SUMMARY OF LOGISTICS AND SUPPLY CHAIN MANAGEMENT

BY MARTIN CHRISTOPHER, ANALYSIS TO AVIATION SYSTEM,

AND APPLICATION TO AVIATION LOGISTICS

AUTHORED BY:

MR. TANADE SIRINUMAS ID: 5531210150

SECTION 1

AVIATION BUSINESS MANAGEMENT

SCHOOL OF MANAGEMENT

AN INDIVIDUAL ASSIGNMENT ADVISOR

DR. SUTHEP NIMSAI

AN INDIVIDUAL ASSIGNMENT

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS OF 1210334

GLOBAL ECONOMIC TRENDS IN THAILAND EXPORTING AND SERVICE

COURSE

MAE FAH LUANG UNIVERSITY

SECOND SEMESTER, 2014

Summary of Logistics and Supply Chain Management by Martin Christopher,

Analysis to Aviation System, and Application to Aviation Logistics

Authored By:

Mr. Tanade Sirinumas ID: 5531210150

Section 1

Aviation Business Management

School of Management

An Individual Assignment Advisor

Dr. Suthep Nimsai

An Individual Assignment

Submitted in Partial Fulfillment of the Requirements of

1210334 Global Economic Trends in Thailand Exporting and Service

Course

Mae Fah Luang University

Second Semester, 2014

Contents

Page

Acknowledgements i

Declaration ii

Executive Summary iii

Part 1: Summary of Logistics and Supply Chain Management by Martin Christopher 1

1.1 Chapter 1: Logistics, the supply chain and competitive strategy 1

1.1.1 Concept of supply chain management and logistics 1

1.1.2 Competitive advantage 1

1.1.3 The supply chain becomes the value chain 1

1.1.4 The changing competitive environment 2

1.2 Chapter 7: The synchronous supply chain 2

1.2.1 Role of information 2

1.2.2 Quick response 3

1.3 Chapter 11: The era of network competition 3

1.3.1 The need for new business model 3

1.3.2 Collaboration in the supply chain 3

1.3.3 Managing the supply chain as a network 3

1.4 Chapter 13: Creating a sustainable supply chain 4

1.4.1 The triple bottom line 4

1.4.2 Greenhouse effect 5

1.4.3 Improving the transport-intensity of supply chain 5

1.4.4 Impact of congestion 5

1.5 Chapter 14: The supply chain of the future 6

1.5.1 Emerging mega-trends 6

1.5.2 Shifting centers of gravity 6

1.5.3 The multi-channel revolution 6

1.5.4 Structural flexibility 6

1.5.5 Vision in 2020 6

Contents (continued)

Page

Part 2: Analysis to Aviation System 7

2.1 Supply side 8

2.2 Demand side 9

2.3 Market 10

2.4 External factors 11

Part 3: Application to Aviation Logistics 12

References 14

Table of Figures

Page

Figure 1: The triple bottom line: people, planet, profit 4

Figure 2: The aviation system 7

i

Acknowledgements

I would like to thank my lecturer, Dr. Suthep Nimsai, for his sharing beneficial book

"Logistics and Supply Chain Management by Martin Christopher" and suggestion. His book

and suggestion gave the directions to plan the outline of this report. For everything you have

done for us, Dr. Nimsai, I thank you.

I would also like to acknowledge the very significant contribution to this report of the

following person for pleasant and hospitable giving us permission to use their information:

Andreas Wittmer

Martin Christopher

Thomas Bieger

ii

Declaration

I, Mr. Tanade Sirinumas being the author of this report, hereby declare that this report

entitled "Summary of Logistics and Supply Chain Management by Martin Christopher,

Analysis to Aviation System, and Application to Aviation Logistics" is written by me, and is

my own effort, and has not been submitted before for any degree to any other University. All

data and information from these other sources presented in this report are correct and have

been duly referenced and acknowledged.

