group decision support for defining the vision and strategic goals for distribution logistics

Proceedings of the 28th Annual Hawaii International Conference on System Sciences - 1995

Group Decision Support for Defining the Vision and Strategic Goals for Distribution Logistics

Jukka Korpela* and Markku Tuominen** *Kymmene Corporation, 53200 Lappeemanta, Finland

**Lappeenranta University of Technology, P.O. Box 20,53851 Lappeemanta, Finland

Abstract

A vision articulates the desired future state for the lo- @tics fitnctions in a company. During the iogistical visioning process, d@erent scenarios are formed and evaluated taking into account the objectives and strategies of the various interest groups. The vision is then transformed into strategic goals, i.e. specific long-term performance targets. The visioning process is unstructured by nature and many decisionmakers are usually involved. In the paper, we present a group decision support system (GDSS) based on the Analytic Hierarchy Process (AHP) for defining the corporate Iogisticai vision and strategic goals. The developed GDSS enables decisionmakers to approach the visioning process analyti- cally, to represent the connections between multiple both tangible and intangible variables and the d#erent scenarios in the form of a hierarchy, and to assign priorities to the elements in the hierarchy.

1. Introduction

Copacino and Rosenfield [l] state that logistics has been recognised not only as a group of important functions, but as functions that have important strategic impacts as well. The strategic importance of logistics is un- derstood especially in organisations that recognise customer service and not the physical product as the single output of any organisation [2], and logistics is becoming a major competitive resource. With the concept value- added logistics, Zubrod [3] refers to bundling traditional services, services, and new capabilities into new configu- rations in order to offer greater value to the customers and to decrease the need to compete on price alone.

The logistics systems of companies are being affected by intensifying pressures resulting e.g. from the increasingly competitive nature of business, the need to reduce costs and inventories, developments in information technology, regulatory changes, product proliferation, and reducing product life cycles [4]. Due to the increasingly turbulent operating environment, the need to develop

more formal approaches to logistics planning has become more and more recognised (see e.g. [5]). Logistics organisation must be strongly involved in the companywide strategic process in order to respond to challenges and to seize opportunities in a proactive manner [6]. Magee et al. [7] have defined three basic roles for the logistics function in the development of the corporate strategic plan: (1) to assist the corporation to understand how logistics can be used for differentiation in the marketplace, (2) to assist in developing and evaluating the total impacts of any proposed corporate strategic plans, and (3) to support the achievement of the corporate and functional objectives in the most efficient manner possible.

In the chapter 2, we propose an integrated approach to logistics strategic management and clarify the role of vision and long-term strategic goals in the aforementioned process. In the chapter 3, we present a group decision support system’ based on the Analytic Hierarchy Process (AHP) for defining the vision and strategic goals for the logistics function in a company. The focus is especially put on distribution logistics by which we refer to the part of a logistics system responsible for the outward move- ment of products from the seller to customer [7] .

2. Logistics strategic management process

Strategic planning can be defined as the process of formulating plans which ensure the long-term profitabil- ity of the organisation [8]. The approach presented by Rushton and Oxley [9] where they divide the planning process into four main phases - analysis, setting objectives, defining plans for achieving the objectives, and monitoring the implementation of the plans - can be considered a typical example of a formal distribution logistics strategic planning process. However, it has become evi- dent that a systematic, periodic strategic planning process is not enough in itself to ensure the long term success of logistics activities. As the rate of environmental change has accelerated, strategic planning may not always pro- duce expected results because of inadequate scanning of environmental trends [lo]. Traditional strategic planning systems lack the sensitivity and responsiveness to envi-

475 1060-3425/95$4.0001995 IEEE

Proceedings of the 28th Hawaii International Conference on System Sciences (HICSS '95) 1060-3425/95 $10.00 © 1995 IEEE

Proceedings of the 28th Annual Hawaii International Confirence on System Sciences - 1995

SITUATIONAL ANALYSES

I I I FEEDBACK

t + 9 + 9 t

DEFINING TEE LOGISTICAL --)

VISION AND STRATEGIC GOALS

It DEFINING TEE DRAWING UP ACTION

EVALUATING

SETTlNG + STRATEGIES TO+ PERFORMANCE,

PLANS FOR TEE --) REwEWmG TBE OBJECTIVES ACHIEVE TBE IMPLEMENTATION

PERFORMANCE AND EXECUTION SITUATION AND

OBJECTIVES OF TEE STRATEGIES MAKING

ADJUSTMENTS

STRATEGIC ISSUES MANAGEMENT

Figure 1. The logistics strategic management process

ronmental changes that companies need in order to cope with the increasingly turbulent operating environment [ill.

