لجستیک

Chapter 1 - Logstistics and supply chain 

1.1 Is it true that every organisation has to move materials to support its operations?  Give examples from different types of organisation to support your views.
If we take a very broad view of materials (including money, information and other intangibles) then every organisation has to move them.  In practice, this is a clear trend in logistics, where managers are ‘replacing inventory with information’.  However, even with a narrow view of logistics moving goods, every organisation has to move goods of some kind (as you can imagine when security firms make deliveries to banks and insurance companies make extensive use of postal services).

1.2  How important is logistics to the national economy?  How has this changed over time?
Figures in the chapter suggest the scope of logistics in some countries.  It would be interesting to compare these with figures for other countries.  Because it is difficult to get reliable figures about logistics, the question of whether this has changed is open to debate.  A reasonable view says that organisations are putting more effort into customer service, and hence logistics, so its national effect is growing markedly.

1.3 Organisations are only really interested in making products that they can sell to customers.  Provided they have reliable first tier supplies and transport for products to first tier customers, logistics is irrelevant.  Do you think this is true?
The simple answer to this is ‘no’ as each organisation should be concerned with operations throughout its supply chains.  They can be affected by events at remote tiers of customers or suppliers – for instance a remote supplier going out of business can affect supplies of important materials further down the supply chain, and many organisations have been affected when distant trading partners act unethically and bring disrepute on the whole chain.  In practice, external integration is still in its infancy, and few organisations really look beyond their immediate suppliers and customers.
 
1.4  Very few organisations deal with the final customer for a product.  Most work upstream and form one step of the supply chain, often passing materials to internal customers within the same organisation.  How does the type of customer affect the organisation of logistics and the measures of customer satisfaction?
In principle all customers should be treated in the same way, and logistics should aim for continuing customer satisfaction.  In practice, internal customers may use different measures of service, perhaps emphasising an internal view rather than an external one. 

1.5 The cost of logistics varies widely from organisation to organisation.  What factors affect these costs?  Are the costs fixed or can they be controlled?
There can be a huge variety of logistics costs in different types of organisation.  The usual ones are the type of materials moved, its weight, volume, perishability, value, special handling, packaging, distances moved, and so on.  Some of these are under the control of logistics managers, but the majority are not (but perhaps logistic manages can influence them).

1.6 How can you measure customer service or satisfaction, and why is it important?
There are many possible measures of customers service, including lead time, responsiveness, costs, amount of damage, errors, product availability, and so on.  We return to this question in chapter 14.  Customer service is important for the same reason that it is important to every other function within an organisation – poor customer services loses customers, and without customers the organisation will soon close down.
 
1.7 How can a company find the best balance between service level and costs?
This is a difficult question for which there is no simple answer.  Balancing costs and benefits is a key theme in logistics, and we return to it frequently in the book.

1.8 Is it really true that logistics affects all aspects of an organisation’s performance?
Yes.  Try thinking of some operations that do not depend on the supply of appropriate materials.

1.9 ‘Logistics is a part of every product package’.  What does this mean, and is it true?
A product package is the complex combination of goods and services that every organisations passes to its customers.  Logistics contributes to this package through availability, price, location of materials, and so on.  This contribution is an inherent part of the ‘offer’ given to customers.
 
1.10 In 1996 a survey by Deloitte & Touche in Canada26 found that 98% of respondents described logistics as either ‘critical’ or ‘very important’ to their company.  The survey also emphasised the rate of change in the area, with over 90% of organisations either currently improving their supply chain or planning improvements within the next two years.  Do you think that these findings are still valid?
Probably – though it might be that logistics is now considered even more important and is improving even faster

Chapter 2 - Development of logistics

2.1 People say that logistics is now changing so quickly that it is going through a revolution.  Is there evidence to support this view?
Phrases like ‘logistics revolution’ are usually used by consultants and writers to give dramatic effect and sell more of their products.  There is certainly a lot of evidence for logistics undergoing a lot of rapid changes – either listed n the chapter or found from other sources.  However, emotive phrases do not really add to this. 

2.2 What are the main factors encouraging logistics to change?
These are listed in the chapter.  The most important factors are communications, customer service, globalisation, and so on.

2.3 How is logistics responding to the pressures to change?  What changes do you think there will be in the next decade?
Logistics managers have developed many new ways of working – including just-in-time deliveries, e-procurement, global positioning, and all the other methods mentioned n the chapter.  It is always difficult to see what changes there will be in the next decade.  Oil is becoming increasingly expensive and this might have a major effect on logistics; environmental pressures may continue – there are many opinions about this.

2.4 What exactly is meant by ‘customer satisfaction’, and how is it achieved?
Customer satisfaction is achieved by giving customers exactly what they want.  Achieving this is made difficult by the fact that we all want different things (hence the need for agile logistics) and we all want as much as possible for the lowest possible price (hence lean logistics).  So there is always a balance as firms provide a service that will give reasonable levels of service with a reasonable effort.

2.5 How have attitudes towards customer service changed in recent years, and why are they now considered so important?
It is generally said that firms are putting more emphasis on customer service – but this is often more a matter of perception than reality.  To be fair, many companies are giving better customer service.  It is important as customers who have a choice move towards firms that treat them better.  Other firms with worse service lose customers, and their only source of income soon dries up – so no customers and soon no organisation.

2.6 Logistics are either lean or agile.  What does this mean, and is it true?
Lean logistics emphasises internal efficiencies and use of resources; agile logistics emphasise customer service.  Traditionally this is seen as a balance – either leaner or more agile.  But this is a simplified view and the two are not mutually exclusive.

2.7 Logistics managers often describe themselves as processors of information rather than movers of goods.  To what extent is this true?  How has the situation changed in recent years?
If you want some material, the traditional view is that you hold it in stock until you actually need it.  More recently, managers take the view that they do not actually need the material in stock, provided they know where to find it and move it quickly into their operations.  In other words, they are ‘replacing inventory by information’. 

