Logistic and Operation Management

Fabrizio Salvador9 Operations and Technology Management Global Logistics Management Sustainability, Quality, Risks Wolfgang Kersten / Thorsten Blecker / Heike Flämig Eds... from: Kerste

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Edited by Prof Dr Thorsten Blecker, Prof Dr George Q Huang and Prof Dr Fabrizio Salvador

9

Operations and Technology Management

Global Logistics Management

Sustainability, Quality, Risks

Wolfgang Kersten / Thorsten Blecker /

Heike Flämig (Eds.)

e r i c h s c h m i d t v e r l a g

ES

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Global Logistics Management

Sustainability, Quality, Risks

Edited byWolfgang Kersten, Thorsten Blecker,

and Heike Flämig

With Contributions byAdel Al-Mansi, Hatem Aldarrat, Dagoberto Alves de Almeida, Nasrin Asgari, Deepak Barman, José Arnaldo Barra Montevechi, Helmut Baumgarten, Ronivaldo Belan, Leticia Biescas Altelarrea, Thorsten Blecker, Michael Bohn, Anna Corinna Cagliano, Maria Caridi,

Inga-Lena Darkow, Debadyuti Das, Kateryna Daschkovska, Ralf Elbert, Heike Flämig, Christian W Flotzinger, David Francas, Gabriela Garcia-Lopez, Alexander Goudz, Hans-Dietrich Haasis, Tobias Held, Hannelore Hofmann-Prokopczyk, Susanne Hohmann, Tong Huan, George Q Huang, Yun Huang, Bernd Kaluza, Wolfgang Kersten, Matthias Klumpp, Jan Koch, Herbert Kotzab, Antje Krey, Charles Lau, Ma Lin, Matthias Lorenz, Abolfazl Mirzazadeh,

Enzo Morosini Frazzon, Bernd Noche, Wolfgang Ortner, Manja Ostertag, Margherita Pero, Carlo Rafele, Fathi Rhoma, Daniel Rief, Hubert B Schemitsch, Peter Schentler, Bernd Scholz-Reiter, Jörg Schweiger, Kianoush Siamardi, Andrea Sianesi, Gyaneshwar Singh Kushwaha, Frank Straube, Morteza Tolouei, Martin Tschandl, Hans G Unseld, Andreas Wieland, Herwig Winkler, Heiko Wöhner, Reza Zanjirani Farahani, Stephan Zelewski, Hassan Zoghi

ERICH SCHMIDT VERLAG

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ISBN 978 3 503 11228 9ISSN 1863-3390

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from: Kersten/Blecker/Flämig (Eds.), Global Logistics Management.

V

Preface

Changes in business environment due to globalization and short product life cycles have increased the intensity of competition in many markets Therefore companies collaborate closely with their suppliers and customers using Supply Chain Man-agement concepts to optimize the inter-organizational flow of material, information and capital through their networks Originating in business logistics management, Supply Chain Management approaches were enlarged when the synchronization of manufacturing operations, common product design and standardized information technologies were integrated Companies like Dell, Wal-Mart or Benetton gain their competitive advantage by the application of these Supply Chain Management techniques New approaches are developed in the actual academic discussion, like common sustainability, quality and risk management in supply chains

With this volume we want to contribute to the holistic global management of logistics networks Therefore we structure the book in five main areas of interest The first topic highlighted is globalization Although there already has been a dis-cussion in science and practice for years, many aspects of these topic are still not evaluated yet The authors deal with the consequences of globalization for local lo-gistics structures as well as with management concepts to control international net-works The second area of interest covered is sustainability and the underlying question how supply chains can become ecologically sustainable In respect to fu-ture generations we are convinced that this topic is of tremendous importance for the management of logistics networks Two rightly popular topics in science and practice build the joined third focus of this volume – risk and quality management

in supply chains Because both concepts seem to be related regarding to the ures they use as well as to their main approaches The contributions of our forth main area show, how products and product related issues interfere with the design

meas-of logistics networks Finally we present contributions which deal with the formance of supply chain networks

per-We would like to thank the authors for their excellent contributions which vance the logistics research progress Without their support and hard work, this vo-lume would not be possible Additional thanks are due to the publishing company, the Erich Schmidt Verlag, especially to Dr Joachim Schmidt for the possibility to publish this volume and his valuable cooperation This book would not exist with-out a good organization and preparation We would like to thank Philipp Hohrath, Thomas Will, and Jan Koch for their efforts to prepare, structure, and finish this book

