies have emerged
 Look at both lean and agile logistics strategies, and the role
of mass customization in the latter
 Develop a taxonomy of supply chain strategies
3
Outline







Definitions of logistics and SCM
Strategy
The evolution of manufacturing
Lean production
Agile supply chains and mass customization
Combined logistics strategies
Critical factors to consider in supply chain
planning
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and
Supply Chain Management, John Wiley & Sons, Ltd.(p35)
4
What is logistics?
 Logistics involves getting, in the right way, the
right product, in the right quantity and right
quality, in the right place at the right time, for the
right customer at the right cost (8Rs)
 It’s not just ‘trucks and sheds’
5
What is supply chain
management?
 The supply chain is the network of organizations that are
involved, through upstream and downstream linkages, in
the different processes and activities that produce value in
the form of products and services in the hands of the
ultimate consumer
 Supply chain management (SCM) is the management
across a network of upstream and downstream
organizations of material, information and resource flows
that lead to the creation of value in the form of products
and / or services
6
Strategy
7
 Strategy
– It is about planning and configuring the organization
for the future according to certain stakeholder
expectations.
– A particular long term plan for success
 An organization without a strategy is like a ship
without a compass
8
Corporate
strategy
Firm level
Business
unit strategy
SBU level
Functional
strategy
Top-down view
departmental level
(marketing,
production,
logistics,…)
9
National Taiwan Normal University Shihyu Chou
(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p36))
Corporate
Strategy
SBU A’s
Strategy
Strategy:
Function A1
Strategy:
Function A2
National Taiwan Normal University
Shihyu Chou
(reference: Mangan, J., Lalwani, C., and
Butcher, T.,(2008), Global Logistics and
Supply Chain Management, John Wiley
& Sons, Ltd.(p37))
SBU B’s
strategy
Strategy:
Function A3
Strategy:
Function B1
Strategy:
Function B2
Strategy:
Function B3
Logistics &
SCM Strategy
A holistic view of logistics and SCM strategy formulation
10
 SCM is an activity that is truly cross-functional
and not limited to one functional area.
 Companies need to evolve their strategies to meet
the challenges of the dynamic, ever changing
business environment.
 Integration is a key feature of effective SCM
 Formulating a strategy for logistics and SCM
should not be restricted to the logistics function;
instead it should involve taking a crossfunctional, process based perspective.
11
The evolution of manufacturing
12
Mass production
Lean production
Output volume
Mass production
Craft production
Output variety
The evolution of production strategy
13
National Taiwan Normal University Shihyu Chou
(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p39))
 Toyota Production System (TPS) is the origin of
lean production and lean logistics. (Kiichiro
Toyota, Taiichi Ohno, and others)
 They improved the Ford can production model
and also included the thinking of quality.
 TPS:
– The emphasis is not on the efficiency of individual
machines, but on the flows through the system.
14
Lean Production
15
 Lean production:
– Quick machine turnover, elimination of waste, even
production flows, low levels of inventory, faster total
process time, achieving total quality
– Pulled system (JIT) rather than push system
 Eliminating waste in a pull based value stream of
activities with level production (i.e. even
production runs with neither idle time nor surges
in demand) and just-in-time inventory
management
16
 Typical wastes:
– Overproduction, waiting, transportation, inappropriate
processing, unnecessary inventory, unnecessary motion,
defects
 A key aspect of lean is ensuring that value is
added at each stage of the process and steps in
the process that do not add value are eliminated
17
 Lean can also be applied in the service context.
 Lean consumption, the principles:
–
–
–
–
–
Solve the customer’s problem completely
Don’t waste the customer’s time
Provide exactly what the customer wants
Provide what’s wanted exactly where it’s wanted
Provide what’s wanted where it’s wanted exactly when
it’s wanted
– Continually aggregate solutions to reduce the
customer’s time and hassle.
18
Agile supply chains and
mass customization
19
Agile supply chains
 The agile supply chain is a demand-pull chain
designed to cope with volatile demand.