A comprehensive logistics strategic management process that avoids the pitfalls of traditional strategic planning is formed by integrating the periodic strategic planning process with a continuous strategic issues management process. Strategic planning is used for defining the basic objectives for a company and assuring co-operation and synergy between the different functions of a company while strategic issues management is used on a continuous basis to deal with environmental and internal turbu- lence [12]. The strategic planning subprocess consists of the following main phases: (1) situational analyses, (2) defining the vision and strategic goals for the logistics function, (3) determining objectives and strategies, (4) drawing up tactical action plans, and (5) evaluating the implementation of the plans and making the needed adjustments. The aim of the strategic issues management subprocess is to continuously scan the environment and the organisation for early identification of issues having a significant impact on the logistics function using the following steps: (1) the identification of trends, (2) assessing the impact and urgency of the identified trends, (3) as- signing priorities to the issues, and (4) planning responses to the issues [13]. The integrated logistics strategic management process (Figure 1, partly adapted from [ 141) combines the advantages of periodic strategic planning with the flexibility of continuous strategic issues management and provides a company’s logistics function the ability to be strategically oriented, to handle external and internal developments in a proactive manner, and to ensure the continuous validity of the strategic plans.

The role of vision is increasingly important in the strategic management process. A vision is a term that is used for describing a picture of a relatively remote future in which business has developed under the best of pos-

sible conditions and in accordance with the hopes and dreams of the owner or the chief executive [ 151. Wilson [ 161 defines a strategic vision as a coherent and powerful statement of what the business can and should be years hence. A vision is a significant part of the strategic management process because it establishes both a direction and a destination for the future, it forms a capstone and integrating mechanism for the other elements of the strategic management process, and it can be used as a force for empowering and motivating the personnel and for implementing strategic plans [16]. A powerful vision should be rather simple, clearly defined and easily under- standable, the time span covered by the vision should be rather long, the vision should be realistic in order to create commitment within the organisation, and it should help to keep the organisation focused on the important issues [ 171. A strategic goal can be defined as a portman- teau term to denote the concrete results of visions and the criteria against which the success of strategies will be evaluated [15]. Strategic goals can be divided into four categories: economic, quantitative, qualitative, and development goals.

The overall corporate vision should be defined before the logistics function can approach its total potential in contributing to the company’s competitiveness and prof- itability [18]. The corporate vision lays the guidelines within which the logistics function can define the logistical vision (purpose) statement which must be compatible with the corporate level vision. The corporate vision and the logistical vision have a hierarchical relationship as illustrated in Figure 2.

Traditionally, the visioning process has been approached as a singularly individual exercise where a leader articulates a personal vision where to lead the company [ 161. Individual visioning is a fairly straight- forward process which promotes forcefulness and sim- plicity but in order to fully utilise all experience in an

476



Figure 2. The relationship between the corporate and logistics vision [ 181

organisation and to create commitment, visioning should be approached as a collective, group decision-making process. A collective visioning process should form a framework within which differing perspectives and values, different types of thinking can be integrated. A truly shared vision for an organisation or a function emerges from the personal visions of the key personnel and thus fosters commitment [ 191. One of the main problems as- sociated with collective visioning is creating consensus in a group as consensus is often based on compromise that may dramatically reduce the scope of the vision [ 161.