2.8 Why do traditional companies find it so difficult to compete against e-companies?
Not all traditional companies do find it difficult to compete, and many companies are hardly affected by e-business.  However, e-business has certainly allowed some companies to develop very efficient operations (like the standard example of Amazon).  It is very difficult to compete against these – as it is difficult to compete against any large, efficient operations.

2.9 Some people argue that globalisation has been the largest single driver of change in logistics.  Do you think this is true?
This is arguably true – but we could also make a case for other factors.  The truth is that a whole range of different factors is combining to drive change.

2.10 In 1996 a survey of Canadian logistics companies 46, 47 listed the main benefits expected from outsourcing logistics as follows.  Are these benefits likely to be different in other countries, or to have changed in Canada over the past few years?

This seems like a reasonable list of benefits that would appear in any country and is still relevant (allowing for small variations and adjustments

Chapter 3 - Building effective supply chains

3.1  Is logistics really a strategic function with a long-term affect on organisational performance? 
Yes – and there is a lot of evidence to support this, such as the fate of companies that fail to deliver their products, expensive logistics making firms uncompetitive, penalties for late deliveries, lack of availability, and so on

3.2  What is a logistics strategy?
This is a very difficult question.  The book gives a definition, but it remains an intangible concept that is hard to imagine.  Essentially, it is everything that affects the long-term performance of logistics, and this is clearly a diverse set of components.
 
3.3  What is meant by ‘strategic fit’ and how can logistics manager try to get it?
This means that there is ‘harmony’ between a strategy and its environment.  Essentially managers take into account all relevant factors and design a good strategy that successfully lead them towards their aims.

3.4 Some managers argue that there is no point in publishing logistics strategies, as everyone knows that they deliver products to customers.  Do you find such arguments convincing?
There is some truth in this – but a mission should add some details.  In particular, it should not only say that the firm wants to deliver materials, but also how it will do this, what factors it will emphasise, how it will act, and so on.

3.5 There should never be a top-down design of strategy, as senior managers never know enough about day-to-day operations to design realistic strategies.  Do you think this is true?
Probably.  Senior managers certainly should not design a strategy in isolation from actual operations, as the results are likely to be unachievable.  There used to be a fashion for strategic managers to go to an isolated resort where they could work out their ideas away from the day-to-day concerns of management – but the results were generally theoretical abstractions that were unworkable in reality.

3.6  When customers judge products, they include factors like availability, lead time and after sales service – and these are part of logistics.  So does logistics really form a part of the product package?
Yes.

3.7  What are the options for a logistics strategy?  What factors affect an organisation’s choice? 
The main options parallel Porter’s generic strategies, phrased in terms of leanness, agility or specialisation.  Within these broad terms are a wide range of factors that an individual firm can focus on.  Their choice depends on ‘fit’ or allowing operations that work well in their environment.

3.8  There is only one ‘best’ logistics strategy in any circumstances, and managers should look for this.  Do you think this is true?
No.  In any circumstances managers can have different views about the solutions that are likely to work best.

3.9  Can logistics really be both lean and agile at the same time?
Yes.  For instance e-procurement can be both leaner and more agile.

3.10 How can a supply chain become agile?
By introducing flexibility – in the form of spare capacity, stocks, automated procedures, or whatever else is needed

Chapter 4 - Implementing the strategies

 

4.1 What exactly is meant by ‘implementing the logistics strategy’?
This includes all of the activities that move from the broad and intangible ideas in the strategy down to actually doing the work.  It takes logistics from ‘providing customer service’ to having a lorry deliver a product. 

 

4.2 It is often more difficult to implement a logistics strategy that to design one, so most logistics plan fail in the practice rather than the theory.  What exactly does this mean – and is it necessarily true? 
This essentially means that it is easier to think about things and plan them than to actually do them!  Most advice, research, consulting, and work in general discusses the design of good strategies, and relatively little work has been done on implementation.  Yet experience suggests that firms are much more likely to fail in the implementation of their strategies than in the original design.

 

4.3 What can an organisation do to improve the implementation of its logistics strategy?
Advice for this is given in the chapter.

 

4.4 What exactly is a logistics infrastructure?
Following the definition in the chapter, a logistics infrastructure consists of the organisational structure and the systems, human resources, culture and resources to support it.  It contains the parts of the organisation within which logistics works.

 

4.5 Apart from showing who reports to whom, what else does an organisational structure show?
It shows everyone’s roles, responsibilities, the way that work is organised within a firm, and so on.
 
4.6 What determines the best shape for a supply chain?
There is generally no ‘best’ shape for a supply chain, and there can be several ways of finding a good balance between competing objectives.  The main consideration, of course, is what the supply chain is trying to achieve.  The ‘best’ shape comes closest to achieves all of the aims.

 

4.7 When a company outsources logistics it loses control over the operations, employs someone who is unfamiliar with the work of the organisation and has completely different aims and culture, and pays enough to give the third party provider a healthy profit.  Does this seem like a sensible move?
Although outsourcing can bring many benefits (described in the book) it also brings problems.  Because of the points mentioned, and others, outsourcing is not always a sensible move.

 

4.8 What sets the capacity of a supply chain?
The amount of throughput that can be achieved at the constraining bottleneck in the chain.  In practice it is often difficult to find the capacity of a chain.

 

4.9 Supply chains are not usually designed from scratch, but evolve over time.  Does this create any particular problems? 
Usually this is good news, as chains can be adjusted by a series of incremental improvements (which bring the benefits described in the chapter).  Of course, this also brings the weaknesses – and in particular the small changes might mean that firms avoid making radical changes when they are needed.

