Phase 4 – Individual Project The rough draft must be a completed paper, with APA formatting, all 7 sections complete (using Roman numerals of each section per the outline), references, and good grammar. You were recently hired as the VP of Logistics for the ABC Manufacturing Company. This is a new position. During the lengthy interview process, the CEO shared her strategic plans for worldwide growth in the company’s consumer sales. Previously, sales had been confined to domestic sales only. As a result of little staff logistics expertise, the company had kept the traditional logistics model of shipping all finished products from its warehouse and factory location on the East Coast of the United States, even though there was a growing market on the West Coast that competition was serving from a West Coast warehouse. However, the CEO pointed out that despite its national popularity from a feature and quality perspective, it seemed to penetrate poorly on the West Coast because of her need to charge higher prices as the result of higher shipping costs. The marketing manager tried to mitigate this competitive disadvantage by freight equalization so that end customers would pay the same amount of shipping costs as West Coast competition charged, regardless of where they were located. This met with some insignificant success because timeliness of delivery was another important issue. Therefore, the CEO had asked you, as your first assignment, to write a white paper to address the following specific points. She remembered that you had quite a bit of experience addressing some or all of these issues during your career. Key Assignment Draft Format As a stickler for formatting, she has specifically asked you to use the following Roman numeral sections and headings in the paper: Section I: Introduction (200 words) A. In general, what are the qualitative pros and cons for domestic sales of having multiple distribution centers and shipping locations in the United States? B. In general, what are qualitative pros and cons of having one or more international distribution centers for international sales, as opposed to shipping directly from a U.S. manufacturing location warehouse? Key Assignment Draft Format Section II: Decision-Making Criteria (300 words) The CEO is considering either expanding the warehouse next to the East Coast manufacturing plant; or for the same total construction and operating costs, building a West Coast distribution center; or for the same total construction and operating costs, building a combination manufacturing and warehouse location on the West Coast. As a completely separate issue, she is also considering opening a distribution center overseas, to serve the fast-growing warm weather markets of France and Spain. Key Assignment Draft Format Given the following general information, what are at least 5 criteria that must be considered when locatin.

1. Phase 4 – Individual Project
The rough draft must be a completed paper, with APA
formatting, all 7 sections complete (using
Roman numerals of each section per the outline), references,
and good grammar.
You were recently hired as the VP of Logistics for the ABC
Manufacturing Company. This is a new
position. During the lengthy interview process, the CEO shared
her strategic plans for worldwide growth
in the company’s consumer sales. Previously, sales had been
confined to domestic sales only. As a result
of little staff logistics expertise, the company had kept the
traditional logistics model of shipping all
finished products from its warehouse and factory location on the
East Coast of the United States, even
though there was a growing market on the West Coast that
competition was serving from a West Coast
warehouse. However, the CEO pointed out that despite its
national popularity from a feature and
quality perspective, it seemed to penetrate poorly on the West
Coast because of her need to
charge higher prices as the result of higher shipping costs.

2. The marketing manager tried to mitigate this competitive
disadvantage by freight equalization so that end
customers would pay the same amount of shipping costs as West
Coast competition charged, regardless
of where they were located. This met with some insignificant
success because timeliness of delivery was
another important issue. Therefore, the CEO had asked you, as
your first assignment, to write a white
paper to address the following specific points. She remembered
that you had quite a bit of experience
addressing some or all of these issues during your career.
Key Assignment Draft Format
As a stickler for formatting, she has specifically asked you to
use the following
Roman numeral sections and headings in the paper:
Section I: Introduction (200 words)
A. In general, what are the qualitative pros and cons for
domestic sales of
having multiple distribution centers and shipping locations in
the United
States?
B. In general, what are qualitative pros and cons of having one
or more

3. international distribution centers for international sales, as
opposed to
shipping directly from a U.S. manufacturing location
warehouse?
Key Assignment Draft Format
Section II: Decision-Making Criteria (300 words)
The CEO is considering either expanding the warehouse next to
the East Coast
manufacturing plant; or for the same total construction and
operating costs,
building a West Coast distribution center; or for the same total
construction and
operating costs, building a combination manufacturing and
warehouse location
on the West Coast. As a completely separate issue, she is also
considering
opening a distribution center overseas, to serve the fast-growing
warm weather
markets of France and Spain.

4. Key Assignment Draft Format
Given the following general information, what are at least 5
criteria that must be
considered when locating a new or expanded shipping
warehouse domestically?
Internationally?
a.The products are primarily medium- and large-size insulated
coolers, like you might use
for a picnic or trip to the beach. As a result, no matter what
mode of shipping is used,
transportation firms charge by space, or cubic feet, rather than
weight, which is the more
normal method.
b.The coolers are made of 3 components, which are all produced
by suppliers solely on
the East Coast.
c.The market is very competitive with generally stable or
decreasing marketplace prices
because of this competition.
d.In states and countries that are warm year-round, sales are
pretty steady; in countries
and states that have seasons, 90% of sales occur in the May–
August period.
e.Domestic demand is expected to increase 5% annually;
international demand is
expected to increase 15% annually.
f.Right now, to keep West Coast customers happy, the CEO says
that they only charge
those customers the local freight cost of shipping, which is $200
for anything up to half a
truckload.
g.The current exchange rate is 1 euro = $1.50.

5. Key Assignment Draft Format
Section III: Metrics to Assess Success (250 words)
A. Describe 3 metrics that you would use to assess the success
of any logistics
plan involving you as a manufacturer and an internationally
based mass
merchandiser. Provide support for your selections.
Key Assignment Draft Format
Section IV: non quantitative Factors (200 words)
Identify 3 subjective, qualitative factors to consider in the
recommendation.
Section V: Conclusion (200 words)
What are the 3 most important points that you want the CEO to
understand about this
entire decision-making process?
What are Metrics?
A unit of measurement that provides a way to objectively
quantify a process.
• Aids in understanding complex processes/operations
• Highlights areas of concern

6. • Target areas for improvement
Most businesses use some type of metrics.
• Financial Performance Metrics
• Sales
• Profits vs Costs
• Year-Over-Year Sales
• Customer Satisfaction
• Internal Operations
• Strategic Performance
• Compliance
Metrics for Logistics Success
Metrics are what tell the manager and his or her employees
whether
or not they met their expected results.
• measuring, monitoring and reviewing information relevant to
goals
• weighed against strategy, effort and performance,
• reflects what is important to both the customer and the
company
You can’t manage what you can’t measure