3. Group decision support for defining the logistical vision and strategic goals

The Analytic Hierarchy Process (AHP) is a systematic procedure for structuring any problem [20]. AHP is based on the following three principles: decomposition, com- parative judgements, and synthesis of priorities. AHP starts by decomposing a complex, multicriteria problem into a hierarchy where each level consists of a few man- ageable elements which are then decomposed into another set of elements [21]. The second step is to use a meas- urement methodology to establish priorities among the elements within each level of the hierarchy. The third step in using AHP is to synthesise the priorities of the elements to establish the overall priorities for the decision alternatives. AHP focuses on the choice phase in the three-phase decision process described by Simon [22] while the emphasis with group decision support systems has traditionally been on the intelligence and design phases [23].

The Analytic Hierarchy Process forms a systematic framework for group interaction and group decision making [24]. Dyer and Forman [23] describe the advantages of AHP in a group setting as follows: (1) both tan- gibles and intangibles, individual values and shared values can be included in an AHP-based group decision process, (2) with AHP, the discussion in a group can be focused on objectives rather than on alternatives, (3) with

AHP, the discussion can be structured so that every factor relevant to the decision is considered in turn, and (4) in a structured analysis, the discussion continues until all relevant information from each individual member in the group has been considered and a consensus choice of the decision alternative is achieved. A detailed discussion on conducting AHP-based group decision making sessions including suggestions for assembling the group, con- structing the hierarchy, getting the group to agree, ine- qualities of power, concealed or distorted preferences, and implementing the results can be found in [24] and P51.

Using AHP, we develop a group decision support system for defining the vision and strategic goals for the distribution logistics function of a company. The approach to strategic planning used in this paper has been defined by Saaty and Keams [26] as follows: “Planning is a thinking and social process of aligning what is deduced to be the likely outcome of a situation, given current actions, policies and environmental forces, with what is perceived as a desirable outcome which requires new actions and policies.” Thus, strategic planning consists of two basic interacting phases which are called the forward process and the backward process [27]. The aim of the forward process is to define the most likely future state for an organisation resulting from the actions of the present actors and their policies. In the backward process, the desired future state of an organisation is the starting point and the aim is to define the required policies to ensure the realisation of the desired future. The AHP-based approach to defining the vision and strategic goals for the logistics organisation is shown in Figure 3.

FORWARD PROCESS

OTHER SCENARIOS CORPORATE

LEVEL STRATEGIC - A;;yHER-- FOR THE

LOGISTICS - LOGICAL FUTURE

GOALS GOALS ORGANISATION

iI

t

F P 0 R

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STRATEGIC GOALS RESPONSES BY PROBLEMS

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ORGANISATION ORGANISATION

BACKWARD PROCESS

Figure 3. The AHP-based approach to defining the logistical vision and strategic goals

The utilisation of the Analytic Hierarchy Process for defining the vision and strategic goals for the distribution logistics function of a company consists of three main phases. The first step is to define the projected future for the distribution logistics organisation by analysing the internal and external forces affecting the logistics function. At the second phase, the desired future - the vision -



is determined, the problems hindering the progress towards the vision are analysed, and the most effective responses, i.e. the long term strategic goals, are determined. The third step is to include the strategic goals into the forward process and analyse their effect on the logical future of the logistics organisation. The objective for the planning process is to drive the logical future and the desired future as close to each other as possible by making changes to the strategic goals, and thus the three main phases may have to be repeated many times.

3.1. Determining the logical future

The corporation A is involved in a processing industry. Most of the corporation’s products are exported and logistics has a key role in the success of the business. The chief executives of the corporation have updated the long- term strategic goals for the corporation and now the executives responsible for the distribution logistics function need to define the vision and the corresponding strategic goals for their organisation within the guidelines created at the corporate level. The logistics management team consists of five persons and strategic planning is always a collective effort by the group.

The first step in using AHP is to construct a hierarchy that represents the problem under consideration. A typical hierarchy used in a forward process consists of the following levels: (1) the goal for the process, (2) the actors affecting the future of the organisation, (3) the strategic goals the actors are pursuing, and (4) the scenarios describing the possible future states of the organisation. In a group setting, debate and discussion are the best way to generate a hierarchy that reflects the problem under study [25]. Each member of the group is offered the possibility to present their own arguments and viewpoints about the elements to be included in the hierarchy.

