Supply Chain Management

An introduction to logistics, second edition

by Donald Waters

Discussion questions

Chapter 1 - Logistics and supply chain

  1. Is it true that every organisation has to move materials to support its operations? Give examples from different types of organisation to support your views.
  2. How important is logistics to the national economy? How has this changed over time?
  3. Organisations are only really interested in making products that they can sell to customers. Provided they have reliable first tier supplies and transport for products to first tier customers, logistics is irrelevant. Do you think this is true?
  4. Very few organisations deal with the final customer for a product. Most work upstream and form one step of the supply chain, often passing materials to internal customers within the same organisation. How does the type of customer affect the organisation of logistics and the measures of customer satisfaction?
  5. The cost of logistics varies widely from organisation to organisation. What factors affect these costs? Are the costs fixed or can they be controlled?
  6. How can you measure customer service or satisfaction, and why is it important?
  7. How can a company find the best balance between service level and costs?
  8. Is it really true that logistics affects all aspects of an organisation’s performance?
  9. ‘Logistics is a part of every product package’. What does this mean, and is it true?
  10. In 1996 a survey by Deloitte & Touche in Canada26 found that 98% of respondents described logistics as either ‘critical’ or ‘very important’ to their company. The survey also emphasised the rate of change in the area, with over 90% of organisations either currently improving their supply chain or planning improvements within the next two years. Do you think that these findings are still valid?
Back to top

Chapter 2 - Development of logistics

  1. People say that logistics is now changing so quickly that it is going through a revolution. Is there evidence to support this view?
  2. What are the main factors encouraging logistics to change?
  3. How is logistics responding to the pressures to change? What changes do you think there will be in the next decade?
  4. What exactly is meant by ‘customer satisfaction’, and how is it achieved?
  5. How have attitudes towards customer service changed in recent years, and why are they now considered so important?
  6. Logistics are either lean or agile. What does this mean, and is it true?
  7. Logistics managers often describe themselves as processors of information rather than movers of goods. To what extent is this true? How has the situation changed in recent years?
  8. Why do traditional companies find it so difficult to compete against e-companies?
  9. Some people argue that globalisation has been the largest single driver of change in logistics. Do you think this is true?
  10. In 1996 a survey of Canadian logistics companies 46, 47 listed the main benefits expected from outsourcing logistics as follows. Are these benefits likely to be different in other countries, or to have changed in Canada over the past few years?
Back to top

Chapter 3 - Building effective supply chains

  1. Is logistics really a strategic function with a long-term affect on organisational performance?
  2. What is a logistics strategy?
  3. What is meant by ‘strategic fit’ and how can logistics manager try to get it?
  4. Some managers argue that there is no point in publishing logistics strategies, as everyone knows that they deliver products to customers. Do you find such arguments convincing?
  5. There should never be a top-down design of strategy, as senior managers never know enough about day-to-day operations to design realistic strategies. Do you think this is true
  6. When customers judge products, they include factors like availability, lead time and after sales service – and these are part of logistics. So does logistics really form a part of the product package?
  7. What are the options for a logistics strategy? What factors affect an organisation’s choice?
  8. There is only one ‘best’ logistics strategy in any circumstances, and managers should look for this. Do you think this is true?
  9. Can logistics really be both lean and agile at the same time?
  10. How can a supply chain become agile?
Back to top

Chapter 4 - Implementing the strategies

  1. What exactly is meant by ‘implementing the logistics strategy’?
  2. It is often more difficult to implement a logistics strategy that to design one, so most logistics plan fail in the practice rather than the theory. What exactly does this mean – and is it necessarily true?
  3. What can an organisation do to improve the implementation of its logistics strategy?
  4. What exactly is a logistics infrastructure?
  5. Apart from showing who reports to whom, what else does an organisational structure show?
  6. What determines the best shape for a supply chain?
  7. When a company outsources logistics it loses control over the operations, employs someone who is unfamiliar with the work of the organisation and has completely different aims and culture, and pays enough to give the third party provider a healthy profit. Does this seem like a sensible move?
  8. What sets the capacity of a supply chain?
  9. Supply chains are not usually designed from scratch, but evolve over time. Does this create any particular problems?
  10. Re-engineering might be attractive in principle, but in reality it is difficult, expensive, risky – and unlikely to get the expected benefits. If this is true, why do organisations still consider radical changes?
Back to top

