4 - Mar 09 - Chapter 4 - Implementing The Strategy

Implementing the strategy
CHAPTER 4 | MARCH 9, 2019

Implementing a logistics strategy
 Making of lower level decisions

 Translation of strategic aims into positive actions
 Implementation is a journey from vague strategic aspirations to actual materials

movement
 Strategies only become effective when they are implemented

 Long-term aims are translated into lower decisions
 Work is carried out to achieve them
Logistics strategy – Common Problems
 People who design the strategies are not responsible for their implementation
 Strategies are badly designed, perhaps with the wrong aims or focus
 It is impossible, or very difficult, to implement them properly
 They do not take enough account of actual operations, perhaps because there were not
broad enough discussions
 They are over-ambitious, or somehow not realistic
 They ignore key factors, or emphasize the wrong features
 People only pay lip-service to supporting the strategies
 Enthusiasm for the strategies declines over time
Logistics strategy – Assisting factors
 Think about implementation all the way through the design

 An organizational structure that is flexible and allows innovation
 Formal procedures for translating the strategy into reasonable decisions at lower levels
 Effective systems to distribute information and support management decisions
 Open communications which encourage the free exchange of ideas
 Acceptance that strategies are not fixed, but continue to evolve over time
 Control systems to monitor progress
 Convincing everyone that the strategy is beneficial, so they conscientiously play their part in
implementation
 Developing an organizational culture that supports the strategy
Structure of Supply Chain
 Consists of:
 Tiers of suppliers feeding materials from original sources into an organization’s operations
 Tiers of customers moving materials out to the final customers
 Some supply chains have few tiers of customers and suppliers while others have many
 Some chains have very simple flows of materials while others have complex networks
 Different types of products need different structures in their supply chain
 Company focusing on fast delivery will build a different chain to one focusing on low costs
Structure of Supply Chain – Factors
 Type of customer demand

 Economic climate
 Availability of logistics services
 Culture
 Rate of innovation
 Competition
 Market and financial arrangements
 Such factors are considered in designing a supply chain
Structure of Supply Chain – Design
 Organizations decide upon:

 Types of intermediary (who form the suppliers and customers in the chain)
 Numbers of these intermediaries
 Warehousing arrangements
 Work done in logistics centers
 Customers served from each center
 Modes of transport
 Delivery speed etc.
 Key question is about Supply Chain’s Length and Breadth
Supply Chain Length
 Number of tiers or intermediaries

 Materials flow through between source and destination
 Supply chains are shorter when producers sell directly to customers
 Supply chains are longer with many intermediaries

 Including several stages of manufacturing each connected through intermediaries
 Exporters move materials to offshore customers

 Use a series of logistics centers, transport operators, agents, freight forwarders, brokers, agents
Supply Chain Breadth
 The number of parallel routes that materials can flow through
 Commonly seen in the number of routes out to final customers
 Cadbury’s has a broad supply chain

 You can buy their chocolate through a huge number of retailers
 EBH has a narrower chain, and most of their products sell through their own shops
 Some outlets have a very narrow chain and they only sell from a single outlet
Supply Chain Length & Breadth –
Important Factors
 The amount of control that an organization wants over its logistics

 The quality of the service
 The cost
 Narrow supply chain

 Achieves control over logistics
 Difficult to achieve high customer service or low costs
Supply Chain Length & Breadth –
Important Factors
 Broader supply chain

 Achieves higher customer service
 Increases costs
 Reduces manufacturer’s control over logistics
 Making the supply chain both long and broad removes most control from the manufacturer
 Customers get good service
 Location of facilities
 Concerns warehouses and logistics centers.
 Centralized or Decentralized
 Ownership & Outsourcing

 Strategic alliances result in 3rd party or contract logistics
 Lower costs, specialization, high performance level, flexibility & reduced
control
European Contract BOOK | PAGE 91
Logistics
Contract logistics is a huge business in Europe. Datamonitor estimate the total cost of logistics was
$150 billion in 1999, with 26% of this involving third party suppliers. By 2003 the proportion of
contracted business will be 30% higher – increasing the market from $38 billion to $57 billion.
Germany is the biggest European market for logistics services (28% of the total)
followed by France (20%) and the UK (17%). Because each of the economies has developed
differently, and because of the different logistics requirements, the use of third parties varies quite
widely. In the UK almost 40% of logistics is contracted, while in Greece it is nearer 12%. If you
multiply the size of the logistics market by the proportion that is outsourced, you see that
Germany, France and the UK each spend about $10 billion a year on third party logistics. These are
continuing to grow at about 8% a year, but growth will be faster in Italy and Spain which currently
have large logistics markets, but relatively low levels of outsourcing.
The two main issues facing contract logistics are consolidation of logistics into fewer, large
companies, and geographical expansion of these companies. The European Union has encouraged
trade throughout an integrated market, and larger logistics companies are emerging to service the
whole market. Few of these companies are expanding by organic growth, but are
looking for mergers, acquisitions and strategic alliances with other logistics companies.
 Enabling practices
 Adoption of best practices to run operations
 Capacity
 Largest amount of material that flows at a given time
 Each component in the supply chain needs to have an appropriate capacity
Managing Change
Change is inevitable
 Many organizations prefer to stick to their old practices
 Flexible competitors to gain an advantage