Tanade Sirinumas

iii

Executive Summary

The logistics and supply chain management book by Martin Christopher says about

logistics and supply chain concept, how to create the competitive advantage, changing in

competitive environment presently. And to create more effective supply chain, the supply

chain partner should collaborate to become the synchronous supply chain. Because now is the

era of network competition. Furthermore, the supply chain management should think about

the sustainable supply chain. One of the sustainable topics is Greenhouse effect. And the last,

Martin Christopher wrote about the future, new mega-trends, shifting of center of gravity, and

2020 vision.

To analyze the knowledge from logistics and supply chain management book, the

author uses the aviation system model of Andreas Wittmer and Thomas Bieger that separate

into 4 sides that are: supply side, demand side, market, and external factors.

And the ways to apply to use in the aviation logistics business are: the aviation

logistics business should create the competitive advantage, study the customers, collaborate

with the partners and competitors to share information and capacity to each other, apply the

new idea, new technology, and new innovation to use in the organization, and think about the

sustainability issues.

1

Part 1: Summary of Logistics and Supply Chain Management

by Martin Christopher

1.1 Chapter 1: Logistics, the supply chain and competitive strategy

(Christopher, 2011, pp. 1-24)

1.1.1 Concept of supply chain management and logistics

Logistics is the plan for product and information flow, while supply chain is wider

than logistics because it includes with relationship flow of suppliers through customers too.

1.1.2 Competitive advantage

There are two type of competitive advantage: first is cost advantage, second is value

advantage.

1) Cost advantage

Cost advantage occurs between company and its competitors. That is competition by

cost. The cost advantage can be made by economy of scale.

2) Value advantage

Value advantage is the competitive advantage from creating the value to customers by

responds the different demand of customers. And the service can make added value to

customers. The term “service” in logistics is speed of the delivery or just in time.

1.1.3 The supply chain becomes the value chain

The supply chain increases its value by using value chain. The method is to join with

outsourcing to make the network and to make the advantage together. But to do this method,

the partners in supply chain should have high level of relationship.

2

1.1.4 The changing competitive environment

The new rules of competition

The company cannot stand alone. And the customers have less royalty; they will

consume the substitute products because their trend changes to be commoditization.

Globalization of industry

The supply chain is longer and complex because of finding the lower cost of resource

and labor from foreign countries.

Downward pressure on price

The price deflation occurs from out-of-date products and easy price comparison

through the internet.

Customers taking control

The power comes from demand of customers, not product or service quality.

1.2 Chapter 7: The synchronous supply chain

Nowadays, the nature of business is more boundaries-less. Supply chain needs the

synchronized network to be more efficient network. To be synchronous, the supply chain

partners should share the information between each other includes demand data, demand

forecasts, other details (Christopher, 2011, pp. 141-157).

1.2.1 Role of information

Internet is a way that used to create synchronous supply chain. The internet links

between customers and suppliers directly, and then the suppliers can respond their customers

immediately. Moreover, the internet is a way that use low costs, and provide customer short

time searching and reduce transaction costs. And the information that can get from internet

will make the supply and demand match with each other in the market.

The companies use information and information technology to improve their customer

response to become the successful company. Because the information technology or IT

system make them know the demand data quicker.

An example of the benefit of sharing information is “quick response.”

3

1.2.2 Quick response

Quick response is the idea that the suppliers will response the company as soon as the

company has demand. This method make the company carries less inventory, and safety

stock.

1.3 Chapter 11: The era of network competition

(Christopher, 2011, pp. 211-226)

1.3.1 The need for new business model

The organization should make more effective network and share the information

together. The business cannot stand alone.

1.3.2 Collaboration in the supply chain

The co-ordination between supply chain partners should be trust. The closer

relationship between suppliers and buyer will make mutual benefit or “win-win” outcome.

1.3.3 Managing the supply chain as a network

1) Collective strategy development

To make more effective, the supply chain partners should share and make the strategy

together.

2) Win-win thinking

Supply chain partners should have win-win thinking. Win-win thinking does not mean

50/50, but it means all partners will get benefit minimally.

3) Open communication

To make powerful network, the partners should use the information technology, such

as internet, to share the information to each other.

4

1.4 Chapter 13: Creating a sustainable supply chain

Sustainable is the term of concerning the world. When people say about sustainable,

they will talk about the triple bottom line mostly (Christopher, 2011, pp. 241-254).