Chapter 5 - Integrated supply chains

  1. When logistics is divided into separate functions, each has its own objectives. Is this necessarily a bad thing, or can there be positive benefits?
  2. An integrated supply chain is a convenient notion, but it does not reflect real operations. An organisation is only really concerned with its own customers and suppliers, and does not have time to consider other organisations further along the chain. Do you think that this is true?
  3. Integration depends on the sharing of information. Why should one company willing give its confidential information to another?
  4. Why do large fluctuations in supply and demand appear when customers do not talk to their suppliers? Is this inevitable, or are there ways of reducing the variations?
  5. What are the benefits of supply chain integration?
  6. When Christopher 5 says that ‘supply chains compete, not companies’ what exactly does he mean?
  7. Decker and van Goor 4 say that integration in the supply chain can be at the level of: Physical movement, Shared information, Integrated control, or Integrated infrastructure - what do they mean by this?
  8. An organisation makes money by paying its suppliers less and charging its customers more. Does this seem a reasonable basis for co-operation? What can be done to improve things?
  9. What is the best level of integration for a supply chain?
  10. Some people say that all the recent developments in logistics can be summarised as ‘integration’. Do you think this is true?
Back to top

Chapter 6 - Global logistics

  1. What are the main differences between logistics within a single country and logistics that span a number of different countries? What are the specific problems of working internationally?
  2. By their nature, all supply chains must be international. Do you think this is true?
  3. Is it always best to locate factories in areas that give lowest production costs?
  4. Some regions of the world present particularly difficult problems for logistics. What regions do you think are most difficult to work in, and why?
  5. Companies adopt many patterns for ownership and operations when they work internationally. What are the most successful patterns?
  6. Global operations are a simplistic ideal that can never work in practice. Do you think this is true?
  7. Where are the world’s largest free trade areas? Do they really allow free trade between members? What benefits do these bring?
  8. If free trade is such a good idea, why do countries not simply remove all their duties and tariffs on trade?
  9. If you were delivering a truckload of materials through a series of international borders, what problems might you expect to meet. How could you reduce or avoid these?
  10. Why are companies moving towards global operations? What are the implications for logistics?
Back to top

Chapter 7 - Locating facilities

  1. If a company chooses a poor site it can always move to a better one. Such changes are an essential part of business. Do you agree with this?
  2. Which areas of the world currently have the fastest economic growth? Why? Is this likely to change over the next twenty years?
  3. What are the most important factors in choosing a region or country to work in?
  4. A city often has restaurants congregating in one area. Why do businesses form such clusters of similar firms, when each could separate and move away from the competition?
  5. What costs should you consider when making a location decision? Is cost always an important factor? Are costs distorted by government grants and incentives?
  6. Mathematical models for location take a simplified view, they make assumptions, approximate values, and only include a few factors that are most easily quantified. How useful are they for real decisions?
  7. What is the basic difference between infinite set and feasible set approaches to location? Can they be used together?
  8. What features would you expect to see in computer software that helps with location decisions? Do a survey of relevant packages to see how they work and the kind of analyses included.
  9. What kinds of problem are solved by network models?
  10. How has improving technology helped with making business location decisions?
Back to top

