BUSINESS LOGISTICS MANAGEMENT

BUSINESS
LOGISTICS
MANAGEMENT
A Supply Chain Perspective
THIRD EDITION
WESSELJ.
PIENAAR
and JOHN J.VOGT
OXFORD
UNIVERSITY PRESS
SOUTHERN AFRICA
Contents
'If
Contributors vi
Preface vii
1 Introduction to business logistics
(W.J. Pienaar) 1
Introduction 1
Business logistics in a macroeconomic
perspective 2
Evolution of the concept of logistics 5
Emergence of logistics in a business context 5
The concepts of logistics and supply chain
management 8
Business logistics activities 11
Conclusion 15
2 Competitive advantage created by logistics
(W.J. Pienaar) 19
Introduction 19
Logistics linkages with the value chain 19
The value-added role of logistics 22

Customer service 25
Aspects of competitive advantage 29
Wealth creation through logistics 30
Conclusion ' 31
3 Logistics and supply chain strategy planning
(J. Louw)
Introduction
What do strategy and strategic
management mean?
Organisational strategy
The strategy formulation process
Developing a logistics and supply chain strategy
Implementing a logistics and supply chain
strategy
Conclusion
34
34
.35
36
.37
39
.48
50
Tactical logistics management and supply
chain integration
(W.J. Pienaar) 56
Introduction 56
Tactical logistics activities 56
Managing the goods flow
Product supply chain processes

Time management in supply chains
Conclusion
Financial aspects of logistics and
supply chain management
(W.J. Pienaar)
Introduction
Shareholder value
Cost of equity
Free cash flow
Economic value added
Value drivers
Return on investment
Logistics costing and activity-based costing
Marginal costing
Cost-volume-profit analysis
Worked examples
57
.59
.66
.73
76
.76
.76
.77
78
78
.79
.82
.84
,86

90
94
6 Forecasting supply chain requirements
(W.J. Pienaar) 104
Introduction 104
Features of forecasting 105
Types of forecasting 106
Long-term and short-term forecasting 107
The forecasting process 107
Selecting appropriate forecasting techniques 108
Validating forecasting models 111
Techniques for stationary time series data 112
Techniques for forecasting time series data
with a trend 120
Forecasting seasonality 125
Example of the forecasting process 128
Conclusion 134
Appendix 138
7 Network integration
(J.Louw) 144
Introduction 144
Network integration and supply chain design 145
Supply chain configuration and functional
requirements 147
The stages of supply chain design and
implementation 149
Factors to take into account in supply
chain design 157
Modelling approaches 159
Conclusion 163

8 Production and operations management
(J.
van Eeden)
167
Introduction 167
Strategic and planning concepts 170
Quality management 178
Inventory management 182
Operations management: current approaches
and philosophies 184
Operations management in the service sector

188
Conclusion 189
9 Procurement management
IW.J. Pienaar) 193
Introduction 193
The objectives of procurement management 193
The strategic role of procurement within a
business 195
Tiers of procurement management 196
The nature and classification of purchased
products 197
Selecting and developing suppliers 200
Procurement-related activities that enhance
supply chain success 204
Procurement cost management 205
Electronic procurement 207
Conclusion 209
10 Inventory management

(J.N.
Cronje)
213
Introduction 213
The purpose of inventory 214
Types of inventories 216
Important inventory concepts 218
Inventory costs 220
Inventory planning 223
Inventory control 240
Conclusion 244
11 The design of storage and handling facilities
(J.Vogt) 250
Introduction
Initial requirements
Sizing the warehouse
Operations and warehouse management
systems
The design process
Fire
Security
Lighting
Conclusion
250
251
252
253
253
262
263

264
264
12 Packaging and containerisation
(U.
Kussing
and
P.
Kilbourn)
267
Introduction 267
Definition and functions of packaging 267
The role of packaging in logistics 269
Marketing 271
Development of packaging solutions 272
Containerisation 276
Integrating technology with packaging and
containerisation 279
Packaging: a supply chain perspective 281
Conclusion 282
13 Equipment used in facilities
(J.
Vogt)
285
Introduction 285
Selection of equipment 285
Risks involved in purchasing equipment 286
Storage methods for small items 286
Pallets and their storage 289
Hanging rail systems 293
Moving loads 294

Moving and sorting 296
Containers 298
Conclusion 300
14 The operation of a warehouse
(J.Vogt) 302
Introduction 302
Warehouse processes 302
Errors in operation 304
Stock management 304
Types of warehouses and facilities < 305
Cross-dock operations 305
Efficiency in a warehouse 308
Processes and operations 309
Delivery-transport operations 317
Bar
coding,
scanning and radio frequency
identification technology 317
The challenge of managing continuous change 319
Lean and six sigma operations 320
Safety 321
Conclusion 321
15 The transport system
(W.J. Pienaar) 323
Introduction 323
Operational characteristics of the various
modes of freight transport 324
Terminals 330
Goods carried in the transport system 331
Freight transport service providers 333

The freight transport user , 335
Government as stakeholder in the transport
system 336
Conclusion 337
16 Transport cost structures and
pricing principles
(W.J. Pienaar) 341
Introduction 341
Efficiency in transport 341
Economies of scale 341
Competition withiri'modes of transport 344
Cost structures of the different
transport modes 347
Cost trade-offs in transport 352
Profit planning and control 355
Tariff quoting 356
Conclusion 358
17 Transport management
(W.J. Pienaar) 362
Introduction 362
Strategic transport management 363
Tactical transport management 368
Principles of efficient operational transport
management 373
Conclusion 379
18 Managing international supply chains
(W.J. Pienaar and
J.
Vogt) 383
Introduction 383

Distribution channels 383
Transporting goods internationally 386
International trade 392
Customs departments 394
Security issues 394
Free-trade agreements and free-trade zones 396
International trade information requirements 397
International trade documentation 398
Data to be submitted for international
movement 403
International commercial terms 404
Conclusion 414
Incoterms 2000: a visual guide 418
Appendix 420
19 Product returns and reverse logistics
management
(U.
Kussing
and
W.J.
Pienaar) 421
Introduction 421
The role of reverse logistics within the
product returns management process 421
Product returns management: scope and
activities 422
The impacts of reverse logistics 426
Product returns and reverse logistics
processes 429
Logistics and the environment 431

Closed-loop supply chains 433
Conclusion 434
20 Controlling logistics performance
(U.
Kussing)
438
Introduction 438
The process of control 439
The concept of quality 442
Performance measurement 444
Benchmarking 450
The SCOR model 453
Business intelligence 455
Conclusion 456
Index
460