1.4.1 The triple bottom line

Triple bottom line consists of 3 aspects.

1) Environment e.g. climate change, pollution, deficiency of resources

2) Economy e.g. financial security of the company

3) Society e.g. wellbeing of people, labor standard

The triple bottom line can be written into 3Ps of people, planet, and profit.

Figure 1: The triple bottom line: people, planet, profit

Source: Accenture

To continue the business to the future, the company should contribute the future

wellbeing of the world as well.

5

1.4.2 Greenhouse effect

Nowadays, the people have the awareness of the environmental issues. One of these

issues is “Greenhouse gases.” The emissions that relate to the activity that produce them is

called “carbon footprint.”

The journey of one product from suppliers to customer cause a lot of carbon footprint.

So supply chain management should think about strategy to reduce the emissions.

1.4.3 Improving the transport-intensity of supply chain

The ways to improve transport-intensity and reduce the emissions could be: the

supply chain decisions impact the resource footprint that includes:

Design

Change product design to be able to reuse, recycle

Source

Find the source from new location that cause less emission during transportation than

old location

Make

Produce by using the way that reduce the emission

Deliver

Change the transportation mode to reduce carbon footprint

Return

Improve transport utilization by share transport with other organization to reduce

“empty miles”

1.4.4 Impact of congestion

Traffic congestion is one of key issue when think about the sustainable. The

improvement of infrastructure may cause the traffic congestion. Because the infrastructure is

not be improved all of them that make the bottlenecks on somewhere.

6

1.5 Chapter 14: The supply chain of the future

(Christopher, 2011, pp. 257-267)

1.5.1 Emerging mega-trends

The population in some region may increase, and also, the demographic of age will

change too.

There will be the new “mega-cities” because the moving from rural to urban increase.

The wealth people will change from western region to new emerging economies

countries.

1.5.2 Shifting centers of gravity

The center of gravity may shift in both supply and demand side. One evident of

shifting is the growing new urban.

1.5.3 The multi-channel revolution

Many companies provide multi-option for ordering and delivery to their customers

currently. The internet is a way that they offer to their customer. The transaction trough

internet increase constantly. Then the customers can compare the price, plan the lead time,

and request their specific demand. Conversely, the suppliers can study their customers’

behavior through the internet and use this information to launch the strategies.

1.5.4 Structural flexibility

The many supply chain partners co-operate with each other by:

Sharing their information

Sharing their capacity

Sharing their knowledge for product and process innovation

1.5.5 Vision in 2020

The “doing more with less” method will increase in the organizations.

The new technology and new thinking will improve the manufacturing.

7

Part 2: Analysis to Aviation System

Figure 2: The aviation system

Source: Wittmer and Bieger

The aviation system includes with

1) Supply side

2) Demand side: customer

3) Market: where the supply and demand meet together

4) External factors; that are social, economic, political, ecological, and technological

(Wittmer and Bieger, 2011, p. 2)

8

2.1 Supply side

Competitive advantage

The suppliers or producers should make the competitive advantages for their own

business. They may use the cost advantage by compete with their competitors or use value

advantage by serve the value to their customer.

Value chain and co-operation

The suppliers and producers should join together and make benefit together. They

should share their information maybe through the internet. This will lead the win-win

outcome for them, for example, make the quick respond. The companies cannot stand alone

because the customers’ trend has changed.

Sustainability

The producers should review their process since design product, find the resource,

produce, transport, and return the product to make sure that their process makes less

emission, because the environmental issue is one key issue of sustainability. The business

should make the world sustain along with itself.

Future trends

There will be new trends in the world, so the supplier and produces should change

themselves to meet the customers’ demand or improve their business, such as using more

information technology and provide the multi-channel to customers. Moreover, the suppliers

and producers may change themselves because of the resource or the infrastructure

improvement in the new urban, not only change by following the demand. Last, the new

technology will come to improve the manufacturers and make new innovation for the

products and service.

