Abstract 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 between the point of origin and the point of consumption to meet the clients’ needs (Butterworth-Heinemann, 2004). A number of logistical strategies exist from company to company, each claiming to be more efficient, faster, and better than their competitors. Any logistical strategy should contain some common components that supports the company’s overall logistics strategy (Waters, 2003). An effective strategy can be established for any logistical situation utilizing these four components: Agile logistics, lean management, a good relationship with vendors and effective technology systems.
Logistical Strategies within the Supply Chain
Because supply chain strategy depends on the type of supply chain a company uses, the type of functional strategies chosen should complement the type of supply chain that the company is a member of (Langabeer and Rose, 2002). The purpose of this paper is to explore and expand on the identified components within the supply chain that can be used as a framework when developing a logistics strategy. This framework consists of four identified components: Agile logistics, lean manufacturing, and good relationships with vendors and effective technology that exist when developing logistics strategies. 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…