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Logistics research: a 50 years’ march of ideas

Logistics research: a 50 years’ march of ideas Logist. Res. (2009) 1:53–65 DOI 10.1007/s12159-008-0009-y REVIEW PAPER Peter Klaus Received: 22 November 2008 / Accepted: 28 November 2008 / Published online: 14 January 2009 Springer-Verlag 2009 Abstract Logistics—as a field of the Applied Sciences the process of the formation and advances of the field by addressing issues from the worlds of business and the pausing for a moment after about 50 years of rather diverse economy—is now more than 50 years old. This essay and dynamic developments. An effort is made to describe, makes an effort to review, reflect, and interpret what reflect and interpret what researchers have done and researchers have done and thought in this field so far, what thought in the names of ‘‘Logistics’’ and of ‘‘Supply Chain kind of impact their ideas apparently made, and where the Management’’ (SCM), and what kind of impact their ideas ‘‘march of ideas’’ about logistics research might lead in the possibly made in their efforts to shape and move the field future. The first part of the review presents data that ahead. It is a review of the past ‘‘50 years’ march of recently have become available about the quantitative logistical ideas’’. With some hindsight and growing dis- impact of logistics in an international comparison between tance from the points of departure, it is assumed, the countries. From this review some hypotheses are derived important milestones and turns in the development of the about the growth opportunities for the field in the future field may be seen more clearly than ‘‘on the march’’. Past and the challenge of maintaining the dynamics of the progress can be assessed with more certainty, and a better development of logistics in maturing, post-industrial vision of what course the field might take in the future may economies. In the second part the qualitative evolution of result. scientific logistical thinking—the ‘‘march of ideas’’ of the Developments will be traced in two different ways: last 50 years—is reviewed, mapped and, again, interpreted with respect to the question, where the ‘‘next’’ challenges, First, a highly aggregated look at the state of logistics new ideas, and directions may be found to further advance and its impact upon the ‘‘real world’’ is taken by the ‘‘Science of Logistics’’. reviewing some quantitative data that have become available recently. From this, some inferences on the pace Keywords Logistics research  Epistemology and direction of the diffusion of logistical activity in Quantitative measurements  Instrumentation  given countries and industries are drawn, i.e.—to stay in Industrialization  Flow dynamics  the picture—on the motivating forces and the pace of the Cross-organizational integration ‘‘march’’ of logistics. Following this look at quantifiable aspects of the development of logistics, the qualitative evolution of scientific logistical thinking during a 50-year time span is This essay is about the progress of the ‘‘Science of considered in more detail: what kinds of major issues have Logistics’’. It is trying to contribute to the understanding of been addressed between the 1960s and today? What kinds of ideas which are promising answers and solutions to those issues have been suggested by the different members and groups of the scientific community of logisticians? P. Klaus (&) And, to the extent this can be identified, which are the Nuernberg, Germany scientific roots that inspired those ideas? e-mail: peter.klaus@logistik.uni-erlangen.de 123 54 Logist. Res. (2009) 1:53–65 Eventually, some concluding thoughts on what this • size and development of each country’s material analysis suggests for the future development of the Science logistics sector, as measured by per capita logistics of Logistics and its future impact are submitted. spending in Euros. The result of this analysis is shown graphically in Fig. 1. 1 The march of logistics: some comparative The positive correlation between relative logistics observations on the quantitative growth expenditure and relative national wealth that shows for the and the diffusion of logistical activities at national left-hand-side section of the graph of Fig. 1 (marked and industry levels ‘‘Diffusion and Growth’’) may be interpreted quite simply: It could be just another confirmation of Adam Smith’s The task of ‘‘measuring’’ the volume of logistical activi- historical finding on the primary cause for the ‘‘Wealth of ties at the aggregated level of countries and industries in Nations’’. The more Division of Labour is practised in an order to assess their impact relative to all economic economy, the better off the respective people will be! activity is a difficult one. It has hardly been addressed in Spelling this interpretation out in more detail: the past. Reliable answers to the question about the The Division of Labour in the context of today’s global logistics sectors’ impact and—still more challenging—to economy means that processes of value creation are the question of a potential relationship between the increasingly shared between countries. Economic activity volumes and impact of logistical activities in the ‘‘real is dispersed between ever more specialized ‘‘tiers’’ and world’’ on one side, the evolution of ‘‘Logistics Science’’ centres of activity, leveraging favourable ‘‘economies’’ as a body of ideas and knowledge on the other side, have wherever they are found on the globe. The number of nodes not been available so far. and links in modern ‘‘Supply’’ and ‘‘Value’’ Chains increases. More transfer activities between the tiers, nodes 1.1 What comparative data suggests: a correlation and actors involved are required! between the growth of logistics and the ‘‘Wealth of Global Division of Labour has effects along several Nations’’ dimensions: • a ‘‘geographical’’ dimension of placing, respectively In a recent—although quite preliminary—effort several studies that provide answers at least to the ‘‘measurement’’ dislocating activities across the globe. More and longer transportation links are needed, increasing the absolute question were reviewed and reconciled as best as possible [39]. The data focus on the volumes of ‘‘material’’ logis- volume of transport activity and demanding higher tics activities of moving, storing, handling physical goods, levels of transport speed, frequency, reliability, etc.; that are quantifiable in tons, miles, numbers of jobs, and • the ‘‘time’’ dimension because of the fact that activities reflected in monetary expenses for those activities at which are dispersed between many centres of activity in complex value chain structures are performed on national and industry levels. different schedules, and at different speeds, which The study related the means that there is more need for differentiated ‘‘pacing’’, i.e. for more buffering, storage, inventories, • level of economic development in the countries and adjustments of goods flow velocities; included (respectively the ‘‘wealth’’ of those countries), • a dimension of alternative ‘‘arrangements of objects’’, as measured by the Gross Domestic Product (GDP) per because there is more need to sort, arrange and capita in Euros, to the rearrange goods and information as they move between the tiers of the value chain in order to adapt to differing capacities, lot size requirements, assortments of mate- This analysis was based primarily on data assembled or estimated rials at each centre of activity—i.e. there is more need about ‘‘national logistics expenditures’’ by Bowersox and Calantone [8] and Bowersox et al. [9], Armstrong et al. [2], Wilson [38, 83]. for parsing, picking, packing, consolidation and decon- In the German language ‘‘material’’ logistics is of often referred to solidation activities. as ‘‘TUL’’ logistics (=Transport, Umschlag, Lagerung). Sheffi and Klaus [67] referred to this as ‘‘PPP’’-logistics, i.e. logistics as the sum This is nothing but a complicated way of saying that the of physical ‘‘Placing’’ activities—transporting, moving objects from increasing integration of an economy into global economic one point in a geography to another—of ‘‘Pacing’’—taking care of the cooperation and the global Division of Labour requires time-related activities of storing, buffering, warehousing, inventory keeping—and ‘‘Parsing’’—arranging and rearranging objects by parcelling, deconsolidating, picking/packing, sorting, consolidating. This chart was originally published in Klaus [39; p. 346]. Countries This notion of material logistics traces back to Marshall’s [50] and are identified by their international vehicle license plate symbols Weld’s [78] discussion of the creation of economic ‘‘utilities’’. Trend-lines have been added for the argument following. 123 Logist. Res. (2009) 1:53–65 55 Fig. 1 A relationship between 4,0 levels of economic development of national economies and the 3,5 US volume and value of material logistics activities 3,0 Saturation? SE NL 2,5 BE DK IE CH 2,0 CY UK GR ESA A 1,5 EE LV SI 1,0 CZ LT PT PL MT 0,5 RO SK HU China BG IND 0,0 0,0 5,0 10,0 15,0 20,0 25,0 30,0 35,0 40,0 45,0 GDP per Inhabitand (in T€ p.a.) ever more logistics as a condition for increasing the wealth So far, the argument just corroborates what Fig. 1 sug- of the participating nations. The ‘‘rich’’ countries in the gests—that there may be a positive correlation between upper right sector of Fig. 1, such as the US, the Nether- relative national logistics expenditures and material lands (NL), Denmark (DK), Ireland (IRL), Switzerland ‘‘wealth’’ levels of countries and industries. (CH), have economies that are most advanced with respect to their global integration. They also have relatively 1.2 On the pace of growth and diffusion logistics: two high logistics expenditures. The ‘‘poorer’’ countries at hypotheses the lower left sector in Fig. 1, such as India and China, Bulgaria (BG), operate at lower levels of national and For the intention to learn about the pace of the ‘‘march of global Division of Labour and have relatively lower levels ideas’’ in logistics, a few more inferences may be drawn of logistical activity. from the observations in Fig. 1: This fundamental relationship may also hold at the level In those lesser developed countries and industries where of industries within a country: industries with traditionally there is potential for more Division of Labour there will be lower levels of Division of Labour, such as the agricultural growing demand for added capacity and sophistication of and crafts sectors, provide relatively lower contributions logistical activities. Any progress in the development of the to national wealth and require relatively less developed ‘‘Science of Logistics’’ which helps to expand the capaci- and lower cost logistics activities. Industries with highly ties for ‘‘placing’’, ‘‘pacing’’, and ‘‘parsing’’ materials and developed, widely spread Division of Labour, such as most goods, may directly contribute to wealth creation. Hi-Tech and modern mass-production assembly industries, From this observation a first hypothesis is derived: the contribute more to national wealth and demand more most dynamic future for material logistics and related sophisticated and more expensive logistics. scientific efforts will be in countries that are not yet fully integrated into the networks of international Division of Labour, and in sectors of economies like the agricultural, craft, and other industries that have not yet fully exploited Some of the variance around the trend line in Fig. 1 may be the respective opportunities! These ‘‘markets’’ for the explained by the very different geographical structures of these countries. Geographically spread out countries like the US and Science of Logistics have not been explored and served Sweden with significant amounts of natural resources to be moved very well in the past. They should be addressed more in the require above average transportation expense. Geographically com- future. pact, very densely populated and resource-poor countries such as The second hypothesis drawn from Fig. 2 suggests: Switzerland and Denmark are below average. 