 

4.10 Re-engineering might be attractive in principle, but in reality it is difficult, expensive, risky – and unlikely to get the expected benefits.  If this is true, why do organisations still consider radical changes?
Because re-engineering often fails it does not necessarily mean that it always fails – and because re-engineering is not always the best approach, it does not mean that it is never the right approach.  Sometimes supply chains need radical overhaul of the type suggested by BPR

Chapter 5 - Integrated supply chains

5.1 When logistics is divided into separate functions, each has its own objectives.  Is this necessarily a bad thing, or can there be positive benefits? 
There can certainly be disadvantages from companies working more closely together (some of which are mentioned in the chapter).  However, it is generally felt that the benefits more than compensate for these.  The main difficulty is not convincing firms of the benefits of integration, but overcoming the practical difficulties that it involves.

5.2 An integrated supply chain is a convenient notion, but it does not reflect real operations.  An organisation is only really concerned with its own customers and suppliers, and does not have time to consider other organisations further along the chain.  Do you think that this is true?
In principle, every organisation in the supply chain can be affected by operations in every other organisation, and the way to overcome problems is by visibility and co-operation throughout the entire chain.  However, each member really only deals with its first tier suppliers and customers, and the practical difficulties of forming closer alliance with more remote partners are increasingly severe.  So the reality is that few firms, even those who recognise the benefits of integration, look far beyond the first tiers.

5.3 Integration depends on the sharing of information.  Why should one company willing give its confidential information to another?
The simple answer is because it can get considerable benefits from sharing information.  When organisations share information the implication is that the benefits to each outweigh the drawbacks.

5.4 Why do large fluctuations in supply and demand appear when customers do not talk to their suppliers?  Is this inevitable, or are there ways of reducing the variations?
This is the basis of the bullwhip effect which occurs because stocks levels and safety buffers are related to the amount of uncertainty in a supply chain.  When partners do not communicate openly, there is inevitably more uncertainty – and hence more variation.  The only way to reduce the variation and buffering – and restore more stable conditions to the chain, is to increase visibility and have trading partners more openly collaborating.

5.5 What are the benefits of supply chain integration?
A list giving some of these is in the chapter.

5.6 When Christopher 5 says that ‘supply chains compete, not companies’ what exactly does he mean?
Because one trading partners can only gain at the cost to the other, there has traditionally been a confrontational relationship between them.  The stronger partner gains at the expense of the weaker one.  However, Christopher points out that both partners only prosper when final customers continue to buy their products.  So members of the same chain should co-operate and work towards greater customer satisfaction – making their final products more attractive than those coming through other chains.  Then competitor are not other members of the same chain, but members of other chains that are delivering competing products.

5.7 Decker and van Goor 4 say that integration in the supply chain can be at the level of:
• Physical movement
• Shared information
• Integrated control
• Integrated infrastructure
What do they mean by this?
This is one view of the way that organisations can move towards integration.  Initially there is some limited co-operation – with a first move typically considered to be the sharing of common information, but this view says that this follows a more basic movement of materials.  Then the co-operation evolves to include joint control of movements, and then joint design and control of movements through the chain.

5.8 An organisation makes money by paying its suppliers less and charging its customers more.  Does this seem a reasonable basis for co-operation?  What can be done to improve things?
This is the inherent incongruity within supply chains.  The argument is based on the following apparent contradiction.  Trading partners can only prosper when they work together to make customers satisfied with their final products – and at the same time they can only prosper by taking advantage of their trading partners to make a profit from them.  The counter argument is that trading partners must each benefit from a transaction, and their mutual benefit is maximised when they co-operate rather than compete.  But this is often a difficult argument, especially when a powerful trading partner takes advantage of a less powerful one.
 
5.9 What is the best level of integration for a supply chain?
Current thinking is that more integration increases visibility and overall benefit – so the more integration the better.

5.10 Some people say that all the recent developments in logistics can be summarised as ‘integration’.  Do you think this is true?
This may be a nice catchphrase but it is not really convincing. You might equally say, recent development in logistics can be summarises as communications’ – or technology, globalisation, competition, and so on.  Recent developments have come about for a combination of many reasons

Chapter 6 - Global logistics

6.1  What are the main differences between logistics within a single country and logistics that span a number of different countries?  What are the specific problems of working internationally?
In principle, logistics always meets the same kind of problems, but these are exacerbated by moving longer distances and across borders.  The chapter lists the main features and problems with international logistics.

6.2 By their nature, all supply chains must be international.  Do you think this is true?
In earlier chapters we mentioned that managers have to put arbitrary boundaries around supply chains, or else they keep getting longer and more complicated.  We could continue adding parts until virtually all transactions became part of a single universal trading function.  So, we can define small sections of supply chain that occur within a single country – but if we take a bigger picture it would be difficult to find one that does not have international elements.

6.3 Is it always best to locate factories in areas that give lowest production costs?
No.  If organisations emphasise low costs they should look for the lowest total cost of delivery and not just the production cost.  And often the cost is not the major consideration.

6.4  Some regions of the world present particularly difficult problems for logistics.  What regions do you think are most difficult to work in, and why?
There are many options here – but to remain apolitical we do not name any specific ones.

6.5  Companies adopt many patterns for ownership and operations when they work internationally.  What are the most successful patterns?
The best options depend on circumstances.  For a long time the ‘international’ pattern was probably dominant, where a heads office largely controlled foreign operations from its domestic headquarters.  More recently the trend has been towards global operations.
 
6.6  Global operations are a simplistic ideal that can never work in practice.  Do you think this is true?
No.  There many examples of companies that work globally.  In the same way, there are companies that have remained tied to their origins and have not – and do not want to – become global.

6.7  Where are the world’s largest free trade areas?  Do they really allow free trade between members?  What benefits do these bring?
The two largest are NAFTA – obviously dominated by the USA – and the EU.  There are several others around the world of varying size, structure, formality, aims, and so on.  These can bring many benefits, some of which are listed in the chapter.  Most aim at liberating trade – but it is usually fair to say that they move in this direction rather than achieve completely open markets.

6.8  If free trade is such a good idea, why do countries not simply remove all their duties and tariffs on trade?
Essentially they believe that the benefits from free trade are not great enough to overcome the problems.  This is an area for considerable discussion.