Chapter 8 - Capacity management

  1. To what extent are location decisions and capacity plans related?
  2. Capacity is the most important decision in the design of a supply chain, as it affects the amount of materials that can be moved. Do you find this argument convincing?
  3. You often see notices at the entrance to bars, pubs, clubs, halls and other buildings with messages along the lines of, ‘The capacity of this facility of 300 people’. What does this really mean?
  4. Is it possible to measure the capacity of an entire supply chain?
  5. All plans are based on forecasts. These inevitably contain errors – so the resulting plans are inaccurate at best and often useless. What do you think of this view?
  6. How would you set about planning the capacity of a supply chain?
  7. No company would seriously consider limiting the amount of customer demand, and they would always raise capacity instead. Do you think this is true?
  8. What type of decisions would managers need when considering the expansion of facilities?
  9. Why does capacity change over time?
  10. Why does capacity change over time?
Back to top

Chapter 9 - Moving materials through supply chains

  1. What decisions are needed for tactical and operational planning for logistics?
  2. How do short-term schedules control the flow of materials through supply chains?
  3. By definition ‘optimal schedules’ are best. So why are organisations satisfied with worse schedules that come from, say, scheduling rules?
  4. MRP was developed to plan the supply of parts at manufacturers, so it cannot really be used in other types of organisation. Do you think this is true?
  5. MRP II may be a good idea in theory, but it is difficult to plan logistics, let alone finance and marketing, from a master schedule. Any working system would be so unwieldy that they could never work properly; even if they did work, operations would be too inflexible to cope with agile competitors. What do you think of these views?
  6. What are the main difficulties of using ERP?
  7. What are the most significant changes that JIT brings to logistics in an organisation?
  8. What happens if an organisation wants to introduce JIT, but finds that its suppliers cannot cope with the small batches and frequent deliveries?
  9. If you were in hospital and needing a blood transfusion, would you rather the transfusion service used a traditional system of holding stocks of blood, or a just-in-time system? What does this tell you about JIT in other organisations?
  10. ECR does not eliminate stock from the supply chain, but simply passes it on to someone else. Do you think this is true?
Back to top

Chapter 10 - Procurement

  1. Is there really a difference between purchasing and procurement?
  2. People often say that you should get four or five quotations, even for repeat orders, as this encourages competition and keeps prices low. Other people say that you should form an alliance with one supplier so that you understand each other’s needs and can work closely together. Which of these views do you find more persuasive?
  3. What exactly do procurement departments do?
  4. What features would make an ideal supplier?
  5. Outsourcing decisions are not strategic but the result of simple ‘make-or-buy’ analyses. What does this mean, and is it true?
  6. Forward purchasing has many advantages – as demonstrated by the huge markets in financial futures. What are these benefits? If these are so obvious, why do many organisations buy just-in-time?
  7. Is it fair to say that the effort put into procurement should be related to the value of materials bought?
  8. Do you think an organisation should always negotiate hard with suppliers to get the cheapest prices and best conditions it can?
  9. There is a lot of talk about the benefits of purchasing through the Internat. What are these?
  10. In 2000 The Trading and Standards Institute in London made test purchases from 102 retail Websites. There were problems with 37% of these, 38% arrived later than promised and 17% did not arrive at all 20. What does this tell you about e-procurement?
Back to top

Chapter 11 - Inventory management

  1. Stock is always a waste of money. Do you think this is true?
  2. What is a reasonable amount of stock for a manufacturer to hold?
  3. What are the costs of holding stock? If these costs are really difficult to find, how reliable are the results from any kind of analysis?
  4. What assumptions are made in the economic order quantity model? How realistic are they?
  5. What effects do variability and uncertainty have on inventory control?
  6. What should you consider when setting a service level? For instance, how can a hospital set a reasonable service level for its supplies of blood for transfusions?
  7. We have discussed the control of stocks in terms of MRP, JIT and independent demand systems. When would you use each of these? Are there any other methods?
  8. What features would you expect to see in an automated inventory control system? Look at some commercial packages and compare the features they offer.
  9. Stocks are inevitable in all operations. Methods like JIT only transfer stocks from one part of the supply chain to another. Do you think this is true?
Back to top