5 where a level of ‘‘saturation’’ with respect to Division of An additional factor explaining the relatively low spending on logistics in ‘‘poorer’’ countries, of course, which is not accounted for Labour in an economy—or an industry—will be reached, in Fig. 1, is a relatively lower wage cost level—but the general trend the growth and impact of material logistics will reach shown will not be affected. limits. In mature economies ‘‘global’’ integration is This relationship will be more complicated in reality, because it is approaching maximum levels. If, in addition, the consumer also contingent on the typical value density factors in an industry. For population and the industrial workforce is stagnating or the purpose of this discussion these additional contingencies are even declining in mature countries, as is the case in most neglected. Diffusion and Growth Logistics Spending per Inhabitand (in T€ p.a.) 56 Logist. Res. (2009) 1:53–65 parts of Western Europe and Japan, physical consumption, Sciences, and Engineering. Each of these fields has its own the material needs for production supplies, and conse- perspective and prefers its own set of methods. The logisti- quently the needs for industrial distribution activities will cians of the first generations—if they did not operate in not grow further. purely pragmatic, a-methodical ways—brought with them This argument potentially explains why in the demo- the perspectives and methods from the fields and institutions graphically and economically mature countries, which are where they came from, since there were no indigenous placed in the upper right corner of Fig. 1, the ‘‘march of logistics courses and institutions. And even among the material logistics’’ may come to a halt. younger generation academics in logistics, who received If logistical ideas and the ‘‘Science of Logistics’’ want to their education in Logistics and SCM programs and depart- maintain their momentum and impact in the context of ments, the style and direction of their work is still influenced matured economies and industries, new fields of applica- by their roots in either ‘‘Marketing Science’’, ‘‘Economic tion will have to be found, which shall be discussed later in Modelling’’, ‘‘Operations Research’’, ‘‘Scientific Manage- this essay. ment Studies’’, ‘‘Engineering’’, the ‘‘New Institutional Economics’’, ‘‘Management and Organization Theory’’, or other affiliations. Logistics, significantly more than other 2 March of ideas: a brief history of logistics fields, is embedded in a diverse network of intellectual as a step-by-step accumulation of ideas, research relationships—which also explains the difficulty for logis- questions and suggested answers ticians to establish their own, distinct scientific identity. On the basis of these considerations about the appro- So far in this essay, ‘‘logistics’’ has been referred to as the priate level of detail and a historical and disciplinary logic sum of the material, quantifiable activities of ‘‘placing’’, of clustering materials, six sets of ideas, their approximate ‘‘pacing’’, and ‘‘parsing’’ goods and things. In this second time of entry into the ‘‘marching band’’ of the evolving part of the discussion, the review of logistics is continued as Science of Logistics, and their likely roots in ‘‘classical’’ a description and interpretation of a ‘‘march of ideas’’—an academic contributions from other sciences are suggested. attempt at the historical epistemology of logistics. In the following discussion and Fig. 2 through 7 each entry The level of detail of the following discussion is is labelled by a descriptive term—‘‘Awareness’’, ‘‘Indus- intended at a middle range: it should say more about the trialization’’, ‘‘Engineering Instrumentation’’, ‘‘Flow substance of ideas than the frequently suggested categori- Dynamics’’, ‘‘Cross-Organizational Integration’’. Refer- zations of logistics into three or four development phases ence is made to those ‘‘classical’’ contributions in the provide. But is should also avoid the little structured literature which laid the foundations of the respective jungle of technical concepts and terms that were discussed ideas, and to those ‘‘milestone’’ contributions that marked a in the field of logistics over time, such as ‘‘Materials major change and expansion in thinking about logistics. Requirements Planning (MRP)’’, ‘‘Just-in-Time (JIT)’’, ‘‘Vendor Management Inventory (VMI)’’, ‘‘Collaborative 2.1 Creation of ‘‘Awareness’’ for logistics research Planning, Forecasting and Replenishment (CPFR)’’, etc. needs and the institutionalization of the field The primary criteria for clustering the ideas, research questions and answers into distinct phases in a way that The early phase of creating awareness for the need and serves the purpose of this essay will be their historical promise of doing systematic research in the field of logis- context and their association with certain scientific com- tics—in both in the business community and in the munities. Logistics Science is a cross-disciplinary field, academic field of management studies—has been described stimulated and informed by a wide range of other, older in numerous textbooks and articles, such as Stock and sciences, ranging from Economics, Mathematics, to the Lambert’s [73] and Ballou’s [6]. The start of the ‘‘logistics younger fields of Business Administration, the Organization march of ideas’’ is located and dated rather uniformly to the US in the early 1960s. The historical motivation for this happening at that time See footnote 2 above! was the ‘‘Marketing Revolution’’ that had started from Such as the ‘‘functional’’, ‘‘physical distribution’’, ‘‘supply chain/ the United States after World War II. No longer was the cross-functional’’ and a ‘‘global supply network’’ phase. Recent examples are in Baumgarten [5] and Ballou [6]. capacity to efficiently produce scarce goods a decisive The choice of these criteria is inspired by Rheinberger’s [63] factor for business success. Rather, the ability to attract and argument that the study of the development of scientific knowledge service customers who have many alternative choices to should reflect to historical context and the means and methodologies satisfy their needs became the key. And being identified as through which the process of knowledge generation takes place. The analysis is deliberately qualitative and interpretive rather than based on formal methodology (as, e.g. in Charvet’s [13] recent article). Described by Keith [35] in an article of the same title! 123 Logist. Res. (2009) 1:53–65 57 Fig. 2 The creation of SupplyChain ‘‘awareness’’ for logistics: the Management foundation of physical “JIT Industrial Logistics distribution ‘‘science’’, and the The „ „ Marshall (1890) -> “Procurement , “Production emergence of ‘‘industrial “Marketing Shaw (1912) -> Revolution 1960s 1970s 1980s 1990s 2000s logistics’’ and ‘‘supply chain Weld(1916) -> Magee(1960) management’’ as new pillars of Converse(1921) -> Drucker PhysicalDistribution Keith (1960) -> the fields identity „ “Science (1962) Roots Milestones Lines of Evolution one crucial element of Marketing, the activities of trans- Now the issues of cross-functional and inter-organizational porting and warehousing—‘‘Physical Distribution’’ to integration became the major attention-getters for outsiders customers—which formerly were rather peripheral con- and insiders, causing a sequence of ‘‘waves’’ of interest that cerns to management and academic research, became the peaked in the mid-1990s around the concept of Efficient nucleus for the emerging field of logistics. Consumer Response (ECR), around the turn of the mil- Milestones in the creation of awareness and the begin- lennium around ‘‘E-logistics’’. Today ‘‘Supply Chain Risk’’ ning of the institutionalization of what became ‘‘Marketing and the ‘‘Greening’’ of Logistics seem to have become the Logistics’’ and ‘‘Business Logistics’’ were Magee’s [48] ideas that are drawing most popular and academic interest. Harvard Business Review article on ‘‘The Logistics of Distribution’’ and Drucker‘s [20] Fortune article on ‘‘The 2.2 Initial ‘‘Instrumentation’’ of logistics research Economy’s Dark Continent’’. Smykay et al. [71] published through operations research and modelling the first textbook on ‘‘Physical Distribution Manage- methods ment’’—marking the entry of the field into the academic world. There had been earlier efforts to create awareness The first ‘‘Awareness’’ wave of logistics research related to for the importance of Marketing and Distribution by Marketing and Physical Distribution was primarily authors such as Shaw [66], Weld [78], and Converse [17]. descriptive and exhortative in the sense that the structures But it seems to have been Drucker’s article and popularity of well-managed distribution systems were described. in the broad management community which, for the first Appeals for a systematic, ‘‘holistic’’ treatment of the issues time, drew really wide ranging attention to the need for of transportation and warehousing were made. systematic scientific work in exploring ‘‘the logistics of But soon the need for deeper, more structured and more distribution’’. Rather soon other authors followed. ‘‘Phys- truly ‘‘scientific’’ analyses was recognized. Some prior ical Distribution’’ and ‘‘Logistics’’ were institutionalized in work from the military environment, the simultaneous more academic institutions and professional associations rise in progress and popularity of the field of Operations such as the National Council for Physical Distribution Research (OR), and new possibilities of running large scale Management (later to become the Council of Logistics models and mathematical calculations on computers in the Management and recently the Council of Supply Chain 1960s and 1970s lead to a rapid expansion of OR-related Management Professionals). With several years delay, work in logistics. from about 1970, parallel developments of logistics Much of this work addresses geographical aspects of research, publications, and institutionalization also evolved logistical systems design and optimization, building on in Europe and in other parts of the world. foundations as far back as the nineteenth century, such as By the 1980s the power of Marketing and Distribution the famous model of the ‘‘Isolated State’’ by the economist issues for drawing attention to the emerging field seems to von Thu ¨ nen [75], Launhardt’s [41] and Weber’s [77] have been exhausted. The new idea of ‘‘just-in-time’’ and classics on industrial location decisions. A long line of ‘‘lean’’ industrial procurement and production became a more recent OR work about vehicle routing and scheduling new centre of interest and a new pillar of the field of started with Clarke and Wright [15] and was continued in logistics’ sense of identity—to be discussed below in the more comprehensive approaches to the analysis of trans- section about the Toyota Production System (TPS) and portation systems and how they should be optimized [49]. ‘‘Flow Dynamics’’. Starting in the 1990s another major shift took place in A frequently quoted early source is Lewis [45], which demon- strated the savings potentials which can be realized by taking a ‘‘total the perception where the heart of the field is—‘‘SCM’’. cost’’ perspective. Early examples are Morgenstern’s [51] ‘‘Note on the Formulation The first monograph of this kind in Germany, possibly in all of of the Theory of Logistics‘‘ and publications by the RAND Europe, was Pfohl’s [56] dissertation. Corporation (e.g. [25]). 