A Performance Cycle Node and a Link

The performance cycle summarizes all the work necessary to complete a logistics operation. Nodes and links are two distinct parts making up a performance cycle. A performance cycle node is the operational location in the cycle. Nodes are the organizations that are involved in the supply chain. Examples include manufacturing plants, distributors, customers, tier 1 suppliers, warehouses. Performance cycle links interconnect the different nodes in the cycle to create a coherent flow of material in the supply chain. Example of links is transportation links and communication/information links.

The primary unit of analysis for integrated logistics is the performance cycle. Viewing logistical integration in terms of performance cycles provides a basic perspective of the dynamics, interfaces, and decisions that must link to create an operating system. At a basic level, suppliers, the firm, and its customers are linked together by communications and transportation. The facility locations that performance cycles link together are referred to as nodes.

In addition to nodes and links, a logistical performance cycle requires inventory. Inventory is measured in terms of asset level deployed to support operations. Inventory committed to a system consists of base stock and safety stock positioned to protect against variance. It is at the facility nodes that work related to logistics occurs. 'Within nodes, inventory is stocked or flows through the node, necessitating a variety of different types of material handling and at least limited storage. While a degree of handling and in-transit storage takes place within transportation. such activity is minor in comparison to that t9pically performed within a logistical facility, such as a warehouse.

Performance cycles become dynamic as they accommodate input/oid1mt requirements. The input to a performance cycle is an order that specifics requircillents for a product or material. A hidey - volume system will typically require a variety of different performance - cycle arrangements to satisfy overall order requirements. When rec1uirements are highly predictable or relatively low, the performance cycles required to provide logistical support can be simplified. For example, the overall performance-cycle structure required to support a large retail enterprise like Target or V/al-Mart is far more complex than the operating structure requirements of a direct mail-order company.

System output is the level of performance expected from the logistical operation. To the extent that operational requirements are satisfied, the performance-cycle structure is effective in accomplishing its mission. Efficiency is related to resource expenditure necessary to achieve logistical effectiveness. The effectiveness and efficiency of performance cycles arc key concerns in logistical management.

Depending on the operational mission of aparticularpcrforimance cycle, required activities may he under the complete control of a single firm or may involve multiple firms. For example, manufacturing support cycles arc typically under complete control of a single enterprise. In contrast, performance cycles related to physical distribtition and procurement normally involve customer or supplier participation. Performance cycles span the overall supply chain and link participating firms.

It is important to realize that transaction frequency varies between performance cycles. Some performance cycles are established to facilitate a one-time purchase or sale. In such a case the cycle is designed, implemented, and then abolished, once the transaction is complete Other performance cycles represent long-term arrangements. A complicating fact is that any operation or facility in one logistical arrangement may also be a participant in a vast number of different performance cycles. For example, the warehouse facility of a hardware wholesaler might receive merchandise from several hundred manufacturers on a regular basis. Likewise, a for-hire transportation carrier typically participates in numerous different performance cycles., spanning a wide variety of industries.

when one considers an enterprise of national or mulunational scope involved in marketing a broad product line to numerous customers - engaging in basic manufacturing and assembly, and procuring materials and components on a global basis - the notion of individual performance cycles linking all operations is difficult to comprehend. It is almost mind-boggling to estimate how many performance cycles exist in the logistical systems of General Motors or IBM.

Regardless of the number and different types of performance cycles a firm uses to satisfy its logistical requirements, each must be individually designed and operationally managed. The fundamental importance of performance-cycle design and operation cannot be overemphasized. The performance cycle is the basic unit of design and operational control. A performance-cycle perspective is important to satisfy logistical requirements. In essence, the performance-cycle structure is the framework for implementation of integrated logistics. Figure 2 - 3 illustrates the performance-cycle structure of the three basic logistical operating areas. Figure 2 - 4 illustrates a complex network of performance cycles arranged in a multiecheloned structure.

Three points are significant to understanding the architecture of integrated logistical systems. First of all, the performance cycle is die tindaineirtal unit for integrated analysis of logistical functions. Second. the pertbrrnance-cycle structure in terms of link and node arrangement is basically the same whether one is concerned with physical distribution, manufacturing support, or procurement. However. considerable differences exist in the control that a firm enjoys over a specific type of performance cycle. Third, regardless of how vast and complex the overall logistical system structure is, essential interfaces and control processes must be identified and evaluated in terms of individual performance-cycle arrangements when seeking process integration.

To better understand this important concept, the similarities and differences in

the nature of physical distribution, manufacturing support, and procurement predominance cycles arc discussed and illustrated in greater detail.

Physical Distribution Performance Cycles

Physical distribution operations involve processing and delivering customer orders. Physical distribution is integral to marketing and sales performance because it provides timely and economical product availability. The overall process of gaining and maintaining customers can be broadly divided into transaction-creating and

physical-fulfillment