LOGISTICS STRATEGY SCM Material Flow Supplier Converter Distributor

LOGISTICS STRATEGY

SCM Material Flow Supplier Converter Distributor Retailer Source Converter Supplier Distributor Consumers End-User Value-Added Services Funds/Demand Flow Information Flow Reuse/Maintenance/After Sales Service Flow

Competitive advantage and the ‘Three Cs’ Customers Needs seeking benefits at acceptable prices Va Va lu e Assets and utilisation Company 3 Cost differentials Assets and utilisation Competitor

Real costs per unit The experience curve Cumulative Volume 4

The Strategic Factor of a Company´s Competitiveness The competition in terms of time takes place in a number of permanent fights: Ø Ø Ø for a shorter delivery time, for better quality, better product variability, product complexity, shorter life cycle of products.

Productivity and Value advantage Matrix 1 5 Cost & Service leader 2 Service leader Value Adantage Commodity Market 3 4 Cost Leadership Productivity advantage

Supply chain excellence High Relative Customer Value Low High Relative Delivered Cost 7 Low

Porter’s Generic Value Chain Suppor t Activiti es Primary Activitie s Infrastructure Human Resource Management Technology Development Procurement Inbound Logistics Operations Outbound Logistics Elapsed Time - Value added time cost Marketing & Sales Service

Productivity and Value advantage Matrix 1 5 Cost & Service leader 2 Service leader Value Adantage Commodity Market 3 4 Cost Leadership Productivity advantage

Gaining competitive Value Advantage Logistics Leverage Opportunities: • Tailored service • Reliability • Responsiveness, etc advantage through logistics The goal: superior customer value at less cost Cost Advantage Logistics Leverage Opportunities: • Capacity utilisation • Asset turn • Schedule integration 10

Investing in process excellence yields greater benefits Product excellence (%) 100 Revised emphasis Current emphasis 100 Process excellence (%) 11

The four pillars of supply chain excellence Supply Chain Excellence Responsiveness 12 Reliability Resilience Relationships

Managing the ‘ 4 Rs’ Responsiveness : Time-based competition is now the norm. The focus is on agility. Reliability : Unreliable processes create uncertainty and variability. Equally, lack of visibility adds to uncertainty. Resilience : Today’s turbulent and volatile markets require supply chains that are capable of dealing with the unexpected and the unplanned. Relationships : As supply chains become more complex and as out-sourcing increases dependency on suppliers, the need for relationship management increases. 13