6.9 If you were delivering a truckload of materials through a series of international borders, what problems might you expect to meet.  How could you reduce or avoid these?
Problems at borders depend on government controls.  In the extreme you might be stopped from crossing, or the requirements are made so stringent that you can never achieve them all.  More often administrative matters like paperwork are more likely to cause difficulties.  Improving communications is improving these, but they can still cause problems.  You might imagine these in, say, industrialising countries – but if you take, for example, the USA there are restrictions that prohibit trade with certain other countries, prohibit many goods from being imported, and require stringent checks on loads entering the country to make sure that they are not linked to terrorist activities.

6.10  Why are companies moving towards global operations?  What are the implications for logistics?
A series of comments about these are listed in the chapter

Chapter 7 - Locating facilities

7.1 If a company chooses a poor site it can always move to a better one.  Such changes are an essential part of business.  Do you agree with this? 
To some extent this is true.  Wherever a firm locates – even when it is in the best possible location – circumstances can change and its best option is to move somewhere else.  But such moves are generally expensive, take a lot of time, and cause major disruption.  It is certainly not easy for most firms to move, so by far the better option is to find the right location in the first place.  

7.2  Which areas of the world currently have the fastest economic growth?  Why?  Is this likely to change over the next twenty years? 
The countries that leap to mind are probably China and India.  There are many reasons why these have chosen – and succeeded in – policies of economic growth.  An obvious factor is that they have large domestic markets and have used these to fuel exports as a way of generating wealth.  In practice, other areas are also growing quickly.  Over the next few years it might be that areas of South America, Africa, and Eastern Europe will grow quickly.

7.3 What are the most important factors in choosing a region or country to work in? 
These depend on circumstances.  A list of important considerations are given in the chapter.

7.4 A city often has restaurants congregating in one area.  Why do businesses form such clusters of similar firms, when each could separate and move away from the competition?
The principle is that a cluster of similar firms attracts customers to visit an area, increasing the overall demand.  Then by offering different variations on similar products – such as restaurants – each gets a share of a bigger market.  If the businesses offer identical products, then it probably makes sense for them to work in different locations. 

7.5 What costs should you consider when making a location decision?  Is cost always an important factor?  Are costs distorted by government grants and incentives?
When choosing a location an organisation should consider all the costs of operating and delivering products to customers. Having said this, cost is not always the dominant factor.  Government grants and other incentives do distort things in the short term – but locations decisions are for the long term and organisations should always bear this in mind with their decisions.

7.6 Mathematical models for location take a simplified view, they make assumptions, approximate values, and only include a few factors that are most easily quantified.  How useful are they for real decisions?
Models are by definition simplifications.  Managers can use them to give useful information – but it is always managers who make the final decisions.. 
 
7.7 What is the basic difference between infinite set and feasible set approaches to location?  Can they be used together?
An infinite set approach looks for the best location in principle regardless of availability: a finite set approach looks at available sites.  Yes, they are often used together – with each giving some information to managers.

7.8 What features would you expect to see in computer software that helps with location decisions?  Do a survey of relevant packages to see how they work and the kind of analyses included.
A survey of software advertised on Websites can give a lot of useful information.
 
7.9 What kinds of problem are solved by network models? 
Any problem which can be described in terms of nodes connected by arcs.  There are many problems of this type.
 
7.10  How has improving technology helped with making business location decisions?
Technology has helped in many ways, but perhaps the most common is the availability of databases to describe the features of alternative locations

Chapter 8 - Capacity management

8.1  To what extent are location decisions and capacity plans related?
They are closely related aspects of supply chain design.  Essentially decisions about capacity say how many facilities are needed, while location decisions show where they are put.

8.2  Capacity is the most important decision in the design of a supply chain, as it affects the amount of materials that can be moved.  Do you find this argument convincing?
It is certainly a key decision that affects all other decisions about the movement of materials.  However, capacity decisions are never made in isolation, but form a part of the overall logistics function.  It is too simple to describe it as the single most important decision.
 
8.3 You often see notices at the entrance to bars, pubs, clubs, halls and other buildings with messages along the lines of, ‘The capacity of this facility of 300 people’.  What does this really mean?
This is very unlikely to be a physical constraint, so it means that someone has set an arbitrary limit on the number of people who can use the facilities at any time.  Arguably this is not really a true capacity, but reflects a decision about the number of customers to serve. 

8.4 Is it possible to measure the capacity of an entire supply chain?
Unless there is some obvious bottleneck that limits throughput, it is very difficult to find the capacity of all the paths through a supply chain.  It is so difficult in practice that it might be virtually impossible. 

8.5 All plans are based on forecasts.  These inevitably contain errors – so the resulting plans are inaccurate at best and often useless.  What do you think of this view?
Forecasts may contain errors, but they are the best information that is available.  They are also models, which give useful information to managers, but come with the usual warnings about simplified views, and so on.  The alternative is to make decisions without any information, based on ignorance – and this is certainly not recommended. 

8.6 How would you set about planning the capacity of a supply chain?
A reasonable approach to capacity planning is described in the chapter, based on the usual steps of finding the capacity needed, finding the capacity available, identifying mismatches, finding ways of overcoming the mismatch, selecting and implementing the best alternatives.

8.7 No company would seriously consider limiting the amount of customer demand, and they would always raise capacity instead.  Do you think this is true?
No.  There are many examples of companies that limit demand for their products.

8.8 What type of decisions would managers need when considering the expansion of facilities?
 This concerns the basic problem of capacity management that is discussed in the chapter.

8.9 Why does capacity change over time?
There are many reasons for this.  The chapter mentioned some – holidays, fatigue, experience, learning effects, wearing of equipment, replacement policies, etc.  In any circumstances there may be many reasons for the capacity to change over time – some of which are random, while others are systematic.
 
