Logistics--the art and science of adding value to parts and products so they are available efficiently and on time all along an enterprise's supply chain--has been recognized as one of the most important factors in achieving and maintaining a competitive business advantage in today's global marketplace.
The Center for Transportation Studies (CTS) is developing a new master's degree, an interdepartmental program: the Masters of Engineering in Logistics (MEL), the first of its kind in the nation. The MEL program will begin admitting students in September 1998. The faculty approved the nine-month interdisciplinary program on April 19.
"Forward-looking companies now realize that logistics sells," said Professor Yossi Sheffi, director of CTS. "Advanced logistics practices not only reduce inventory, transportation and coordination costs, but they also lead to better customer service and increased sales."
Recognizing the importance of supply chain management--moving efficiently from raw materials to finished product in the consumer's hand--most leading corporations have reorganized. Functions such as transportation, material management, warehousing and distribution have been combined into a logistics function and process.
The new degree, said Professor Sheffi, "is another step forward in advancing MIT's leadership position in transportation and logistics."
The Masters of Engineering in Logistics degree is based on a series of courses, most of them new or modified substantially. It includes a new core curriculum in which students will be exposed to several courses integrated through case studies.
DRAWS FROM MANY SOURCES
The program will be offered in cooperation with several departments and organizations within MIT, including civil and environmental engineering, aeronautics and astronautics, and ocean engineering. These departments already participate in the Center's educational program. In addition, both the Sloan School of Management and the Center for Advanced Educational Services plan to integrate several of the new degree's offerings in their own programs.
CTS already offers two graduate degrees: the Masters of Science in Transportation (MST), and the interdepartmental PhD in transportation. The Center involves more than 50 faculty and research staff from across the Institute; it also manages its own corporate affiliates and public agencies' affiliates programs.
"CTS has grown and prospered along all these dimensions over the last several years as a result of the dedication and hard work of its faculty and staff," said Professor Sheffi.
CTS predicts a growing demand for logisticians due to the globalization of commerce, the continuing movement towards deregulation and privatization of transportation sevices worldwide, the recognition by industry of the necessity to move nimbly among markets and between suppliers, increasing environmental concerns which require recycling and safe disposition of manufacturing byproducts, and most importantly, the consumer's ever-higher expectations for better service, lower prices and greater choices.
In addition, realignments due to mergers and acquisitions create extended supply chains that require a continuous logistical redesign of supply and distribution networks.
To illustrate, Professor Sheffi cited the situation faced by Proctor & Gamble and Wal-Mart.
Proctor & Gamble, maker of paper, drugs and soap products, was Wal-Mart's largest supplier, and Wal-Mart was Proctor & Gamble's biggest customer. Traditional, transaction-based, sometimes adversarial relationships between the two giants were costly in terms of erratic ordering patterns, excessive (and costly) inventories, and service failures. Recognizing the problem, the two companies developed over several years a joint logistics process involving information sharing, joint demand forecasting and coordinated shipments. This partnership laid the foundation for an industry-wide initiative called ECR, or Efficient Consumer Response.
From a logistics perspective, this trend toward cooperation up and down the supply chain is dramatically positive. Over the past several years, manufacturers practicing ECR have seen sales rise, inventories drop, and profits go up. Professor Sheffi notes that Proctor & Gamble estimates that retailers can save $30 billion a year by a wider practice of ECR--that is, logistical--principles.
The new MEL program will be administered by an executive director and supervised by an industry steering committee. It will be governed by the transportation education committee--including faculty from across the School of Engineering--which already governs the Interdepartmental PhD and the MST degrees.
External "joint ventures" now envisioned for the MEL program include involving international institutions in the teaching process. As logistics is, by nature, an international subject, CTS plans to found a logistics teaching consortium comprised of international universities and logistics organizations from around the world.
The consortium will involve two-way distance learning. It will aim to create a cybercommunity of students, educators, researchers and practitioners, all involved in knowledge exchange. To this end, the logistics program will be "Web-enabled," involving extensive Web sites with many interactive features.
With the launching of the new logistics degree, CTS is expanding its commitment to education, including the two graduate transportation degrees it offers. Professor Sheffi noted that the transportationeducation committee is in the process of restructuring and strengthening the MST degree, examining the program, the market it serves and its educational objectives.
A version of this article appeared in MIT Tech Talk on May 21, 1997.