Logistics and Supply Chain Management, 4th Edition

LOGISTIC S & SUPPLY CHAIN MANAGEMENT

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America, where order entry lead time has been reduced from eight days to one

hour, with a 40 per cent reduction in space and a 70 per cent reduction in cus-

tomer claims.

This approach has been likened to a game of rugby rather than a relay race!

What this means is that a team of closely integrated colleagues run up the field

together passing the ball as they run. In a relay race no one can run until they

receive the baton from the preceding person in the chain. The end result is that this

vital part of the service process can be speeded up whilst simultaneously improv-

ing the quality of the output, hence a major competitive advantage is achieved.

In a manufacturing context the customer order management system must be

closely linked to production planning and the materials requirements plan. Ideally

all the planning and scheduling activities in the organisation relating to the order

and its satisfaction should be brought together organisationally.

Logistics as the vehicle for change

As markets, technologies and competitive forces change at ever increasing rates

the imperative for organisational change becomes more pressing. The paradox is

that because organisational structures are rigid, even ossified, they do not have

the ability to change at anything like the same rate as the environment in which

they exist.

The trend towards globalisation of industry, involving as it does the co-

ordination of complex flows of materials and information from a multitude of off-

shore sources and manufacturing plants to a diversity of markets, has sharply

highlighted the inappropriateness of existing structures. What we are discovering is

that the driving force for organisational change is logistics.

To compete and survive in these global markets requires a logistics-oriented

organisation. There has to be nothing less than a shift from a functional focus to

a process focus. Such a radical change entails a regrouping within the organisa-

tion so that the key tasks become the management of cross-functional work flows.

Hewlett Packard is an example of a company that has restructured its organisation

around market-facing processes, rather than functions. Order fulfilment has been

recognised as a core process and so, on a global scale, there is one order man-

agement system architecture that links order entry, order management and factory

order/shipment processing. This core process is supported by a common informa-

tion system that provides ‘end-to-end’ visibility of the logistics pipeline from order

through to delivery.

In fact it is through such breakthroughs in information technology that the type

of organisational change we are describing has been made possible. The informa-

tion network now defines the organisation structure. In other words, the information

As markets, technologies and competitive forces change at ever increasing

rates the imperative for organisational change becomes more pressing.