The logistics executives agree on three main actors that have a significant effect on the future of the logistics organisation which are the corporation itself, the customers, and the competitors. The corporation has three main corporate level strategic goals that are (1) to become the market leader in its main product groups, (2) to become a customer and marketing oriented company with a special focus on all aspects of customer service, and (3) to mould the present, rather complicated organisational structure into a synergetic, integrated whole. The customers’ long- term goals especially relating to logistics include the trends to decrease the order sizes, to shorten the order lead times, and to emphasise the multiple customer service factors instead of only the price when making purchasing decisions. The main competitors of the corporation will try to differentiate their products by allocating a

lot of resources for improving their ability to provide customer service and to decrease their logistical costs by forming strategic alliances with other companies in the industry and with their logistical subcontractors.

The alternative development paths for the distribution logistics organisation are described by using scenarios. A scenario is a portrayal of the future with strong focusing on the particular subject being emphasised with an ade- quate account of its interaction with environmental factors [28]. Scenarios can be either exploratory or anticipa- tory [26]. The exploratory scenarios are used to examine the logical sequence of events generated by the compo- nents of the sy,stem being analysed whereas the anticipa- tory scenarios are used to examine the required actions needed to realise the desired goal. Using scenarios, the logistics management team of the corporation A define the following three possible future states for their organisation: 1. status quo scenario: the focus of the distribution logistics function will be maintained on transportation, the influence of the logistics function on marketing and production related decisions will not be increased, and the competitive advantages inherent in a holistic, logistical approach will not be utilised 2. optimistic scenario: a logistical co-ordination unit with strong Influence on planning and management of logistical activities throughout the company will be created, and logistics will be utilised as a main source of competitive advantage 3. pessimistic scenario: the now existing logistical organisation will.be dissolved, and the responsibilities of all logistical activities will be decentralised and given to the numerous marketing and production units of the corporation; the subcontractors providing the logistical services (e.g. transportation) will have a stronger role in the logistical chain of the corporation

The AHP hierarchy constructed of the aforementioned elements for defining the logical future for the logistics organisation is presented in Figure 4.

The next step in using AHP is to assign priorities for each element in the hierarchy. The priorities are set by comparing each set of elements in a pairwise fashion with respect to each of the elements in a higher stratum [2 I]. A verbal or a corresponding 9-point numerical scale can be used for the comparisons and the comparisons can be based on objective, quantitative data or subjective, qualitative judgements. In a group setting, there are several ways of including the views and judgements of each per- son in the priority setting process. In our example case, the logistics management team make decisions in a common objectives context where all members of the group have the same objectives [23]. In a common objec-



ACTORS

ACTORS’ GOALS

SCENARIOS

t 1

CORPORATION A 1 CUSTOMERS 1 COMPETITORS 4 I 1

MARKET DECREASE DIFFERENTI- - LEADERSHIP - ORDERSIZE ATE

CUSTOMER SHORTEN STRATEGIC - ORIENTATION - LEADTIME - ALLIANCES

SYNERGETIC CUSTOMER - ORGANIZATION - SERVICE

71 I OPTIMISTIC STATUS QUO PESSIMISTIC

-. 1 v... .s-.. . - _ - . ._ _ . -- - .- - . . . . plgure 4. me m-w merarchy for aenning me logical future for the logistics organisation

tives context, there are four ways that can be used for setting the priorities: (1) consensus, (2) vote or compromise, (3) geometric mean of the individuals’ judgements, and (4) separate models or players. The primary method used in the presented case is to try to achieve consensus based on extensive debate and discussion. However, if consensus cannot be established, the geometric mean of the group members’ judgements is used as it is the uniquely appropriate rule for combining judgements since it preserves the reciprocal property of the judgement matrix [23] and [29].

With the hierarchy illustrated in Figure 4, the priority setting procedure is started by comparing the actors in a pairwise fashion with respect to the goal (what is the relative importance of each actor to the logical future of the logistics function). Then the importance of the strategic goals of each actor is evaluated and the last step is to compare the scenarios with respect to each actors’ strategic goals (what is the relative probability of each scenario with respect to each strategic goal). The priorities of the actors affecting the future development of the logistics organisation are presented in Figure 5.

