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Business Logistics Supply Chain Management Ronald H Ballou
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Meryl Uphoff
Dec 23, 2023, 5:48:49 PM12/23/23
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Ronald Herman Ballou, professor emeritus of operations, passed away peacefully on March 19 in Solon, Ohio. Ballou treasured his 46 years at Case Western Reserve University Weatherhead School of Management, where he taught supply chain management.
Over the course of his career, Ballou spent many years at Northwestern University and Michigan State University. He was a consultant in the area of logistics and supply chain management to many national firms and author of several business logistics textbooks. His legacy will live on through the many students, fellow faculty and family members he influenced during his career.
Business Logistics Supply Chain Management Ronald H Ballou
Download Zip https://t.co/dGuHuftN4H
This article will be divided into three sections: past, present, and future. The past section will trace major events that created business logistics as it is practiced today. In particular, do the events portend the future of business logistics and supply chain management? The present section will attempt to summarize the state of business logistics. How business logistics relates to supply chain management will be addressed. The future section will make some predictions as to the issues that need to be addressed and the events that will likely take place in the near term.
It has been my good fortune to experience the inception and growth of business logistics, and now supply chain management, as an area of academic study, research, and business practice. As a logistician, I will trace the evolution of thought in the field and make some predictions as to where the field may be headed. Much of what I have to say is based on my understanding of the events of the past as they occurred in the United States and what these events mean for the future. There is no documented historical record withstanding scientific scrutiny that can be used to validate what occurred and why. Conclusions in this article come from my impression of the events surrounding business logistics, their basis, and their meaning from the vantage point of one who has lived through the formation and growth of business logistics and who has been deeply involved in logistics education, research, and practice for more than 40 years.
This article will be divided into three sections: past, present, and future. The past section will trace major events that created business logistics as it is practiced today. In particular, do the events portend the future of business logistics and supply chain management? The present section will attempt to summarize the state of business logistics. How business logistics relates to supply chain management will be addressed. The future section will make some predictions as to the issues that need to be addressed and the events that will likely take place in the near term.
The first college course (Michigan State University) and textbook (Smykay et al., 1961) appeared around 1960. Within the context of the total cost approach, activities such as transportation, inventory control, warehousing, and facility location were discussed. The emphasis was on a firms outbound movement of goods and dealt little with inbound movements. In 1964, the scope of physical distribution was expanded (Heskett et al., 1964) to include physical supply and was called business logistics. Using the descriptive name of business logistics was not only an attempt to distinguish the name from military logistics but to focus on logistics activities that took place within the business firm. Purchasing was not generally considered nor was production. On the other hand, there was a similar movement by those interested in the purchasing activity. Whereas purchasing was initially considered a buying activity, there were efforts to expand the scope to include many of the activities familiar to physical distribution but associated with the inbound side of the firm. This expanded scope was embodied in such names as procurement and materials management.
When comparing the early vision of physical distribution and logistics with the current one for supply chain management, there is little difference. For example, the definition in 1962 offered by Smykay et al. (Smykay et al., 1962) was:
Although physical distribution is usually associated with outbound product movements from a firm, this definition indicates a broader concept that includes both inbound and outbound movements. Heskett et al. (Heskett et al., 1964) described business logistics in terms of both physical supply and physical distribution, but they also recognized that logistics takes place throughout the supply channel, from producer to end consumer. Figure 2 shows the multiple echelons of a supply channel for flour, and Heskett et al. suggested that there needs to be coordination of the product flows throughout the entire channel. These concepts are similar to what is currently described as supply chain management and, at that time, physical distribution and logistics were somewhat synonymous terms. Although these early definitions suggest a broad scope for physical distribution and logistics, the focus was on coordinating among the activities within the function, with little emphasis on coordinating among the other functions within the firm or among external channel members. This limited application of a much broader scope probably had to do with technological limitations of information systems at the time and the difficultly of managing across areas of responsibility.
A new name emerges: Supply Chain Management (SCM). This name is taking the logistics area by storm since so many in various business fields seem to embrace it and see activities of their areas imbedded in it. The origin of the name seems a mystery and exactly what supply chain management is, compared with physical distribution and logistics, is being debated. Some are saying that it is a fulfillment of the activity integration promise implied in early definitions while others think it is a new and bold concept. Those believing that supply chain management is evolutionary construct a diagram of the type shown in Figure 3. The claim is that supply chain management is not new and they recognize that the logistics pioneers had many of the ideas promoted by current supply chain enthusiasts. For example, note what Heskett et al. said in 1964 (Heskett et al., 1964) with reference to the flour tree of Figure 2:
Specifically, note that they refer to the entire supply channel and suggest that coordination is needed throughout the channel. These are ideas that form the basis for supply chain management as practiced today.