ad-Hamburg, August 2008 Wolfgang Kersten, Thorsten Blecker and Heike Flämig

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VII

Table of Content

Preface VTable of Content VII

I Logistics in a Global Context

Transfer Pricing, Taxation and Capacity Planning in International

Manufacturing Networks 3

David Francas

Bringing regional networks back-into global supply chains: Strategies

for logistics service providers as integrators of logistics clusters 21

Hans-Dietrich Haasis and Ralf Elbert

System Dynamics Analysis on the Evolution of Logistics Cluster: An

Empirical Analysis Of Logistics Networks And Nodes In Yangtze River

Delta of China 33

Ma Lin and Tong Huan

Holistic Security in Global Supply Chains - A Strategic Framework 45

Andreas Wieland and Helmut Baumgarten

Logistics in the Context Of Internationalisation – How Chinese and

German Companies Enter Foreign Markets 59

Frank Straube, Michael Bohn, and Daniel Rief

II Sustainability in Logistics

Future Scenarios 2030: The Contribution of Logistics to a Sustainable

Development 75

Christian W Flotzinger and Hannelore Hofmann-Prokopczyk

Design of an Environmental Supply Chain Network: A Biosolids Waste

Case Study 87

Adel Al-Mansi, Hatem Aldarrat, Fathi Rhoma, Alexander Goudz,

Matthias Lorenz, and Bernd Noche

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Table of Content

VIII

Biogas Logistics Supply Chain Network Design: A Framework Model 99

Fathi Rhoma, Hatem Aldarrat, Adel Al-Mansi, Alexander Goudz,

and Bernd Noche

Reasons for the Slow Development of Reverse Logistics in the Electronic Industry of China 113

Charles Lau

III Risk and Quality Management in Supply Chains and Logistics

Quality Management Impacts on Logistics Networks measured by

Supply Chain Performance Indicators 129

Matthias Klumpp and Manja Ostertag

A Conceptual Approach for Quality Improvements in Project-Oriented

Supply Chain Networks 149

Herwig Winkler, Hubert B Schemitsch, and Bernd Kaluza

Impact Of Supply Chain Quality Management on Competitive Advantage and Organizational Performance 171

Deepak Barman, Gyaneshwar Singh Kushwaha, and Debadyuti Das

Supply Chain Risk Management for Robustness in a Logistical

Framework 187

Inga-Lena Darkow and Heiko Wöhner

Container Logistics Networks under Context Diversity 205

Bernd Scholz-Reiter, Kateryna Daschkovska, and Enzo Morosini Frazzon

Risk and Capacity Management in Logistics Networks: The Example

of Global Container Operators 223

Stephan Zelewski, Matthias Klumpp, and Susanne Hohmann

Logistics Services: Theoretical and Empirical Findings on Quality

Perceptions 239

Wolfgang Kersten and Jan Koch

IV Product Induced Logistics Strategies

Logistic Network Strategies and Product Harmonization – Some Findings

of the Interrelation between Logistics Network Setup and Product

Country Clustering in the Fast Moving Consumer Goods Industry in

Europe 261

Tobias Held

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Table of Content

IX

Optimal Pricing for a Three-Level Supply Chain with Different Channel Structures Using Game-Theoretic Approach 279

Yun Huang and George Q Huang

Conceptual Design of a ROI Benefit Assessment for Web-based

Supplier Relationship Management Scenarios 295

Wolfgang Ortner, Jörg Schweiger, and Martin Tschandl

Inbound Supply Chain Management in Mass Customization:

Specific Aspects and Requirements for Efficient Procurement 311

Peter Schentler and Antje Krey

Economic Order Interval under Variable Inflationary Conditions 325

Abolfazl Mirzazadeh

Product Architecture and Supply Chain Design: Impacts on Mix

Flexibility 339

Andrea Sianesi, Margherita Pero, and Maria Caridi

V Performance and Capacity Management in Supply Chains

A Client-Supplier Relationship Performance Measuring Model Based on Integrated Engineering 361

Dagoberto Alves de Almeida, Ronivaldo Belan,

and José Arnaldo Barra Montevechi

Airport Integrated Capacity Model 381

Leticia Biescas Altelarrea

Fast Transhipment Equipment and Novel Methods for Rail Cargo 393

Hans Unseld and Herbert Kotzab

Evaluation of Advanced Parking Information Systems at Airports 405

Hassan Zoghi, Kianoush Siamardi, and Morteza Tolouei

Simulation for Logistics Performance Management: Comparing

Different Approaches 423

Anna Corinna Cagliano, and Carlo Rafele

Analysis of on-time delivery measure in a supply chain 443

Nasrin Asgari and Reza Zanjirani Farahani

Development and Implementation of a Six Sigma Readiness Model

in the Food Industry 455

Wolfgang Kersten, Gabriela Garcia-Lopez, and Jan Koch

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Keywords: Manufacturing Strategy, Plant Network Configuration, Transfer