7. Variation by Industry
• Percentage of downtime of
airplanes and average repair time
• Number of planes arriving and
taking off on time
• Percentage of planes for which the
catering or the cabin cleaning did
not occur prior to take-off
• Percentage of planes that had to
wait longer than planned for
refueling
• or de-icing
• Percentage of lost luggage
• Inbound freight costs for raw materials
• Percentage of on-time shipments for
inbound freight
• Outbound shipping cost and sales spending
• Percentage of on-time shipments to
customers
• Percentage of added costs to the company
for premium freight shipments caused by
the firm’s shipping errors, if the firm has its
own fleet
• Percentage of truck miles with no
backhauls (called deadhead miles)

8. Criteria to Use
The choice of metrics is important. If a wrong or unimportant
metric is
chosen, and the organization focused resources and effort on
excelling at
that metric, time and money could be wasted.
Consider the following stakeholder groups when developing
performance
metrics:
• Internal stakeholder group includes the firm’s owners,
stockholders,
and senior managers.
• costs
• profits
• market share
• External stakeholders are any and all customer groups.
Criteria Examples by Industry
Slide Number 1Key Assignment Draft FormatKey Assignment
Draft FormatKey Assignment Draft FormatKey Assignment
Draft FormatKey Assignment Draft FormatWhat are

9. Metrics?Metrics for Logistics SuccessVariation by
Industry�Criteria to Use����Criteria Examples by
Industry�Slide Number 12
I1'you want to pinpoint a plac,: and tinre that the lirst glinl.s of
the Manragernent Century appeared
on the horizon, you could do 'worse than Chicag,c, Va), 1ti86"
'fhere, tc, the re:cen1.ly fonmr:d
American Societv of Mechanical Engineers, I-lenry R. Towne, a
coli:runder of the Yale I.ock
Manufacturing Comprany. delrivered att address ti.tled "''l'he
Engineer as ran Econornist."
Towle argued that therc were good engincerrs arxl qo,rd
businessnlenL. bul seld,onr were they one
and the same. I{e went on to asseft that ''ther manugement
o;f'works hils become a rnatter c,f such
great and far-reracrhing in,portancer as perhaJrs to.jus;ti1'y its
classifir;ation also as one of the:
modem arts."
Towne's speech heralded a ncw reality in al least thrcc rcspects.
Call the llrst. conLsciousness
raisirrg: Managenrent was to be viewcd aLs a set ollpractices
theLt c<.rul,C be studied and improved.
It was to be rooted in econornics, which to lhis cro'wd nreirnt
achieving maximum eflic,icncy with
the resources pro'vided. And the nrembers of'the audience wcrc
cngineers. In the rJecades to
come, such maste:rs of the material univerrse, from frrcdcrick
Szinslorv'l'aylor to Irlicliael Pofter,
Tom Pcters, and lVlichacl I Iarnmcr, would have il
disproportionate: el'f'ect on rnilnagement's

10. history.
J'owne was catching a wave. During the ccnturl'rLhat lbllowed.
managr:ment alj we know it
would come into beirLg and shape the wc,rld in ri,hich we
vyork. 'l-hree eras pu,ncturate the period
liom the 1880s urrtil loday. ln the llrst, tl-re;lears until World
War II, aspirations to scicntific
exaclitude gave vrings to thc ambitions c,f a new, 5slf'-
proclaimed manzLgerial e litc. 'fhe second.
from the late l')4,0s until about 1980. was n'lanagr:rialisrn's cra
of good f-eelings. its apogee of
self-confidence and v',idcsprcad public sr"rpport.'Ihc third and
ongoing era has been mzrrked by a
kind of retreat -in1o spccialization, servitucle to rnarket fcrrces,
and cleclining rnor:al ermbitions.
But it has also been an cra o1'global triurnph, measurecl b]l
agreement on ccrtain key ideas,
steadily improving productivity, the w'orldwide march ol'the
MIl,, degrce, and a general
elevation ol-expectations about how workers shoulcl be trr:ated.
Americans and a l'ew othcr Anglophoncs dominatecl
managernent's carlv hislory" in lhe scnsc
that their idcas orr thc sub.jcct gainecl the grcatcsl.
cLlrrenc).'l'herc wcre cxccptionrs: In 1908 Henri
Irayol, an engineerr who had ruln onc o1'lirancc's largcst
mining compauics. crrrrmcrated a list of
management pr:inciples, which included a hierarchical chain
01'command. a scparation o1'
functions, and an cmllhasis on planning and budg,erting, Still,
his 19115 nragnunl opus.
Administration lrrdustrielle et G6n6rale. took der;ades to b,e
translated zLnd to have much effect
beyond France, A,lthough globalization promises morc-di'verse
sources o1'thinl<ing on

11. management, nnost o1'our story sc-r far talles plac,r irr thc
lJnitcd St,ates. (See thc sidebar "Saving
Ourselves fronr Cilobal Provincialism.")
The Age ol' oolicientific Managenlentl'
In the last two decades ol-the l9th century, the [J.Sl. was
srhifiing- urreasily--1iom a loosely
connected world o1'small towns, small businesseis, and
agriculturc to an industrialized network of
cities, factories, a.nd large companies linlked by rail. A rising
midclle class was
professionalizing--early incarnations of the:American M,:dical
Asscr,ciation arrd the ,A.rnerican
Bar Association date from this era-and m<lunling a progressive
push against corrupt political
bosses and the l'rnance capitalists, who were bttslr
c,onsr:tlidlating indus;tries such as oil and steel in
the best robber-baron style.
Progressives clair:ned special wisdom roo,ted irL s,;ience and
captur,:d in llrocelsses. Fre-derick
Taylor, who wrotrt that "the best manage:ment is a. true
science, res;ting upon clearly defined laws,
rules, and principlles," clearly counted hirnsclf in their camp
(fans such tts Louis llrandeis and Ida
Tarbell agreed). I-tis stated goal was the "muximurn prosperity
lor the ernplol'er, coupled with the

