Global Logistics Management

Kent N. Gourdin is Director of the Global Logistics and Transportation Program in the School of Business and Economics at the College of Charleston. He also holds the Henry Tecklenburg Chair in Intermodal Transportation.

• Preface xiiiAcknowledgments xv1 Introduction to Logistics 1Logistics: The Historical Perspective 1Logistics: The Modern Perspective 2Components of a logistics system 4The role of logistics in the organization 7Logistics as a Source of Competitive Advantage 8Why Is Management Interest in Logistics Growing? 10Trends in global trade 10Customers are demanding greater value 10Transportation privatization and liberalization 11Transportation security 12Environmental concerns 12Changing view of inventory 13Continuing advances in information technology 14Electronic commerce 15Logistics in the Global Organization 15Conceptual Model and Statement of Purpose 17Chapter Summary 18Study Questions 192 Logistics in the Organization 21Introduction 21The Marketing/Logistics Partnership 22Marketing and Logistics Channels 22Alternative channel structures 22Why do channels develop? 23Channel flows 23Designing effective channels 25Environmental Issues 25Marketing Issues 26Channel management issues 31Formal and informal channel relationships 32Domestic versus global channels 33Future trends in channel structures 35Managing the Logistics System 36Tradeoff Analysis 37Enhancing Corporate Profitability with Logistics 39Chapter Summary 41Study Questions 423 Customer Service 44Introduction 44What Is Customer Service? 45Elements of Customer Service 45Customer Service in a Global Setting 49How Much Service Should Be Offered? 50Barriers to Quality Customer Service 52Controllable factors 52Uncontrollable factors 53Improving Customer Service Performance 54The Consequences of Poor Customer Service 55Improving Customer Service in Comparison to its Costs 59Customer Service and the Internal Customer 59Chapter Summary 60Study Questions 604 Inventory Management 62Introduction 62Inventory and Customer Service 63Purposes of Inventory 64Types of Inventory 64Objectives of Inventory Management 65Inventory costs 65Managing inventory costs 66Classic Inventory Models 66Economic order quantity (EOQ) model 66Modifications to the basic EOQ model 67Model limitations 68Fixed order point/fixed order quantity model 68Fixed order interval model 68Safety stock requirements 70Inventory Management: Signs of Trouble 71Improving Inventory Management 74Materials Requirements Planning (MRP) 77Distribution Resource Planning (DRP) 77Just-In-Time (JIT) Inventory Management 77Basic tenets of JIT 78Advantages of JIT 79Disadvantages of JIT 79JIT II/vendor managed inventory (VMI) 80The reality of JIT 81Integrated Inventory Management: DRP, MRP, and JIT 82Inventory Management in a Global Market 83Chapter Summary 85Study Questions 865 Global Transportation Systems 87Introduction 87The Five Modes of Transportation 88Rail 89Road transport 91Pipelines 93Air 93Water carriage 94Deregulation and Privatization of Transportation 97Deregulation 97Privatization 98Future directions 99Government’s Role in Transportation 100Direct control and regulation of transport firms 100Provision of transport infrastructure 101Promulgating and enforcing environmental, safety, and security laws 101Transportation Security 102Intermodal Transportation 103Rail 104Ocean transport 104Air 105Motor transport 105Infrastructure issues 106Concluding comments 106Chapter Summary 106Study Questions 1076 Transportation Management Issues 109Introduction 109Developing Win/Win Shipper/Carrier Relationships 109Transport Pricing 111Market structure models 111Relevant market area 112Shipper demand 113Carrier costs 113Pricing in Practice 115Price negotiation: the carrier’s perspective 115Price negotiation: the shipper’s perspective 116Private Transportation 116Other Issues Affecting Transportation Cost and Service 117Infrastructure availability and condition 117Environmental and quality of life issues 121Customs and cargo security 125Carrier safety 125Conclusions 126Chapter Summary 126Study Questions 1277 Warehousing 129Introduction 129The Strategic Role of Warehousing in Logistics 131Functions of Warehousing 132Warehouse Roles 134Warehouse Location Issues 135Centralized versus decentralized warehouses 135Selecting specific sites 137Warehousing Alternatives 139Private warehousing 139Contract warehousing 139Public warehouses 139Warehousing Strategies 140Warehousing Concerns in Overseas Markets 141Chapter Summary 143Study Questions 1438 Materials Handling and Packaging 145Introduction 145Basic Warehouse Design 145Manual Versus Automated Materials Handling Systems 146Manual warehouses 146Automated warehouses 147Manual versus automated: making the choice 147Trends in Materials Handling 150Reliability 150Total