123 58 Logist. Res. (2009) 1:53–65 Fig. 3 The ‘‘instrumentation’’ Complex Networks Risk & of logistics: integrating Configuration Reverse Log. modelling techniques and operations research von Thünen (1826) -> Instrumentation Manuf. Resource Launhardt (1882) -> Planning, ERP “OR & Modelling Wagner/Whitin (1958) Weber (1909) -> Hax/Meal (1975) Morgenstern (1951) -> 1960s 1970s 1980s 1990s 2000s Hight (1975) Geisler (1960) -> Location, Routing Studies Lot & Inventory Sizing Roots Milestones Lines of Evolution Another line of OR and work is concerned with object- concern. The concepts of the ‘‘Industrialization’’ of logis- quantity dimensions of logistical operations, determining tics services were gradually being discovered and adopted optimal order sizes, lot sizes, inventory levels and related among leading logistics organizations, marking another scheduling arrangements in production and distribution. milestone and a new stage along the ‘‘march of logistics Pioneering contributions in this area were Magee [47], ideas’’. Stimulation for this powerful development pri- Wagner et al. [79], Hax and Meal [29], and Wight’s [81] marily came from ‘‘best business practices’’ of successful work about MRP. service and retail companies. The person who first drew More recently much work is about the development of attention to the idea and potentials of the ‘‘Industrialization integrated solutions, seeking the joint optimization of of Services’’ was Levitt [43, 44] (Fig. 4). geographical, time, quantity and monetary aspects of The academic predecessors who paved the way for the planning through concepts like Manufacturing Resource idea in the Scientific Management literature were Babbage Planning (MRP II) and Enterprise Resource Planning [3], Taylor [74], Ford [22], Shewhart [68] and Deming (ERP) systems development. Recently the integration of [18]. Their themes were the realization of Economies of the additional issues of ‘‘Reverse Logistics’’ and ‘‘Risk’’ Scale through product standardization and production- considerations is adding still another level of complexity to lines, statistical quality controls, brand-name mass-mar- the modelling and optimization challenges in logistics. An keting of services, and the rationalization of service process innovative approach that is tried by some of the ‘‘instru- structures. With regard to the latter, a remarkable early mentation’’ researchers is in the use of models from nature contribution in Europe to the study of industrial organiza- for the solution of very complex decision problems [19] tion and process structures by Nordsieck [52] was (Fig. 3). rediscovered. The ‘‘instrumentation’’ of logistics trough mathematical Pioneers in the ‘‘Industrialization of Logistics Services’’ methods, through ever more advanced statistical and were some extraordinarily successful transport and retail modelling techniques and increasingly powerful support companies such as UPS, FEDEX, and WALMART. The from Informatics, is still dynamically moving forward. It line of research which followed their example is docu- may be the most rigorous and best documented stream of mented primarily in case study descriptions and business logistical research through the prestigious journals of the strategy discussions. The ideas and practices of ‘‘Indus- OR-associated researchers, such as Operations Research, trialization’’ were extended by such contributions as Camp Management Science, Mathematics of Operations [12] on ‘‘Benchmarking’’ and Hammer [28]on‘‘Process Research. The ‘‘quantitative logistics’’ community is a Reengineering’’, which for a period of time stimulated a lot tightly knit subgroup among logisticians. of research and publications. Industrialization concepts are making use of the full range of OR instruments that were 2.3 The ‘‘Industrialization’’ of logistics services discussed in the preceding ‘‘Quantitative Methods Instru- mentation’’ section, and also of the ‘‘Flow Dynamics’’ and From the 1970s and 1980s onward, when the consolidation ‘‘Cross-institutional Integration’’ concepts and research and institutionalization of logistics in functional depart- discussed below. ments and the professionalization and concentration of ‘‘Third Party’’ transport and Logistics Service Provider organizations rapidly advanced, the challenges and poten- tials of their perpetual rationalization became a new Examples are in Sasser [64]. A discussion about the most recent logistics segment taking up the ‘‘industrialization‘‘ path—after the parcel—and international express services, LTL services, worldwide e.g. Wallace [76]. This concern also was the basis of the container-line services seems to become the truckload-industry as impressive growth of ERP software providers such as SAP. discussed in Klaus and Muller [37]. 123 Logist. Res. (2009) 1:53–65 59 Fig. 4 Bringing the ideas and concepts of ‘‘industrialization’’ to logistics Benchmarking, Process-, Taylor (1912) -> “Industrialization Service-Engineering Shewhart(1924) -> of Logistics Ford (1926) -> Services: 1970s 1980s 1990s 2000s Successful Nordsieck(1934) -> Practices Levitt (1972,1976) -> UPS, FEDEX, ProductionLine Approach, Deming(1986) -> WALMART Branding, Standards Roots Milestones Lines of Evolution Fig. 5 March of the engineers: RFID, the ‘‘instrumentation’’ of Internet of Things logistics through logistics hard- and software E-Commerce Instrumentation „ E-Logistics “Engineering Watt (born1736) -> e.g. Babbage (1832) -> Jünemann(1971) 1970s 1980s 1990s 2000s Taylor (1912) -> Baumgarten (1972) Materials FlowSystems Warehouse, Container Tech Roots Milestones Lines of Evolution 2.4 The instrumentation of logistics through ‘‘hard’’ know-how of Engineering and Management (‘‘Wirtschaft- engineering technologies singenieur’’), were taken by Helmut Baumgarten at the Technical University of Berlin. Baumgarten [4] did early Another path and stage in the ‘‘march of logistics ideas’’— work about standardized container systems. He became one in parallel with ‘‘Industrialization’’—developed in response of the founders of ‘‘Bundesvereinigung Logistik (BVL)’’ in to the rapid growth, professionalization and concentration 1978, which from its beginning followed a mission of of the logistics functions within large industrial, retail, and integrating the disciplines of Business Administration and logistics service provider organization. The ‘‘Engineering Engineering in the field of logistics. Instrumentation’’ of the field started through engineers who Today research and development in the area of ‘‘hard’’ specialized on research and development of ‘‘hard’’ Logistics Engineering technologies is a firmly established equipment and systems for logistics operations. Initially and indispensable line of work which is getting increas- this happened quite separate from mainstream ‘‘Business ingly integrated with other lines of logistics research and Logistics’’. The work of the early logistics engineers development. Beyond the established, continuously ongo- addressed the demands for better productivity and upwards ing R&D work done in the areas of ‘‘hard’’ transport scalability of logistical operations through the development equipment, container and warehouse design and operations of mechanized and automated transport, warehousing, issues, attention in recent years has been given to related packaging, and other equipment (Fig. 5). in-plant engineering systems developments, sometimes This early development is traceable rather clearly in referred to as the ‘‘Intralogistics’’ segment. With the Central Europe: one of the pioneers is Reinhardt Ju ¨ nemann, emergence of the Internet ‘‘E-Logistics’’—attempting to a mechanical engineer by education, who did dissertation utilize the technological possibilities of the Internet to research in the engineering of warehouse operations in the better meet the needs of ever more diversified and volatile early 1970s [33]. Later his work expanded to industrial logistics demand—received a lot of attention for several materials flow equipment, picking–packing, and container years. Today, most interest is in the development and hardware systems, and the integration of the technologies application of RFID-technology for applications in logis- of OR, computer-assisted planning, controlling, etc. [34]. tics. A vision of an ‘‘Internet of Things’’ [11] is now trying In the 1980s Ju ¨ nemann founded the first dedicated research to integrate the possibilities of the technologies of the institute to Logistics Engineering, the Fraunhofer ‘‘Institute Internet, of RFID-based ‘‘intelligent objects’’ and of for Materials Flow Systems and Logistics (IML)’’ at Dortmund. Parallel initiatives, including also the first cre- 16 Compare the definition of Intralogistics by CeMAT, the world’s e ation of a dedicated academic program that jointly teaches world’s leading fair for Intralogistics based at Hannover. 123 60 Logist. Res. (2009) 1:53–65 Fig. 6 The discovery of Toyota Production System and ‘‘flow KnowledgeLog‘s., Quick Response dynamics’’ Quesnay(1758) -> „ New Applications ECR “FlowDynamics Forrester (1961) -> Ohno(1988, Porter (1985) -> orig. 1978) 1980s 1990s 2000s Womacket al. (1990) Stalk(1988)-> KSA (1993) Toyota Production“ Lean System Logistics Roots Milestones Lines of Evolution decentralized, semi-autonomous control systems (to be other industries. Among the voices who contributed most discussed in the next section). to the diffusion of the concepts of ‘‘flow’’ thinking and Toyota Production System were Schonberger [65], 2.5 Toyota system and the mastery of ‘‘Flow Goldratt [26], Wildemann [82], Shingo [69], and Dynamics’’ Womack et al. [84] (Fig. 6). Adaptations of some of the basic ideas of flow dynamics Not before the early 1980s, revolutionary new insights into followed in the fashion industries through the ‘‘Quick the configuration and operation of logistical systems were Response’’ and then through the worldwide ECR initiatives first noticed in the West which Japanese managers had in the broader consumer goods and retail industries [40]. A quietly implemented in Japanese industry after World War new focus in general management discussions on ‘‘Value II: The ‘‘Toyota Production System (TPS)’’. Taiichi Ohno Chain Management’’ [58], ‘‘Time-Based Management’’ had originally published his book about TPS in Japanese in [72], also Hammer’s [28] already mentioned discussions of 1978 [53]. But it took years until the power of the ideas ‘‘Process Reengineering’’ at that time may both have been which it offered were discovered and fully appreciated in facilitated by the discoveries and successes of Japanese- the US and Europe. style flow management, and may have served as a source of At the heart of Ohno’s ideas was the conceptualization still more awareness for phenomena of flow dynamics (e.g. of industrial production as a flow system. Machines and [21]). Creative applications of flow thinking and the con- workers are arranged in the sequence of the manufacturing cept of demand-driven control of flow dynamics are now process—the idea that Henry Ford had realized first in found in fields far away from ‘‘material’’ logistics, such as 1913 with the installation of his line for the assembly of a Knowledge Management (‘‘Knowledge Logistics’’ by standardized mass-product. Lullies et al. [46] and the ‘‘Logistics of Events’’ [7]). Ohno’s path-breaking contribution which moved the The mastery of flow dynamics has become a key con- concept ‘‘beyond large-scale production’’ was based on cern of logisticians. With this and an ongoing increase in several additional ideas. The most important one is control the complexity of global supply chains—to be discussed in of the ‘‘flow dynamics’’ strictly by customer demand rather the next section of this article—additional research ques- than by a preset, rigid clock rate. Synchronization of the tions came up, such as the discussions about the ‘‘bull- flow across multi-stage sequences of activities, which may whip’’ effect [42], i.e. the difficulties of the governance and be interlinked in complex and flexible ways, is achieved by control of flow dynamics. passing on demand signals from the end of the chain in With hindsight, several predecessors and early founda- ‘‘backwards’’, upstream direction from stage to stage, and tions to ‘‘flow’’ thinking, flow system design and flow by making sure that demands signalled are met ‘‘just-in- dynamics issues are found. The earliest example is the time’’. TPS allowed for quantum leaps in productivity, French economist and physiocrat Francois Quesnay’s [61, inventory reduction, and the ability to handle a significant 62] description of the economy as a circular flow system degree of product variety at the same time. The rigidity and that can be modelled after the human blood circulation complexity of centralized ‘‘synoptic’’ planning systems system. In the 1950s, the father of ‘‘Systems Dynamics’’, was substituted by sequences of simple loops of demand Jay Forrester, and his MIT research group, had already signals and just-in-time supply responses which could be begun to study and describe the phenomena of flow nested and changed in many ways. After its discovery in the West, the powerful idea of Goldratt [26] novel ‘‘The Goal‘‘which claims to have sold more than a million copies may be considered the best-selling book on organizing industrial production logistics as demand-driven logistics of all time. flow systems was continually being refined and adopted to Wildemann was the first to popularize the concept in German industry, helping to start the ‘‘just-in-time revolution’’ in European i.e. the subtitle of his 1988/1978 book! industry too. 123 Logist. Res. (2009) 1:53–65 61 Fig. 7 ‘‘Cross-organizational integration’’—the logistics of SCM & supply chains Coase(1938) -> “X-Organizational New Institut. Structures Simon (1960) -> Integration NetworkGovernance Oliver/W (1982) Alchian/Demsetz(1972) -> Houlihan(1985) Lawrence/Lorsch (1970) -> Christopher 1980s 1990s 2000s Weick(1976) -> (1992) Complexity Autonomous Management Systems Roots Milestones Lines of Evolution dynamics in industrial contexts [23]. Apart from this line of New conceptualizations of the issues of the design and research, there has been parallel, more technical work in management of complex Supply Chain structures and new Europe about flows in transport systems (e.g. [59]) and answers to the issues raised are primarily drawn from the materials flows (as discussed above