12. maximum prosperity for each employee,"'through "a lar nnore
equal ,Civision o{'the responsibility
between the meLnzLgenrent and the worknren." lfritnslation
(lest the reerder r)verestimale'['aylor's
respect for workers' protential contributic,ns):
'J'h,o laborer should work according to a prooess
analyzed and d,::signeC by management llor oplimum
efficiency'. "the onc: best r'vav," alJ'ov;ing
him to do as mruch as hun-ranly'possible rvitlrin a s;pecifrc
time period
The publication, in l!)l l, of l-aylor's Principles of'Scicntillc
Managenlent ,rriginally a paper
presented to thlt sam,J American Society of Mechanical
F,nginecl:;-_set c,lf a century-long quest
for the right balance |etween the "things of prodLuclion" and
the "hurnatritv of- production," as thc
Englishman Olivr:r Sheldon put it in 1923. Or. oS s,0lt10 w,luld
hai,e irt, bclr.veen lhe "numbers
people" and the "people people." It's thc key lens;ion ttrat has
dcfined rnanag(Jlnent thinking.
The cartoon version of management history dep:icts the htrman
relatirlns rnovcment, be gun in the
1920s and l9.lrls. as 3 rcaction to Taylor's relcnllle,ss, reductive
cnrpl'rasis on the quantifiable. A
better view regar,ls the two as complemi:nt1ry. .rs cr,'idence .
consider the rcsearch of [llton Mayo

13. and the other men behin<J the pathbreaking H;u,r,thorne
studies.
'fheir work shaLres'l'ayllor^s
overarching anrbition to improve produc,tiviity and cooperation
rvith managefil,3rt through the
application of lscience,lhough in this oas;c the science was
psychologly and, trl a le'sser cxllent,
sociology.
'fhe studies, which r.l,ere mostly conducted at Wcs;rtr:rn
f]lectric's llawthclrne plant in Cliccro,
Illinois, began in1924 and ran through [932; evr:ntually thcy
inv,clr,ed other factories and other
companies. T'h.e snalysis was largely tlone at llaLn,arcl
llusincss St:hool, including otttposts such
as its Fatigue La|. (lf tircd u,orkers were the problent, ho'w to
dcsiigrr operrations to lessert
exhaustion bu1 slill achicve maximum output'?) I'hc tlawthorne
studies were e asily the most
important social science research ever done on rinrlustry.
'fhe projcct is worth unpacking a bit, if
oniy to dispel thi: popular myth about rvhat was learncd.
ri"'l'hc1' turrLed the lights up, productivity
improved. Ttrey turncd the lights clown. sarne thirrg,. .Any sign
of attcntion lrom managernent was

14. enough to impiove productivity.") l:issentiarll),' t]hc slttclicsr
progres;secl through a succcssion o1'
hypolheses, ,iirr,,uniting each one. Neither chanEres in physical
ccr,nditions (better illurninLation).
nor in work schedules (more rest breaksr). nor e'ven in
inc,:ntive s'r'str:nts couldl lully explain why
productivity stiea.dily improved among ar set of )/oLung
u/omen-=allwaLys labeled "the girls'"-
assembling parts; in a test room.
The principles 6.f Scientific t[anagemenl (1911) r;e,t offa
century-long quest to balance
"the
things of production" and "the humanit'y of prodtlction'"
After years 6f'experiments it began to dawn on J4tt1'o" an
Australian psychologist who had
joined
the IIBS faculty,,ihal at least two factors u,ere r1niv'irrg the
results. Firs1,
ithe women had lbrged
thLemselves into a group, and group dynarnics--mernbers
erncourag;ing,cne, another--were
proving a strong cleterminant of output. Second, "rthe girls"
hild bet:n r:ons,ulted b1'the rese,archers

15. a1. every step of the way: 1'he intention of'the eKpelimertl
hLad been explairred to,them, and their
suggestions hadi been solioited. From suclh heady s1.u1T'rvere
ilistillc,d the basic insights of the
human relations; srlhool-that workers were not rnerr3
atttornatons 10 bre measurr:d and goosed
u,ith a stopwatch;that it was probably helpful to inquirr: alter
whartthey knew'and felt; and that a
group had subsl.arrLtial control over hovr much it r,vas
prepared to produce.
Those insights sound humane, and they were. Still.,lle aim
ol'the oxperiments rn'as always to
discover how psyr;hology could be used 1.o raise prorCuctivity,
resislt unionizaticrl'I, ilnd increase
workers' cooperal.ion with mar-ragement. Bel-rind the efTort
of'Taylor and the so-called "Harvard
Clircle" was an elitisrrr, a class arrogance, ahnost
incomprehensitrle bly today's standards. Dean
Wallace []. Donham, who founded FIEtR. ardenlly' bclieve,J
that an. ecl.ucated managerial cadre-a
"new managirrEl c[ass"--was the answer to the nation's
pr,oblems: to tfre Depression, tc, inept
government, to s<t,cial upheaval. He and others on 1.hc banks
of the Charles loolied down on the
1,,'pical worker as a lersser being, onc to bc manipulated in
service of highcr purposcs (<,rr a.s
T'aylor saicl of'the type ol'marr bcst suite<lto loacl prili:. ir,on.

16. "so stu;rid ancl so phrlcgrnatic that he
more nearly rescnlbles in his mental mak.e-up the ox").
Management Triumphant
l'hen into these sl.uffl,rooms blew a blast o1'tieshL, cleansing
air. Call it I lumicilne Druckcr.
F,ersonal conf'r:ssion: Although l, like e/ery othcr right-
thinking student of management, have
long tugged nty lirrelock in ritual homage to the glreat rnan, I
nevcr fullS' appreciatcd w'hat a
revolutionary thinkcr he was until I steeped myself in the work
o1'hii; predcccssors.
tfhe application oI humanistic psychologl' to social institutions.
Ilegilning with Concept of the Corporation (lc)4ti) and
continuinplthrrough'l'hc Practice of
tvlanagement (1954) 'and
Managing fcrr Results (1964), Peter Druc;ker laid out a vision
of the
corpoiation as a s;ocial institution -indeccl. a social network
in,,vhich thc capacity and potential
of evoryc,ne involved were to be rcspccted. Out with tl're
vocabulary (and mincl-set) of "boss,"
"forelnan," and "wclrker"; in with "marrager" and "r3tttployce."
lf lDruckcr didn't invent the
r:oncept of "manitgen:rent." he did more than &tty1'v111' else
to introducr: thc "nl" rvord and all its