integration 151Flexibility and modularity 151Upgradeability 151Automated identification 152Ease of use 155Maintainability 155Conclusions 155Product Packaging 156Types of packaging 156Organizational influences on packaging 156The role of packaging 157Logistics packaging materials 157Environmental issues 158Packaging for global markets 159Bar coding 160Developments in packaging 161Tradeoffs with other components of the logistics system 161Chapter Summary 163Study Questions 1639 Managing Logistics Information 166Introduction 166The Order Processing System 167Logistics Information Systems 168Environmental scanning 169LIS and information management 169Forecasting Methods 170Qualitative forecasts 170Time-series methods 170Causal methods 171Forecasting logistics needs 172Selecting the right forecasting technique 172Using Information to Link a Global Logistics System Together 172Electronic data interchange (EDI) 172Impediments to global implementation of EDI procedures 178Developments in Logistics Information Systems 178The Internet and electronic commerce 179Open-systems computer networks 180Wireless communication 180Multidimensional bar codes 180Radio frequency identification (RFID) technology 180Other advances in communications 182Chapter Summary 182Study Questions 18310 Inbound Logistics and Purchasing 185Introduction 185The Growing Importance of Inbound Logistics 186Inbound Logistics Activities 187Customer service 187Transportation 187Inventory management 187Warehousing and storage 188Maintenance 188Information management 188Salvage and waste disposal 189Production 189Summary 189Purchasing 190Goals of purchasing 191Purchasing tasks 191Improving purchasing productivity 194Organize for enhanced productivity 197Management Techniques for Improving Materials Management 200Chapter Summary 200Study Questions 20011 The Global Logistics Environment 203Introduction 203The Global Supply Chain 204Changing Market Opportunities 205Emerging nations 205Multilateral trade organizations 205Global sourcing 208Cultural Issues in Logistics 208Alternative Global Distribution Strategies 209International Documentation 211Customs Regulations 212Foreign Trade Zones 214Logistics Intermediaries and Facilitators 215Third-Party Logistics Providers 217Controlling the Global Logistics System 219Chapter Summary 220Study Questions 22112 Logistics Strategies 224Introduction 224Corporate Strategic Planning 225Formulating Logistics Strategy 226Integrating the Logistics Channel 230Implementing Logistics Strategies 232Centralization of logistics activities versus decentralization 233Third-party service providers 234Logistics strategy and improved corporate performance 237Future Issues That Will Affect Logistics 237Implications for Logistics Managers 241Chapter Summary 242Study Questions 24213 Developing High-Quality Logistics Systems 245Introduction 245Basic Quality Concepts: The Internal Perspective 246Leadership 247Cooperation 247Learning 248Process management 248Employee outcomes 248Organizational performances 248Basic Quality Concepts: The External View 249The Service Quality Model 250Total Quality Management (TQM) in Logistics 253Developing a Formal Quality Process 254Quality Process Success Factors for Logistics Management 256ISO 9001:2000 The International Quality Standard 259The Cost of Quality 260Chapter Summary 260Study Questions 26114 Improving Logistics Performance 263Introduction 263Improving Organizational Performance 264Continuous and breakthrough improvements 265Basic Tools for Improving Logistics Performance 266Process analysis tools 266Statistical analysis tools 268Benchmarking 268Activity-based costing 270Effecting Meaningful Change 274Logistics service quality 274Productivity 275Process effectiveness 276Impediments to Improved Logistics Performance 276Failure to adopt the customer’s viewpoint 276Lack of requisite cost data 277Lack of broad-based management skills 278Failure to think of logistics as a system 278Need for cultural change within the organization 279Creating a World-Class Logistics System 279Chapter Summary 281Study Questions 28215 Organizing for Logistics Effectiveness 284Introduction 284Overview of Logistics Organizations 285Building an Effective Logistics Organization 288Centralization 288Scope of responsibility/span of control 289Formalization 289Integration 289The Role of Logistics in the Firm 289Inter-organizational effectiveness 290Variables Influencing Organizational Structure 291Organization size 292Corporate structure 292Corporate strategy 292The importance of logistics 293Corporate information technology 293Environmental uncertainty 293Environmental heterogeneity 294Summary 297Reconciling Intra- and Inter-Organizational Issues 298Moving Towards the “Best” Organizational Structure 299Chapter Summary 299Study Questions 300Index 303