Pric-ing, Taxation, Operational Hedging

1 Introduction

A strong motivation for the configuration of an international manufacturing work has been the access to low costs production inputs although the benefit of centralized production in low-cost countries is often associated with disadvantages

net-of increased logistics costs Furthermore, investment decisions net-of multinational companies are affected by international tax rate differentials Exploiting such dif-ferences by means of cross-country profit shifting can decrease global tax liability Finally, companies have to take into account that investment decisions are typically made long before actual demand is known Therefore it is of crucial importance that a supply chain is designed robustly to unknown operating conditions in order

to avoid lost sales or excess capacity This paper studies a manufacturer’s market network design problem from a network capacity investment perspective Specifically, the optimal network configuration is examined for a firm that pro-duces two products in order to serve two geographically dispersed markets using a common component and regionalized final assembly For this specific setting, four network strategies are possible with different degrees of flexibility as shown in Figure 1: Nodes refer to active facilities, i.e component production plant(s) and fi-nal product assembly facilities; the connecting arcs represent supply-demand links either between network sites resulting in component flows or between assembly fa-

multi-from: Kersten/Blecker/Flämig (Eds.), Global Logistics Management

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David Francas

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cilities and market areas Each of the displayed structures corresponds to a generic plant charter strategy commonly discussed in global manufacturing networks (Cohen and Lee 1989, Lu and Van Mieghem 2007)

Figure 1: Possible configurations of the international manufacturing network (cf Lu and Van Mieghem 2007)

Clearly, shipping costs are higher for a process-focused network than using a ket-focused configuration, as the common components need to be shipped across plants Benefits associated with a market area strategy are reduced shipping costs and higher responsiveness to market due to advantages of quick delivery, whereas process-focused networks benefit from economies of scale due to consolidated pro-duction (Hayes and Wheelwright 1984)

mar-Aside, process-focused networks allow firms to risk-pool the uncertain demand for the common subassembly from all products and markets In this regard, the market area structure describes a dedicated network configuration without any risk-pooling opportunities, while the hybrid structure is the most general and includes the concept of ‘chaining’ introduced by Jordan and Graves (1995) This highly flexible configuration is adapted by many international car manufactures such as

from: Kersten/Blecker/Flämig (Eds.), Global Logistics Management

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Transfer Pricing, Taxation and Capacity Planning in International Manufacturing Networks

Especially in the EU taxation becomes increasingly important since gence of other factors is extremely high Due to an enhanced integration of national markets, disparities of economic and production conditions disappear and differ-ences in corporate tax rates become even more distinct Exploitation of these ex-ogenous market imperfections via production-shifting to low-tax countries thus represents a viable alternative to multinational enterprises (MNEs) in order to de-crease their global tax liability (Stöwhase 2003, Overesch 2006)

conver-In this paper, a numerical study is presented to capture the effects of taxation and demand uncertainty In particular, we examine the performance of the generic operations strategies of a market area configuration, onshore and offshore configu-rations, and a hybrid configuration in between Our results highlight the importance

of creating operational flexibility within the manufacturing network of a tional firm, not only to hedge against demand uncertainty, but to further arbitrage taxation by means of profit-shifting activities

multina-The remainder of the paper is organized as follows: In Section 2 the role of transfer pricing within a corporation is introduced The third section highlights im-portant factors influencing the configuration of international networks and reviews the literature on global network design and manufacturing flexibility The devel-opment of an adequate model that captures both taxation issues and demand uncer-tainty in the framework of flexible manufacturing network structures is described in Section 4 Subsequently, a numerical study is presented to show the effects of taxa-tion and demand uncertainty (Section 5) The paper concludes in Section 6 provid-ing a summary of results and managerial insights obtained

Basically, the use of transfer prices serves two major roles First, in a tax free world the intention of transfer prices is the efficient allocation of resources within a single firm, in addition to their role of providing incentives to divisional managers who are rewarded based on their performance Hence, the rationale for setting transfer prices to value internally exchanged commodities originally derives from the moti-vation of operating autonomous units in a decentralized firm For an extensive lit-

from: Kersten/Blecker/Flämig (Eds.), Global Logistics Management

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