Given 40 years of background with a broad concept for logistics, what exactly is supply chain management to its proponents? There has been an attempt to distinguish logistics from supply chain management, declaring logistics to be a subset of supply chain management. Recently, the Council of Supply Chain Management Professionals (CSCMP), which is the premier organization of supply chain practitioners, researchers, and academics, has defined supply chain management as:
In these two definitions, first note that procurement (i.e., purchasing) and conversion (i.e., production) are now explicitly included in the scope of managing material flows. Second, emphasis is placed on coordination, collaboration and relationship building among channel members that are missing from logistics management. Put another way, supply chain management can be viewed as having three dimensions. These are activity and process administration, interfunctional coordination, and interorganizational coordination. Activity and process administration is much of what logistics has been doing. That is, managing activities such as transportation, inventories, warehousing, and order processing that are within the responsibility of the logistics function. Interfunctional coordination refers to collaborating and building relationships with other functional areas in the same firm, such as with marketing and finance. Interorganizational coordination has to do with collaborating and coordinating product flows among channel members, i.e., those companies that are not owned or operated by the immediate firm. Therefore, SCM is viewed as managing product flows across multiple enterprises (see Figure 4) whereas logistics is seen as managing the product flow activities just within the firm. This is a deviation from the view that the early visionaries had for logistics.
A contemporary view of supply chain management is to think of it as managing a set of processes, where a process is a group of activities relevant to achieving a defined objective, such as filling orders. The Amercan Marketing Association in 2004 defined marketing in terms of processes:
Based on collaboration with industry leaders, Lambert et al. (Lambert et al., 1998) defined eight key sub-processes for supply chain management. These are (1) customer relationship management, (2) customer service management, (3) demand management, (4) order fulfillment, (5) manufacturing flow management, (6) supplier relationship management, (7) product development and commercialization, and (8) returns management. Taken together, they represent supply chain management in its entirety. These processes are to be coordinated through collaboration and relationship management throughout the various echelons of the supply channel, from initial suppliers to end consumers.
Although there is much talk about the benefits of collaboration among channel members and expanding the scope of product flow management to include the entire supply chain channel, to what extent is the theoretical scope of supply chain management actually practiced? Fawcett and Magnan (Fawcett and Magnan, 2002) conducted a survey to find out. Their results are captured in Figure 5. In reality, few firms reach the potential of theoretical integration. About one-half of the firms surveyed are working toward integration within the walls of their own firms. Whether this interfunctional integration is attributed to the implementation of large software systems such as SAP rather than to actual collaboration and compromise is not clear. Approximately one third of the firms focus their integration efforts on their first-tier suppliers. Beyond that, there is little attempt at integration. This is probably due to the inherent difficulties of achieving effective collaboration and to the limitations brought about by competition, such as the reluctance to share proprietary information.
0aad45d008
Over the course of his career, Ballou spent many years at Northwestern University and Michigan State University. He was a consultant in the area of logistics and supply chain management to many national firms and author of several business logistics textbooks. His legacy will live on through the many students, fellow faculty and family members he influenced during his career.
Business Logistics Supply Chain Management Ronald H Ballou
Download Zip https://t.co/dGuHuftN4H
This article will be divided into three sections: past, present, and future. The past section will trace major events that created business logistics as it is practiced today. In particular, do the events portend the future of business logistics and supply chain management? The present section will attempt to summarize the state of business logistics. How business logistics relates to supply chain management will be addressed. The future section will make some predictions as to the issues that need to be addressed and the events that will likely take place in the near term.
It has been my good fortune to experience the inception and growth of business logistics, and now supply chain management, as an area of academic study, research, and business practice. As a logistician, I will trace the evolution of thought in the field and make some predictions as to where the field may be headed. Much of what I have to say is based on my understanding of the events of the past as they occurred in the United States and what these events mean for the future. There is no documented historical record withstanding scientific scrutiny that can be used to validate what occurred and why. Conclusions in this article come from my impression of the events surrounding business logistics, their basis, and their meaning from the vantage point of one who has lived through the formation and growth of business logistics and who has been deeply involved in logistics education, research, and practice for more than 40 years.
This article will be divided into three sections: past, present, and future. The past section will trace major events that created business logistics as it is practiced today. In particular, do the events portend the future of business logistics and supply chain management? The present section will attempt to summarize the state of business logistics. How business logistics relates to supply chain management will be addressed. The future section will make some predictions as to the issues that need to be addressed and the events that will likely take place in the near term.
The first college course (Michigan State University) and textbook (Smykay et al., 1961) appeared around 1960. Within the context of the total cost approach, activities such as transportation, inventory control, warehousing, and facility location were discussed. The emphasis was on a firms outbound movement of goods and dealt little with inbound movements. In 1964, the scope of physical distribution was expanded (Heskett et al., 1964) to include physical supply and was called business logistics. Using the descriptive name of business logistics was not only an attempt to distinguish the name from military logistics but to focus on logistics activities that took place within the business firm. Purchasing was not generally considered nor was production. On the other hand, there was a similar movement by those interested in the purchasing activity. Whereas purchasing was initially considered a buying activity, there were efforts to expand the scope to include many of the activities familiar to physical distribution but associated with the inbound side of the firm. This expanded scope was embodied in such names as procurement and materials management.
