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
The Center for Transportation Studies (CTS) at the Massachusetts
Institute of Technology 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.
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.
The Center for Transportation Studies at MIT 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
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 seens 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 cyber-
community 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
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 transportation
education committee is in the process of restructuring and strengthening
the MST degree, examining the program, the market it serves and its