8.10 Formal planning is useful for manufacturers, but they cannot be used for logistics.  Do you think this is true? 
No.  All organisations need plans, or else they cannot prepare for future operations

Chapter 9 - Moving materials through supply chains

9.1  What decisions are needed for tactical and operational planning for logistics?
Strategic decisions show the long term plans, and when details are added for the shorter term we get the tactical and operations plans.  These show what each element of a supply chain will be doing at any point in time.  So they include decisions about what to buy, what to transport, how to move things, the schedule of delivery vehicles, stock levels – and all the other activities that are performed in the chain.

9.2 How do short-term schedules control the flow of materials through supply chains?
Short term schedules give the timing of activities – and hence the materials needed – and hence their movement.  When a schedule has a machine making a product net week, this sets the requirements for parts, and hence controls the movement of these through the supply chain. 

9.3  By definition ‘optimal schedules’ are best.  So why are organisations satisfied with worse schedules that come from, say, scheduling rules?
Scheduling problems are notoriously complex and involve all kinds of subjective and qualitative factors.  As such, the quality of solutions is likely to be debateable and depend on agreement – with ‘optimal’ being an abstract concept rather than a realistic target.  And scheduling problems are so difficult to solve that even finding a good solution takes a lot of time and effort.  Searching for any kind of ‘optimal’ solution is, at best, prohibitively difficult and is likely to be impossible.

9.4 MRP was developed to plan the supply of parts at manufacturers, so it cannot really be used in other types of organisation.  Do you think this is true? 
No.  The MRP approach of exploding a master schedule using a bill of materials is used in many types of operation.

9.5  MRP II may be a good idea in theory, but it is difficult to plan logistics, let alone finance and marketing, from a master schedule.  Any working system would be so unwieldy that they could never work properly; even if they did work, operations would be too inflexible to cope with agile competitors.  What do you think of these views? 
These summarise the criticisms made of MRP and its extensions.  It is true that MRP II is difficult to implement, that systems become unwieldy, operations are inflexible – together with other problems.  But even when it is difficult and does not work in all circumstances, MRP II can certainly be used in other conditions.  It has been widely adopted and brought major benefits to some companies.

9.6 What are the main difficulties of using ERP?
The same difficulties as using MRP (listed in the chapter) but on a bigger scale.

9.7  What are the most significant changes that JIT brings to logistics in an organisation? 
Changes with JIT are listed in the chapter.  People often suggest that JIT changes virtually all aspects of an organisations operations, especially its logistics.

9.8  What happens if an organisation wants to introduce JIT, but finds that its suppliers cannot cope with the small batches and frequent deliveries?
There are three options here.  The first is to assist suppliers (in the light of the company’s own experience), help to adjust their operations and negotiate (temporary) compromises where needed; the second is to switch to new suppliers who can meet requirements; the third is to give up any plans of introducing JIT.  The second is the most usual.
 
9.9 If you were in hospital and needing a blood transfusion, would you rather the transfusion service used a traditional system of holding stocks of blood, or a just-in-time system?  What does this tell you about JIT in other organisations?
Most of us would prefer a traditional stock of blood.  However, blood has a short shelf life, and hospitals actually operate a limited kind of JIT to deal with varying demand.  This suggests that JIT can have problems with varying demand, and the buffers needed to provide safety cover.

9.10 ECR does not eliminate stock from the supply chain, but simply passes it on to someone else.  Do you think this is true?
Unfortunately, this often seems to happen in practice.  At some point in the line an organisation does not feel confident that its operations are flexible enough to deal with any rapid changes, so it keeps some stock.  Needless to say, this is not the aim of JIT

Chapter 10 - Procurement

10.1 Is there really a difference between purchasing and procurement?
Not really.  Some people say that purchasing only refers to buying, while procurement includes other types of acquisition – but this is a matter of semantics and definition.  To be safe we might refer to ’material acquisition’  but this is rather pedantic.
 
10.2 People often say that you should get four or five quotations, even for repeat orders, as this encourages competition and keeps prices low.  Other people say that you should form an alliance with one supplier so that you understand each other’s needs and can work closely together.  Which of these views do you find more persuasive?
Each approach has its advantages.  The better depends on individual circumstances, but there is a trend away from competitive tender and towards alliances.
  
10.3 What exactly do procurement departments do?
All the administration and related jobs that ensure materials are available within an organisation when they are needed.  A suggested list of such activities is given in the chapter.

10.4 What features would make an ideal supplier?
Essentially one that always delivers the materials ordered according to the terms agreed in the purchase order.  This includes the usual features of reliability, low costs, high quality, short lead time, availability, and so on.

10.5 Outsourcing decisions are not strategic but the result of simple ‘make-or-buy’ analyses.  What does this mean, and is it true?  
Make-or-buy analyses show whether it is better to make some item internally or buy it from a supplier (for instance, a school considering its lunches).  Each decision to outsource can be considered in this context, and it might seem an operational – or tactical – decision for procurement.  However, no firm can simply start or stop making a particular item, and it needs all the usual facilities, infrastructure and planning.  And getting reliable supplies of a product may take some time, especially for difficult products or complex relationships.  So at least some outsourcing decisions are strategic. 

10.6 Forward purchasing has many advantages – as demonstrated by the huge markets in financial futures.  What are these benefits?  If these are so obvious, why do many organisations buy just-in-time?
Forward purchasing gives guaranteed prices for some time in the future, giving the benefits of stability, certain supply, etc.  Of course, this comes at a cost, and when suppliers offer forward purchases they are betting that future spot prices are lower than the forward prices.  There are other ways of getting stability, and JIT uses long term alliance that share the benefits of trading between partners.
 
10.7 Is it fair to say that the effort put into procurement should be related to the value of materials bought?
This seems reasonable.  But it does depend on ‘value’ which is not necessarily the same as price.  For example, spare parts for machinery might have a low cost, but because their absence could disrupt operations they have a high value. 

10.8 Do you think an organisation should always negotiate hard with suppliers to get the cheapest prices and best conditions it can?
This is difficult.  If a company does not negotiate the best possible terms, it is affecting its own profits and possibly long term survival.  On the other hand, if it does negotiate hard it may be affecting a key supplier’s profit and possible long-term survival.  The simplest answer is probably ‘no’ – meaning that each organisation should pay a fair and reasonable price for its materials.

