Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

4.4.1 Principle and Validity of Characteristics in Planning & Control

Intended learning outcomes: Describe the characteristic in planning & control in a supply chain. Explain the use of the results of the analysis.



Any enterprise striving to reach its objectives cannot dispense with individual logistics. This alone is not satisfactory, of course, as it is safe to assume that there are principles common to whole branches of business. With the help of a morphological scheme, the weighting of entrepreneurial objectives can be translated into appropriate logistics.

A characteristic in planning & control in a supply chain is the sum of all values, that is, one value per feature in the morphological scheme. It relates to a product or product family.

Each product or product family, both upstream and down­stream from decoupling points, can have a different characteristic for planning & control. This type of schema can be found in [Hack89] or [LuEv01]. Our discussion will include similar features and values. But we will also consider some important changes and additions in reference to transcorporate cooperation, nonrepetitive production, and the process industry. The 18 features are divided into three groups, namely:

  • Features pertaining to the user and the product or product family
  • Features pertaining to logistics and production resources
  • Features pertaining to the production or procurement order

The following describes each feature and its values and defines the terms. While the features are independent of one another, individual values can certainly relate to other values. For example, the value of a feature can result in a particular value of another feature or preclude that value. But there are cases where there are no such dependent relationships. The totality of all features and values therefore shows redundancies. This situation is actually desirable, for it allows, at least to some extent, testing for plausibility.

Logistics analysis works out a characteristic for planning & control for each product or product family. For each company in a supply chain, a company-internal analysis is carried out.

The determination of the value of a feature is often the result of estimation, probability, or even an intuitive grasp of the situation. Such decisions are a matter for top management. Operations management must insist that top mana­gement make the decisions here. To do this, it will need the help of operations management to foresee the reper­cussions of the deci­sion for one or the other value of a feature. Obviously, it is advantageous to have persons in top management who are experienced in operations.

The results of the analysis can be used as follows:

1. comparison of results in the supply chain reveals potential problems for efficient logistics.

  • Within the company: If features for the product families are too different, differing business methods of planning & control will be used. The coexistence of differing methods causes problems and diminishes the efficiency of logistics.
  • Transcorporate: As described in Sections 2.2.3 and 2.2.4, the same logistics and information systems should be implemented in a supply chain wherever possible. With this, the characteristic for planning & control should be the same all along the network. If not, inefficiency will result.

2. Once the characteristic has been determined, it will indicate the appropriate business methods and techniques for planning & control.

The following sections will derive business methods for planning & control from the features. They all have advantages and disadvantages as well as limits to their implementation. They cannot be employed for all types of business processes. They may be incompatible with the business processes determined through process analysis, making it necessary to change the business processes or to alter entrepreneurial objectives. This kind of feedback also shows whether enterprise objectives and actual business processes cohere.

If planning & control in a company follows an outdated philosophy, this is often because enterprise objectives have not been reviewed and given new weightings. Had the company used changed characteristics for planning & control, it would have been in a position to institute new business methods for planning & control in a timely fashionThe features making up a characteristic have an influence on logistics performance indicators.

3. The features making up a characteristic have an influence on logistics performance indicators.

Various characteristics can result in varying values of performance indi­cators. To compare performance indicators among companies effectively, the features making up the characte­ristics must be taken into account. As for a systematic comparison procedure see [FIR97b].




Course section 4.4: Subsections and their intended learning outcomes

  • 4.4 Characteristic Features Relevant to Planning & Control in Supply Chains

    Intended learning outcomes: Produce an overview on principle and validity of characteristics in planning & control. Explain six features in reference to customer, and item or product or product family, five features in reference to logistics and production resources, as well as seven features in reference to the production or procurement order. Describe important relationships between characteristic features and features of transcorporate logistics in supply chains.

  • 4.4.1 Principle and Validity of Characteristics in Planning & Control

    Intended learning outcomes: Describe the characteristic in planning & control in a supply chain. Explain the use of the results of the analysis.

  • 4.4.2 Six Features in Reference to Customer, and Item or Product or Product Family

    Intended learning outcomes: Present important features and possible values referring to the user and the product or product family. Differentiate between a convergent product structure and a divergent product structure, between continuous demand and discontinuous demand. Explain the product variety concept. Describe unit cost and transportability of an item. Disclose the T analysis within the VAT analysis and its relation to the product variety concept.

  • 4.4.3 Five Features in Reference to Logistics and Production Resources

    Intended learning outcomes: Present important features and their possible values in reference to logistics and production resources. Differentiate between flexible capability of capacity and quantitatively flexible capacity. Explain the production environment: make-to-stock, assemble-to-order, make-to-order, and engineer-to-order. Describe site production, job shop production, as well as single-item-oriented, high-volume and continuous line production.

  • 4.4.4 Seven Features in Reference to the Production or Procurement Order

    Intended learning outcomes: Present important features and possible values in reference to production or procurement order. Differentiate between order release according to demand, prediction, and consumption. Differentiate between production (or procurement) without, with infrequent, and with frequent order repetition. Identify the features flexibility of the order due date and type of long-term order. Explain the concepts of lot size, lot traceability, and loops in the order structure.

  • 4.4.5 Important Relationships between Characteristic Features

    Intended learning outcomes: Identify links among facility layout, orientation of product structure, and (order) batch size. Disclose Links among the features product variety concept, production environment, and frequency of order repetition. Explain why the features frequency of customer demand and frequency of order repetition do not necessarily need to correspond.

  • 4.4.6 Features of Transcorporate Logistics in Supply Chains

    Intended learning outcomes: Present important features, possible values, and increasing complexity of supply chain collaboration, of supply chain coordination, and of the configuration of the supply chain.