17. iterations into how we think about running organi,zations.
Drucker didn'1. fbment the mzrnageriai revolution alone. Frit:z
Roethlisberger, in his masterly
1937 summation of the llawthorne experiments, cle s;cr'ibed
organizaliotts as "social systerns."
JManagement's job, hre stated, was to maintain their eqr-
rilibriunt. In tlhe 1950s Drucker began to
rreviye interest in the work o1'Mary Parker Fotlett., a langeiy
lbrgotten figurc fiom thc l9ll0s
.whose ideas allout managemenl-"powrJr with" r'ather than
"powr3r over." "oo'nstructive
,confrontation," a.nd the pursuit of "win-win" s<lltrli,ons--
{buLnd new resonancer in the postwar era.
Others chimed in. D6uglas McGregor, first as a management
professor at Ml [''s Sloan School,
then as the presi{ent ofAntioch College, drerv on. the
hurnanistic psychology of'Abraharn
Maslow--he gf 1he trierarchy of human needs---lo propoun<l
the lbmous Thecry X (peoprle are
inherently lazy it"nd v,'ill shirk their duties if they itren't
closely p<lliced; and'lheory y (people
want to find meaninlg in their work and will contribute in
positive ways if the rvork is well
designed). X and Y, McGregor took pains to assert. were

18. "<lif1'erent cosrnologlies fthar: is. beliefs
about the nature of nnanl...br"rt not manageriaI strategi,3s." '['o
his dis;nray. nobgdl' much listened
to him on that delai-.
The overall thrul;t of'the postwar managerial thinhcrs.was to
elevate thr: ''humanity of'
production." Wc,rkers will be most productive. the reasoning
wenLt, if thcry'rc respected a.nd if
managers rely on them to motivate themselves and srolve
problenrs on thcir orvn.
"The developrnent, srtrengthening, and multiplicat.ir:rr of
socially rnincled business men is the
central problern of business."-I)san Wallace []. Il)onhanr
Not that the old order wcnt down without a fight. lr.lter
researching General N4otors lbr Concept
of thc Corporation, I)rucker persuaded rising (il{ e.r:ecutive
Charlie Wilson to propose a set oi
refbrms including greatcr autonomy for plant manill-l,ers and
what we'd call "w6rker
'empowerrnent"' toda'y.
'l'wo fbrces killed the idea. (Jne was lhe rerst of'GM
manergentent,
including CEO ratlfre:d P. Sloan. l-he other was thc t-lniited
Autp V/orkcrs, in thc person ol- Waltcr
Reuther, who waLnted no blurring o1-the line bctwecrl
rnallagcment and labor.
More-enlightencd mranagerial attitudes conrbined r,,'ith othcr
fbrccs--a democratization of
.American societ'g following World War II; an cxplrcsion
o1'defbrred demand firr econonric
lgoods-to usher in t'wo decacles of good spirits arrcl :;eoming

19. contr:ntment wittr corporations and
tLheirconduct.'flLe numberof strikes and olhcr.fotr ac,tions
dropped prrecipitously liom thc nasty
.lcvels seen just al1er thc war; union membcrship, ilis it
percentaglc ol'the rvorklirrce, peakcd anci
tlhcn began the lc,ng, slow decline that continues t,o this day.
(lVlanLagerial solicitude was probably
rstimulated by, an unemployment rate that lcll below 3o/o in
1953.)
'The rise of strategic thinking.
lln addition to its more-enlightened attiludes towardL
employees. the postwar period brouElht a
heightened scnse of v,'hat managers could accomp,lish. IIere
again Dnrc:kcr lecLthe wa'1.
lFrom our perch in th,o 21st century', rvhen every colnpany has
a stnatr;g1,and evory cxccutivc a set
of key objectives, it's difflcult to comprehend the lack
of'direction that is said tc, have
r:haracterized earlier generations. Ilut, as Drucker Jrointed out
in'['he: ])ractice of Managemcnt.
"the early ecclnomist" and, by implication, other :,;t:udents of
rnanaglenlent---"cr)nceived of the
businessman ancl his behavior as purell,passive : sucrtess in
business me-ant rapid and intclligent
adaptationto events occurringoutside, in an cconorry shaped by
rimpersonal.,cb.iectiv,e firrces
1.hat were neither controlled by the businessmiin rron
inf'luenced b1'his reerctionLto them."
(.Whether real-1i','e businesspeople felt quite ttrat porverless is
debirtable.)
'fhis was not good enough, Drucker proclaimed.
'"[zl]anagement lhasi to manage. And ma.naging

20. is not just passivrt, aclaptive behaviour." Manager:; lhad to take
chaLrgr;; they should be ''attempting
1.o change the economic environment...constantly puLshing
back the lirnitations of economic
circumstances onthe enterprise's freedclm of erction."'l-o aid in
the effbr-t. he argued. nlanagers
should have ob.jer:tives and should manage accorclirLp to them.
'''Organizations endure, however, in proportion to the breadth
o1'the rnorality b1, which they are
govemed."--Cherster Barnard
I)rucker's 1964 book, Managing frrr Results, set the bar higher.
argu:ing that "businesses exist to
Jrroduce results" and that managers should systemat.ically scan
their rnarkets for opportunities to
grow the enteryrrise. In a 1985 preface to a new ecliti,cn, the
author would claim that the book was
the first one on busin,oss "strategy" but also recalltir;aLt he and
his putrlisher haclbeen dissrraded
fiom using that r,r,ord,
Consultants feltnLo such hcsitation. In 1963 Brucc Ilenderson, a
fcrrmer Westinghouse cxccutive
aLnd a true American original, starl.ed what was to bec;ome the
Bostonr Consulting Group. In short
crrder the firm rvould take as its mission delining cory.torule
strctteSiy--,belbre then the 1.enn had
trarell'been used anrd bringing thc light of its gor;pcl 1o
corporzrtions.
l-his was no mere) shift in vocabula.ry. T'hc rise of <;orporate
stratcgiy rcpresentccl a bolcl new

