Section I. STRATEGIC SOURCING AND LOGISTICS SYSTEMS DESIGN
Section 1 deals with action items that strategically impact business development and that have a major impact on a firm's contribution margins and asset commitments. Section 1 has been updated in this second edition to discuss strategic opportunities not only at the domestic level but also the heightened attention given to continental and global, multi-national supply chain (SC) management. Facility site location for manufacturing transformation and operations, component and finished goods' storage and inventory deployment are areas in which transportation has a dramatic impact. These strategic decisions effect transportation direct charges and ancillary expenditures leading to total delivered or landed costs and contributing to total costs of ownership for products and components. Firm and SC cash to cash cycles in overall materials management are highly impacted by T&L tactics and operations.
Outsourcing at a high level can take place but typically the firm does not outsource the responsibilities and control of the logistics-planning phase involved in steps 1-5. Steps 6-16 in today's business environment are often outsourced operationally to third-party logistics services providers or to information technology providers for operational and efficiency reasons. Consulting assistance is often used to set strategy, but the strategy itself is still the responsibility of the buyer or seller of goods and services since the user of outside services still needs to monitor and maintain control. In this Guide, a number of the following areas receive detailed discussions of the strategic opportunities to gain competitive advantage relative to:
1. sourcing of product components and raw materials;
2. sourcing of indirect materials and services that are operationally needed.
3. control of Work-In-Progress (WIP) inventories.
4. using the principle of postponement in delaying operations later in the supply chain to gain supply chain and logistics efficiencies.
5. inter-facility transfers of finished distribution including the impact on transportation on distribution facility site location.
6. collaborative control processes to balance two-legged inbound and outbound materials flows
7. continuous moves and the collaborative efforts on the part of consortiums, such as Nistevo, Transplace, and TransCore Exchange that combine activities horizontally with other business units and/or competitors to gain transportation capacity efficiencies
8. reverse logistics processes that often cost five times the cost to process compared to forward logistics.
9. organizational and staffing issues.
10. transportation management systems (TMS) opportunities in T&L performance management.
11. Utilizing "Green" concepts to reduce energy use and achieve environmental benefits which may provide competitive advantage.
12. Investigate how to reduce the firm's carbon footprint in enhance environmental issues and streamline the supply chain. As this receives more and more attention, it may be worthwhile to be "ahead of the curve".
The authors refer to Team Group A throughout the Guide as those company executives who are the "risk takers" associated with the determination of T&L strategies, policies and procedures. These key high-level management personnel are drawn from logistics, purchasing, and manufacturing with executive level members from cost accounting, information technology, human resources management, and legal called upon as needed.