When comparing the early vision of physical distribution and logistics with the current one for supply chain management, there is little difference. For example, the definition in 1962 offered by Smykay et al. (Smykay et al., 1962) was:
Although physical distribution is usually associated with outbound product movements from a firm, this definition indicates a broader concept that includes both inbound and outbound movements. Heskett et al. (Heskett et al., 1964) described business logistics in terms of both physical supply and physical distribution, but they also recognized that logistics takes place throughout the supply channel, from producer to end consumer. Figure 2 shows the multiple echelons of a supply channel for flour, and Heskett et al. suggested that there needs to be coordination of the product flows throughout the entire channel. These concepts are similar to what is currently described as supply chain management and, at that time, physical distribution and logistics were somewhat synonymous terms. Although these early definitions suggest a broad scope for physical distribution and logistics, the focus was on coordinating among the activities within the function, with little emphasis on coordinating among the other functions within the firm or among external channel members. This limited application of a much broader scope probably had to do with technological limitations of information systems at the time and the difficultly of managing across areas of responsibility.
A new name emerges: Supply Chain Management (SCM). This name is taking the logistics area by storm since so many in various business fields seem to embrace it and see activities of their areas imbedded in it. The origin of the name seems a mystery and exactly what supply chain management is, compared with physical distribution and logistics, is being debated. Some are saying that it is a fulfillment of the activity integration promise implied in early definitions while others think it is a new and bold concept. Those believing that supply chain management is evolutionary construct a diagram of the type shown in Figure 3. The claim is that supply chain management is not new and they recognize that the logistics pioneers had many of the ideas promoted by current supply chain enthusiasts. For example, note what Heskett et al. said in 1964 (Heskett et al., 1964) with reference to the flour tree of Figure 2:
Specifically, note that they refer to the entire supply channel and suggest that coordination is needed throughout the channel. These are ideas that form the basis for supply chain management as practiced today.
Given 40 years of background with a broad concept for logistics, what exactly is supply chain management to its proponents? There has been an attempt to distinguish logistics from supply chain management, declaring logistics to be a subset of supply chain management. Recently, the Council of Supply Chain Management Professionals (CSCMP), which is the premier organization of supply chain practitioners, researchers, and academics, has defined supply chain management as:
In these two definitions, first note that procurement (i.e., purchasing) and conversion (i.e., production) are now explicitly included in the scope of managing material flows. Second, emphasis is placed on coordination, collaboration and relationship building among channel members that are missing from logistics management. Put another way, supply chain management can be viewed as having three dimensions. These are activity and process administration, interfunctional coordination, and interorganizational coordination. Activity and process administration is much of what logistics has been doing. That is, managing activities such as transportation, inventories, warehousing, and order processing that are within the responsibility of the logistics function. Interfunctional coordination refers to collaborating and building relationships with other functional areas in the same firm, such as with marketing and finance. Interorganizational coordination has to do with collaborating and coordinating product flows among channel members, i.e., those companies that are not owned or operated by the immediate firm. Therefore, SCM is viewed as managing product flows across multiple enterprises (see Figure 4) whereas logistics is seen as managing the product flow activities just within the firm. This is a deviation from the view that the early visionaries had for logistics.
A contemporary view of supply chain management is to think of it as managing a set of processes, where a process is a group of activities relevant to achieving a defined objective, such as filling orders. The Amercan Marketing Association in 2004 defined marketing in terms of processes:
Based on collaboration with industry leaders, Lambert et al. (Lambert et al., 1998) defined eight key sub-processes for supply chain management. These are (1) customer relationship management, (2) customer service management, (3) demand management, (4) order fulfillment, (5) manufacturing flow management, (6) supplier relationship management, (7) product development and commercialization, and (8) returns management. Taken together, they represent supply chain management in its entirety. These processes are to be coordinated through collaboration and relationship management throughout the various echelons of the supply channel, from initial suppliers to end consumers.
Although there is much talk about the benefits of collaboration among channel members and expanding the scope of product flow management to include the entire supply chain channel, to what extent is the theoretical scope of supply chain management actually practiced? Fawcett and Magnan (Fawcett and Magnan, 2002) conducted a survey to find out. Their results are captured in Figure 5. In reality, few firms reach the potential of theoretical integration. About one-half of the firms surveyed are working toward integration within the walls of their own firms. Whether this interfunctional integration is attributed to the implementation of large software systems such as SAP rather than to actual collaboration and compromise is not clear. Approximately one third of the firms focus their integration efforts on their first-tier suppliers. Beyond that, there is little attempt at integration. This is probably due to the inherent difficulties of achieving effective collaboration and to the limitations brought about by competition, such as the reluctance to share proprietary information.
0aad45d008
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