10/28/2021

LOGISTICS
MANAGEMENT AND
STRATEGY
Dr Shahrin Nasir

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CHAPTER 3

VALUE AND LOGISTICS COSTS

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Figure 3.1
The make-up of return on capital employed
(investment)

Source: Courtesy of Sri Srikanthan

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Table 3.1
ROCE and its key drivers
(adapted from CIMA, 2005)

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Figure 3.2
The supply chain proxy

Source: Johnson and Templar, 2011

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Table 3.2
Cash-to-cash cycle times for the FMCG food supply
chain

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Table 3.3
Hypothetical cash-to-cash cycle times for the FMCG
food supply chain following the traditional ‘vertical’
approach to liquidity improvement

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Table 3.4
Cash-to-cash cycle times for the FMCG food supply
chain

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Table 3.5
SCF finance instruments mapped to the three
components of cash-to-cash cycle time

Source: Cosse, 2011

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Table 3.6
Benefits of SCF

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Figure 3.3
Cost breakdown of a bottle of mineral water

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Figure 3.4
Three ways to cut the ‘total cost cube’

Source: Courtesy of Sri Srikanthan

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Figure 3.5
Rent cost against volume of activity

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Figure 3.6
Direct material costs against volume of activity

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Figure 3.7
Break-even chart

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Figure 3.8
Break-even chart A

Source: Courtesy of Sri Srikanthan

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Figure 3.9
Break-even chart B

Source: Courtesy of Sri Srikanthan

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Table 3.7
Planned profit and break-even point for Bond’s new
product

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Table 3.8
Direct product profitability (DPP)

Source: Courtesy of Sri Srikanthan

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Table 3.9
DPP for customer P for a sample of four orders in a
given month

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Table 3.10
Different ways of allocating maintenance costs

Source: Dr Simon Templar, Cranfield School of Management

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Table 3.11
Cumulative time and cost data by activity

Source: Dr Simon Templar, Cranfield School of Management

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Figure 3.10
Cost–time profile for poultry product

Source: After Bernon et al., 2003, reprinted by permission of EIASM

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Figure 3.11
Cost–time grid

Source: Adapted from SUCCESS Handbook, 2003

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Figure 3.12
Customer profitability curve

Source: After Guerreiro et al., 2008

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Table 3.12
Four investment appraisal approaches

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Figure 3.13
Investment decision considerations taking into
account opportunity cost

Source: Dr Simon Templar, Cranfield School of Management

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Figure 3.14
Present value curves for 10 per cent, 30 per cent
and 50 per cent discount rates

Source: Dr Simon Templar, Cranfield School of Management

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Table 3.13
The present value of £1,000 in five years using 10
per cent and 30 per cent discount rates

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Table 3.14
Cash flows associated with the system investment
over its five-year life

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Table 3.15
The NPV for the system investment based on 10
per cent and 20 per cent discount rates

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Figure 3.15
Graphical approach to calculating IRR for the OTIF
investment

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Table 3.16
Summary of the results from the four
investment appraisal approaches

Source: Dr Simon Templar, Cranfield School of Management

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Figure 3.16
Balanced scorecard as a strategic management
system

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Figure 3.17
Tesco’s corporate store steering wheel

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Figure 3.18
Five distinct management processes

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Figure 3.17
Supply chain performance evaluated within the
context of the competitive environment

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