5 Expert Tips on Logistics Planning and Strategy.
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Logistics Planning and Strategy
Meeting objectives is the primary goal of any operating plan. A strategic plan is a framework of a series of guideposts that keeps an operating plan on track, to ensure that desired objectives are achieved. This strategic plan defines the core identity of the business, like what the brand is, its ultimate aim and goals, and the brand’s path or strategy of achieving its goals.
Simultaneously the strategic plan also addresses the stakeholder’s concerns and expectations.
A Harvard Business Review states that an estimated 67% of business strategies fail, due to poor execution. Hence, an effective logistics planning and strategy, and its successful execution, is paramount to the company’s success.
A logistics strategy is comprehensive and effective when it combines all three key levels of logistics planning, which are the strategic, operational and tactical levels, as well as addresses the four main pain points in the supply chain, which are facility locations, customer service levels and inventory, and transportation decision-making.
Benefits of logistics planning
Delivering the right products to the right customers at the right time in a cost-effective manner, is the primary objective of any logistics strategy. An effective logistics strategy defines the service levels at which the organization is most cost-effective and thus helps the company minimize investments and other costs.
The result obviously is a win-win situation for all. The company benefits from cost efficiency, and the customers get what they need at the right time, and brand credibility and customer satisfaction, both are enriched and boosted.
In a fluid and rapidly changing market environment, a logistics planning is of great advantage as it minimizes risks, by enabling companies to anticipate change, and develop strategies to adapt to those changes.
There is a constant state of flux in the supply chains. Hence many companies develop logistics strategies for specific product lines, geographic regions, or customer segments, thereby enabling themselves to adapt to market changes impacting one region or business line, while maintaining efficiency across others.
Hence, without debate, a good Logistics Planning and Strategy is a key factor for the success and credibility of a business.
Three Major Aspects of Strategic Logistics Planning
The three major aspects of strategic logistics planning are –
- Long-term goals
- Means of achieving those
- Process for achieving those
1. Long-term goals
Customer satisfaction, the company’s competitive advantage, and supply chain management are the three long term goals of a logistics planning and strategy.
Delivering value and a good customer service, and resources available for the implementation of the logistics planning is the means for achieving the long-term goals.
The process for achieving the company’s long-term goals includes defining the manner of executing the logistics strategy, anticipating and managing change, and relating each element of the logistics strategy to the company’s overarching business objectives.
The time bracket of a logistics plan and strategy is typically five or more years.
At a more detailed level, A successful logistics plan and strategy must address the following elements:-
- The general overview of the logistics strategy, and how it relates to other business
- The objectives of the logistics strategy, and its relatability to cost effectiveness, service for the product, and the
- An accurate and detailed lay-out of description of each strategy that supports the overall logistics plan and strategy. The logistics planning must include inventory and warehousing, order processing and fulfillment, transportation and customer
- An efficient logistic or operational plan must be broken down into separate segments. These segments must be addressed individually and planned collectively and holistically. These segments include timing, costs for implementation and their impact on other business functions, and the business as a
- A prior estimate and forecasts of requirements with regard to workforce, capital, and any other necessary
- An accurate, well calculated and a detailed financial statement that defines the capital requirements, operating costs and cash flow. This helps to draw out a clear financial picture for executives and stakeholders.
- A business impacts analysis report that details the anticipated impacts on profits, customer service and other business functions, is a crucial part of logistics planning and strategy.
- A crucial component of an effective logistics strategy is aligning the logistics goals to the broader business objectives. Trissa Strategy Consulting states that 63% of successful companies have every business unit, from IT and human resources to marketing and supply chain management, all aligned to their overall corporate strategy. Similarly 64% of successful companies build their budget around their strategy, drawing out and aligning elements such as financial forecasts, capital requirements, and analysis of operating costs and cash flow vital to the company’s
Route to Successful Logistics Planning and Strategy – 5 EXPERT TIPS
1. An adaptive unified buying process
Creation of an adaptive unified buying process is important. A typical buying process, is bifurcated, based on geography. It is of use when buying goods based on a geographic market approach. This process is used when dealing with geographic specific partners. However, another geographical area may call for another process and a different technology.
It is important to ask the clients what is it that they want to buy, and offer to unify all the processes, those partners and those technologies, across geography, to make the buying experience smooth and more transparent for the user.
Technology offers a plethora of good communication tools that can help businesses build their collaborative rapport across the supply chain, to eliminate confusion. Most supply chain members, traditionally, are solely concerned with their own performance and output. It is certainly important for each stakeholder to ensure they’re meeting deadlines
and turning in quality performance, however, going solo and silos along the supply chain, makes it difficult to address inefficiencies in an impactful way.
Oftentimes, not fully understanding how their own activity connects to other teams, breeds a flippant attitude. And many supply chain members simply pass the buck instead of taking accountability.
The solution lies in collaboration. Companies can boost holistic supply chain management by working with all stakeholders, to develop a roadmap for consistent, continuous and collaborative improvement.
3. A Generous Approach to the Supply Chain Collaboration
Collaboration has become the new buzzword in the supply chain world. Increasing number of organisations are recognizing the need to collaborate. A whole new culture of collaborative logistics planning and strategies is evolving.
However, true and dependable collaborations are not the easiest achieve. Boundaries of mistrust need to be broken down, and conflicting objectives need to be discussed and aligned to common objectives and goals of
4. Supply Chain Is a Center of Excellence
A virtual center of excellence with experts across the company collaborating electronically, is undoubtedly a great idea. However, collaboration can be more effective if companies work together in the same location.
This improves communication and collaboration. A supply chain design is extremely complex. The analysis experts can share information sitting side-by-side and graphically depicting and explaining their ideas.
5. A Model That Supports Environmental Sustainability
Environment is precious to all existence on earth. BSR recommends that companies address climate risks in their supply chains by focusing upon the areas of greatest impact and greatest influence, and also take necessary steps to contain harm to
- A broad range of climate risks must be considered and parts of the supply chain that are most at risk need to be
- Supply chain actions, such as procuring internal teams, action with suppliers and broader collaborations, and developing measurable targets for these efforts, must be implemented.
- Evaluation of the impact of supply chain actions and the adjustment of programs and goals from time to time are
Integration of climate risks, and building the climate resilience of the communities on which supply chains depend, enables companies to increase the likelihood of fulfilling the supply chain objectives