7.

LOGISTICS SYSTEM DESIGN

A complete self-appraisal for an internal review examines all major resources such as workforce, equipment, facilities, relationships, and information. In particular, the internal review should focus on a comprehensive evaluation of the existing system's capabilities and deficiencies. Each element of the logistics system should be carefully examined with respect to its stated objectives and its capabilities to meet those objectives. For example, is the logistics management information system consistently providing and measuring the customer service objectives desired by the marketing department? Likewise, does the material management process adequately support manufacturing requirements? Does the current network of distribution centers effectively support customer service objectives? Finally, how do logistics performance capabilities and measures compare across business units and, locations? These and many similar questions form the basis of the selfappraisal required for the internal analysis. The comprehensive review attempts to identify the opportunities that might motivate or justify logistics system redesign or refinement"

Table -1 lists some of the topics frequently covered during an internal review. While the table is not all-inclusive, it does identify many key points. Although the suggested format is not the only approach, it does highlight the fact that the assessment must consider the processes, decisions, and key measures for each major logistics activity. Process considerations focus on physical and information flows through the value-added chain. Decision considerations focus on the logic and criteria currently used for value chain management. Measurement considerations focus on the key performance indicators and the firm's ability to measure them. The specific review content depends on the scope of the analysis. It is unusual that the information desired is readily available. The purpose of the internal review is not detailed data collection but rather a diagnostic look at current logistics processes and procedures as well as a probe to determine data availability. Most significantly, the internal review is directed at the identification of areas where substantial opportunity for improvement

exists. The external assessment is a review of the trends and service demands required by customers. The market assessment objective is to document and formalize customer perceptions and desires with regard to changes in the firm's logistics capabilities. The assessment might include interviews with selected customers or more substantive customer surveys. Table-2 illustrates typical market assessment topics. The assessment should focus on external relationships with suppliers, customers, and consumers. Customers are other institutions downstream in the distribution channel. In the case of manufacturers, for example, customers are wholesalers and retailers. Consumers are the ultimate users of a product. The assessment should consider trends in requirements and processes as well as enterprise and competitor capabilities. While Table-2 does not identify all topics required for the assessment, it does indicate the major items. Technology assessment focuses on the application and capabilities of key logistics technologies, including transportation, storage, material handling, packaging, and information processing. The assessment considers the firm ' s capabilities in terms of current technologies and the potential for applying new technologies. For example, can advanced material-handling capabilities offered through third-party suppliers enhance logistics performance? What is the role of decentralized computing architectures, such as personal computers and client/servers, in supplying responsive logistics information systems? Finally, what can satellite and scanning communications technologies contribute to logistics performance? The objective of the technology assessment is to identify advancements that can provide effective trade-offs with other logistics resources such as transportation or inventory Table-3 illustrates typical technology assessment topics for a number of logistics functions. While the topics are not all-inclusive, the major issues are identified. Such an assessment should be completed with respect to each component of the logistics system as well as from the perspective of overall integration.