ATLANTA, October 1, 2002 - The Logistics Institute (www.tli.gatech.edu) at Georgia Tech is pleased to announce the results of a supply chain strategy focus group that included representatives from 29 companies. The focus group, conducted as a part of the Logistics Management Series of courses at The Logistics Institute, examined the following four key issues in logistics and supply chain management:

A) Data Requirements and Activity Profiling for Reverse Logistics Planning
B) Logistics Performance Indicators
C) Criteria for Differentiating Customers for Customer Service Policy Development
D) Supplier Selection Criteria

Dr. Ed Frazelle, director of The Logistics Institute's (TLI) Logistics Management Series and president of Logistics Resources International
(www.LRILogistics.com) facilitated the supply chain strategy focus group. The focus group included representatives from Cargill, Case, Celiant Corporation, Clorox Products Manufacturing Company, Corporacion Supermercados Unidos, C-P Flexible Packaging, Defense National Stockpile Center, Diageo, FedEx Supply Chain Services, Grainger, JMAC Consiel S.p.A., Kohler Company, NCR Corporation, Newark Electronics, Office Depot, RBX Industries, Russell Athletic, Schneider Logistics, Team S.A., Thomas & Betts, Tiffany & Company, Transentric, U.S. Army Forces Command, U.S. Department of State, U.S. Marine Corps Material Command, U. S. Department of State, Vaisala, Vistakon, and XonTech, Inc. The focus group concluded with the following findings:

A) Data Requirements and Profiles for Reverse Logistics Planning
According to Dr. Frazelle, "Reverse logistics planning is more difficult than traditional logistics planning because there are minimal to no predictable or consistent data sources describing the reverse flows." The focus group members were asked to think creatively about the data requirements for reverse logistics planning. The main purpose for the profiling activity was to identify particular customers, SKUs, suppliers, carriers, and/or salespersons that generate disproportionate shares of returns activity. Some of the culprits were recorded as:
1. Customer Returns Activity Profile to identify if particular customers or categories of customers generate a disproportionate share of returns.
2. SKU Returns Activity Profile to identify the particular SKUs and types of SKUs that generate the majority of returns.
3. Supplier Returns Activity Profile to identify the particular suppliers who provide SKUs that generate a high return rate.

B) Logistics Performance Measures
"Developing and implementing a logistics performance measurement program with appropriate performance targets for each metric is perhaps the fastest, simplest, and least expensive means of raising total logistics performance. If we can get the right metrics in place, we will yield the right behaviors," said Dr. Frazelle. The focus group members developed and ranked a list of key logistics performance indicators in terms of their usefulness in monitoring total logistics performance. Some of the main performance indicators listed by the focus group include: 1. Perfect Order Percentage 2. On-time Delivery Percentage 3. Inventory Accuracy

C) Criteria for Customer Service Segmentation
According to Dr. Frazelle, "Developing a customer service policy is the launching point for world-class logistics. One of the most difficult steps in developing a segmented customer service policy is creating the criteria upon which to segment customers into A, B, and C categories." The top three criteria identified by the focus group for segmenting customers into service-level categories were: 1. Profitability - Profit percentage derived from serving the customer. 2. Sales Volume - Dollar and unit sales derived from the customer. 3. Growth Potential - An estimate of the customers' long-term growth potential.

D) Supplier Selection Criteria
Dr. Frazelle stated, "Once customer service performance targets have been developed, supplier selection criteria can be established to ensure the customer service policy can be executed reliably and without incurring excessive logistics costs. The supplier selection criteria helps to formalize the choice of suppliers to support the customer service policy and those same criteria become the report card metrics for monitoring supplier performance on an on-going basis." The following are the top three items that appeared on the focus groups' list of supplier selection criteria:

1. Total Logistics Cost to Receive/PO Cost
2. Proximity
3. On-Time Delivery Percentage

TLI's focus groups are conducted as a part of its professional education programs. Facilitated by Dr. Ed Frazelle, each focus group addresses key issues in supply chain strategy, inventory management, transportation management, world-class warehousing, global logistics, and third-party logistics.

Complete focus group results are available at http://www.tli.gatech.edu/scfocusgroup.

About The Logistics Institute
The Logistics Institute (TLI) was established in 1992 to coordinate all logistics-related activities on Georgia Tech's campus. TLI's Leaders in Logistics is comprised of more than 20 corporations and government agencies that partner with the Institute to fund research and educational programs. Through this partnership TLI focuses on logistics research, education, and practice, with an emphasis on supply chain design, transportation planning, and e-commerce logistics.

Media Contacts:
Yolanda Wilson
PR Specialist
Georgia Tech Continuing Education yolanda.wilson@conted.gatech.edu 404-385-3547

Tammy Artosky
LMS Program Director
The Logistics Institute at Georgia Tech tammy.artosky@isye.gatech.edu 404-894-1713