in ‘‘Engineering fields of Systems Theory, Organization Theory and the Instrumentation’’). ‘‘New Institutional Economics’’. First, there is the recognition that the critical levers for 2.6 ‘‘Cross-Organizational Integration’’: the logistics successful SCM are not in the efficient planning, mobili- of supply chains zation, and control of goods, materials, and information flow networks alone. There are intricate issues of inter- The first academic arguments for the idea of extending the personal relationships, contractual arrangements, of the horizon of logistics research from an enterprise and ‘‘intra- coordination and governance of the actors and activities ’’ logistics focus to the relationships in inter-organizational involved in the network of supply chain relationships. Otto chains and distributed networks of suppliers, customers and [54] summarized recent research on the multiple levels of other stakeholders took place in the 1980s [31, 36]. But it networks and network relationships that SCM management took 10 years more until—rather suddenly—SCM fully must consider. His model identifies four layers of those caught the fascination of logisticians, and became a major relationships: the familiar ‘‘materials flow’’ and ‘‘infor- topic for practitioners and research. In some countries mation flow networks’’, the ‘‘social relationship’’ networks, ‘‘SCM’’ even began to replace ‘‘Logistics’’ as the denom- and the network of ‘‘institutional’’, i.e. contractual, formal- inator of the field and stimulated a discussion about which organizational arrangements. Recent discussion suggests term should be considered the broader, overarching one, that a fifth ‘‘money’’ or ‘‘value flow’’ network layer should which one should be considered a sub-aspect. also be considered (e.g. [57]). The SCM discussion motivated the community of log- Among the research challenges that are posed by an isticians to address new issues of the full complexities of advanced, multi-dimensional notion of SCM are the issues the design, planning, operation, and control of value chains of and networks that extend beyond individual enterprises and • how to chose and allocate the most efficient coordina- their immediate supplier- and customer relationships. The tion mechanisms in complex supply chain relationship- concern with ‘‘cross-organizational’’ issues has signifi- networks, such as ‘‘Markets’’ and ‘‘Hierarchies’’ [16], cantly opened and enriched the research agenda in the field or ‘‘Clans’’ [55], of logistics to a new range of questions and new ideas, as • finding the right degrees of complexity that can be indicated in Fig. 7. handled within ‘‘tightly coupled’’, hierarchically con- trolled organizational units (e.g. Hagel [27]), The influential American ‘‘Council of Logistics Management • the identification of best combinations of ‘‘loose’’ and (CLM)’’ renamed themselves in 2005 to ‘‘Council of Supply Chain ‘‘tight’’ coupling mechanisms between network actors Management (CSCMP)’’, implying that ‘‘logistics’’ covers a subset of SCM-issues only. A recent discussion of this perspective is in Frankel and units when high degrees of uncertainty and et al. [24]. In this paper, as will become clear, ‘‘Logistics’’ and ‘‘Flow environmental turbulence need to be accommodated Management’’ are considered to be the broader, more generic [70, 80], concepts, and SCM is one—if very important—field of application of logistical concepts and ideas. It may be critically noted in this context, that some authors and Footnote 21 continued practitioners are applying the new ‘‘SCM’’ terminology when they manufacturer–customer relationships, leaving open the question deal with nothing but the long familiar narrower logistical issues of whether there is truly new content of ideas in their uses of the SCM procurement in dyadic supplier–manufacturer relationships or of terminology. 123 62 Logist. Res. (2009) 1:53–65 last not least research related to the material activities of ‘‘placing’’, ‘‘pacing’’, ‘‘parsing’’ goods and services in the future • applying the right incentives and controls in ‘‘team should focus on the specific challenges and demands of work’’ [1], and ‘‘principal–agent’’ [32] relationship economically less mature countries and industries, which networks where information is unevenly distributed have been receiving relatively little attention in the past. between the participants and hierarchical control not The second hypothesis which followed was, that in available. maturing countries and industries the ‘‘march of material Resolutions to those issues of complexity management logistics’’ may end in stagnation, if new directions and and of the governance of networks of loosely coupled ideas for innovative applications for logistics are not found actors are of highest practical relevance in SCM. While— that have relevance and potential impact upon the ‘‘wealth implicitly—most SCM authors assume that ‘‘more is bet- of nations’’—especially of those which are rapidly moving ter’’ with respect to the degrees of integration and control into the post-industrial stage. of the actors in a supply chain, difficult questions are raised The question where those new ideas and directions may about this assumption: for which situations and segments of be found provided motivation for a review of the past complex supply chain networks is this assumption true, for 50 year’s ‘‘march of ideas’’ in logistics. Figure 8 is an which does it not hold [10]? In the design of a supply chain attempt to graphically summarize the observations on the the right ‘‘granularity’’ must be found: how far should the various lines of development in logistics research—a ‘‘Division of Labour’’ and the narrowing of ‘‘Core Com- mapping of the ‘‘march of ideas’’ as it has been drawn-up petencies’’ [60] be carried? How much flexibility and in the second part of this essay. ‘‘agility’’ is right, and what does it cost [14]? How does a Along the centre line of idea developments, labelled the ‘‘principal’’ compensate his ‘‘agents’’—the suppliers and ‘‘Awareness’’ string, the exhibit shows the three major foci outsourcing partners—in order to motivate them to do their that seem to have created ever broader attention to logis- best, yet not overpay them—and how should the gains and tics: It started out with concern for ‘‘Physical Distribution’’ benefits of successful SCM be distributed among the actors and ‘‘Marketing Logistics’’. In the 1980s the primary fas- and activities? cination of the logistics community shifted to ‘‘JIT’’ The concern with cross-organizational integration in systems and the issues of ‘‘Industrial Logistics’’. And now, logistical chains and networks has brought a tremendous since the 1990s, most interest is centering around the terms enrichment of the issues that now are systematically being and promises of ‘‘SCM’’. addressed, and of the ideas which are considered for their Based on the interpretations chosen in this essay, five solution. additional lines of ideas and research have been adding new substance and enriched the ‘‘march of ideas’’ of logistics research in various ways at various points in time: 3 The ‘‘March of Ideas’’ in logistics research: current frontiers and the question of where to go next? • the ‘‘OR and Modelling Instrumentation’’ line of logistics research contributed through the introduction In the first part of this discussion on the growth and dif- and evolution of modelling and Operations Research fusion of ‘‘material’’ logistics, some observations and techniques, based on mathematics and formal econom- hypotheses were presented, which relate to the path and ics, added quantitative tools and methods, thereby pace of the diffusion of logistical activities at the aggre- enhancing the scientific rigour and respectability of the gative level of countries and industries. A preliminary field; analysis of available data suggested that there is a sur- • the ‘‘Industrialization’’ line of research and develop- prisingly clear correlation between relative national ment in logistics, which is rooted in the field of logistics expenditures—i.e. the level of ‘‘material’’ logis- Scientific Management, and driven by the examples of tical activities—and the ‘‘wealth’’ levels achieved in those very successful, large logistics operators, helped the countries. The study of national logistics growth data also field to develop its identity as an important industry and suggested that economically mature countries may reach a to assert its relevance to management; state of saturation with ‘‘material’’ logistics, when the • the additional line of ‘‘Engineering Instrumentation’’ integration into global economic cooperation and interna- research and developments—i.e. the engineering of tional Division of Labour cannot be increased much further specialized hardware and software equipment, compo- and when ‘‘material’’ industrial production levels cannot nents, and systems—brought the opportunities and rise any more. challenges of truly interdisciplinary cooperation to the The first conclusion and hypothesis derived from these logistics, which so far had been delimited to manage- observations was, that a ‘‘Science of Logistics’’ doing ment, OR, and economics research; 123 6 „ Institu. Structures Complexity “X.-Organizational Management Network Governance Integration: Instrumentation Location, Routing Studies Manuf. Resource Complex Networks “OR & Modelling : Lot & Inventory Sizing Planning, ERP Configuration Logist. Res. (2009) 1:53–65 63 1. Supply Chain Management Physical Distribution “JIT ndustrial Logistics „ „ “Awareness : ECR->E-logistics->Risk & Greening Marketing Logistics “Procurement , “Production 1960s 1970s 1980s 1990s 2000s Fig. 8 The march of ideas in logistics research—current frontiers and next developments? • the line of research about the ‘‘Dynamics of Flows’’ primary goal for the future ‘‘Science of Logistics’’ (or of 22 23 that was stimulated by the discoveries and successes of ‘‘Supply Chain Science’’ if this term will be preferred), TPS, opened the research horizon of logistics to new which might define itself as issues of the dynamics of flows and systems; the science of complex network flows—concerned • lastly, the research stream around the issues of ‘‘Cross- with the architectures, dynamics, and successful Organizational Integration’’, that has been stimulated governance in ways that are helping to enhance and by the fascination with the ‘‘Supply Chain Manage- sustain ‘‘The Wealth of Nations’’. ment’’ terminology, made the field move into the issues of complex systems architectures, the possibilities and A final suggestion that may be derived from this map- limits of the governance of those systems, drawing on ping of the ‘‘march of logistics ideas’’—and a possible research foundations in Complex Systems and Organi- answer to the claim that growth and innovation opportu- zation Theory, and modern Institutional Economics. nities in the ‘‘old’’ material logistics field of application might end in stagnation in a gradually maturing, materially The current state of the field is symbolized by the saturated world—is that attention could be directed to ‘‘2008’’ oval in Fig. 8: it is meant to show how the origi- ‘‘complex network flows’’ other than material ones: nally disjunct ideas and lines of discipline-bound research Unresolved—or only partially resolved—challenges, that have been converging and started to interact. At the same may be successfully approached with the tools and insights time, the position of the oval intends to show that there is of logistics, may be found in the non-material areas of still distance to cover until the research streams of ‘‘knowledge management’’—how to better organize, ‘‘Modelling and OR’’, of ‘‘Complex Systems, Organization mobilize, control flows and inventories of ideas and Theory, and Institutional Economies’’, where academic knowledge by creatively applying concepts such as JIT, rigour and deep specialization are primary concerns VMI, of ‘‘loose coupling’’ and ‘‘Agency Theory’’ to (shown in the upper part of Fig. 8), and the more prag- matic, business oriented, ‘‘relevance’’ seeking research Hopp [30] used this term for his recent book publication. streams of ‘‘Industrialization,’’, ‘‘Engineering’’, and ‘‘Flow To help advance the convergence and integration of these streams Dynamics’’ will truly have reached a satisfactory level of of research is the mission which the Logistics Research journal has integration. 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Logistics research: a 50 years’ march of ideas

Klaus, Peter
Logistics Research , Volume 1 (1) – Jan 14, 2009
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Publisher
Springer Journals
Copyright
Copyright © 2009 by Springer-Verlag