Chapter 12 - Warehouseing and material handling

  1. If the flow of materials is properly co-ordinated there is no need for stock and, therefore, no need for warehouses. When do you think that warehouses will disappear from the supply chain?
  2. Warehouses used to be places where goods were stored, often for long period, until they were needed. Has this role significantly changed over time?
  3. There should be a clear distinction between factories which produce things and warehouses which store them. What do you think of this view?
  4. What is cross-docking and when can you use it?
  5. How would you measure the capacity of a warehouse, and why is it important?
  6. What are the benefits of outsourcing warehousing operations? How can this be organised?
  7. Why is the layout of a warehouse important? Supermarkets are really a type of warehouse, so the same factors are important. Is this true?
  8. Automation always gives the most efficient warehouses, so everyone should move in this direction. When do you think all warehouses will be automated?
  9. We are often told that packaging is a major problem for waste disposal. Why is there so much packaging, and how can the amount be reduced?
  10. What is the point of reverse logistics?
  11. Supermarkets sell fresh fruit on polystyrene trays wrapped in plastic film. They say that this protects the fruit and reduces waste. Some people say that the packaging is more wasteful. Who is right?
Back to top

Chapter 13 - Transport

  1. ‘Transport is becoming less important, as e-commerce is replacing flows of goods by flows of information.’ Do you think this is true?
  2. What types of technology are used in transport? How do you expect this to change in the future?
  3. For most operations road is the only realistic mode of transport. If this is true, why do so many people disapprove of heavy lorries?
  4. How can you choose between the different available transport modes? Are there any noticeable trends in the choice?
  5. Why have containers made such an impact on transport?
  6. Many areas of the world say that they need more ports, with up to date facilities. Is there any evidence to support this view?
  7. There has been a significant move away from in-house transport and towards contract providers. Why?
  8. An organisation with weak transport management suffers by giving worse performance than competitors; one with strong transport management suffers by diverting talent away from core activities. What do you think of this argument?
  9. If you want to move a load of materials from Europe to Australia, who can you ask for help?
  10. What kind of operational problems are there with running fleets of transport?

Back to top

Chapter 14 - Measuring and improving performance

  1. ‘What you can’t measure you can’t manage.’ To what extent do you think this is true of logistics?
  2. Managers can be tempted to use the easiest measures of performance, or those that show themselves in the best light. What are the consequences of this? Can you give examples of problems this creates?
  3. Logistics is a service, and managers should always look to provide it at the lowest costs. Everything else is simply mistaken. Do you think this is true?
  4. What are the most appropriate direct and indirect measures of performance for a supply chain?
  5. Performance measures can give conflicting views – changes that improve some measures, make others worse. How can you decide whether the overall effect is beneficial?
  6. Is it easy to find improvements in any supply chain? If it is, why have the managers not already made the improvements?
  7. Why would a successful company give away its commercial secrets to another firm that is benchmarking and trying to become more competitive?
  8. What is the point of drawing some kind of chart to describe a logistics process?
  9. Continuous improvement is not really useful as it just tinkers with existing operations and does not look for significant gains. So why do managers still use it?
Back to top

Chapter 15 - Supply chain risk

  1. Risks are nasty things that damage a supply chain. Is this true?
  2. Is it fair to say that logistics managers have traditionally paid little attention to supply chain risk
  3. What are the main risks facing a supply chain?
  4. Do managers have to consider every risk to the supply chain? If not which ones should they concentrate on?
  5. How would you interpret the expected value of an event? What alternative measures are there?
  6. Managers rarely have any control of the serious risks facing their supply chains, and there is little they can do to influence conditions. So why should they bother with risk management?
  7. It seems that almost every new development in logistics increases the level of risk. Is this a fair statement?
  8. Why is risk management seen as an increasingly important issue?