1. Cost Leadership: Achieving cost leadership is facilitated by logistics cost reduction to a major extent. This can be achieved by many ways. Examples of achieving logistics cost reduction are:
• Reducing transaction costs through IT support
• Warehouse operations based on scale economics
• JIT, cross docking and postponement, which results in reduction of inventory and related costs.
• Reduced vendor base and co-partnerships with suppliers.
2. Differentiation: This strategy focuses on offering superior service. Examples of offering logistics services for differentiation:
• On time and consistent delivery
• Logistics solutions to suit individual requirements
• Tracking consignments
3. Collaboration: A strategy where the customer works in collaboration with the suppliers. An example here is Vendor Managed Inventory (VMI). In VMI, customer places no orders but instead shares information with the vendor. This information relates to actual usage or sales of their product, their current on hand inventory and details of additional marketing activity. On the basis of this information, the supplier takes responsibility for replenishment of the customer inventory.
4. Diversification: Firms having a lot of operations adopt this strategy. The basic objective here is the lower cost and better control over operations thus providing superior customer service.
5. Outsourcing: Outsourcing services to logistics service providers having expertise in this area in order to bring efficiency and effectiveness into the logistics operations. An example in outsourcing is Customs Clearance service providers. As a majority of exporters and importers do not have a proper expertise in this area of logistics operations, many logistics service providers offer customs clearance services to their clients. This can reduce the overall transaction cost.
