Learning about complexity

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The more dynamic the business environment becomes with fast changes in demand, globalisation, outsourcing, e-commerce and higher environmental standards, the more important it becomes to understand how complex systems work.

Companies can no longer rely on research ventures built on product and technological development for their long-term growth. The strategic role of logistics is now to make products for customers in different markets.

Logistics-based business models such as in fashion, where the flow of goods and information is the focus, are getting more of researchers” attention. These companies have taken logistics a step further by developing interfaces between functions or companies in a supply chain, in order to improve customer value.

Value-based logistics is achieved by shifting focus from functions to larger logistics systems, and is built on the knowledge of how to set up and design interfaces between functions and actors in the supply chain network. By doing this, double working will be eliminated and new roles between actors in a supply chain will increase the effectiveness of the total system, including the network of suppliers, customers and providers.

Logistics becomes the engine for a company to be more opportunity-driven. In fast-moving markets, costs are measured in lost sales due to the inability to set up competitive supply chains.

The lowest common denominator in this development is the systems approach, which has been a cornerstone in logistics for decades. So the scope of logistics is getting wider. Logistics is no longer only a matter of a more efficient flow of goods in industrial companies. Today, we see logistics applications in contexts and businesses where the word logistics was previously unknown. Service industries and non-profit organisations are applying logistics thinking to develop their skills concerning how complex systems should be designed and managed to meet demands of environmental and humanitarian sustainability.

While supply chains and networks are getting more complex, there is an increased need for advanced risk management and resilience. This was the theme of the ELA Educators” Day at the Eurolog conference in Berlin last year. To sustain an effective supply chain requires knowledge about the concepts behind the system, incentives for different actors in the chain and knowledge of how the performance of the system should be Logistics-based business models such as in fashion, where the flow of goods and information is the focus, are getting more of researchers” attentiondefined. This is as valid for industrial firms as it is for charities or city logistics systems aiming to cut carbon emissions.

This will be the focus for the 2008 ELA Educators” Day to be held in Gothenburg on May 22, where professors at the major logistics universities in the Nordic countries will present what they think are the most interesting areas for research and education in logistics. The session is open to researchers and representatives from companies interested in new developments, as well as those who want to network and share experiences between academia and industry.

Prof Mats Abrahamsson is from Linköping University, Sweden

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