– Structured so as to allow maximum flexibility
 Enabled by mass customization
– Often incorporates postponed production
 Mass customization involves customization into
various different finished products of what are
largely mass produced product.
20
Mass customization
 Customers usually concentrate on the dissimilar features
among the similar products.
 Different product configurations contain a majority of
shared components and features to accommodate volume
and variety
 Enabled by postponement
– the reconfiguration of product and process design so as to allow
postponement of final product customization as far downstream as
possible
– Not only applied to manufacturing
– E.g. Packaging postponement is merely delaying final packaging
of products until customer orders are received
21
Before standardization
After standardization
The principle of postponement
22
National Taiwan Normal University Shihyu Chou
(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p43))
Flickr Arrr!
Toyota AYGO
Flickr Andy_BB
Citroen C1
Flickr Tim van Rooyen
Peugeot 107
• All three are produced in the new, purpose-built joint
TPCA factory in the Czech Republic
• All three share 92% of the same components
23
Combined logistics strategies
24
Long lead time
Lean
Plan and Execute
Leagile
Postponement
Short lead time
Lean
Continuous
replenishment
Agile
Quick Response
Predictable demand
Unpredictable demand
National Taiwan Normal University Shihyu Chou
(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p46))
Supply demand characteristics
Resulting pipelines
Short lead time + predictable demand
Lean, continuous replenishment
Short lead time + unpredictable demand
Agile, quick response
Long lead time + predictable demand
Lean, planning and execution
Long lead time + unpredictable demand
Leagile production/logistics postponement
National Taiwan Normal University Shihyu Chou
(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p46))
A taxonomy for selecting global supply chain strategies
25
Manufacture of
base product
Lean
Agile
Final Markets
Decoupling
point
National Taiwan Normal University Shihyu Chou
(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics and Supply Chain Management, John Wiley & Sons, Ltd.(p48)
The leagile supply chain
(the base product can be manufactured at a
remote location and shipped to locations
nearer the final market)
26
Critical factors to consider in
supply chain planning
27
Critical factors to consider in
supply chain planning (I)
 Living supply chains
– Companies use a process of dynamic alignment to
match changing customer needs and desires with
different supply strategies.
 Focus on processes and flows
– A supply chain approach in that it allows a full end-toend perspective rather than focus on separate functional
areas
28
Critical factors to consider in
supply chain planning (II)
 Focus on high level objectives
– The best supply chains are agile, adaptable and have
aligned interests among the firms in the supply chain.
This is a ‘Triple A Supply Chain. (Hau Lee from
Stanford)
 The importance of people
– It’s people who drive the supply chain, both inside and
outside a firm, not hard assets or technology. You can’t
do anything without the right people.
29
Critical factors to consider in
supply chain planning (III)
 Its supply chains that compete
– Increasingly it is supply chains that compete more so
than individual firms and products
– A company can have the best and most sophisticated
product in the world, but if it doesn’t have a good
supply chain behind it, then it will likely not be able to
compete, especially in terms of cost and speed, and
indeed many other attributes also.
30
Copyright Declaration
Page
Work
3
Highlight the role of
logistics… chain strategy
can actually
sometimes drive firm
strategy
3
Outline the evolution of
manufacturing,… chain
strategies have emerged
3
3
4
Look at both lean and
agile logistics
strategies…of mass
customization in the
latter
Develop a taxonomy of
supply chain strategies
Strategy
The evolution
of …consider in supply
chain planning
Licensing
Author/Source
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p35)
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p35)
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global
Logistics and Supply Chain Management, John Wiley & Sons,
Ltd.(p35)
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p35)
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p35)
31
Copyright Declaration
Page
Work
Licensing
Author/Source
Logistics involves
getting, …right customer
at the right cost (8Rs)
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p9)
The supply chain is the
network of …in the hands
of the ultimate consumer
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p10)
Supply chain
management (SCM)
is …products and / or
services
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global
Logistics and Supply Chain Management, John Wiley & Sons,
Ltd.(p11)
8
It is about planning
and …according to
certain stakeholder
expectations.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p36)
8
A particular long term
plan for success
5
6
6
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p36)
32
Copyright Declaration
Page
Work
Licensing
Author/Source
9
National Taiwan Normal University Shihyu Chou
(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008),
Global Logistics and Supply Chain Management, John Wiley &
Sons, Ltd.(p36))
10
National Taiwan Normal University Shihyu Chou
(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008),
Global Logistics and Supply Chain Management, John Wiley &
Sons, Ltd.(p37))
SCM is an activity that
is …not limited to one
functional area.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global
Logistics and Supply Chain Management, John Wiley & Sons,
Ltd.(p37)
11
Companies need to
evolve …the dynamic,
ever changing business
environment.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p37)
11
Integration is a key
feature of effective SCM
11
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p37)
33
Copyright Declaration
Page
11
Work
Formulating a strategy for
logistics …taking a
cross-functional, process
based perspective.