21. reach by thosc concerned with the "things of prodr-rction."
llCG's building-block conccpls-the
e,xperience curve. thc growth-share matrix -'crc cnor-mously
influential. but r:ven more
important was the analytical passion that lay unclenleath. 'l'he
coni;ulrtants insisted on deh'ing into
the numbers behind costs, customcrs. and competitors rlo a
dcpth that I-ew cornpanies had
prlumbed before. lStrat"egy's constant cornpanion ancl
['a,;ilitator was vrhat I've clservhcrc called
Grealcr 1'aylorisrn-1.he imperative to take a sharp penr:il and a
stoprvatch not.iust 1o some poor
schlub's daily labor b,ut to every aspect of the comLpzul)"s
operations.
Sitrategy was aggressiive.'fhe point of gathering all those
numbers was to figure out where you
stood in relation 1.o compctitors and how you rnighrt sei:ze
advant.agle over them. With graphs and
cliagrams, BCG relentlessly brougtrt horne thc imporlance of
beinil number on(J or number two in
1'our line of busirress.
Ily l1)67, whcn John Kcnneth Galbraith published'l'hc
Ncu'lndustrial Statc. some had bcgun to
worrv that American companies and their lcadcrslLip had
perhaps lDecome /oo aggressivc.
Galbraith decried the fact that firms had grown so large and
succcssful-- by I (,t7,1 the ll00 largest
IJ.S. manufacturing companies corrtrolled two-thirds; ollthe
country's; manufhcturitrg assets and
rnore than three-fifthr; of its sales, employment, and incorne.
He argucd that social goals
increasingly were adapted to corporate goals. A
largely'anonynloLrs "technostructure" of business

22. leaders could dictate to consumers what to buy an,C. implicitly,
how to li'u'e-or so the theory
rvent.
'fhe Era of'Nervous Globalism
rfter two decades without serious recession, the oil s;h,rclks of
ttre 1970s and an accompanying
econ<rmic malaisr: put paid to the notion of managerjLalisnn
triumpliarrt . A 1966Ilarris poll had
{bund 55% ol'lnreri<;ans voicing "a great deal of confide:nce"
itt the leaders of large companies.
I)y 1975 the percentage had droppred to 15.
Irorces for change.
Itdultiple new firrces confionted American executi'ves,
unleashing heightened cornpetition and
e,ventually disrupting the relative amity thal. had prerzailed
among business, 1ab,or, and
€lovernment.
In an attempt to fight runaway inflation, U.S. Presicl:,nl Jimmy
Carter launched eflbrts to
cleregulate airlines, ra.ilroads, and trucking. His suocessors
would leap onto the deregulatory
trandwagon, tuming their attention to telecomrnunicalionls and
financ:e. Meanr,vhile, U.S. attempts
to encourage global tradc u'ere succeeding all too u,ell. A.s
impcirlr:d cars. steel" and consumer
electronics piled into domestic markets. doubts snucl,r in, too:
"Cclulcl it bc that a bunch o1'
fbreigners, particularlly the Japanese, know more a"bout
managerneint than we doll"

23. 1cchnology', espc,cially computer technology. steadily
:increased the calculating power available
to thernumbers pcopl,:, in the form of'the integrated rircr"rit
('late 1950s), thc minicomputer (mid
1960s), the mic:roprooessor (early n970s), and then the
microcnmput,3r (nrid 1970s). soon to
rnorph into the ubiqu'itous PC. Grcatcr'faylorism" launched in
the era o1'slidc rules, hald lbund
the means to create e'r'er more precise nrode ls ol'hovu a
business sliould pcrlbrrn.
ls stocks began 1.o hi:at up again in 1982-it had 1.a1,:en the
Dou,.lonr:s Industrial Averagc 10
1'ears to crawl ba,;k to its 197'.). high olf 1 ,000 --a livclty
markct fitr corportrtc control deveiloped.
Old constraints algainst hostilc takcovr:rs fell away, ncvv
sourocs of firnds bccarlc availablc to
potential acquirers (think.iunk bonds), and financiers realized
there was mone/ to be rrracle in
buying up companies that had a dog's breakfast of-busrinesses
and sclling off the parts More than
21.5o/o<>f the firms on the lioftune 500 list in 1980 vrer,e
acquired br, 19t19.
'''There is only one vaLlid clefinition o1'business purpose : 'l'o
create a customer." Peter I)ruckcr
lihareholder cirpitalism's ascenl; over stakeholder capitalism.
During this period of intense change, the purpose of strategy,
and indeed o1'corporate
rnanagement, took on new clarity: It was to create r,vcalth for
sharr:holders. To be sure that idea
had always been around, dating back to the buccane,r:ring
t'inanciers,rf thc l9th century. llut

24. during management's era of good feeliings, a more irrolusive
notion krad taken root in some
cluarters. As Michael Lind notes in Lamtl o'l' Promist: his
recent econrf,mic history of the tlnited
litates, in 1951 the chLairman of Standard Oil of Ncu'Jersey had
proclainted, "'l'he job of
managentent is to ma.intain an equitab,le and workinp, balilnce
among, the claims of'the various
directly afTected interest groups...stockholders. ernplo'ye,rs.
customers, ancl thc public at large."
fiometimes labeled "stakeholder capitalism," lhis br,ra<ler-
mincled co'nception would be steadily
chipped away at by partisans of "shar,eholder capitali.srn," to
the point that il allnlost disappearecl
liom discussions of c:orporate purpose.
lManagement thinkers responded to the new pressurcs besetting
crlrporations by sharpr;ning their
lbcus. With his 1980 book, Competitive Strategy, yllglha,el
Porter did more than anyone else to
give strategy an academic rigor it sometimes lack,:d arnollg
consultants. I{is next bool't,
(Jompetitive Adr,antage ( 198.5), u,oul,i arm compani,.rs with
conccrptti such as the valuc chain,
enabling them to breal< down ever)i stage of their opelal.ions
into units that could be costed out,
b,:nchmarked, and measured for cornpetitiveness.
A.s the econom),quicl.:encd and the deal making and
orr:itement orrL S/all Strect mounted, more
people sought toioin the ranks;of'managemenl--'or at |:ast to
obtain the entry r:redential, the