10.9 There is a lot of talk about the benefits of purchasing through the Internat.  What are these? 
A list of benefits is given in this and earlier chapters.

10.10 In 2000 The Trading and Standards Institute in London made test purchases from 102 retail Websites.  There were problems with 37% of these, 38% arrived later than promised and 17% did not arrive at all 20.  What does this tell you about e-procurement?
Such a limited survey does not really give much reliable information at all.  However, it does suggest that e-business is not really the panacea that people often assume.  The problem is generally not the order-taking procedures (which can be much easier through Websites) but the subsequent delivery and products.

Chapter 11 - Inventory management

11.1 Stock is always a waste of money.  Do you think this is true?
No – it serves many useful purposes and can considerably reduce costs.  A shop with no stock would have no stock-holding costs, but high shortage costs; it could reduce its overall costs by increasing stocks and holding costs. 

11.2 What is a reasonable amount of stock for a manufacturer to hold?
This depends entirely on circumstances.  It might be around 10% – or more for processes that need a long time and many components – or less for simple JIT operations.  Managers have to decide the best level (using information from various analyses).

11.3 What are the costs of holding stock?  If these costs are really difficult to find, how reliable are the results from any kind of analysis?
These are usually categorized as unit, reorder, holding and shortage.  All of these can be difficult to assess and they depend on prevailing accounting conventions and opinions.  Being difficult to find does not mean that the costs are of little use or even inaccurate – and they are the best estimates available, so managers can get the best possible results by using them.  As always, the alternative to working with such figures is to work in ignorance, with no idea of what is actually happening. 

11.4  What assumptions are made in the economic order quantity model?  How realistic are they?
These are given in the chapter.  They give a model which can be very useful.  By definition, models contain simplifications of reality.

11.5  What effects do variability and uncertainty have on inventory control?
They inevitably make it more difficult, and more reliant on managers’ opinions.  For instance, when demand is constant a model can suggest a good ordering policy, but when it varies managers have to specify a target level of performance  – and then there is always the risk that this will not actually be achieved.

11.6 What should you consider when setting a service level?  For instance, how can a hospital set a reasonable service level for its supplies of blood for transfusions?
This depends on circumstances.  Managers should consider all relevant details when they set a service level.

11.7 We have discussed the control of stocks in terms of MRP, JIT and independent demand systems. When would you use each of these?  Are there any other methods?
Each method performs best in certain conditions.  By definition independent demand models are best when demand is unrelated – perhaps finished products.  MRP can only be used when there is a master schedule and bill of materials – typical of manufacturers and some services.  JIT only works with steady operations which are flexible enough to cope – typically large scale assembly operations and some services.  These are currently the main methods of inventory management (apart from unreliable approaches such as manager’s opinions or maintaining historical levels).

11.8 What features would you expect to see in an automated inventory control system?  Look at some commercial packages and compare the features they offer.
Many features can be included in software ranging from simple calculations through to automated management systems.  A search of software supplies shows the main tools.

11.9 Stocks are inevitable in all operations.  Methods like JIT only transfer stocks from one part of the supply chain to another.  Do you think this is true?
There is some truth in this, and people often say that JIT operations simply transfer stocks from, say, a manufacturer to its suppliers.  But this is certainly not the intention of JIT – and if it really happens it means that firms have not introduced JIT properly or understood its goals.

Chapter 12 - Warehousing and material handling

12.1 If the flow of materials is properly co-ordinated there is no need for stock and, therefore, no need for warehouses.  When do you think that warehouses will disappear from the supply chain?
People often assume that this is the principle of leanness – but this is a mistake.  Stock often serves a real purpose – so leanness suggests that stocks should be maintained at the realistic minimum.  Although there is a clear trend towards lower stock, this does not mean that all stocks will be eliminated.  And as warehouses are being used for more purposes (in addition to stores of materials) they also serve a useful purpose.  So the indications are that warehouses will remain essential elements of a supply chain for the foreseeable future.

12.2 Warehouses used to be places where goods were stored, often for long period, until they were needed.  Has this role significantly changed over time?
Yes.  They are increasingly used for a variety of jobs.  Some of these are based on their role as stores (such as sorting, break-bulk and consolidation) while others are new tasks (such as finishing, postponement, cross docking, etc).

12.3 There should be a clear distinction between factories which produce things and warehouses which store them.  What do you think of this view?
There seems no reason to separate factories from warehouses.  They both form part of a supply chain, and operations should be done in the most appropriate locations.

12.4 What is cross-docking and when can you use it?
It co-ordinates the flow of materials through a facility so that they are never put into storage but are delivered, sorted and taken straight to a departure bay.  This is used whenever planned movements are known in advance, say with make-to-order operations where the path of a product and the timing is know.

12.5 How would you measure the capacity of a warehouse, and why is it important?
There are several measures for capacity (which we meet in later chapters) which describe either the amount of materials that can be stored, or the throughput within a specified period.  Managers always need measure of performance to show how well operations are going, and how they can be improved.

12.6 What are the benefits of outsourcing warehousing operations?  How can this be organised?
The benefits are listed in the chapter.  The overall approach to outsourcing warehousing is the same as the approach to acquiring any other service – which was discussed in the last chapter. 

12.7 Why is the layout of a warehouse important?  Supermarkets are really a type of warehouse, so the same factors are important.  Is this true?
The layout of any facility determines the ease and efficiency that materials move around.  Some facilities (warehouses, shops, bus stations, libraries, etc) are well designed and allow a free movement of materials – others are badly designed.  The flow of materials should achieve specified aims, and here supermarkets and warehouses have different aims.  Despite their obvious similarities, warehouses want a list of products to be picked and moved as quickly as possible – while supermarkets want customers to stay inside as long as possible and pick more products.

