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


Intended learning outcomes: Describe an enterprise as a firm, a company in its economic environment, and namely as a sociotechnical system. Explain three dimensions of business activity.

An enterprise is, according to [ASCM22] (see notes to the reader further below), any undertaking, venture, initiative, or business organization with a defined mission.

In this course, the enterprise is understood as a firm, a company in its economic environment, and namely as a sociotechnical system. The elements of the system as well as their relation­ships, both within the system and to surrounding systems, are complex in nature. Various interested parties with different ideas and goals have an impact on the company, which makes company management a complex task. Figure 1 shows three dimensions of business activity. Integral company management means building management systems along these dimensions, which simultaneously interlock.

Fig. 1                  Three dimensions of business activity.

Today, management systems for tasks along the value-adding chain affect customers and especially suppliers, just as customers and suppliers influence the management systems. This close partnership is also necessary from the perspective of the comprehensive product life cycle. Product returns from the customer, disassembly, recycling, and returns to suppliers have to be considered as part of value-adding and paid for accordingly.

Management systems for the stake­holders of the enterprise deal with business partners, employees and owners (share­holders). Such individual stakeholders stand opposite the collective stakeholders in the form of society — that is, the macroeconomic system in which the company as a microcosm is embedded. In the figure, the environ­ment (nature) is shown as a personified stakeholder. In practice, of course, the demands of the environment become manifest only through the environmental consciousness of the other stakeholders mentioned.

Priority areas of management systems related to company performance focus on the expected quality and delivery as well as required costs and their financing. Flexibility, agility, and innovation are usually potentials that have an indirect impact on business results, via future performance in the other three areas. Tasks related to company performance influence one another mutually and function as tasks that cut across the tasks along the value-adding chain and the tasks related to stakeholders.

Integral logistics management focuses in particular on expected delivery — on goals such as customer service ratio, delivery reliability, and short lead times. To achieve the objectives, the corresponding way of thinking has to be successfully anchored in all of the management systems along the entire value-adding chain, also across companies. Integral logistics management monitors value-adding over the entire product life cycle, but also considers the impact on the various stakeholders, especially the business partners.

Integral logistics management means implementing ideas, concepts, and methods that have the potential to increase the effectiveness and efficiency of company performance. Here, magic formulas, catchwords, and simplifying theories do not stand much of a chance. The complex reality of day-to-day operation of companies in industry and the service sector demands highly diligent detailed work. In contrast to many a strategic concept in company management, the proof of truth — namely, effectiveness — shows up quickly and measu­rably. Errors rapidly produce dissatisfied customers and employees, and thus poor business results. This immediacy and measurability do not make it easy to shift the blame to others.

On the other hand, logistics tasks offer a variety of possible solutions. This is an area that calls for human creativity, drive, and perseverance. Methods of planning & control in company logistics, and particularly computer-supported tools, are after all merely supporting aids. Moreover, experience has shown repeatedly that the successful use of methods and tools depends heavily on the people who implement them.