25. NIBA. whose lustr:r was burnished by the salaries pairl degree-
holclierr; by investment brlnk.s and
management consulting firms. Some 26.000 MIIAs h;ad b,;en
awarded in the llnited Str,rtes in
1970;by 1985 the number was up to 67.000.
A,t business schools, stratcgy experts such as Porter c[ispla"ced
the faculty who had been teaching
"lbusiness policy." Professors of {inance assumed greater pride
of ;rlar:e, sl-roving towarrJ the
periphery teachen; of the "softer" subiects human brr;:[3vi61-,
organiz:ational dypnlllics---once
c,gntral to Donhanr's aLnd Mayo's visions of managenlent
r:ducation. lcrrtss the board, both in the
c,orporate world and in academics, the numbers people seemed
to be'winning. bringing greater
quantitative precision to itrcreasingly specialized domains of
expeftise.
Biut they weren''t nece,ssarily winning the hearls o1'thr: rvitler
mana.gerial population. In 1 982 two
N{cKinsey consultants, Tom Pelers and Bob iaterrlan,
published [n Search ol'l]xccllc,nce. It
v/as a paean to [hr: importance of culturc in organi:ralions, an
attac]< on stratcg] as a merely
quantitative exercise, and a celebration o1'the human elemcnt in
making compttt-tics sur:cessful.
"Soft is hard," Peters obscrvecl. I'hLe book sold morc than 6
rlillior:Lcopies, astc,nishing its authors
and allerting the publishing industry,lo thc c:xistcnce r:rf a
hugc audiencc lbr books on managerial
vrisdgm. It didn't hurl. that f]xcellence extolled LI.Si.
r:ornpranies and their practices, this shortly
beforc President l{onald Reagan wtuld announce "lt's morning
aStain in America" and wcll after
everyone outsicleJapan had grou,n tired of being leclur,od on

26. the superiority of that country's
management m etl-rodsi.
For ttre ncxt 30 yoars. right down 1.rl our own day, thc trrucl,
strains of thought thc Itumbers-
d.riven push for greater profitabilitl,, ancl the cry' for nrore
respect ibr the "huntanity ol-
prroduction"-lvould coexist in uneasy tension. And notiust on
thc c,rmmanding heighrts of
nnanagement thor-rght. where ideas, books, gurus, a,ncl
a,lademics battllc filr attcntion.
'l']ne ,Jebate
hLasatrsotakenpla.ceincon{'erenceroomsandrlfllc,es-ztncl
inthemindsof'executives
Cleliberating tough choices--where the f-atcs of busirr,;sses.
and people, arc decidcrJ.
Irueled by tax cuts and detlcit spending under President
Ilieagan. tire [J.S. cconom)' surger,l ahead
arfter 1982. But, u.nlike in the I 95C)s, this rising tidr: clidn't
lifi all boats. In the trame of beating
fbreign competition, (completing (or avoiding) takcol,ers. and
servinEithe interr:sts of
srhareholders, i1 becarnc acceptable to sellolf businessers that
didn t fit thc new corporate strategy
zrnd to lay off battalic,ns of workels. Most f'amously at
rGenerral [rlectric under.[ack We,lcLL, the old
employer-employee contract, wittr its irnplicit assurance of
something like lifetirne employment,
rvas ripped up. And tlhe stock marhet cheered, as dlid rnany an

27. indlvidual investor lurecl back into
the aciiip by rising slhare prices and a dazzlittgvarie,tLy
of'rnutual lunds, 401(k) plans, ancl
individual retirenrent accounts.
I4anlgement literature provided the intellectual urrdi:rllirCing
for Lhe new aggtessivenr:ss. Since
the 1960s, strategists had soundecll a wake-up call abr:rut the
need t0 h:lou' your competition, an
arljuration almost totally neglected by the big thinkers; c,f the
prior,era.. Exploiting tools such as
the Freedom of Information Act ( I 966) and databases; such as
LexisNlexis ( 1 970s), consultants
helped clients fill in the details; to see how their sil.uar;ions lit
the frinmeworks der,ised by Porter
and others.
"Strategy is aboul making choices. trade-ofls: it's ab,cut
deliberately ,;hoosing to be dilferent."--
N{ichael Porter
In two notable I{f}R a.fticles irr the 1980s, Michael Je,nsen
resunected agency theory, pror,'iding a
rationale for takeover activity. The idea held that altturtrgh
companies; existed to enrich
slhareholders, too often their managers developed interests of
their ouzn, particularly if fhey didn't
have il sufficientl;r large ownership stake in the enterprise. 'l'o
keep ttreir eyes on the ptize, they
needcd both the stick of potentially being acquired and th,o
carrot of incentives linked to stock

28. price.
Clonvcniently,in 199:t thet-
l.S.Congrcsschangcdth,:rtaxoodctocncouragcthcgrantol's;lock
options as executive conrpensatior-1. As l.ind point,.;out, b'y
the encl of'thc dccaclc nrclre than half
the payout to the lypir:al lioftune 500 executive took l.hat
librni. So what il'thc ratio of CE{) pay
to that of the humble ,cubicle rvorker was climbing tc,
Olynlpian he ights? 'fhinl,r o1'all thc value
the CEO was crearting,.OK, perhaps this wasn't the kind of
moral lcarlership that Walltrce
Donham had had in mind for the rnanagerial class, br,rt lhe was
lontr1 d,;ad. his voice largr;ely
firrgotten.
With the reengine:ering moverncnt, the imporatir,'c to exploil
the latest inlormal.ion techrnology
turbochargcd thLe push for cfliciency and compctitivctrc'ss.
Obliteratc your existing proocsscs,
admonishcd Mictrael I lammer in il celebrated | 990 tltRR
arlicle and tlhcn with cc,author .lames
Champy in a best-selling book. Re:design therl wilh your
ultimatc custot.t.tcr in view, ttre s;ight
lrine provided by the rvonclers of ncw clectronic
communications. lljot't'tptutics 11ocked trr
reengineering's banner, but too often merely as a loft'v-
sounding justilication I'or layoff.s.
[iventually so nlany corporate innocents had been slautrlhlered
in ils name that the mol'erncnt was
dliscri:dited, to be held up later as a chief-exarnplc,of r,t
ma.nagement fad gone horribly ,ryrong.
llhe shift toward leadership and innovation.
lclvocates for l.her hurnanitl'of pr:oduction, meantvhilc.

