Between the company and external organizations= there may be opportunities for a trade-

off between two companies that are directly associated with each other.

Planning and control= essential to the running of an effective and efficient logistics
operation.

Planning= is about ensuring that the operation is set up to run properly – it is ‘doing the
right thing’.

Control= is about managing the operation in the right way – it is ‘doing the thing right’ or
making sure that the operation is being run ‘efficiently’.

to try to achieve on-time-in-full (OTIF) deliveries= a key objective of many logistics systems.

Some key aspects of integration which considers recent developments in manufacturing

techniques.

1. Direct product profitability= DPP is a technique of allocating all of the appropriate costs
and allowances to a given product.

2. Materials requirements planning (MRP) and Distribution requirements planning (DRP)=

systems are computerized planning tools that aim to make the necessary materials or
inventory available when needed.

3. Just-in-time (JIT)= is to provide a production system that eliminates all activities that
neither add value to the final product nor allow for the continuous flow of material- – in
simple terms, that eliminates the costly and wasteful elements within a production process.

4. Cost-to-serve= this is a process-driven accountancy tool used to calculate customer

profitability using the actual business activities and overhead costs that are involved.

5. Distributed order management (DOM)= this systems are designed to arrange orders
across the multiple systems and processes utilized by those involved in replenishing an
order.

6. Supply chain control tower= the concept is to provide supply chain visibility across
divisions, countries and modalities.

Service leader= a company is trying to gain a value advantage over its competitors by
providing a number of key service elements to differentiate its product.

Cost leader= a company is trying to utilize its resources so that it offers the product at the
lowest possible cost, thus gaining a productivity advantage.
Service or value advantage= this might include the provision of a specially tailored service
or the use of several different channels of distribution so that the product is available in the
marketplace in a number of different ways.

Cost or productivity advantage= this may include a number of different means of cost
minimization, such as maintaining very low levels of inventory and ensuring that all
manufacturing and distribution assets are kept at a high utilization.

One-size-fits-all policies= rarely work when they are applied in a world where markets can
differ so radically. Thus, successful companies are most likely to segment their supply
chains according to the particular service and cost requirements of their customers.

Supply chain management= the term is commonly used to cover many if not all of the
various logistics functions.

The concept of the supply chain is really an extension of the ideas that have been
developed concerning the integrated nature of logistics.

The total logistics concept advocates the benefits of viewing the various elements of
logistics as an integrated whole.

Supply chain management is similar, but also includes the supplier and the end user in the
process.

Pareto 80/20 rule, the product surround or logistics elements can represent about 80 per
cent of the impact of the product but only 20 per cent of the cost. This obviously varies
dependent on the product value, but no matter how attractive product may be, it is
essential that the customer service elements are satisfactory and, as we shall see, logistics
plays a crucial role in providing good customer service.

Logistics= referred to ‘the positioning of resources in the right place, at the right time, in
the right quantity, at the right quality, at the right price’.

Direct transaction-related elements= where the emphasis is on the specific physical service
provided, such as on-time delivery, or they may be seen as indirect support (e.g. non-
transactional, or pre- and post-transactional) attributes that are related to overall aspects
of order fulfilment, such as the ease of order taking.

This classification is useful to help identify the key logistics customer service elements,
which can be divided into three chronological categories.

These reflect the nature and timing of the particular service requirements (before, during
and after delivery of the product
1. Pre - transaction elements= are logistics customer service factors that arise prior to the
actual transaction taking place.

2. Transaction elements= are the elements directly related to the physical transaction itself
and are those that are most commonly associated with distribution and logistics.

3. Post-transaction elements= involve those elements that occur after the delivery has
taken place, such as availability of spares, call- out time, invoicing procedures, invoicing
accuracy, product tracing/warranty, returns policy, customer complaints and procedures
and claims procedures.

Multifunctional dimensions= The intention is to assess the different components of

customer service across the whole range of company functions, to try to enable a seamless
service provision.

the Order cycle time = constitutes a single requirement that covers the entire span from
order placement to the actual delivery of the order.

The four main multifunctional dimensions are:

1. time= usually order fulfillment cycle time

2. dependability= such as guaranteed fixed delivery times of accurate, undamaged orders

3. communications= such as the ease of order taking or effective queries response

4 flexibility: the ability to recognize and respond to a customer’s changing needs

Service quality= is a measure of the extent to which the customer is experiencing the level
of service that they are expecting.

Two different models of service quality are considered:

1.Basic service model= a very simple, yet effective, view of service quality, that it is the
match between what the customer expects and what the customer experiences.

Perceived quality= is always a judgement that the customer makes – whatever the
customer thinks is reality, no matter what the supplier may believe to the contrary.

2. Extended service model= this is particularly useful in helping to identify and measure the
critical elements of service for key customers.
Classification of the service gaps.

Gap 1: customer expectation–management perception gap= this is the difference between

the service that the customer expects and the service level that the supplier thinks that the
company wants.

Gap 2: management perception–service standard gap= this is the difference between the
service specification that is set and the supplier management assessment of customer
service requirements.

Gap 3: service standard–service delivery gap= this is the difference between the actual
service that is provided and the planned level of service based on the service specification
that has been set.