Logistics is not confined to tactical decisions about transportation and warehousing. Longer-term decisions are needed to put in place the capabilities that ensure that logistics plays a full role in supporting a company’s products in the market place.
As such capabilities increasingly involve partners in a supply chain, the implications of this ‘full role’ extend far beyond the boundaries of the company itself. Logistics strategy is the set of guiding principles, driving forces and ingrained attitudes that help to coordinate goals, plans and policies between partners across a given supply chain.
If the links in a supply chain are directed at different competitive priorities, then the chain will not be able to serve the end-customer as well as a chain in which the links are directed at the same priorities. This is the idea of ‘focus’, which is based on the view that you cannot be good at everything. Where links in a supply chain are directed at a common and consistent set of goals that are based on the priorities most valued by the end-customer, that supply chain will compete better in the market place than one in which the links have different, conflicting priorities.
All too often, for example, a focus on cost cutting by the management of the day is at odds with the more fundamental priorities of reliability and speed. While profitability may be improved this financial year, long term damage may well have been caused to the supply chain’s ability to compete.
It is difficult to handle high volume, low cost products in the same distribution channel as low volume, high variety products. Logistics processes for classic shirts (styles that last a long time and do not date) are sourced separately from fashion blouses.
Classic shirts are sourced from low cost economies where price is key and delivery times are less important because the product life cycle is long.
Fashion blouses (styles that are in season and may date quickly) are sources closer to the home market because response time is key, and cost is less important.