Subject
Engineering; Engineering Economics, Organization, Logistics, Marketing; Logistics; Industrial and Production Engineering; Simulation and Modeling; Operation Research/Decision Theory
ISSN
1865-035X
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1865-0368
DOI
10.1007/s12159-008-0009-y
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Abstract

Logist. Res. (2009) 1:53–65 DOI 10.1007/s12159-008-0009-y REVIEW PAPER Peter Klaus Received: 22 November 2008 / Accepted: 28 November 2008 / Published online: 14 January 2009 Springer-Verlag 2009 Abstract Logistics—as a field of the Applied Sciences the process of the formation and advances of the field by addressing issues from the worlds of business and the pausing for a moment after about 50 years of rather diverse economy—is now more than 50 years old. This essay and dynamic developments. An effort is made to describe, makes an effort to review, reflect, and interpret what reflect and interpret what researchers have done and researchers have done and thought in this field so far, what thought in the names of ‘‘Logistics’’ and of ‘‘Supply Chain kind of impact their ideas apparently made, and where the Management’’ (SCM), and what kind of impact their ideas ‘‘march of ideas’’ about logistics research might lead in the possibly made in their efforts to shape and move the field future. The first part of the review presents data that ahead. It is a review of the past ‘‘50 years’ march of recently have become available about the quantitative logistical ideas’’. With some hindsight and growing dis- impact of logistics in an international comparison between tance from the points of departure, it is assumed, the countries. From this review some hypotheses are derived important milestones and turns in the development of the about the growth opportunities for the field in the future field may be seen more clearly than ‘‘on the march’’. Past and the challenge of maintaining the dynamics of the progress can be assessed with more certainty, and a better development of logistics in maturing, post-industrial vision of what course the field might take in the future may economies. In the second part the qualitative evolution of result. scientific logistical thinking—the ‘‘march of ideas’’ of the Developments will be traced in two different ways: last 50 years—is reviewed, mapped and, again, interpreted with respect to the question, where the ‘‘next’’ challenges, First, a highly aggregated look at the state of logistics new ideas, and directions may be found to further advance and its impact upon the ‘‘real world’’ is taken by the ‘‘Science of Logistics’’. reviewing some quantitative data that have become available recently. From this, some inferences on the pace Keywords Logistics research  Epistemology and direction of the diffusion of logistical activity in Quantitative measurements  Instrumentation  given countries and industries are drawn, i.e.—to stay in Industrialization  Flow dynamics  the picture—on the motivating forces and the pace of the Cross-organizational integration ‘‘march’’ of logistics. Following this look at quantifiable aspects of the development of logistics, the qualitative evolution of scientific logistical thinking during a 50-year time span is This essay is about the progress of the ‘‘Science of considered in more detail: what kinds of major issues have Logistics’’. It is trying to contribute to the understanding of been addressed between the 1960s and today? What kinds of ideas which are promising answers and solutions to those issues have been suggested by the different members and groups of the scientific community of logisticians? P. Klaus (&) And, to the extent this can be identified, which are the Nuernberg, Germany scientific roots that inspired those ideas? e-mail: peter.klaus@logistik.uni-erlangen.de 123 54 Logist. Res. (2009) 1:53–65 Eventually, some concluding thoughts on what this • size and development of each country’s material analysis suggests for the future development of the Science logistics sector, as measured by per capita logistics of Logistics and its future impact are submitted. spending in Euros. The result of this analysis is shown graphically in Fig. 1. 1 The march of logistics: some comparative The positive correlation between relative logistics observations on the quantitative growth expenditure and relative national wealth that shows for the and the diffusion of logistical activities at national left-hand-side section of the graph of Fig. 1 (marked and industry levels ‘‘Diffusion and Growth’’) may be interpreted quite simply: It could be just another confirmation of Adam Smith’s The task of ‘‘measuring’’ the volume of logistical activi- historical finding on the primary cause for the ‘‘Wealth of ties at the aggregated level of countries and industries in Nations’’. The more Division of Labour is practised in an order to assess their impact relative to all economic economy, the better off the respective people will be! activity is a difficult one. It has hardly been addressed in Spelling this interpretation out in more detail: the past. Reliable answers to the question about the The Division of Labour in the context of today’s global logistics sectors’ impact and—still more challenging—to economy means that processes of value creation are the question of a potential relationship between the increasingly shared between countries. Economic activity volumes and impact of logistical activities in the ‘‘real is dispersed between ever more specialized ‘‘tiers’’ and world’’ on one side, the evolution of ‘‘Logistics Science’’ centres of activity, leveraging favourable ‘‘economies’’ as a body of ideas and knowledge on the other side, have wherever they are found on the globe. The number of nodes not been available so far. and links in modern ‘‘Supply’’ and ‘‘Value’’ Chains increases. More transfer activities between the tiers, nodes 1.1 What comparative data suggests: a correlation and actors involved are required! between the growth of logistics and the ‘‘Wealth of Global Division of Labour has effects along several Nations’’ dimensions: • a ‘‘geographical’’ dimension of placing, respectively In a recent—although quite preliminary—effort several studies that provide answers at least to the ‘‘measurement’’ dislocating activities across the globe. More and longer transportation links are needed, increasing the absolute question were reviewed and reconciled as best as possible [39]. The data focus on the volumes of ‘‘material’’ logis- volume of transport activity and demanding higher tics activities of moving, storing, handling physical goods, levels of transport speed, frequency, reliability, etc.; that are quantifiable in tons, miles, numbers of jobs, and • the ‘‘time’’ dimension because of the fact that activities reflected in monetary expenses for those activities at which are dispersed between many centres of activity in complex value chain structures are performed on national and industry levels. different schedules, and at different speeds, which The study related the means that there is more need for differentiated ‘‘pacing’’, i.e. for more buffering, storage, inventories, • level of economic development in the countries and adjustments of goods flow velocities; included (respectively the ‘‘wealth’’ of those countries), • a dimension of alternative ‘‘arrangements of objects’’, as measured by the Gross Domestic Product (GDP) per because there is more need to sort, arrange and capita in Euros, to the rearrange goods and information as they move between the tiers of the value chain in order to adapt to differing capacities, lot size requirements, assortments of mate- This analysis was based primarily on data assembled or estimated rials at each centre of activity—i.e. there is more need about ‘‘national logistics expenditures’’ by Bowersox and Calantone [8] and Bowersox et al. [9], Armstrong et al. [2], Wilson [38, 83]. for parsing, picking, packing, consolidation and decon- In the German language ‘‘material’’ logistics is of often referred to solidation activities. as ‘‘TUL’’ logistics (=Transport, Umschlag, Lagerung). Sheffi and Klaus [67] referred to this as ‘‘PPP’’-logistics, i.e. logistics as the sum This is nothing but a complicated way of saying that the of physical ‘‘Placing’’ activities—transporting, moving objects from increasing integration of an economy into global economic one point in a geography to another—of ‘‘Pacing’’—taking care of the cooperation and the global Division of Labour requires time-related activities of storing, buffering, warehousing, inventory keeping—and ‘‘Parsing’’—arranging and rearranging objects by parcelling, deconsolidating, picking/packing, sorting, consolidating. This chart was originally published in Klaus [39; p. 346]. Countries This notion of material logistics traces back to Marshall’s [50] and are identified by their international vehicle license plate symbols Weld’s [78] discussion of the creation of economic ‘‘utilities’’. Trend-lines have been added for the argument following. 123 Logist. Res. (2009) 1:53–65 55 Fig. 1 A relationship between 4,0 levels of economic development of national economies and the 3,5 US volume and value of material logistics activities 3,0 Saturation? SE NL 2,5 BE DK IE CH 2,0 CY UK GR ESA A 1,5 EE LV SI 1,0 CZ LT PT PL MT 0,5 RO SK HU China BG IND 0,0 0,0 5,0 10,0 15,0 20,0 25,0 30,0 35,0 40,0 45,0 GDP per Inhabitand (in T€ p.a.) ever more logistics as a condition for increasing the wealth So far, the argument just corroborates what Fig. 1 sug- of the participating nations. The ‘‘rich’’ countries in the gests—that there may be a positive correlation between upper right sector of Fig. 1, such as the US, the Nether- relative national logistics expenditures and material lands (NL), Denmark (DK), Ireland (IRL), Switzerland ‘‘wealth’’ levels of countries and industries. (CH), have economies that are most advanced with respect to their global integration. They also have relatively 1.2 On the pace of growth and diffusion logistics: two high logistics expenditures. The ‘‘poorer’’ countries at hypotheses the lower left sector in Fig. 1, such as India and China, Bulgaria (BG), operate at lower levels of national and For the intention to learn about the pace of the ‘‘march of global Division of Labour and have relatively lower levels ideas’’ in logistics, a few more inferences may be drawn of logistical activity. from the observations in Fig. 1: This fundamental relationship may also hold at the level In those lesser developed countries and industries where of industries within a country: industries with traditionally there is potential for more Division of Labour there will be lower levels of Division of Labour, such as the agricultural growing demand for added capacity and sophistication of and crafts sectors, provide relatively lower contributions logistical activities. Any progress in the development of the to national wealth and require relatively less developed ‘‘Science of Logistics’’ which helps to expand the capaci- and lower cost logistics activities. Industries with highly ties for ‘‘placing’’, ‘‘pacing’’, and ‘‘parsing’’ materials and developed, widely spread Division of Labour, such as most goods, may directly contribute to wealth creation. Hi-Tech and modern mass-production assembly industries, From this observation a first hypothesis is derived: the contribute more to national wealth and demand more most dynamic future for material logistics and related sophisticated and more expensive logistics. scientific efforts will be in countries that are not yet fully integrated into the networks of international Division of Labour, and in sectors of economies like the agricultural, craft, and other industries that have not yet fully exploited Some of the variance around the trend line in Fig. 1 may be the respective opportunities! These ‘‘markets’’ for the explained by the very different geographical structures of these countries. Geographically spread out countries like the US and Science of Logistics have not been explored and served Sweden with significant amounts of natural resources to be moved very well in the past. They should be addressed more in the require above average transportation expense. Geographically com- future. pact, very densely populated and resource-poor countries such as The second hypothesis drawn from Fig. 2 suggests: Switzerland and Denmark are below average. 