Logistics Strategy Definition:
What is a logistics strategy? Logistics strategy is the set of guiding principles, driving forces and ingrained attitudes that assist to coordinate goals, plans and policies, and which are reinforced through conscious and subconscious behaviour within and between partners across a network.
When it comes to company strategy, logistics was formerly thought of as nothing more than managing the transport network and warehouses. Companies now recognize that logistics planning is essential to corporate strategy, particularly in light of the pressing requirement for sustainability to be included into business operations.
Because carbon emissions have an impact on climate change, logistics can be crucial in reducing a company's environmental impact.
In addition, we are in the midst of a period of profound global transformation that is changing the socio-economic and political environments. Supply and value chains are coming under more and more pressure, thus they could need constant assessment and revision.
Importance of Logistics planning and strategy : It will assist in streamlining service levels to the point where a business is operating at its most economical and energy-efficient levels.
Logistics Strategy vs Logistics Operations
The supply chain management (SCM) process encompasses both logistics strategy and logistics operations.
Logistics strategy makes use of management principles to ensure that workflow is optimized. It entails warehousing, commodities flow, services, and information efficiency design, implementation, and maintenance.
The manufacturing process is usually the only focus of logistics operations. Operations may be referred to as planning in the service industry, but management of that part of the organization is carried out in a similar manner. Simply said, it is concerned with the movement (flow and storage) of items, information, products, and services within the supply chain, whereas logistics operations are concerned with manufacturing, materials handling, and inventory management.
Within the logistics and operations management of the organization, logistics strategy and logistics operations work in tandem. All of this should be evaluated in terms of whether the end user's needs for pricing, quality, and availability have been met effectively. Importance of Logistics strategies rely n Customer satisfaction.
Customer satisfaction is a top goal in decision-making because the end user determines whether or not a retailer's customer base will survive.
There are four options to consider:
• Adapt. 'Strategy'
Adapt strategy is not something that is done in a formal way. A common attitude is that "our approach is not to have a strategy." Operating decisions are made in response to current needs, with financial goals serving as the primary guiding principle.
Financial goals are the key guiding element once again, but this time they are attained through a structured planning procedure. Because it is the oldest and most influential alternative, it is referred to as "classical."
• Be accommodating.
Decisions are now again being made on a daily basis, but financial goals are no longer the major issue.
• The problem is systemic.
Assumes that there is no contradiction between the ends and means of achieving corporate objectives.
Six Concepts for Logistics Strategy Formulation
• Total Cost Concept – Tradeoff conflicting costs at optimum
• Differentiated distribution – Not all products should be provided the same level of customer service
• Mixed strategy – A pure strategy has higher costs than a mixed strategy
• Postponement – Delay formation of the final product as long as possible
• Shipment consolidation – Smaller shipment sizes have disproportionately higher transportation costs than larger ones
• Product standardization – Avoid product variety since it adds to inventory
Considerations: The Logistics planning triangle. Read More
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