12.8 Automation always gives the most efficient warehouses, so everyone should move in this direction.  When do you think all warehouses will be automated?
Automation can be very efficient – but it also has problems, such as capital cost, inflexibility, size, and so on.  Different levels of technology are most appropriate for different types of warehouse.  So all warehouses – or even most – will not be automated in the foreseeable future.

12.9 We are often told that packaging is a major problem for waste disposal.  Why is there so much packaging, and how can the amount be reduced?
Packaging serves several purposes (listed in the chapter).  Sometimes this is excessive, and organisations are already taking steps to reduce and even minimise the amount.  Remember that it is not in a supplier’s interest to spend too much on packaging, and then transport it through supply chains when they can be moving goods.  On the other hand, packaging is beneficial and some is needed to, say, protect materials.  Firms need a balance that sets a reasonable amount of packaging – and the trend is towards less, and to more packaging that can be recycled and used again.

12.10 What is the point of reverse logistics?
There are several circumstances – returning packaging, returning defective units, returning unused goods, recycling gods, etc – when materials are moved backwards through supply chains.  In other words, customers return things to suppliers, giving backward logistics.  The amount continues to grow.

12.11 Supermarkets sell fresh fruit on polystyrene trays wrapped in plastic film.  They say that this protects the fruit and reduces waste.  Some people say that the packaging is more wasteful.  Who is right?
Both sides are to some extent right.  The amount of packaging should essentially be the lowest amount that serves its purpose.  Any more than this is an expensive and unnecessary waste of money and resources

Chapter 13 - Transport

13.1 ‘Transport is becoming less important, as e-commerce is replacing flows of goods by flows of information.’  Do you think this is true? 
No.  E-commerce is replacing slow and inefficient flows of information by faster more efficient ones – but it still relies on transport to move products to customers.  Some products can be delivered electronically (music, software, information, films, etc), but most products need transport to make deliveries.  If anything, expectations for deliveries are raised for e-business, and transport has to be more efficient (for example, book deliveries to homes have to be made very quickly to compete with high street shops). 

13.2 What types of technology are used in transport?  How do you expect this to change in the future?
Operators use every kind of technology that can improve the actual movement of goods or the associated flows of information and money.  These include improvements to vehicles and the movement of goods.  The most obvious newer uses are based on in-cab communications, and these are likely to continue for the foreseeable future.

13.3 For most operations road is the only realistic mode of transport.  If this is true, why do so many people disapprove of heavy lorries? 
It is difficult to think of a supply chain that does not involve road transport at some point.  In this sense road transport is an essential part of all economic activity (summarised in the Eddington Report).  The contradiction is that few of us like roads that are clogged with lorries, green field that are now covered by trading estates, or air that is now filled with pollution.  Unfortunately, despite improving operations, it seems that we cannot yet have the benefits of materials delivered without all the drawbacks.  

13.4 How can you choose between the different available transport modes?  Are there any noticeable trends in the choice?
There are a range of costing and related analyses that can help with such decisions.  At the moment, there is a trend towards increasing total transport (in line with global operations) and this is encouraging more container ships – while increasing demand for oil and gas is increasing the use of pipelines.  Because of its flexibility, road transport remains the dominant mode.

13.5 Why have containers made such an impact on transport?
By giving standard load sizes, they allow all handling of goods to use standard equipment.  These movements can then be made very efficient, giving all the benefits listed in the chapter.

13.6 Many areas of the world say that they need more ports, with up to date facilities.  Is there any evidence to support this view?
Increasing global operations either needs existing ports to grow, or new ports to be built.  Some regions are currently badly served by ports, and the better option is to build new ones.  Sometimes, existing ports can be improved by increasing capacity, installing new handling equipment, and so on.  If economic development is to continue, some areas certainly need new, larger and better ports.  It is worth saying that countries often see major port developments as a matter of national pride rather than commercial ventures – and then the arguments for expansion are less convincing.

13.7 There has been a significant move away from in-house transport and towards contract providers.  Why?
Transport consists of a set of coherent activities that is fairly easy to pass to an outside operator.  Then a firm can get the advantages listed in the chapter.  However, this is not an inevitable outcome, and firms have to make the decisions based on reliable analyses.

13.8 An organisation with weak transport management suffers by giving worse performance than competitors; one with strong transport management suffers by diverting talent away from core activities.  What do you think of this argument?
This is not convincing.  The first part is true – poor transport allows competitors to gain an advantage.  But the second part suggests that transport is such a trivial part of operations that it is not worth bothering with.  In reality, transport is an essential function, whose performance affects the broader performance of the whole organisations.  It is not worth building a Rolls Royce car if you cannot deliver it to customers.  A more convincing argument would say that every organisation should aim to make its transport as efficient and effective as possible.

13.9 If you want to move a load of materials from Europe to Australia, who can you ask for help?
There are many alternatives here, depending on the type of load.  A starting point might be to contact parcel delivery service (expensive), airlines (very expensive), shipping lines (not organised to deal with small loads), or more usefully freight forwarders.  Search the Internet to find companies who are offering related services!

13.10 What kind of operational problems are there with running fleets of transport?
Every type of problem from getting qualified drivers through to monitoring fuel consumption.  This could be a very long list

Chapter 14 - Measuring and improving performance

14.1 ‘What you can’t measure you can’t manage.’  To what extent do you think this is true of logistics?
This is partly true.  Managers certainly need to monitor performance to see how well their operations are going, see if they are reaching targets, measure progress, and so on.  The most satisfactory measures have attributes that can be directly measured, giving cardinal data.  But realistically, not all aspects of performance can be directly measured, and then managers have to exercise their judgement and discretion.  The principle of monitoring performance is right, but we have to be careful with the details of measurement.

14.2 Managers can be tempted to use the easiest measures of performance, or those that show themselves in the best light.  What are the consequences of this?  Can you give examples of problems this creates?
Giving an accurate view of performance is not easy, and it is true that managers are often tempted to take short-cuts.  Although not directly related to logistics, it emerged during the economic turmoil of 2008 that US bankers were using measures of performance that gave them billions of dollars in annual bonuses at the same time as their companies were going bankrupt. 