Licensing
Author/Source
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p38)
National Taiwan Normal University Shihyu Chou
(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008),
Global Logistics and Supply Chain Management, John Wiley &
Sons, Ltd.(p39))
13
The emphasis is not…
but on the flows through
the system.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global
Logistics and Supply Chain Management, John Wiley & Sons,
Ltd.(p39)
16
Quick machine
turnover…faster total
process time, achieving
total quality
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p39)
16
Eliminating waste in a
pull based value …and
just-in-time inventory
management.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p42)
14
34
Copyright Declaration
Page
17
Work
A key aspect of lean is
ensuring …the process
that do not add value are
eliminated
Licensing
Author/Source
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p41)
Solve the customer’s
problem completely
…. solutions to reduce
the customer’s time and
hassle.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p41)
Mass customization
involves …products of
what are largely mass
produced product.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global
Logistics and Supply Chain Management, John Wiley & Sons,
Ltd.(p42)
21
Customers usually
concentrate on the
dissimilar features among
the similar products.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p42)
21
the reconfiguration of
product
and …customization as
far downstream as
possible
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p43)
18
20
35
Copyright Declaration
Page
Work
21
Packaging postponement
is …products until
customer orders are
received
22
23
Licensing
Author/Source
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p43)
National Taiwan Normal University Shihyu Chou
(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008),
Global Logistics and Supply Chain Management, John Wiley &
Sons, Ltd.(p43))
Flickr Arrr!
http://www.flickr.com/photos/gasheadsteve/157345234/sizes/m/i
n/photostream/
2012/09/24 visited
23
Flickr Andy_BB
http://www.flickr.com/photos/andyboohh/5421789547/
2012/10/15 visited
23
Flickr Tim van Rooyen
http://www.flickr.com/photos/timmee/282614963/
2012/10/15 vistied
36
Copyright Declaration
Licensing
Author/Source
Page
Work
23
All three are produced in
the new, purpose-built
joint TPCA factory in the
Czech Republic
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p44)
23
All three share 92% of
the same components
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p44)
25
National Taiwan Normal University Shihyu Chou
(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008),
Global Logistics and Supply Chain Management, John Wiley &
Sons, Ltd.(p46))
25
National Taiwan Normal University Shihyu Chou
(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008),
Global Logistics and Supply Chain Management, John Wiley &
Sons, Ltd.(p46))
26
National Taiwan Normal University Shihyu Chou
(reference: Mangan, J., Lalwani, C., and Butcher, T.,(2008),
Global Logistics and Supply Chain Management, John Wiley &
Sons, Ltd.(p48)
28
Companies use a process
of …needs and desires
with different supply
strategies.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p48)
37
Copyright Declaration
Licensing
Author/Source
Page
Work
29
The best supply chains
are agile…This is a
‘Triple A Supply Chain.
(Hau Lee from Stanford)
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p49)
29
It’s people who drive the
supply chain, …You can’t
do anything without the
right people.
Mangan, J., Lalwani, C., and Butcher, T.,(2008), Global Logistics
and Supply Chain Management, John Wiley & Sons, Ltd.(p49)
38