Page 289 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Logistics and Supply Chain Management

Notes Figure 13.1 illustrates the generalized process flow. The process is segmented into three phases:
problem definition and planning, data collection and analysis, and recommendation and
implementation.

13.1.1 Phase I: Problem Definition and Planning

Phase I of logistics system design and planning provides the foundation for the entire project. A
thorough and well-documented problem definition and plan are essential to all that follows.

Feasibility Assessment

Logistics design and planning must begin with a comprehensive evaluation of the current
logistics situation.

Notes The objective is to understand the environment, process, and performance
characteristics of the current system and to determine what, if any, modifications might be
necessary.

The process of evaluating the need for change is referred to as feasibility assessment, and
includes the activities of situational analysis, supporting logic development, and cost/benefit
estimation.

Situational Analysis

Situational analysis is the collection of performance measures and characteristics that describe
the current logistics environment. A typical appraisal requires an internal review, a market
assessment, a competitive evaluation, and a technology assessment to determine improvement
potential and opportunities.

The internal review is necessary to develop a clear understanding of existing logistics processes.
It profiles historical performance, data availability, strategies, operations, and tactical policies
and practices. The review usually covers the overall logistics process as well as each logistics
function.
A complete self-appraisal for an internal review examines all major resources, such as workforce,
equipment, facilities, relationships, and information. In particular, the internal review should
focus on a comprehensive evaluation of the existing system’s capabilities and deficiencies. Each
element of the logistics system should be carefully examined with respect to its stated objectives
and its capabilities to meet those objectives.

Example: Is the logistics management information system consistently providing and
measuring the customer service objectives desired by the marketing department? Likewise,
does the material management process adequately support manufacturing requirements? Does
the current network of distribution centres effectively support customer service objectives?
Finally, how do logistics performance capabilities and measures compare across business units
and locations?
These and many similar questions form the basis of the self-appraisal required for the internal
analysis. The comprehensive review attempts to identify the opportunities that might motivate
or justify logistics system redesign or refinement.

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