14.3 Logistics is a service, and managers should always look to provide it at the lowest costs.  Everything else is simply mistaken.  Do you think this is true?
No.  Managers should design logistics so that they achieve the organisation’s aims – one of which might be low costs.  However, the idea that logistics should always be done as cheaply as possible – particularly without regard to service levels – is a mistake.  In an extreme, the cheapest way to organise logistics is to close-down all logistics activities.  This gives no costs – and correspondingly, no service.

14.4 What are the most appropriate direct and indirect measures of performance for a supply chain?  
These depend on the aims of the organisation and the ways that managers set about achieving them.  They are likely to differ (at least to some extent) in every organisation.

14.5 Performance measures can give conflicting views – changes that improve some measures, make others worse.  How can you decide whether the overall effect is beneficial?
Measures give information to managers.  Then managers analyse the results and make their decisions.  So the balance between measures  is a question of management judgement, and how they lot the organisation’s progress towards its goals.  All management decisions need some balance between competing objectives, and this is another example of this effect.

14.6 Is it easy to find improvements in any supply chain?  If it is, why have the managers not already made the improvements?   
Depending on circumstances, it may or may not be easy to find improvements.  Some of these may be significant improvements, while others are minor.  And any improvements may or may not be easy to implement.  As with all operations, logistics come in so many different forms that we cannot generalise.  With outdated and inefficient logistics it may be easy to find major improvements; with lean operations it may be difficult to find even small adjustments.  Perhaps a key factor is the managers’ desire or ability to make necessary changes – and there can be a variety of reasons why managers are reluctant or unable to improve logistics.

14.7 Why would a successful company give away its commercial secrets to another firm that is benchmarking and trying to become more competitive?
A company will not give away commercial secrets to help a competitor benchmark.  But there are ways of exchanging less sensitive information that allows both firms to benefit.  For instance, compiling a register of logistics’ best practices – preferably over a whole industry – allows every organisation who contributes to gain from the experiences of others.  And the reality is that the great majority of information about logistics is publically available.  For instance, Wal-Mart has some of the most efficient logistics in the retail industry – and you can find details of virtually all aspects of their logistics from published sources. 

14.8 What is the point of drawing some kind of chart to describe a logistics process?
It gives a description of the operations that is much easier to understand – ‘one picture ios worth a thousand words’.  Then managers can see more clearly what is happening, consider adjustments, and understand the consequences of their changes.

14.9 Continuous improvement is not really useful as it just tinkers with existing operations and does not look for significant gains.  So why do managers still use it?
 Continuous improvement is the safest and easiest way of improving logistics.  The adjustments can easily be incorporated – or reversed – giving the benefits listed in the chapter.  And they build-up over time to give significant benefits.  On the other hand, radical changes – like BPR – are more dangerous and can cause permanent damage to an organisation.  And they have the major disadvantage that they do not always work

Chapter 15 - Supply chain risk

15.1 Risks are nasty things that damage a supply chain.  Is this true?
Partly.  Risks actually concern the likelihood – and possible consequences – of things that might happen in the future.  These might be beneficial as well as harmful.  However, we are normally pessimistic and only consider harmful events that might disrupt the smooth working of a supply chain.

15.2 Is it fair to say that logistics managers have traditionally paid little attention to supply chain risk?
Yes.  Risk management is a core part of insurance, finance and related activities – but logistics managers have paid little real attention to it.  Surveys suggest that supply chain risk management is at a very early stage of development.

15.3 Almost by definition, risks are rare events.  So why should managers spend their time worrying about the slight chance that some obscure event will actually happen, when they could spend their time worrying about the ordinary things that almost certainly will happen?
Superficially this seems like a convincing argument – but the problem is that even rare events can have very severe consequences.  Having our house burn down is rare, but most of us cannot afford the consequences if it actually happens, and so we take-out fire insurance. 

15.4 What are the main risks facing a supply chain?
Unfortunately, there is a huge number of potential risks to any chain.  The chapter suggests some of the most pressing.

15.5 Do managers have to consider every risk to the supply chain?  If not which ones should they concentrate on?
In practice, there are so many possible risks that it is impossible to identify them all, let alone include them in related analyses.  So managers clearly have to focus on the most significant risks – and these are the ones with a combination of high probability of occurring and serious consequences when they do occur.  In other words, they give less attention to risky events that are unlikely actually to occur, or those whose occurrence is not really important. 

15.6 How would you interpret the expected value of an event?  What alternative measures are there?
The expected value of an event is defined as the product of the event’s probability and the consequences.  This gives the average cost of a risk when it is met a large number of times.  It is not the cost every time the risk is met.  This measure gives a means of comparing risks, and it is easy to use and understand.  But it has a number of weaknesses, such as not reflecting the weight that managers actually give to risks.  The main alternative uses expected utility, but this is still not an ideal solution.

15.7 Managers rarely have any control of the serious risks facing their supply chains, and there is little they can do to influence conditions.  So why should they bother with risk management?
It may be true that many of the most severe risks are external and managers cannot influence them.  But this does not mean that they ignore them.  Instead, they have to design responses and prepare their organisation to deal with risky events that might occur.  We may not be able to affect (to any real extent) the risk of our house burning down, but we still prepare for the possibility by taking out insurance.

15.8 It seems that almost every new development in logistics increases the level of risk.  Is this a fair statement?
Yes.  All changes come with associated risks, and managers have to balance them.  The problem seems to be that they often introduce new types of operations without fully exploring the risks.

15.9 Why is risk management seen as an increasingly important issue?
To some extent this is because managers are becoming aware of the impact of risks and are taking positive steps to manage them as a way of improving operations.  They may also be coming increasingly aware of the methods of risk management, largely transferred from insurance and financial management.  At the same time, there are other pressures, such as new legislation that forces them to acknowledge the role of risks and need to manage it properly.  The message is that a number of factors are encouraging managers to look more closely at supply chain risk.