5 where a level of ‘‘saturation’’ with respect to Division of An additional factor explaining the relatively low spending on logistics in ‘‘poorer’’ countries, of course, which is not accounted for Labour in an economy—or an industry—will be reached, in Fig. 1, is a relatively lower wage cost level—but the general trend the growth and impact of material logistics will reach shown will not be affected. limits. In mature economies ‘‘global’’ integration is This relationship will be more complicated in reality, because it is approaching maximum levels. If, in addition, the consumer also contingent on the typical value density factors in an industry. For population and the industrial workforce is stagnating or the purpose of this discussion these additional contingencies are even declining in mature countries, as is the case in most neglected. Diffusion and Growth Logistics Spending per Inhabitand (in T€ p.a.) 56 Logist. Res. (2009) 1:53–65 parts of Western Europe and Japan, physical consumption, Sciences, and Engineering. Each of these fields has its own the material needs for production supplies, and conse- perspective and prefers its own set of methods. The logisti- quently the needs for industrial distribution activities will cians of the first generations—if they did not operate in not grow further. purely pragmatic, a-methodical ways—brought with them This argument potentially explains why in the demo- the perspectives and methods from the fields and institutions graphically and economically mature countries, which are where they came from, since there were no indigenous placed in the upper right corner of Fig. 1, the ‘‘march of logistics courses and institutions. And even among the material logistics’’ may come to a halt. younger generation academics in logistics, who received If logistical ideas and the ‘‘Science of Logistics’’ want to their education in Logistics and SCM programs and depart- maintain their momentum and impact in the context of ments, the style and direction of their work is still influenced matured economies and industries, new fields of applica- by their roots in either ‘‘Marketing Science’’, ‘‘Economic tion will have to be found, which shall be discussed later in Modelling’’, ‘‘Operations Research’’, ‘‘Scientific Manage- this essay. ment Studies’’, ‘‘Engineering’’, the ‘‘New Institutional Economics’’, ‘‘Management and Organization Theory’’, or other affiliations. Logistics, significantly more than other 2 March of ideas: a brief history of logistics fields, is embedded in a diverse network of intellectual as a step-by-step accumulation of ideas, research relationships—which also explains the difficulty for logis- questions and suggested answers ticians to establish their own, distinct scientific identity. On the basis of these considerations about the appro- So far in this essay, ‘‘logistics’’ has been referred to as the priate level of detail and a historical and disciplinary logic sum of the material, quantifiable activities of ‘‘placing’’, of clustering materials, six sets of ideas, their approximate ‘‘pacing’’, and ‘‘parsing’’ goods and things. In this second time of entry into the ‘‘marching band’’ of the evolving part of the discussion, the review of logistics is continued as Science of Logistics, and their likely roots in ‘‘classical’’ a description and interpretation of a ‘‘march of ideas’’—an academic contributions from other sciences are suggested. attempt at the historical epistemology of logistics. In the following discussion and Fig. 2 through 7 each entry The level of detail of the following discussion is is labelled by a descriptive term—‘‘Awareness’’, ‘‘Indus- intended at a middle range: it should say more about the trialization’’, ‘‘Engineering Instrumentation’’, ‘‘Flow substance of ideas than the frequently suggested categori- Dynamics’’, ‘‘Cross-Organizational Integration’’. Refer- zations of logistics into three or four development phases ence is made to those ‘‘classical’’ contributions in the provide. But is should also avoid the little structured literature which laid the foundations of the respective jungle of technical concepts and terms that were discussed ideas, and to those ‘‘milestone’’ contributions that marked a in the field of logistics over time, such as ‘‘Materials major change and expansion in thinking about logistics. Requirements Planning (MRP)’’, ‘‘Just-in-Time (JIT)’’, ‘‘Vendor Management Inventory (VMI)’’, ‘‘Collaborative 2.1 Creation of ‘‘Awareness’’ for logistics research Planning, Forecasting and Replenishment (CPFR)’’, etc. needs and the institutionalization of the field The primary criteria for clustering the ideas, research questions and answers into distinct phases in a way that The early phase of creating awareness for the need and serves the purpose of this essay will be their historical promise of doing systematic research in the field of logis- context and their association with certain scientific com- tics—in both in the business community and in the munities. Logistics Science is a cross-disciplinary field, academic field of management studies—has been described stimulated and informed by a wide range of other, older in numerous textbooks and articles, such as Stock and sciences, ranging from Economics, Mathematics, to the Lambert’s [73] and Ballou’s [6]. The start of the ‘‘logistics younger fields of Business Administration, the Organization march of ideas’’ is located and dated rather uniformly to the US in the early 1960s. The historical motivation for this happening at that time See footnote 2 above! was the ‘‘Marketing Revolution’’ that had started from Such as the ‘‘functional’’, ‘‘physical distribution’’, ‘‘supply chain/ the United States after World War II. No longer was the cross-functional’’ and a ‘‘global supply network’’ phase. Recent examples are in Baumgarten [5] and Ballou [6]. capacity to efficiently produce scarce goods a decisive The choice of these criteria is inspired by Rheinberger’s [63] factor for business success. Rather, the ability to attract and argument that the study of the development of scientific knowledge service customers who have many alternative choices to should reflect to historical context and the means and methodologies satisfy their needs became the key. And being identified as through which the process of knowledge generation takes place. The analysis is deliberately qualitative and interpretive rather than based on formal methodology (as, e.g. in Charvet’s [13] recent article). Described by Keith [35] in an article of the same title! 123 Logist. Res. (2009) 1:53–65 57 Fig. 2 The creation of SupplyChain ‘‘awareness’’ for logistics: the Management foundation of physical “JIT Industrial Logistics distribution ‘‘science’’, and the The „ „ Marshall (1890) -> “Procurement , “Production emergence of ‘‘industrial “Marketing Shaw (1912) -> Revolution 1960s 1970s 1980s 1990s 2000s logistics’’ and ‘‘supply chain Weld(1916) -> Magee(1960) management’’ as new pillars of Converse(1921) -> Drucker PhysicalDistribution Keith (1960) -> the fields identity „ “Science (1962) Roots Milestones Lines of Evolution one crucial element of Marketing, the activities of trans- Now the issues of cross-functional and inter-organizational porting and warehousing—‘‘Physical Distribution’’ to integration became the major attention-getters for outsiders customers—which formerly were rather peripheral con- and insiders, causing a sequence of ‘‘waves’’ of interest that cerns to management and academic research, became the peaked in the mid-1990s around the concept of Efficient nucleus for the emerging field of logistics. Consumer Response (ECR), around the turn of the mil- Milestones in the creation of awareness and the begin- lennium around ‘‘E-logistics’’. Today ‘‘Supply Chain Risk’’ ning of the institutionalization of what became ‘‘Marketing and the ‘‘Greening’’ of Logistics seem to have become the Logistics’’ and ‘‘Business Logistics’’ were Magee’s [48] ideas that are drawing most popular and academic interest. Harvard Business Review article on ‘‘The Logistics of Distribution’’ and Drucker‘s [20] Fortune article on ‘‘The 2.2 Initial ‘‘Instrumentation’’ of logistics research Economy’s Dark Continent’’. Smykay et al. [71] published through operations research and modelling the first textbook on ‘‘Physical Distribution Manage- methods ment’’—marking the entry of the field into the academic world. There had been earlier efforts to create awareness The first ‘‘Awareness’’ wave of logistics research related to for the importance of Marketing and Distribution by Marketing and Physical Distribution was primarily authors such as Shaw [66], Weld [78], and Converse [17]. descriptive and exhortative in the sense that the structures But it seems to have been Drucker’s article and popularity of well-managed distribution systems were described. in the broad management community which, for the first Appeals for a systematic, ‘‘holistic’’ treatment of the issues time, drew really wide ranging attention to the need for of transportation and warehousing were made. systematic scientific work in exploring ‘‘the logistics of But soon the need for deeper, more structured and more distribution’’. Rather soon other authors followed. ‘‘Phys- truly ‘‘scientific’’ analyses was recognized. Some prior ical Distribution’’ and ‘‘Logistics’’ were institutionalized in work from the military environment, the simultaneous more academic institutions and professional associations rise in progress and popularity of the field of Operations such as the National Council for Physical Distribution Research (OR), and new possibilities of running large scale Management (later to become the Council of Logistics models and mathematical calculations on computers in the Management and recently the Council of Supply Chain 1960s and 1970s lead to a rapid expansion of OR-related Management Professionals). With several years delay, work in logistics. from about 1970, parallel developments of logistics Much of this work addresses geographical aspects of research, publications, and institutionalization also evolved logistical systems design and optimization, building on in Europe and in other parts of the world. foundations as far back as the nineteenth century, such as By the 1980s the power of Marketing and Distribution the famous model of the ‘‘Isolated State’’ by the economist issues for drawing attention to the emerging field seems to von Thu ¨ nen [75], Launhardt’s [41] and Weber’s [77] have been exhausted. The new idea of ‘‘just-in-time’’ and classics on industrial location decisions. A long line of ‘‘lean’’ industrial procurement and production became a more recent OR work about vehicle routing and scheduling new centre of interest and a new pillar of the field of started with Clarke and Wright [15] and was continued in logistics’ sense of identity—to be discussed below in the more comprehensive approaches to the analysis of trans- section about the Toyota Production System (TPS) and portation systems and how they should be optimized [49]. ‘‘Flow Dynamics’’. Starting in the 1990s another major shift took place in A frequently quoted early source is Lewis [45], which demon- strated the savings potentials which can be realized by taking a ‘‘total the perception where the heart of the field is—‘‘SCM’’. cost’’ perspective. Early examples are Morgenstern’s [51] ‘‘Note on the Formulation The first monograph of this kind in Germany, possibly in all of of the Theory of Logistics‘‘ and publications by the RAND Europe, was Pfohl’s [56] dissertation. Corporation (e.g. [25]). 