29. plrrsucd a lblu.rrier linc. Within a couplc
6f years of the publication of In Search of tixcelle nce,
[]usinessWcetri reported that a tliird of the
c;ompanies helct up in the book no longer met lhe erulhors''
criteria for superiority.
-lhis
embarrassment suggested a more 1{eneral conlusic,n t}rat rrvas
to dog thc humanists nttmely, just
rvhat were the managerial practices that would bring out rlhe
best liorn employees, and how were
they to be measured and their value to the company callcr-
rlatedl'
titratcgy at least had a fairly clear paradigm and set of
lia.meworks 1or successive generalions of
thinkers to build on. rCharnpions o1'shareholder va.lui: glloried
in their single yardstick, the stock
price, as the meariure of all things By comparisot't, sl.udents of
human behavior in organi:zations
ivere all over the lanclscape. Sch,cllars in the field clecried
what one o.f thern. Jeffrey Pfi:fft:r,
called its "fairll' low L:vel of paradigm development'" and the
fact that they couldn't agree among
tlLemselves about whir:h problems:most needed to be
irddr,essed.
Such eclecticisrn, to put it charitably, wzrs mirrored on the list
of busirness best sel.lc-rs. Ilooks on
how to be a learning organization .iostled with onesr on the

30. wisdom of teams, the llower of
corporate loyalt.y, the necessilr of core competences, the
importance ,cf delightirlg custiDmers,
and the imperative to navigate change, as in figuring r:rut
rvho'd move:d your cheese.
11'the thinking on the human side c,oalesced at all, it v','as
around tr,l'o l.hemes: leadership and
innovation. Over the last two decades o1'the 20th centlur:y,
businesr'; schools revisecl theiir rnission
fi'om "educatintrl g,eneral nranagers" to "helping lea"derrs
de:'u'elop." [Jnlortunately. despitLe s;ome
inspiring writing on how lcaderrs differ liom managcrs, nc,
consensus has lormcd on exaclly what
c,rnstitutes a lea.der or how lhc,se exalted beings conlrl 1rl
erxist. ('l'he current do'wnturn ltas raised
questions about corporate leaders' sources of authorit';' as well.
Ser: the sidebar "'*/ho lv4arjc You
the Boss?")
Itrnovation invitesl lcsrs contror,€rs)'. Both humiinisls artd
numbers pcc,ple recognize its ,;ri1.ical,
c,ompany-saving impoftance in an erra whcn ncw rivals can
cmerge surddenly fiorn nowhcre.
industry leadership ca.n change hands iin a tricer, an,J
cornpetitive arlvantages once thou1lht
unassailable are eroded in months' Books by [?'icharcl Foster
and c]la)uton clhristensen
dcmonstratcd to a wicle managcrial audicncc how ne'uv
l.echnologics systcmaticallLy' displacc old
ones, in the process overtltrou'intr1 the pecking order ,:rf cntire
indu:;trie s.
"If you only do what worked in thr: past, you r.vill ,r,'alie up

31. one da), zrncl llnd that you've becn
passetl by."-ClaytonL Christenscn
Innovation is u,he,rc satislying thc llercc dcmands of-thc
rnarket dr::pends. as never befcrre. on
eliciting the bcs;t liom tl-re humanity o1''Jrroduclion. ]{o rJnc
zct appctlr:s ttl havc been ab,le tlo
autonrate thc invention ol-the ncry r)r to come up vrith
rnachine-replic:ablc sr-rbstitutes firr the
spark of human irnagiLnation. Pcrhaps thc biggest rnanatgcrial
chall,;nge lacing the lllst-century
company will be ttnding ways to free that spark. resi<Jcnt in
emplcryccs, liom the orgarrization's
tidal pull to keerp doirrg the same old things.'fhc aplc
of'managenrent iisn't over. of coursc.
llanagement thought is spreading to rvherever capil.ali:;n and
more-or-less liee rnarke[s f ind a
hLome. By some counts that home l'ras welconl'::d 3 b'ilLli'on
new inhabilants ovcr the past tr'vo
ilecacles, with tlhe lall of Soviet communism and the, ecrlnomio
libr,:ralization ol'Clhina r,incl India'
Capitalism and th.e managerial ideas that strug,gle'lo, nrake i1.
more prr:ductive ha"ze indisputably
rendered the w6rld richer and better educated. And not just thc
capitalist ancl nreLnaLgerial elite,
including the estimated half million people awardecl ran IVIBA
or itis lloreign cquirralent lasrt year:

32. llhe ;lercentage, of pe,cple worldr,virle living belou'the
por,'efiy linc has droppcd dramalicallly in
the past 50 years, while literacy ra.l.es hal'e steadilv cl[innbed.
In the world ofolfices, factories. stores, and even
cu.lbir:lerfiLrms, Jrarl.icularll'those of large
orgalizations, people, expect to tre treated with fairrt,:,ssr and
respect (even i1'their long-term job
seiurity is less assured). Illatant sr3xism, nake,J bulli'ing. and
outnlge,ous morlsgerial beharvior are
rnore likely to 6e called out, even i1'ttrey haven't be,en totalLy
eIinrinated. [Jporr going lhrcugh the
firont door of a compa.ny almost anrywhere in the cap:Ltal,isrl
world, ii visitor can typicall), assume
that certain rule,s'will be followed, certain procedures observed.
1'rue, managerialism hasn't sc,lvecX all the protrlems irr the
workplace. Most nol.atrlv, it has;n't
figured out a way to employ everyone who wants rn job, though
achieving that goal probably
r,equires the effirfl.s of'governrnent and economists as w,ell,
along r,vith a public consensus.
Ironies, occasionally ,cruel, have accompanied manap,erialism's
rii;e. As Pcter l)rucker observed,
vvhen he was a boy growing up in Vienna the peoprle who put
in tlre longest hours wer$ thiose at
tkre b<lttom of the economic ladder--the lady's; nlaid
,i:xpe,cted to wait up 1br her rnistre,ss to
r,3turn home from the opera. Nowerdays it's thc execuli,u'c

33. elite, fieldirrg 300 e-rnails a clay and
calls tiom around the world, who toil into the nieht.
hnd managerialism's work is not finished. Ile,cause
nnanagenlent iLs, finally. about hou'to make
humans and the:ir organizatiorrs more effcctive, and bercaLuse
humans stubborrLly cling to their
propensity to be, well, human-there will ncv,:r bt: "1hc one best
'r'o),.' But thcre:'s;alnrost
alway s a bctter way. I4anagement will keep looliint fbr it.
Drivers of Supply Chain Performance
• Facilities
– The physical locations in the supply chain network
where product is stored, assembled, or fabricated
• Inventory
– All raw materials, work in process, and finished
goods within a supply chain
• Transportation
– Moving inventory from point to point in the supply
chain
Drivers of Supply Chain Performance
• Information
– Data and analysis concerning facilities, inventory,

