Derby Business School

www.derby.ac.uk/dbs
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Education
with the personal touch
Lecture Week 4 Maximising Commercial
Considerations
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Competing through logistics and

supply-chain management

In modern logistics what starts this whole process off? Is it demand or supply?

How do products win orders in the

market-place?
What is a product?
Tangible goods designed,
manufactured and marketed
Accompanying service delivered
through the supply-chain and
logistics
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How do products win orders in the

market-place?
Quality of product meeting requirements
Availability of product when needed

Value for money of the product at a fair

price
Quality
All the above are measurable
Cost

Time

Quality in the Supply Chain

Consistent conformance to requirements

Absence of defects
In the correct quantity
Orders fulfilled completely
Robust processes order picking, sequential
delivery, display-to-shelf packaging etc

Time in the Supply Chain

Defined as how long the customer has to
wait from placing an order to the receipt of
the product.

Survival of the fastest!!

Vision Express in around an hour local
optician up to a week or more. How do they
do this??
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Cost in the Supply Chain

Low costs of the supply-chain reflect in the
prices/profits that the organisation makes
Manufacturing
Transportation
Distribution

A price reduction culture is the norm for suppliers

in many industry sectors
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Other commercial factors

Dependability how consistently do we achieve QCT
% of orders delivered on time
% of orders delivered in full
% of defects
allowable tolerances
% are not good enough of a measure today - ppm

Flexibility dealing with uncertainty

Through a robust supply chain
Through contingency planning
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Other commercial factors harder to

quantify
Confidence how well the relationships are
managed prompt response to queries,
courtesy, accuracy etc

Security and confidentiality of data

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Back to the commercial question How do products win orders in the

market-place?
Order winners those factors that directly help to
win orders key reasons from the customer
perspective
Order qualifiers those factors that are an entry
ticket/minimum standard to be considered eg ISO
9000, food hygiene and may be order losers

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Terry Hill Methodology (2005) even more considerations

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Different product ranges have different

supply-chain considerations

Summary
No hard and fast rules
Variable responses are found to deal with
commercial considerations
Deep analysis of commercial considerations is
needed
Ability to review and revise is a key feature
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