Based on the evaluations by the logistics management team, the corporation A is the most influential actor with the priority of 0.443 because the corporation defines the

basic guidelines within which the logistics function must operate. The effect of the customers on the future of the logistics organisation is evaluated to be almost as strong because the requests of the customers form an essential starting point for the operations of any company. The competitors are assessed to be the least influential actor because the corporation A already is a significant player in the market.

The priorities assigned to the actors’ strategic goals are illustrated in Figure 6. The most important corporate level objective is to become a customer and marketing oriented company with excellent customer service. The customers’ goal to base their purchasing decisions on the quality of the total customer service is considered the second most important factor on the second level of the hierarchy affecting the future of the logistics organisation. The competitors’ aim to use customer service as a source of differentiation is also evaluated to have a major impact on the development of the logistics function.

The outcome of the forward process, i.e. the likelihoods of the scenarios, is presented in Figure 7. The optimistic scenario has the highest likelihood because the achievement of the corporate level objectives, responding to the tightening logistical requests by customers and responding to the competitors’ predicted moves necessitate

A CORPORATION A

C T CUSTOMERS 0 R COMPETITORS

0,000 0,050 0,100 0,150 OJOO OJSO OJOO 0350 0,400 0,450

PRIORITY

Figure 5. The priorities of the actors

479


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improvements in the overall logistical co-ordination in the corporation A. The likelihood of the status quo scenario is rather high and the logistics executives cannot be assured that the optimistic scenario will be real&d without an> supportive actions by thtr logistics organisation.

3.2. Defining the strategic goals

The logistics management team use the AHP-based backward process to an;jl>,ie the problemr hindering the logrstics organisation to rcalise the desired future and to define the most efi‘ectilc responses to the problems, As wilh the fon;laral process, the first step is to construct a hier,archy Twhich tlplcall\, consists of the following levels:

( 1) the desired future, (2) the problems and threats affecting the realisation of the desired future, and (3) the alternative responses to the threats and problems.

The starting point in the backward pro’cess is the desired future, i.e. the vision, which in this case is the op- tlmistic scenario. The optimistic scenario reflects the hopes and dreams of the logistics executrves and portrays the development of the logistics organisation under ideal circumstances. The logistics management team agree on the following potential threats and problems facing their organisation in the future: ( I) logistical decision making in the corporation is decentralised, (I!) the customers inte- grate vertically backwards in the value chain raking the rt:sponsibility e.g. for transportation in their own hands,

E N ;~ STATI5QI 0

R I

0 PESSI.MISU I(‘

Q ,000 0,100 0.200 0,300 0.400 0,500

l.lKELIHOOD

Figure 7. The likelihoods of the scenarios

480



(3) logistics is not considered a process with a lot of po- assign priorities to them. The problems and threats are tential for competitive advantage and thus inadequate first compared pair-wise with regard to their importance in resources are allocated for logistical development, and (4) complicating the progress of the logistics organisation the subcontractors providing e.g. the operational transpor- towards the vision. The effectiveness of the strategic tation services today want to increase their influence and goals in minimising the effects of each problem are then to expand their responsibilities with regard to the corpo- evaluated with pairwise comparisons. The backward hi- ration’s logistic activities thus posing a threat to the lo- erarchy and the priorities of the elements are illustrated in gistics organisation. Figure 8.

The logistics executives define the following strategic goals as potential responses to the identified threats and problems: (1) the logistics organisation initiates a major effort to increase its influence on production and marketing functions and to create a logistical planning unit, (2) the present distribution network with the focus on Europe is expanded to be a global one, (3) the logistics organisation ties direct connections to each customer of the corporation and creates value-added to the physical product by offering each customer exactly the right type and level of customer service, (4) the logistical information systems are modernised to support the planning, management and control of the whole range of logistical activities, (5) the profile of distribution logistics in the corporate management system is sharpened so that logistics is acknowl- edged as a main source of competitive advantage, (6) the abilities and the functionality of the logistics organisation are developed with the special focus on cost- effectiveness, and (7) the quality provided by the logistics organisation is developed to be superior to the competitors.