34. transportation, costs, prices, and customers
throughout the supply chain
• Sourcing
– Who will perform a particular supply chain activity
• Pricing
– How much a firm will charge for the goods and
services that it makes available in the supply chain
Facilities
rage (warehouses)
(responsiveness priority)
Facilities
• Components of facilities decisions
– Role
• Flexible, dedicated, or a combination of the two
• Product focus or a functional focus
– Location
• Where a company will locate its facilities

35. • Centralize/decentralize, macroeconomic factors, quality of
workers, cost of workers and facility, availability of
infrastructure, proximity to customers, location of other
facilities, tax effects
Facilities
functions
– responsive, costly
excess capacity – more efficient, less responsive
Facilities
-related metrics
low/cycle time of production
Facilities
• Overall trade-off: Responsiveness versus
efficiency

36. – Cost of the number, location, capacity, and type of
facilities (efficiency) and the level of
responsiveness
– Increasing the number of facilities increases
facility and inventory costs but decreases
transportation costs and reduces response time
– Increasing the flexibility or capacity of a facility
increases facility costs but decreases inventory
costs and response time
Overall Trade-Off
• Responsiveness versus efficiency
– Cost of the number, location, capacity, and type of
facilities (efficiency)
– Level of responsiveness
– Increasing number of facilities increases facility and
inventory costs, decreases transportation costs and
reduces response time
– Increasing the flexibility or capacity of a facility
increases facility costs, decreases inventory costs
and response time
Inventory
nd demand

37. time
Inventory
supply chain to range from being very low cost to
very responsive
quantity of inventory that provides the right level of
responsiveness at the lowest possible cost
Components of Inventory Decisions
nt of inventory used to satisfy demand
between shipments
losing sales

38. Components of Inventory Decisions
demand
flexible production
served on time from
product held in inventory
Components of Inventory Decisions
-related metrics
-to-cash cycle time
a specified number of
days of inventory
Components of Inventory Decisions
-related metrics
entory

39. Inventory
-off: Responsiveness versus
efficiency
chain more responsive
in production and transportation costs because
of improved economies of scale
Transportation
chain
r responsiveness
but lower efficiency
Transportation
inventory to find the right balance between

40. responsiveness and efficiency
Transportation
flexibility
Transportation
-related metrics
ound transportation cost
rted by mode
Transportation
-off: Responsiveness versus
efficiency

41. and the speed with which that product is transported
(responsiveness)
ses responsiveness
and transportation cost but lowers the inventory holding
cost
Drivers of Supply Chain PerformanceDrivers of Supply Chain
PerformanceFacilitiesFacilitiesFacilitiesFacilitiesFacilitiesOver
all Trade-OffInventoryInventoryComponents of Inventory
DecisionsComponents of Inventory DecisionsComponents of
Inventory DecisionsComponents of Inventory
DecisionsInventoryTransportationTransportationTransportation
TransportationTransportationSlide Number 21
Key Assignment Draft
The rough draft must be a completed paper, with APA
formatting, all 7 sections complete
(using Roman numerals of each section per the outline),
references, and good grammar.
You were recently hired as the VP of Logistics for the ABC
Manufacturing Company. This is a
new position. During the lengthy interview process, the CEO
shared her strategic plans for
worldwide growth in the company’s consumer sales. Previously,
sales had been confined to
domestic sales only. As a result of little staff logistics
expertise, the company had kept the
traditional logistics model of shipping all finished products

42. from its warehouse and factory
location on the East Coast of the United States, even though
there was a growing market on the
West Coast that competition was serving from a West Coast
warehouse. However, the CEO
pointed out that despite its national popularity from a feature
and quality perspective, it seemed
to penetrate poorly on the West Coast because of her need to
charge higher prices as the result of
higher shipping costs.
The marketing manager tried to mitigate this competitive
disadvantage by freight equalization so
that end customers would pay the same amount of shipping
costs as West Coast competition
charged, regardless of where they were located. This met with
some insignificant success
because timeliness of delivery was another important issue.
Therefore, the CEO had asked you,
as your first assignment, to write a white paper to address the
following specific points. She
remembered that you had quite a bit of experience addressing
some or all of these issues during
your career. As a stickler for formatting, she has specifically
asked you to use the following
Roman numeral sections and headings in the paper:
Section I: Introduction (200 words)
A. In general, what are the qualitative pros and cons for
domestic sales of having multiple
distribution centers and shipping locations in the United States?
B. In general, what are qualitative pros and cons of having one
or more international
distribution centers for international sales, as opposed to

43. shipping directly from a U.S.
manufacturing location warehouse?
Section II: Decision-Making Criteria (300 words)
The CEO is considering three options with the same total
construction and operating costs:
expanding the warehouse next to the East Coast manufacturing
plant; building a West Coast
distribution center; or building a combination manufacturing
and warehouse location on the West
Coast. As a completely separate issue, she is also considering
opening a distribution center
overseas, to serve the fast-growing warm weather markets of
France and Spain.
Given the following general information, what are at least 5
criteria that must be considered
when locating a new or expanded shipping warehouse
domestically? Internationally?
a. The products are primarily medium- and large-size insulated
coolers, like you might use
for a picnic or trip to the beach. Transportation firms charge by
space, or cubic feet,
rather than weight, which is the more normal method.
b. The coolers are made of 3 components, which are all
produced by suppliers solely on the
East Coast; the raw materials to make this product are bulky,
and inbound shipping from
the East Coast suppliers currently represents 20% of total raw
material costs.

44. c. The market is very competitive with generally stable or
decreasing marketplace prices.
d. In states and countries that are warm year-round, sales are
pretty steady; in countries and
states that have seasons, 90% of sales occur in the May–August
period.
e. Domestic demand is expected to increase 5% annually;
international demand is expected
to increase 15% annually.
f. Right now, to keep West Coast customers happy, the CEO
says that they only charge
those customers the local freight cost of shipping, which is $200
for anything up to half a
truckload.
g. The current exchange rate is 1 euro = $1.50.
Section III: Metrics to Assess Success (250 words)
A. Describe 3 metrics that you would use to assess the success
of any logistics plan
involving you as a manufacturer and an internationally based
mass merchandiser. Provide
support for your selections.
Section IV: nonquantitative Factors (200 words)
Identify 3 subjective, qualitative factors to consider in the
recommendation.
Section V: Conclusion (200 words)
What are the 3 most important points that you want the CEO to

45. understand about this entire
decision-making process?