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Strategic Logistics Planning

Strategic Logistics Planning. Compiled by Rulzion Rattray. Strategic Logistics Planning. Understand & assess the macro environment. Analyse & understand the internal capabilities. Combines these to set objectives in consultation & with the support of major elements of the organisation.

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Strategic Logistics Planning

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  1. Strategic Logistics Planning Compiled by Rulzion Rattray

  2. Strategic Logistics Planning • Understand & assess the macro environment. • Analyse & understand the internal capabilities. • Combines these to set objectives in consultation & with the support of major elements of the organisation

  3. The Resource EnvironmentTheValue Chain Michael Porter (1985) Firm’s Infrastructure Human Resource Management Secondary Activities Margin Technology Development Procurement Outbound Logistics Inbound Logistics Marketing & Sales Service Operations Margin Primary Activities

  4. Overview External Factors Organisational Strategic Plan • Social • Ecological • Political • Technological • Economic Marketing Manufacturing Physical Distribution Finance Adapted from Capacito, W., & Rosenfield, D.B., (1984), “Analytical Tools for Strategic Planning”, 15(3), pp47-61, Council of Logistics Management USA. Logistics Functional Strategic Plans

  5. Key Issues in Logistics Planning • Customer Service: • Demand for improved service, quality a major element in competitive advantage • Logistics costs: • Physical distribution, up to 30% of sales value • External pressures • Regulatory change pressures, competitive pressures of globalisation • Trade offs: • Response to change requires complex adjustment. • Organisational conflicts: • Often no clear responsibility for logistics

  6. Strategic Logistics Planning Business goals & strategies Quality of Individual link of logistics system Customer service requirements • Facility location • Operations strategy • Inventory management • Information systems • Material handling • Traffic & transportation • Planning & control • Organisation Integrating logistics planning Design of integrated logistics management system Overall performance Adapted from Capacito, W., & Rosenfield, D.B., (1984), “Analytical Tools for Strategic Planning”, 15(3), pp47-61, Council of Logistics Management USA.

  7. Pressures Influencing System New customer Service requirements Changing costs Pressure for financial performance Logistics System Regulatory change Constantly improving IT availability Pressure to reduce inventory Requirement for innovation and efficiency Adapted from Capacito, W., & Rosenfield, D.B., (1984), “Analytical Tools for Strategic Planning”, 15(3), pp47-61, Council of Logistics Management USA.

  8. Conflicts of Interest High revenue through: Sales & Marketing Higher Customer Service  High levels of availability  Rapid introduction of new products Lower Logistics Cost effective production: Production More Disrupting factors in production • High constant capacity utilisation • Longer production runs, Fewer set up costs Fewer Logistics Tight budgets for: Higher Stocks Finance & Control • Stocks • Cost Lower Adapted from Capacito, W., & Rosenfield, D.B., (1984), “Analytical Tools for Strategic Planning”, 15(3), pp47-61, Council of Logistics Management USA.

  9. Analytical Methods • Decisions support systems • Advantage of quick analysis, & can incorporate the complex trade offs. • Logistics cost analysis by: • Channel, Product, type of customer, geographic area, logistics function, etc. • Use of simulations: • What if simulations, (I.think) • Optimisation

  10. Shapiro Grid framework Breadth of product line Cost Service Curves Narrow Broad Decentralised Inventory Logistics costs Service costs or Delivery Time, etc Centralised Inventory • Elbows create concentration • away from elbow large increases in delivery time and only moderate decrease in costs • Straight steep curves variation and niches • more room for differentiators • Service consists of a range of dimensions • A basis for competitor comparison on two dimensions

  11. References • Capacito, W., & Rosenfield, D.B., (1984), “Analytical Tools for Strategic Planning”, 15(3), pp47-61, Council of Logistics Management USA. • Christopher, M., (1995), “Logistics the Strategic Issues”, Chapman Hall, London. • Aitken, J., “Supply Chain Integration within the Context of a Supplier Association”, Cranfield University PHD Thesis, 1998. Cited in Christopher, M., (1998), “Logistics and Supply Chain Management. Strategies for Reducing Cost and Improving Service”, Financial Times Pitman Publishing, London.

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