123 58 Logist. Res. (2009) 1:53–65 Fig. 3 The ‘‘instrumentation’’ Complex Networks Risk & of logistics: integrating Configuration Reverse Log. modelling techniques and operations research von Thünen (1826) -> Instrumentation Manuf. Resource Launhardt (1882) -> Planning, ERP “OR & Modelling Wagner/Whitin (1958) Weber (1909) -> Hax/Meal (1975) Morgenstern (1951) -> 1960s 1970s 1980s 1990s 2000s Hight (1975) Geisler (1960) -> Location, Routing Studies Lot & Inventory Sizing Roots Milestones Lines of Evolution Another line of OR and work is concerned with object- concern. The concepts of the ‘‘Industrialization’’ of logis- quantity dimensions of logistical operations, determining tics services were gradually being discovered and adopted optimal order sizes, lot sizes, inventory levels and related among leading logistics organizations, marking another scheduling arrangements in production and distribution. milestone and a new stage along the ‘‘march of logistics Pioneering contributions in this area were Magee [47], ideas’’. Stimulation for this powerful development pri- Wagner et al. [79], Hax and Meal [29], and Wight’s [81] marily came from ‘‘best business practices’’ of successful work about MRP. service and retail companies. The person who first drew More recently much work is about the development of attention to the idea and potentials of the ‘‘Industrialization integrated solutions, seeking the joint optimization of of Services’’ was Levitt [43, 44] (Fig. 4). geographical, time, quantity and monetary aspects of The academic predecessors who paved the way for the planning through concepts like Manufacturing Resource idea in the Scientific Management literature were Babbage Planning (MRP II) and Enterprise Resource Planning [3], Taylor [74], Ford [22], Shewhart [68] and Deming (ERP) systems development. Recently the integration of [18]. Their themes were the realization of Economies of the additional issues of ‘‘Reverse Logistics’’ and ‘‘Risk’’ Scale through product standardization and production- considerations is adding still another level of complexity to lines, statistical quality controls, brand-name mass-mar- the modelling and optimization challenges in logistics. An keting of services, and the rationalization of service process innovative approach that is tried by some of the ‘‘instru- structures. With regard to the latter, a remarkable early mentation’’ researchers is in the use of models from nature contribution in Europe to the study of industrial organiza- for the solution of very complex decision problems [19] tion and process structures by Nordsieck [52] was (Fig. 3). rediscovered. The ‘‘instrumentation’’ of logistics trough mathematical Pioneers in the ‘‘Industrialization of Logistics Services’’ methods, through ever more advanced statistical and were some extraordinarily successful transport and retail modelling techniques and increasingly powerful support companies such as UPS, FEDEX, and WALMART. The from Informatics, is still dynamically moving forward. It line of research which followed their example is docu- may be the most rigorous and best documented stream of mented primarily in case study descriptions and business logistical research through the prestigious journals of the strategy discussions. The ideas and practices of ‘‘Indus- OR-associated researchers, such as Operations Research, trialization’’ were extended by such contributions as Camp Management Science, Mathematics of Operations [12] on ‘‘Benchmarking’’ and Hammer [28]on‘‘Process Research. The ‘‘quantitative logistics’’ community is a Reengineering’’, which for a period of time stimulated a lot tightly knit subgroup among logisticians. of research and publications. Industrialization concepts are making use of the full range of OR instruments that were 2.3 The ‘‘Industrialization’’ of logistics services discussed in the preceding ‘‘Quantitative Methods Instru- mentation’’ section, and also of the ‘‘Flow Dynamics’’ and From the 1970s and 1980s onward, when the consolidation ‘‘Cross-institutional Integration’’ concepts and research and institutionalization of logistics in functional depart- discussed below. ments and the professionalization and concentration of ‘‘Third Party’’ transport and Logistics Service Provider organizations rapidly advanced, the challenges and poten- tials of their perpetual rationalization became a new Examples are in Sasser [64]. A discussion about the most recent logistics segment taking up the ‘‘industrialization‘‘ path—after the parcel—and international express services, LTL services, worldwide e.g. Wallace [76]. This concern also was the basis of the container-line services seems to become the truckload-industry as impressive growth of ERP software providers such as SAP. discussed in Klaus and Muller [37]. 123 Logist. Res. (2009) 1:53–65 59 Fig. 4 Bringing the ideas and concepts of ‘‘industrialization’’ to logistics Benchmarking, Process-, Taylor (1912) -> “Industrialization Service-Engineering Shewhart(1924) -> of Logistics Ford (1926) -> Services: 1970s 1980s 1990s 2000s Successful Nordsieck(1934) -> Practices Levitt (1972,1976) -> UPS, FEDEX, ProductionLine Approach, Deming(1986) -> WALMART Branding, Standards Roots Milestones Lines of Evolution Fig. 5 March of the engineers: RFID, the ‘‘instrumentation’’ of Internet of Things logistics through logistics hard- and software E-Commerce Instrumentation „ E-Logistics “Engineering Watt (born1736) -> e.g. Babbage (1832) -> Jünemann(1971) 1970s 1980s 1990s 2000s Taylor (1912) -> Baumgarten (1972) Materials FlowSystems Warehouse, Container Tech Roots Milestones Lines of Evolution 2.4 The instrumentation of logistics through ‘‘hard’’ know-how of Engineering and Management (‘‘Wirtschaft- engineering technologies singenieur’’), were taken by Helmut Baumgarten at the Technical University of Berlin. Baumgarten [4] did early Another path and stage in the ‘‘march of logistics ideas’’— work about standardized container systems. He became one in parallel with ‘‘Industrialization’’—developed in response of the founders of ‘‘Bundesvereinigung Logistik (BVL)’’ in to the rapid growth, professionalization and concentration 1978, which from its beginning followed a mission of of the logistics functions within large industrial, retail, and integrating the disciplines of Business Administration and logistics service provider organization. The ‘‘Engineering Engineering in the field of logistics. Instrumentation’’ of the field started through engineers who Today research and development in the area of ‘‘hard’’ specialized on research and development of ‘‘hard’’ Logistics Engineering technologies is a firmly established equipment and systems for logistics operations. Initially and indispensable line of work which is getting increas- this happened quite separate from mainstream ‘‘Business ingly integrated with other lines of logistics research and Logistics’’. The work of the early logistics engineers development. Beyond the established, continuously ongo- addressed the demands for better productivity and upwards ing R&D work done in the areas of ‘‘hard’’ transport scalability of logistical operations through the development equipment, container and warehouse design and operations of mechanized and automated transport, warehousing, issues, attention in recent years has been given to related packaging, and other equipment (Fig. 5). in-plant engineering systems developments, sometimes This early development is traceable rather clearly in referred to as the ‘‘Intralogistics’’ segment. With the Central Europe: one of the pioneers is Reinhardt Ju ¨ nemann, emergence of the Internet ‘‘E-Logistics’’—attempting to a mechanical engineer by education, who did dissertation utilize the technological possibilities of the Internet to research in the engineering of warehouse operations in the better meet the needs of ever more diversified and volatile early 1970s [33]. Later his work expanded to industrial logistics demand—received a lot of attention for several materials flow equipment, picking–packing, and container years. Today, most interest is in the development and hardware systems, and the integration of the technologies application of RFID-technology for applications in logis- of OR, computer-assisted planning, controlling, etc. [34]. tics. A vision of an ‘‘Internet of Things’’ [11] is now trying In the 1980s Ju ¨ nemann founded the first dedicated research to integrate the possibilities of the technologies of the institute to Logistics Engineering, the Fraunhofer ‘‘Institute Internet, of RFID-based ‘‘intelligent objects’’ and of for Materials Flow Systems and Logistics (IML)’’ at Dortmund. Parallel initiatives, including also the first cre- 16 Compare the definition of Intralogistics by CeMAT, the world’s e ation of a dedicated academic program that jointly teaches world’s leading fair for Intralogistics based at Hannover. 123 60 Logist. Res. (2009) 1:53–65 Fig. 6 The discovery of Toyota Production System and ‘‘flow KnowledgeLog‘s., Quick Response dynamics’’ Quesnay(1758) -> „ New Applications ECR “FlowDynamics Forrester (1961) -> Ohno(1988, Porter (1985) -> orig. 1978) 1980s 1990s 2000s Womacket al. (1990) Stalk(1988)-> KSA (1993) Toyota Production“ Lean System Logistics Roots Milestones Lines of Evolution decentralized, semi-autonomous control systems (to be other industries. Among the voices who contributed most discussed in the next section). to the diffusion of the concepts of ‘‘flow’’ thinking and Toyota Production System were Schonberger [65], 2.5 Toyota system and the mastery of ‘‘Flow Goldratt [26], Wildemann [82], Shingo [69], and Dynamics’’ Womack et al. [84] (Fig. 6). Adaptations of some of the basic ideas of flow dynamics Not before the early 1980s, revolutionary new insights into followed in the fashion industries through the ‘‘Quick the configuration and operation of logistical systems were Response’’ and then through the worldwide ECR initiatives first noticed in the West which Japanese managers had in the broader consumer goods and retail industries [40]. A quietly implemented in Japanese industry after World War new focus in general management discussions on ‘‘Value II: The ‘‘Toyota Production System (TPS)’’. Taiichi Ohno Chain Management’’ [58], ‘‘Time-Based Management’’ had originally published his book about TPS in Japanese in [72], also Hammer’s [28] already mentioned discussions of 1978 [53]. But it took years until the power of the ideas ‘‘Process Reengineering’’ at that time may both have been which it offered were discovered and fully appreciated in facilitated by the discoveries and successes of Japanese- the US and Europe. style flow management, and may have served as a source of At the heart of Ohno’s ideas was the conceptualization still more awareness for phenomena of flow dynamics (e.g. of industrial production as a flow system. Machines and [21]). Creative applications of flow thinking and the con- workers are arranged in the sequence of the manufacturing cept of demand-driven control of flow dynamics are now process—the idea that Henry Ford had realized first in found in fields far away from ‘‘material’’ logistics, such as 1913 with the installation of his line for the assembly of a Knowledge Management (‘‘Knowledge Logistics’’ by standardized mass-product. Lullies et al. [46] and the ‘‘Logistics of Events’’ [7]). Ohno’s path-breaking contribution which moved the The mastery of flow dynamics has become a key con- concept ‘‘beyond large-scale production’’ was based on cern of logisticians. With this and an ongoing increase in several additional ideas. The most important one is control the complexity of global supply chains—to be discussed in of the ‘‘flow dynamics’’ strictly by customer demand rather the next section of this article—additional research ques- than by a preset, rigid clock rate. Synchronization of the tions came up, such as the discussions about the ‘‘bull- flow across multi-stage sequences of activities, which may whip’’ effect [42], i.e. the difficulties of the governance and be interlinked in complex and flexible ways, is achieved by control of flow dynamics. passing on demand signals from the end of the chain in With hindsight, several predecessors and early founda- ‘‘backwards’’, upstream direction from stage to stage, and tions to ‘‘flow’’ thinking, flow system design and flow by making sure that demands signalled are met ‘‘just-in- dynamics issues are found. The earliest example is the time’’. TPS allowed for quantum leaps in productivity, French economist and physiocrat Francois Quesnay’s [61, inventory reduction, and the ability to handle a significant 62] description of the economy as a circular flow system degree of product variety at the same time. The rigidity and that can be modelled after the human blood circulation complexity of centralized ‘‘synoptic’’ planning systems system. In the 1950s, the father of ‘‘Systems Dynamics’’, was substituted by sequences of simple loops of demand Jay Forrester, and his MIT research group, had already signals and just-in-time supply responses which could be begun to study and describe the phenomena of flow nested and changed in many ways. After its discovery in the West, the powerful idea of Goldratt [26] novel ‘‘The Goal‘‘which claims to have sold more than a million copies may be considered the best-selling book on organizing industrial production logistics as demand-driven logistics of all time. flow systems was continually being refined and adopted to Wildemann was the first to popularize the concept in German industry, helping to start the ‘‘just-in-time revolution’’ in European i.e. the subtitle of his 1988/1978 book! industry too. 123 Logist. Res. (2009) 1:53–65 61 Fig. 7 ‘‘Cross-organizational integration’’—the logistics of SCM & supply chains Coase(1938) -> “X-Organizational New Institut. Structures Simon (1960) -> Integration NetworkGovernance Oliver/W (1982) Alchian/Demsetz(1972) -> Houlihan(1985) Lawrence/Lorsch (1970) -> Christopher 1980s 1990s 2000s Weick(1976) -> (1992) Complexity Autonomous Management Systems Roots Milestones Lines of Evolution dynamics in industrial contexts [23]. Apart from this line of New conceptualizations of the issues of the design and research, there has been parallel, more