Logistical Strategies within the Supply Chain
La’Trice L. Watson
American Military University
Logisticians continually make strategic level decisions in order to manage uncertainty, customer service and cost. Clients such as manufacturers, raw materials suppliers, distributors, retailers and shippers are provided a service by logistic service providers within the supply chain which makes it necessary to formulate strategies (Davenport, Jarvenpa, & Beers, 1996). Logistics is a part of the supply chain, which plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information ...view middle of the document...
The right logistics strategy will drive reduced costs, better customer service and improved profits.
The first component to consider when developing logistics strategies is agile logistics. Agility is described as a capability which contains organizational structure, information systems, and logistic processes (Waters, 2003). With the ever changing market, businesses need to have an agile supply chain that is flexible and quick to adjust to new conditions. The ability to adjust the business processes, operations and information flow along the extended supply chains becomes vital for a company’s survival and success (Paley, 2005). Having agile logistics reinforces the true understanding of how supply chain management is an extension of logistics management in that supply chain management is about developing a process to respond to the different requirements of each customer (Burgess, 1998). It has to be separated from the lean supply chains or the lean manufacturing concept which focusses on reducing fat such as inventory cost wherever possible (Harrison and Van Hoek, 2006). According to Paley, 2005, having agile logistics helps with enriching the customer, enhancing competitiveness, organizing to master change and uncertainty and to leverage the impact of people and information. This compliments the added value modeling system because being agile does not allow a company to act in isolation, it takes the customers preference into account as it aligns itself with customers, suppliers, employees and many others.
The second component, lean manufacturing emphasizes minimization of all resources used in supply chain management. The lean logistics methodology uses proven lean practices and principles to reduce waste, complexity and errors. It focuses on getting the highest throughput with the least amount of inventory (Hines, 2004). It’s like downsizing in the military, doing more with less to minimize waste and save money. Anything that does not add value to the final product gets eliminated. For example, carrying a large inventory can be seen as a type of waste that carries with it a high cost. A second major focus is to empower workers, and make production decisions at the lowest level possible (Hines, 2004).
The third component is building a good relationship with vendors and distributors. This component is a very important part of any logistics strategy. Vendors represent businesses and they are usually focused on mutually beneficial trading relationships (Bowersox and Closs, 1996). Collaborative planning, forecasting, and replenishment (CPFR) supports this component in that there has to be cooperative management of inventory with supply chain trading partners jointly planning supply chain activities making the retailer and supplier responsible for the success of the entire process (Sandoe et al., 2001). Maintaining a healthy relationship with your supplier will, in most cases, benefit both parties financially, but it is...