After structuring the hierarchy for the backward process of the elements mentioned above, the next step is to

The two clearly most important problems and threats facing the logistics organisation are the decentralisation of logistical decision making and the potentially increasing influence of the subcontractors on logistical matters. The logistics management team assess the threat of the customers’ vertical integration to be of considerable importance but the reluctance of the corporation to invest on logistical development is not considered a significant problem. Getting the corporate level executives to ac- knowledge logistics as a major competitive advantage by the means of e.g. internal communication is evaluated to be the most effective response to the problems and threats. First, if the potential and leverage of logistics are widely accepted in the corporation, the threat of decen- tralising logistical decision making is minimised and the willingness to allocate resources to logistical development is fostered. Second, if logistics is recognised as a key competitive advantage, the corporate executives are not prepared to let the subcontractors play a significant role in the corporate logistical decision making. Creating value- added with excellent customer service and providing superior quality are the two next most effective strategic goals. The remaining four strategic goals are assessed to

1 DESIRED FUTURE - THE VISION 1

THREATS/ PROBLEMS

CORPORATE DECENTRA- LIZATION

0.399 I

CUSTOMERS’ VERTICAL

INTEGRATION 0.184

LOGISTICAL PLANNING UNIT

0.119

INADEQUATE SUBCONTRACTORS’ RESOURCES FOR INCREASING

LOGISTICS INFLUENCE 0.064 0.353

1 GL0BAL

NETWORK 0.109

ALTERNATIVE STRATEGIC GOALS

VALUE-ADDED lNPORMATlON CUSTOMER SYSTEMS

SERVICE -- DEVELOPMENT 0.163 0.112

PROFILE OF ORCANlZATlONAL LaxsrIa DEVELOPMENT

0.230 0.116

I Figure 8. The AHP hierarchy for the backward process

481



SUBCONTR 30

@

Al - Q

Figure 9. The effectiveness of the strategic goals with regard to the threats related to corporate decentralisation and to the subcontractors

DECENTRR

-PI.A.U(IT - GLOB .NET - WLIJERDD @- INF.SYST - - aJaI.ITY

be almost equally effective responses to the problems. The effectiveness of the alternative strategic goals with respect to each individual problem can be examined and visualised in further detail with the help of matrix screens as illustrated in Figure 9. The x-axis represents the effectiveness of the strategic goals in responding to the problems related to the decentralisation of logistical decision making in the corporation and the y-axis the effectiveness of the strategic goals in responding to the threat of subcontractors expanding their influence on corporate logistics. The alternative strategic goals are positioned in the matrix based on their effectiveness in responding to the aforementioned threats. It can easily be noted that sharp- ening the profile of logistics within the corporation is the most effective response to both presented problems.

Sensitivity analyses can be used for examining the effects of changes in the priorities of the threats on the priorities of the alternative strategic goals. The sensitivity of the results gained in the decision process with respect to the threat posed by the subcontractors is presented in Fig- ure 10. It can be seen that the higher the priority of the threat by the subcontractors is the more effective sharpen- ing the profile of logistics, creating value-added customer service, and providing superior logistical quality are in responding to that threat. Correspondingly, the priorities of the other potential strategic goals decrease if the threat by subcontractors is assessed to be higher. Based on the

sensitivity analysis, it can be concluded that the order of preference of the alternative strategic goals is rather stable with regard to the priority of the threat under study.

After using the sensitivity analyses and the matrix screens to support an extensive discussion, the logistics management team decide to choose the four strategic goals with the highest priority as their major responses to the threats and problems identified in the backward process. In order to examine the total impact of the strategic goals on the logical future of the logistics organisation, they must be inserted in the forward process.

3.3. Examining the effect of the strategic goals

The four strategic goals with the highest relative weights are entered into the forward hierarchy by relating them to the corporate level strategic goals. The logistical strategic goals are given priorities by comparing them pairwise with respect to each of the corporate level goals. New relative weights are also assigned to the scenarios at the lowest level of the hierarchy by comparing their relative likelihood with respect to each logistical strategic goal. The relevant question is as follows: if the logistics organisation is successful in pursuing a certain strategic goal, what is the relative likelihood of the three scenarios? The hierarchy of the second forward process and the priorities of the elements are illustrated in Figure 11.

