Maximizing Competitive Advantage through Logistics Linkages

2. Competitive advantage created by logistics Chapter 2

3. Logistics linkages with the value chain Value-added role of logistics Customer service Aspects of competitive advantage Wealth creation through logistics Competitive advantage created by logistics

4. Logistics management is ‘that part of supply chain management that plans, implements and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers’ requirements’. (CSCMP) Logistics linkages with the value chain

5. The point-of-origin of a supply (value) chain occurs where no primary suppliers exist – solely supporting members. The point of consumption is where no further value is added to a product and it is consumed or used without serving as an input to another supply chain. Logistics linkages with the value chain(continued)

6. Flow of goods: Raw materials Semi-finished goods Finished goods Waste materials Returned goods Logistics linkages with the value chain(continued)

7. Flow of services Flow of information Efficiency and effectiveness Optimal level of logistics expenditure Logistics linkages with the value chain(continued)

8. Logistics linkages with the value chain(continued)

9. Form utility Place utility Time utility Possession utility - All four utilities created in the supply chain process - Place and time utility created by logistics- Consumer surplus - Perceptions of value Value-added role of logistics

10. Value-added role of logistics (continued)

11. Components of customer service: Pre-transaction component Transaction component Post-transaction component Service performance control: Availability Stockout frequency Fill rate Orders shipped complete Customer service

12. Service performance control(continued) Operational performance Suitability Market coverage Goods security Transaction time Reliability Flexibility Service quality Customer service (continued)

13. Studies dealing with wealth within supply chains have indicated the following: Enhance the competitive advantage of the entire chain (not individual members) Create value for downstream member clients in excess of that offered by competitors Co-operation and co-ordination Inherent value by perceptions of customers and clients Aspects of competitive advantage

14. Understand customers’ value perception – different customer segments Competitiveness of the chain improves with individual improvement. Competitive advantage means better value to customers than competitors. Financial performance of all the members in the supply chain is dependent on customers’ value perception of service offered. Aspects of competitive advantage(continued)

15. Any serious quest to achieve and retain competitive advantage requires that supply chain service performance must be stated from the point of view of the customer. Aspects of competitive advantage(continued)

16. Percentage of consignments received at the correct place Percentage of consignments received on time Percentage of consignments received damage-free Percentage of consignments received complete Percentage of orders fulfilled accurately Percentage of orders billed accurately Critical measures

17. Revenue growth Operating-cost reductions Working-capital efficiency Fixed-capital efficiency Wealth creation through logistics