technical work in management of complex Supply Chain structures and new Europe about flows in transport systems (e.g. [59]) and answers to the issues raised are primarily drawn from the materials flows (as discussed above in ‘‘Engineering fields of Systems Theory, Organization Theory and the Instrumentation’’). ‘‘New Institutional Economics’’. First, there is the recognition that the critical levers for 2.6 ‘‘Cross-Organizational Integration’’: the logistics successful SCM are not in the efficient planning, mobili- of supply chains zation, and control of goods, materials, and information flow networks alone. There are intricate issues of inter- The first academic arguments for the idea of extending the personal relationships, contractual arrangements, of the horizon of logistics research from an enterprise and ‘‘intra- coordination and governance of the actors and activities ’’ logistics focus to the relationships in inter-organizational involved in the network of supply chain relationships. Otto chains and distributed networks of suppliers, customers and [54] summarized recent research on the multiple levels of other stakeholders took place in the 1980s [31, 36]. But it networks and network relationships that SCM management took 10 years more until—rather suddenly—SCM fully must consider. His model identifies four layers of those caught the fascination of logisticians, and became a major relationships: the familiar ‘‘materials flow’’ and ‘‘infor- topic for practitioners and research. In some countries mation flow networks’’, the ‘‘social relationship’’ networks, ‘‘SCM’’ even began to replace ‘‘Logistics’’ as the denom- and the network of ‘‘institutional’’, i.e. contractual, formal- inator of the field and stimulated a discussion about which organizational arrangements. Recent discussion suggests term should be considered the broader, overarching one, that a fifth ‘‘money’’ or ‘‘value flow’’ network layer should which one should be considered a sub-aspect. also be considered (e.g. [57]). The SCM discussion motivated the community of log- Among the research challenges that are posed by an isticians to address new issues of the full complexities of advanced, multi-dimensional notion of SCM are the issues the design, planning, operation, and control of value chains of and networks that extend beyond individual enterprises and • how to chose and allocate the most efficient coordina- their immediate supplier- and customer relationships. The tion mechanisms in complex supply chain relationship- concern with ‘‘cross-organizational’’ issues has signifi- networks, such as ‘‘Markets’’ and ‘‘Hierarchies’’ [16], cantly opened and enriched the research agenda in the field or ‘‘Clans’’ [55], of logistics to a new range of questions and new ideas, as • finding the right degrees of complexity that can be indicated in Fig. 7. handled within ‘‘tightly coupled’’, hierarchically con- trolled organizational units (e.g. Hagel [27]), The influential American ‘‘Council of Logistics Management • the identification of best combinations of ‘‘loose’’ and (CLM)’’ renamed themselves in 2005 to ‘‘Council of Supply Chain ‘‘tight’’ coupling mechanisms between network actors Management (CSCMP)’’, implying that ‘‘logistics’’ covers a subset of SCM-issues only. A recent discussion of this perspective is in Frankel and units when high degrees of uncertainty and et al. [24]. In this paper, as will become clear, ‘‘Logistics’’ and ‘‘Flow environmental turbulence need to be accommodated Management’’ are considered to be the broader, more generic [70, 80], concepts, and SCM is one—if very important—field of application of logistical concepts and ideas. It may be critically noted in this context, that some authors and Footnote 21 continued practitioners are applying the new ‘‘SCM’’ terminology when they manufacturer–customer relationships, leaving open the question deal with nothing but the long familiar narrower logistical issues of whether there is truly new content of ideas in their uses of the SCM procurement in dyadic supplier–manufacturer relationships or of terminology. 123 62 Logist. Res. (2009) 1:53–65 last not least research related to the material activities of ‘‘placing’’, ‘‘pacing’’, ‘‘parsing’’ goods and services in the future • applying the right incentives and controls in ‘‘team should focus on the specific challenges and demands of work’’ [1], and ‘‘principal–agent’’ [32] relationship economically less mature countries and industries, which networks where information is unevenly distributed have been receiving relatively little attention in the past. between the participants and hierarchical control not The second hypothesis which followed was, that in available. maturing countries and industries the ‘‘march of material Resolutions to those issues of complexity management logistics’’ may end in stagnation, if new directions and and of the governance of networks of loosely coupled ideas for innovative applications for logistics are not found actors are of highest practical relevance in SCM. While— that have relevance and potential impact upon the ‘‘wealth implicitly—most SCM authors assume that ‘‘more is bet- of nations’’—especially of those which are rapidly moving ter’’ with respect to the degrees of integration and control into the post-industrial stage. of the actors in a supply chain, difficult questions are raised The question where those new ideas and directions may about this assumption: for which situations and segments of be found provided motivation for a review of the past complex supply chain networks is this assumption true, for 50 year’s ‘‘march of ideas’’ in logistics. Figure 8 is an which does it not hold [10]? In the design of a supply chain attempt to graphically summarize the observations on the the right ‘‘granularity’’ must be found: how far should the various lines of development in logistics research—a ‘‘Division of Labour’’ and the narrowing of ‘‘Core Com- mapping of the ‘‘march of ideas’’ as it has been drawn-up petencies’’ [60] be carried? How much flexibility and in the second part of this essay. ‘‘agility’’ is right, and what does it cost [14]? How does a Along the centre line of idea developments, labelled the ‘‘principal’’ compensate his ‘‘agents’’—the suppliers and ‘‘Awareness’’ string, the exhibit shows the three major foci outsourcing partners—in order to motivate them to do their that seem to have created ever broader attention to logis- best, yet not overpay them—and how should the gains and tics: It started out with concern for ‘‘Physical Distribution’’ benefits of successful SCM be distributed among the actors and ‘‘Marketing Logistics’’. In the 1980s the primary fas- and activities? cination of the logistics community shifted to ‘‘JIT’’ The concern with cross-organizational integration in systems and the issues of ‘‘Industrial Logistics’’. And now, logistical chains and networks has brought a tremendous since the 1990s, most interest is centering around the terms enrichment of the issues that now are systematically being and promises of ‘‘SCM’’. addressed, and of the ideas which are considered for their Based on the interpretations chosen in this essay, five solution. additional lines of ideas and research have been adding new substance and enriched the ‘‘march of ideas’’ of logistics research in various ways at various points in time: 3 The ‘‘March of Ideas’’ in logistics research: current frontiers and the question of where to go next? • the ‘‘OR and Modelling Instrumentation’’ line of logistics research contributed through the introduction In the first part of this discussion on the growth and dif- and evolution of modelling and Operations Research fusion of ‘‘material’’ logistics, some observations and techniques, based on mathematics and formal econom- hypotheses were presented, which relate to the path and ics, added quantitative tools and methods, thereby pace of the diffusion of logistical activities at the aggre- enhancing the scientific rigour and respectability of the gative level of countries and industries. A preliminary field; analysis of available data suggested that there is a sur- • the ‘‘Industrialization’’ line of research and develop- prisingly clear correlation between relative national ment in logistics, which is rooted in the field of logistics expenditures—i.e. the level of ‘‘material’’ logis- Scientific Management, and driven by the examples of tical activities—and the ‘‘wealth’’ levels achieved in those very successful, large logistics operators, helped the countries. The study of national logistics growth data also field to develop its identity as an important industry and suggested that economically mature countries may reach a to assert its relevance to management; state of saturation with ‘‘material’’ logistics, when the • the additional line of ‘‘Engineering Instrumentation’’ integration into global economic cooperation and interna- research and developments—i.e. the engineering of tional Division of Labour cannot be increased much further specialized hardware and software equipment, compo- and when ‘‘material’’ industrial production levels cannot nents, and systems—brought the opportunities and rise any more. challenges of truly interdisciplinary cooperation to the The first conclusion and hypothesis derived from these logistics, which so far had been delimited to manage- observations was, that a ‘‘Science of Logistics’’ doing ment, OR, and economics research; 123 6 „ Institu. Structures Complexity “X.-Organizational Management Network Governance Integration: Instrumentation Location, Routing Studies Manuf. Resource Complex Networks “OR & Modelling : Lot & Inventory Sizing Planning, ERP Configuration Logist. Res. (2009) 1:53–65 63 1. Supply Chain Management Physical Distribution “JIT ndustrial Logistics „ „ “Awareness : ECR->E-logistics->Risk & Greening Marketing Logistics “Procurement , “Production 1960s 1970s 1980s 1990s 2000s Fig. 8 The march of ideas in logistics research—current frontiers and next developments? • the line of research about the ‘‘Dynamics of Flows’’ primary goal for the future ‘‘Science of Logistics’’ (or of 22 23 that was stimulated by the discoveries and successes of ‘‘Supply Chain Science’’ if this term will be preferred), TPS, opened the research horizon of logistics to new which might define itself as issues of the dynamics of flows and systems; the science of complex network flows—concerned • lastly, the research stream around the issues of ‘‘Cross- with the architectures, dynamics, and successful Organizational Integration’’, that has been stimulated governance in ways that are helping to enhance and by the fascination with the ‘‘Supply Chain Manage- sustain ‘‘The Wealth of Nations’’. ment’’ terminology, made the field move into the issues of complex systems architectures, the possibilities and A final suggestion that may be derived from this map- limits of the governance of those systems, drawing on ping of the ‘‘march of logistics ideas’’—and a possible research foundations in Complex Systems and Organi- answer to the claim that growth and innovation opportu- zation Theory, and modern Institutional Economics. nities in the ‘‘old’’ material logistics field of application might end in stagnation in a gradually maturing, materially The current state of the field is symbolized by the saturated world—is that attention could be directed to ‘‘2008’’ oval in Fig. 8: it is meant to show how the origi- ‘‘complex network flows’’ other than material ones: nally disjunct ideas and lines of discipline-bound research Unresolved—or only partially resolved—challenges, that have been converging and started to interact. At the same may be successfully approached with the tools and insights time, the position of the oval intends to show that there is of logistics, may be found in the non-material areas of still distance to cover until the research streams of ‘‘knowledge management’’—how to better organize, ‘‘Modelling and OR’’, of ‘‘Complex Systems, Organization mobilize, control flows and inventories of ideas and Theory, and Institutional Economies’’, where academic knowledge by creatively applying concepts such as JIT, rigour and deep specialization are primary concerns VMI, of ‘‘loose coupling’’ and ‘‘Agency Theory’’ to (shown in the upper part of Fig. 8), and the more prag- matic, business oriented, ‘‘relevance’’ seeking research Hopp [30] used this term for his recent book publication. streams of ‘‘Industrialization,’’, ‘‘Engineering’’, and ‘‘Flow To help advance the convergence and integration of these streams Dynamics’’ will truly have reached a satisfactory level of of research is the mission which the Logistics Research journal has integration. 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