LOGISTICS STRATEGIC PLANNING

LOGISTICS STRATEGIC PLANNING

A unified, comprehensive and integrated planning process to achieve competitive advantage through increased value and customer service, which results in superior customer satisfaction (where we want to be), by anticipating future demand for logistic services and manufacturing resources of the entire supply chain (how to get there). This planning is done within the context of corporate goals and plans.
Strategic Planning for Logistics; Ohio State University

SUPPLY CHAIN DECISIONS

Direction and Extent of Vertical Integration Production/Procurement decisions Selection of Partners Nature of Relationships Facilities Location Inventory decisions Transportation decisions Communications Interface Design Decisions

ACHIEVING STRATEGIC FIT

Competitive strategy and all functional strategies must fit together to from a coordinated overall strategy. Each functional strategy must support other functional strategies and help a firm reach its competitive strategy goal. The different functions in a company must appropriately structure their processes and resources to be able too execute these strategies successfully.

METHODOLOGY FOR ACHIEVING STRATEGIC FIT

Understanding the customer Understanding the supply chain Achieving strategic fit

UNDERSTANDING THE CUSTOMER

The quality of product needed in each lot The response time that customers are willing to tolerate The variety of products needed The service level required The price of the product The desired rate of innovation in the product

DEMAND UNCERTAINTY
Apparent Implied Impact on customer needs Implied uncertainty spectrum Correlation between implied demand uncertainty and other attributes

SUPPLY CHAIN RESPONSIVENESS

Respond to wide ranges of quantities demanded Meet short lead times Handle a large variety of products Build highly innovative products Meet a very high service level

R E S P O N S I V E N E S S

HIGH

LOW HIGH COST LOW

FINDING THE ZONE OF STRATEGIC FIT

RESPONSIVE SUPPLY CHAIN

RESPONSIVENESS SPECTRUM

EFFICIENT SUPPLY CHAINS IMPLIED UNCERTAINTY CERTAIN SPECTRUM DEMAND

UNCERTAIN DEMAND

CHANGES IN SUPPLY CHAIN STRATEGY OVER A PRODUCTS RESPONSIVE LIFE CYCLE

SUPPLY CHAIN

RESPONSIVENESS SPECTRUM

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EFFICIENT SUPPLY CHAINS

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IMPLIED UNCERTAINTY CERTAIN SPECTRUM DEMAND

UNCERTAIN DEMAND

COMPARISON OF EFFICIENT AND RESPONSIVE SUPPLY CHAINS PRIMARY GOAL

EFFICIENT SUPPLY CHAIN Supply demand at lowest cost RESPONSIVE SUPPLY CHAIN Respond quickly to demand

COMPARISON OF EFFICIENT AND RESPONSIVE SUPPLY CHAINS PRODUCT DESIGN STRATEGY

EFFICIENT SUPPLY CHAIN Maximise performance at minimum product cost RESPONSIVE SUPPLY CHAIN Create modularity to allow postponement of product differentiation

COMPARISON OF EFFICIENT AND RESPONSIVE SUPPLY CHAINS PRICING STRATEGY

EFFICIENT SUPPLY CHAIN Lower margins because price is a prime customer driver RESPONSIVE SUPPLY CHAIN Higher margins as price is not a prime customer driver

COMPARISON OF EFFICIENT AND RESPONSIVE SUPPLY CHAINS MANUFACTURING STRATEGY

EFFICIENT SUPPLY CHAIN Lower costs through higher utilisation RESPONSIVE SUPPLY CHAIN Maintain capacity flexibility to meet unexpected demand

COMPARISON OF EFFICIENT AND RESPONSIVE SUPPLY CHAINS INVENTORY STRATEGY

EFFICIENT SUPPLY CHAIN Minimise inventory to lower cost RESPONSIVE SUPPLY CHAIN Maintain buffer inventory to meet unexpected demand

COMPARISON OF EFFICIENT AND RESPONSIVE SUPPLY CHAINS LEAD TIME STRATEGY

EFFICIENT SUPPLY CHAIN Reduce but not at the expense of cost RESPONSIVE SUPPLY CHAIN Aggressively reduce even if the costs are significant

COMPARISON OF EFFICIENT AND RESPONSIVE SUPPLY CHAINS SUPPLIER STRATEGY

EFFICIENT SUPPLY CHAIN Select based on cost nad quality RESPONSIVE SUPPLY CHAIN Select based on speed, flexibility and quality

COMPARISON OF EFFICIENT AND RESPONSIVE SUPPLY CHAINS TRANSPORTATION STRATEGY

EFFICIENT SUPPLY CHAIN Greater reliance on low cost modes RESPONSIVE SUPPLY CHAIN Greater reliance on responsive modes

EXPANDING STRATEGIC SCOPE

Intra- company and Intra-operation Scope
The minimse local cost view

Intra-company Intra-functional Scope

The minimise functional cost view

Intra-company Inter-functional Scope

The maximise company profit view

Inter-company Inter-functional view

The maximise supply chain surplus view