Page 290 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Unit 13: Logistics Design and Operational Planning

The suggested format is not the only approach, but it does highlight the fact that the assessment Notes
must consider the processes, decisions, and key measures for each major logistics activity.
Process considerations focus on physical and information flows through the value chain. Decision
considerations focus on the logic and criteria currently used for value chain management.
Measurement considerations focus on the key performance indicators and the firm’s ability to
measure them.
The specific review content depends on the scope of the analysis. It is unusual that the information
desired is readily available. The purpose of the internal review is not detailed data collection
but rather a diagnostic look at current logistics processes and procedures as well as a probe to
determine data availability. Most significantly, the internal review is directed at the identification
of areas where substantial opportunity for improvement exists. The external assessment is a
review of the trends and service demands required by customers. The market assessment objective
is to document and formalize customer perceptions and desires with regard to changes in the
firm’s logistics capabilities. The assessment might include interviews with select customers or
more substantive customer surveys.

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Caution The assessment should focus on external relationships with suppliers, customers,
and consumers. The assessment should consider trends in requirements and processes as
well as enterprise and competitor capabilities.
Technology assessment focuses on the application and capabilities of key logistics technologies,
including transportation, storage, materials handling, packaging, and information processing.
The assessment considers the firm’s capabilities in terms of current technologies and the potential
for applying new technologies.

Example: Can advanced materials handling capabilities offered through third-party
suppliers enhance logistics performance? What is the role of advanced information technology,
communication, and decision support systems in guiding responsive logistics capabilities?

Finally, what can satellite and scanning communications technologies contribute to logistics
system capability? The objective of the technology assessment is to identify technology
advancements that can provide effective trade-offs with other logistics resources such as
transportation or inventory.

Supporting Logic Development

The second feasibility assessment task is development of a supporting logic to integrate the
findings of the internal review, external assessment, and technology study. Supporting logic
development often constitutes the most difficult part of the strategic planning process. The
purpose of the situational analysis is to provide senior management with the best possible
understanding of the strengths and weaknesses of existing logistics capabilities for both current
and future environments. Supporting logic development builds on this comprehensive review
in three ways.
First, it must determine if there are sufficient logistics improvement opportunities to justify
detailed research and analysis. In a sense, supporting logic development forces a critical review
of potential opportunities and a determination of whether additional investigation is justified.
Supporting logic development uses the logistics principles (e.g., tapering principle, principle of
inventory aggregation) to determine the feasibility of conducting detailed analysis and the
potential benefits. While completing the remaining tasks in the managerial planning process
does not commit a firm to implementation or even guarantee a new logistics system design, the
potential benefits of change should be clearly identified when developing the supporting logic.

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