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GLOBAL LOGISTIC MANAGEMENT GLOBAL LOGISTIC MANAGEMENT LECTURE 9: ORGANISING FOR EFFECTIVE LOGISTICS Agenda Agenda 1 Definition of Organisation 2 Traditional Logistics Management 3 Optimal Organizational Forms 4 Organizational Strategies used by Manufacturers 5 Components of Corporate and Logistics Mission Statements 6 Ways of Improving Logistics Organizational Effectiveness 7 Logistics Management Evaluation Measures 8 Summary 1 Definition of Organisation 1 Definition of Organisation An organisation is a social arrangement which pursues collective goals, controls its own performance, and has a boundary separating it from its environment. Organizational structure is a mainly hierarchical concept of subordination of entities that collaborate and contribute to serve one common aim. 2 Traditional Logistics Management 2 Traditional Logistics Management V P M a r k e t i n g V P P r o d u c t i o n V P F i n a n c i a l C E O • Sales service • Channels of distribution • Product returns and warranties • Manufacturing • Purchasing/ procurement • Traffic • Warehousing • Information systems • Budgeting • Inventory • Data processing Responsibilities Objectives Large inventories Low inventories Small and frequent production runs Larger and infrequent production runs Decentralized warehousing Plant warehousing Centralized warehousing Large product assortment Fewer products 2 Traditional Logistics Management 2 Traditional Logistics Management • Sales service • Channels of distribution • Product returns and warranties • Manufacturing • Purchasing/ procurement • Traffic • Warehousing • Information systems • Budgeting • Inventory • Data processing Responsibilities Objectives Rapid order processing Inexpensive order processing Generous returned goods policies Fast transportation Expedited shipments More rigid returned goods policies Low cost transportation V P M a r k e t i n g V P P r o d u c t i o n V P F i n a n c i a l C E O Control Exercised By Logistics Control Exercised By Logistics Executives Over Selected Logistics Functions Executives Over Selected Logistics Functions Transportation Warehousing Inventory control Order processing Packaging Purchasing and procurement 89% 94% 97% 98% 90% 70 93 95 97 88 55 83 81 79 74 43 76 67 61 55 8 70 37 48 39 15 58 44 51 41 Activities 1966 1976 1985 1990 1999 Percent of Reporting Companies 3 Optimal Organizational Forms 3 Optimal Organizational Forms Hollow corporation ◦ A small organization of managers and “idea people” who hire external companies to perform various types of activities, including manufacturing, logistics, distribution, billing, sales, and marketing. Virtual corporation ◦ A number of companies come together to develop, produce, sell, and distribute a product or a service of limited scope. 4 Organizational Strategies used 4 Organizational Strategies used by Manufacturers by Manufacturers Process-based Market-based Channel-based Process-based Organisation Process-based Organisation Process-based Organisation is the organisation structured by its business processes. Each process makes up its own requirements for an appropriate structure. Business process may include: Production and Logistic Marketing and Marketing Accounting and Finance Human Resource and Administration Market-based Organisation Market-based Organisation Market-based Organisation is the organisation geographically structured according to its market. Market-based structure allows the focus of organisational resources on a particular market. Example of Market-based organisation: Honda Vietnam Ford Asia Asia Pacific or North America areas . GLOBAL LOGISTIC MANAGEMENT GLOBAL LOGISTIC MANAGEMENT LECTURE 9: ORGANISING FOR EFFECTIVE LOGISTICS Agenda Agenda 1 Definition of Organisation 2 Traditional