482



E F0

OWJ

FF 0250 E c s G OJOO TTO 1 R A 0,150

VAL ET

ES 0,100

iG 0,050

s 1 SC

0,000

0,000 PO 1,000

THE PRIORITY OF THE THREAT BY THE SUBCONTRACTORS

I==== -I- GLOBAL

NETWORK -t VALUE-ADDED

-++ TNF.SYSTEMS

-jY- PROFHE

-f- ORGANIZATIOb AL DEV.

-+- QUALITY

rlgure IU. A senslrlmy analysis wlrn respect to me mreat posea my me suucomractors

By adding the logistical strategic goals, the likelihood of the optimistic scenario, i.e. the vision, increased sig- nificantly compared to the fast forward process. The likelihood of the vision is now 0.628 and the likelihood of the status quo scenario only 0.274. The logistics management team can be fairly certain that by setting the four strategic goals for their organisation and by striving for achieving them, the desired future can be realised. Sensi- tivity analyses can also be used to support the second forward process as demonstrated earlier in this paper.

3.4. Conclusions

With the help of the Analytic Hierarchy Process -based group decision support system, the members of the logistics management team were able to define the vision and strategic goals for their organisation. The vision and the

strategic goals in turn form the starting point for the planning of shorter term objectives and strategies, and tactical action plans. The proposed group decision support system forms ,a flexible and systematic framework for logistical planning. The presented GDSS provides the possibility to approach strategic planning as a process consisting of two interacting phases, i.e. a forward process and a backward process. Furthermore, the vision and strategic goals can effectively be linked to the corporate level goals. The other characteristics of the presented GDSS include the following: (1) a group session can be conducted in a systematic and structured way addressing each relevant issue in turn, (2) both quantitative data and qualitative, subjective judgements can be included in the planning process, (3) although consensus is the preferred way of assessing the priorities for the elements in the hierarchy, other ways, such as the geometric mean of the

ACTORS

ACTORS’ COALS

LOGISTI- CAL SIRATE-

ClC COALS

, kORPORATION A 1

I 1

CUSTOMERS 11 COMPETITORS 1 I 0.443 I 0.387

I 4 I- *

LOGISTICAL VALUE-ADDED PROFILE SUPERIOR PLANNING CUSTOMER OF LOGISTICAL

UNIT SERVICE LoGlsTla QUALlTY 0.144 0.116 0.017 0.095

1 I I I

Y 1 I 1 r

4

DECREASE ORDER SIZE

0.063

SHORTEN LEADTIME

0.115

CUSTOMER

-IL

1 1 I 1

SERVICE 0.209 I

0.127

0.169

STRATEGIC ALLIANCES

0.042

SCENARIOS AI\

OPTIMISTIC STATUS QUO PESSIMISTIC 0.628 0.274 0.098

Figure 11. The AHP hierarchy for the second forward process

483



individual judgements or voting, can also be used, (4) the decision process in a group can be documented in detail with the presented GDSS, (5) the GDSS is flexible in use as elements can easily be added to or removed from the hierarchy, and (6) sensitivity analyses can be used to support the group decision process.

4. Discussion

A systematic logistics strategic management process consists of a periodic strategic planning cycle and a continuous strategic issues management system. Vision is used for describing the desired future state and the long term direction for the logistics functions in a company. During the visioning process, different scenarios have to be formed and evaluated taking into account the long term objectives and strategies of various interest groups. The defined vision is then transformed into strategic goals that are specific long-term performance targets. The visioning process is unstructured by nature and many decisionmakers are usually involved.

With the presented Analytic Hierarchy Process -based group decision support system, two interacting approaches - the forward process and the backward process - to strategic planning can be integrated, and the logistical vision and goals can be linked to the corporate level goals. The proposed GDSS is an effective and flexible tool for group decision making, and it forms a systematic framework for conducting structured group sessions.

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group decision support for defining the vision and strategic goals for distribution logistics

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