Logistic Stratergy
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There are many shifts and changes that occur in an organizations logistics, all of which have a direct or indirect impact on the supply chains logistic operations.
The supply chain is a network of organizations that are involved, through upstream and downstream linkages, in different processes and activities that produce value in the form of products and services in the hands of the ultimate consumer. (Christopher 1998). With the logistical activities defined as, the process of strategically managing the procurement, movement and storage of materials, parts and finished inventory (and related information flows) through the organization and its marketing channels in such a way that current and future profitability are maximised through the cost effectiveness of orders. (Christopher 1998).
The supply chain basically has three main parts, supply, manufacturing, and distribution, and the chain regularly starts with the suppliers of suppliers and ends with the customers of your customers. (www.centipedia.com).
Strategy can be defined as the direction and scope of an organization over the long term, which achieves advantages in a changing environment through its configuration of resources with the aim of fulfilling the stakeholders expectations. (Johnson 2005).
The development and ongoing use of a formal logistic strategy is to guide logistic operations through times of change and will identify potential strengths and weakness within the supply chain logistic operation. The creation of a logistic strategy can be achieved from a solid understanding of basic logistics, current and emerging technologies and initiatives, industry forces and the logistic operations current and future aims. The understanding of the future aims of the organization is essential. All the component areas of the supply chain operation should be analysed to gain any advantages and maintain the effectiveness of the strategy. The component areas of a complete logistic strategy should include:
Transportation
Outsourcing
Logistic Systems
Competitors
Human Resources
Network Design
Supply Chain
Information
Option Analysis
Strategy Review
Communications
The effectiveness of a logistic strategy will be experienced throughout the organization, and within every component of the supply chain. The strategy should be able to respond to changes quickly and effectively. A weak production strategy can bring production to a standstill, if the production capability is not great enough to meet peak demand periods and inventory assets are not adequately provisioned, the demand will not be satisfied. A competent distribution strategy, for storage and throughput ensures delivery of the right product at the right time. Transportation strategies, connects all the components of the supply chain and ensures on time delivery which affects the performance of the components within the supply chain. The logistic strategy should be constantly reviewed, as changes from external and internal pressures can change quickly. Global economics and competitors cause external pressures that can challenge strategies. From price fluctuations to raw material availability, the strategy must be flexible to be able to react to the changes. Also, internal policies can be disruptive. Moves into new markets to create opportunities will need proper planning and be incorporated into the strategy. Without proper planning, the opportunity to enter new markets could become a liability, and undermine the original strategy.
To assist in determining an organizations strategy, a management analysis tool often used is the PEST and SWOT analysis. PEST is an acronym for Political, Economic, Social and Technological, whilst SWOT is an acronym for Strengths, Weakness, Opportunities and Threats.
The PEST analysis helps identify the businesss market potential according to external factors and the SWOT analysis headings provide a good framework for reviewing strategy, position and direction of a company or business proposition. (www.buisnessballs.com).
The following PEST (Fig 1) and SWOT (Fig 2) matrix provide examples of areas that can be assessed whilst completing an analysis. Political*
Ecological/environmental issues *
Current legislation home market *
Future legislation *
European/international legislation *
Regulatory bodies and processes *
Government policies *
Government term and change *
Trading policies *
Funding, grants and initiatives *
Home market lobbying/pressure groups
Economic*
Home economy situation *
Home economy trends *
Overseas economies and trends *
General taxation issues *
Taxation specific to product/services *
Seasonality/weather issues *
Market and trade cycles *
Specific industry factors *
Market routes and distribution trends *
Customer/end-user drivers
Social*
Lifestyle trends *
Demographics *
Consumer attitudes and opinions *
Media views *
Law changes affecting social factors *
Brand, company, technology image *
Consumer buying patterns *
Fashion and role models *
Major events and influences *
Buying access and trends
Technological*
Competing technology development *
Research funding *
Associated/dependent technologies *
Replacement technology/solutions *
Maturity of technology *
Manufacturing maturity and capacity *
Information and communications *
Consumer buying mechanisms/technology *
Technology legislation
Fig 1
Strengths*
Advantages of proposition *
Capabilities *
Competitive advantages *
Resources, Assets, People *
Experience, knowledge, data *
Financial reserves, likely returns *
Marketing – reach, distribution, awareness *
Location and geographical *
Price, value, quality *
Processes, systems, IT, Communications
Weaknesses*
Disadvantages of proposition *
Gaps in capabilities*
Lack of competitive strength *
Financials *
Own known vulnerabilities *
Timescales deadlines and pressures *
Cash flow, start-up cash-drain *
Continuity, supply chain robustness *
Effects on core activities, distraction *
Processes and systems
Opportunities*
Market developments *
Competitors vulnerabilities*
Industry or lifestyle trends *
Technology development and innovation*
New markets, vertical, horizontal*
Niche target markets*
Geographical, export, import *
Tactics – surprise, major contracts *
Business and product development *
Information and research
Threats*
Political effects *
Legislative effects*
Environmental effects*
Competitor intentions – various*
Market