Change is inevitable – Symptoms
 Low sales and falling market share, as old products are overtaken by competitors
 Many customer complaints, particularly about quality and delivery dates
 Reliance on a few customers, especially with long-term, fixed-price contracts
 Old-fashioned attitudes and operations
 Poor industrial relations, with low employee morale and high staff turnover
 Poor communications within the organization and with trading partners
 Too much inflexible top management with no new appointments
 Inward-looking managers who are out of touch with operations or customers.
Change Management – Stages
Denial Defense Discarding Adoption Integration

• Where • Defending the • Beginning to • Using the new • Assuming the
employees deny current way of move away from ways and new ways are
that there is a doing things and the old ways accepting that normal and
need for change criticizing new and towards the they are using them
proposals new ones beneficial naturally
Rate of change
 Major changes can be very disruptive, organizations generally

prefer a series of small adjustments
 Known as Kaizen or Continuous Improvement
 A stream of relatively minor changes can be absorbed by the

organization without major interruptions
Rate of change
 Lesser risk, as any of the ‘improvements’ that do not work can

easily be reversed
 This incremental approach builds a momentum for improvement,
 Makes sure that the logistics system is always getting better
 Suggestions for iterative improvements come from many sources
(customers, competitors, suggestion boxes)
 Sometimes there is a more formal arrangement, such as the plan–
do–check–act cycle, or Deming wheel
Deming Wheel – PDCA
 Plan – looking at the existing logistics, collecting information, discussing alternatives, and
suggesting a plan for improvement
 Do – where the plan is implemented, and data is collected on subsequent performance
 Check – which analyses the performance data to see if the expected improvements actually
appeared
 Act – if there are real improvements the new arrangements are made permanent, but if there
are no improvements, lessons are learnt and the new arrangements are not adopted.
Business Process Reengineering (BPR)
 The fundamental rethinking and radical redesign of business processes to

achieve dramatic improvements in critical, contemporary measures of
performance, such as cost, quality, service and speed
 Do not look for improvements in your current operations

 You start with a blank sheet of paper
 Design a new process from scratch
 BPR does not replace continuous improvement
BPR – Principles for Supply Chain
 A supply chain should be designed across functions and allow work to flow
naturally, concentrating on the whole supply chain rather than the separate
parts
 Managers should strive for dramatic improvements in performance by radically
rethinking and redesigning the supply chain
 Improved information technology is fundamental to re-engineering as it allows
radical new solutions
 All activities that do not add value should be eliminated
BPR – Principles for Supply Chain
 Activities should be carried out where they make most sense – information
processing, for example, becomes a part of logistics rather than a separate
function
 Decisions should be made where the work is done, and by those doing the work
 You do not have to be an expert to help redesign a supply chain, and being an
outsider without preconceived ideas often helps
 Always see things from the customer’s point of view.
End of Lecture 4

4 - Mar 09 - Chapter 4 - Implementing The Strategy

Uploaded by

Copyright:

Available Formats

4 - Mar 09 - Chapter 4 - Implementing The Strategy

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

4 - Mar 09 - Chapter 4 - Implementing The Strategy

Uploaded by

Copyright:

Available Formats

Implementing the strategy

CHAPTER 4 | MARCH 9, 2019

 Making of lower level decisions

 Implementation is a journey from vague strategic aspirations to actual materials

 Strategies only become effective when they are implemented

 Think about implementation all the way through the design

 Type of customer demand

 Organizations decide upon:

 Number of tiers or intermediaries

 Supply chains are shorter when producers sell directly to customers

 Supply chains are longer with many intermediaries

 Exporters move materials to offshore customers

 The number of parallel routes that materials can flow through

 Commonly seen in the number of routes out to final customers

 Cadbury’s has a broad supply chain

 The amount of control that an organization wants over its logistics

 Narrow supply chain

 Broader supply chain

 Ownership & Outsourcing

 Many organizations prefer to stick to their old practices

 Flexible competitors to gain an advantage

Denial Defense Discarding Adoption Integration

 Major changes can be very disruptive, organizations generally

 Known as Kaizen or Continuous Improvement

 A stream of relatively minor changes can be absorbed by the

 Lesser risk, as any of the ‘improvements’ that do not work can

 Do – where the plan is implemented, and data is collected on subsequent performance

 The fundamental rethinking and radical redesign of business processes to

 Do not look for improvements in your current operations

You might also like