9

2.2 Demand side

Customer taking control

Nowadays, customers have high power than sellers. Customers can choose products

or substitute products. Moreover, customers can make special requirements for products or

services because the companies try to compete with each other by serve the value to

customers.

Benefits from internet

Customers gain benefits from the internet. First, the customers can make price

comparison so the customers can choose the appropriate price. This leads the price deflate.

Second, the customers can contact the supplier directly, and the supplier will respond

immediately too. Moreover, the customer can tell the supplier what they want, even if their

need is special request.

Help the world

The customers can help the world by consume the products and services that make

less carbon emission or Greenhouse gases.

Changing of customers

The demographic of customers had changed. There will be the new rich of customers

in the new urban and new economic countries.

10

2.3 Market

Cyber market

The internet becomes the new market place between the supplier and the customers.

The internet makes the transaction faster and low cost.

Collaborate through supply side, market, and demand side

The internet is the way that links supply side, market, and demand side. The

information exchange occurs in internet networks so the supply side and demand side will

know the information of other side and market. This makes equilibrium in the market.

New market emerges

Because of the new urban and infrastructure improvement, the market will change

from old place to new place with high demand.

11

2.4 External factors

Technology improve supply chain

Technology plays a key role in improve supply chain. It links all partners and makes

the procedures better, such as, be the fastest way to communicate between all partners, make

the innovation in manufacture.

Ecological issue

The environmental issues such the Greenhouse effect becomes an important issue in

supply chain management. It leads supply chain partners change their process to maintain the

sustainability of the world.

Government

The infrastructure improvement by the government can affect the supply chain, such

as the imperfect infrastructure improvement cause the traffic congestion.

12

Part 3: Application to Aviation Logistics

Create the competitive advantage

The aviation logistics is a business that has substitute service. Then the aviation

logistics business should improve itself; maybe start from creating the competitive

advantages, serve the value to customers by make its service fast and reliable.

Know the customers

The aviation logistics business should also know own customers and market.

Nowadays, the group of customers and market change from one region to other region

quietly. So the aviation logistics business should study the customers’ behavior all the time,

which it can start from study from the internet, or the information from partners.

Collaborate to make win-win outcome

The aviation logistics business cannot stay alone; it has a lot of partners in its supply

chain. It should coordinate with its partners to help each other, for example, sharing the

information together, to make the win-win outcome. Moreover, it can reduce cost by joint

venture and share the capacity with its competitors, change the competitors to become the

partners, then the empty miles will not occur and this is a way to reduce the carbon footprint.

Reduce the emission

The aviation logistics business is one of the businesses that create a lot of carbon

dioxide. And this is not the sustainable way. So the aviation logistics business should

improve its technology and strategy to reduce the emission as much as possible.

13

Social improvement

Not only the environmental topic, the aviation logistics business should think about

the well-being of society, human right, living standard of staffs, to make the sustainable

business.

Apply new method

To make the better process, the aviation logistics business should apply new method,

new idea, new technology, and new innovation to use in its organization. Because of the

world change all the time, the aviation logistics business cannot remain on the same point.

14

References

Christopher, M. (2011). Logistics, the supply chain and competitive strategy. In Logistics &

supply chain management (4th ed., pp. 1-24). Harlow, England: Financial Times

Prentice Hall.

Christopher, M. (2011). The synchronous supply chain. In Logistics & supply chain

management (4th ed., pp. 141-157). Harlow, England: Financial Times Prentice Hall.

Christopher, M. (2011). The era of network competition. In Logistics & supply chain

management (4th ed., pp. 211-226). Harlow, England: Financial Times Prentice Hall.

Christopher, M. (2011). Creating a sustainable supply chain. In Logistics & supply chain

management (4th ed., pp. 241-254). Harlow, England: Financial Times Prentice Hall.

Christopher, M. (2011). The supply chain of the future. In Logistics & supply chain

management (4th ed., pp. 257-267). Harlow, England: Financial Times Prentice Hall.

Wittmer, A., & Bieger, T. (2011). Fundamentals and Structure of Aviation Systems. In R.

Müller (Ed.), Aviation systems management of the integrated aviation value chain

(p. 2). Berlin: Springer.