Logistics strategy

Logistics strategy is the set of guiding principles, driving forces and ingrained attitudes that help to coordinate goals, plans and policies and which are enforced through conscious and subconscious behaviours within and between partners across a network.
Companies implement a logistics strategy because the supply chain constantly changes and that affects the organization. To adapt to the flexibility of the supply chain, companies should develop and implement a formal logistics strategy. This will allow a company to identify the impact of imminent changes and make organizational or functional changes to ensure service levels are not reduced. Logistics strategy facilitates gaining a competitive edge to support emerging technologies.

As a service function logistics involves the four basic features:

• Reliability: Influences the degree of trust, which a supplier can have, in a company‘s capability for honoring commitments. The supplier has to be perceived as reliable and for this the supplier needs to exhibit certain service characteristics. A high degree of
reliability in terms of inventory and material delivery is expected from the supplier end. Thus a key objective of the logistical system needs to be reliability in meeting the needs of the customer, according to the resource planning.
• Responsiveness: The speed with which customer demands are being responded. Responsiveness is expected at all levels of the supply chain. Response to pre-sales enquiry by using latest available information and communication technologies is an important strategy. Supplying material as per customer needs, and frequent deliveries in fewer lot sizes are important. Deliveries can also be made at the various assembly centers, which are in proximity to the markets. A firm will gain a winning edge in competitive markets through a responsive strategy.
• Relationship: Firms spend huge amounts in Customer Relationship Management (CRM) related activities for development of long term relationships to retain customers, and also reduce the element of risk in demand management. Partnering with the right supplier and considering the supplier operations, as an extension of its own operations will enhance the efficiency and effectiveness of the supply chain.
• Rationalization: This refers to reducing the supplier base and partnering with select suppliers. The supplier‘s facility is treated as an extension of the buyer‘s facility and there is sharing of information, experience and resources for mutual advantage.

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