SCMAP Perspective #235
April 22, 2010 by carlo
Perspective (#235)
Published in Port Calls, February 1, 2010
LOGISTICS STRATEGIES
Fax 551-3207
Email lizaalmonte@yahoo.com.ph
By Ed Sanchez
SCMAP Executive Director
Logistics Strategies
Supply Chain Management continues to evolve, and with it, Logistics Management also continues to evolve, since the latter is part of the former. In addition to the effects of changes in SCM, technological developments and the unfolding business scenarios have their influences.
Every now and then, we spend space for technical publications. This is another one of them. Of course we avoid technical details and attempt to simplify the discussion.
“As the logistics discipline continues to mature, it is relevant, if not crucial, to periodically assess the current state of the field in terms of its classification of key concepts, activities, and events.” This is a direct quote from a research article in the Journal of Business Logistics, Vol. 29 No. 2 2008, entitled “A Logistics Strategy Taxonomy”.
Co-authors of the research are Chad W. Autry (Texas Christian University), Zach G. Zacharia (Lehigh University) and Charles W. Lamb (Texas Christian University). The research makes use of statistical tools: a survey and statistical techniques. The main result of the research is as follows.
The research identified 11 clusters of activities in the discipline of logistics, and measured the importance of each cluster to two types of Logistics Strategy, namely (1) Functional Logistics Strategy and (2) Externally Oriented Logistics Strategy..
As examples, below are the items listed under two out of the 11 clusters of activities.
4. Logistics Social Responsibility
- Environmentally conscious packaging
- Packaging of hazardous materials
- Recycling
- Reusable packaging
- Waste management
3. Inventory & Order Management
- Distribution Requirements Planning
- Inbound freight cost analysis
- Inventory order management .
- Inventory value analysis .
- Manual order transmittal
- Material Requirements Planning
- Order planning for demand smoothing
The importance of each activity cluster to each strategy (two columns) was rated on a scale of 1= not at all important, to 7= extremely important. Significant difference in importance to the two strategies at below 0.01 probability is marked “sig*”, and also in boldface.
The two logistics strategies are described by the authors as follows.
Strategy 1: Functional Logistics Strategy
The primary goal is to achieve maximum logistics efficiency. This is accomplished by focusing on inventory and order management; order processing; and procurement and storage activities, as well as by addressing common functions related to customer service, operational controls, and transportation management.
Strategy 2: Externally Oriented Logistics Strategy. The primary goal is to emphasize the ability to respond quickly and efficiently to changing customer needs, outbound delivery, support and services. This is accomplished by focusing on Interfirm Coordination and Collaboration Activities, logistics social responsibility, Strategic Distribution Planning, and by leveraging supply chain technology and information systems, as well as addressing common functions related to customer service, operational controls, and transportation management
Managers can examine their strategy and look at the activity clusters to determine which are being emphasized by the company, and also look at the company’s performance compared to industry or competitors or internal benchmarks. Based on these comparisons, managers can fine-tune their strategy.
“Managers who are able to identify their current logistics strategy as either FL or EOL (or mostly FL/EOL) can use the activity clusters … and the items that comprise these clusters [shown only in the research article] to prepare a logistics strategy audit form for use during periodic strategic evaluation sessions, i.e., strategic benchmarking versus internal goals. Such a form can then be used to assess which of the activity types and specific activities are being emphasized by the firm and the firm’s performance on these dimensions compared to their industry or major competitors, or versus pre-established internal benchmarks.
“The results of these comparisons can then be used to fine-tune or enhance the latent strategy, and provide strategic direction for the firm’s logistics planning function. Using this technique, it is also possible that some managers who perceive that their firm logistics strategy is unique or innovative may find that their focus is closely aligned with one of the two strategies identified in this study. As a result, they too may find that the activities and clusters that represent alternative strategy types are useful for auditing and fine-tuning their strategies, and for creating greater differentiation based on logistics strategy versus competitors
Soft Skills Seminar Reformatted
SCMAP’s second seminar offering for the year will be a soft skills seminar. Instead of a public seminar, one company has expressed interest in hiring the services of Prof. Ninoy Rollan of Ateneo de Manila, professor in Leadership and Human Resources for an in house seminar.
Address inquiries and comments to Ed Sanchez at tel. 671-8670, fax 671-4793, cell 0918-914-1689, or email scmap.org@gmail.com. Those interested in SCMAP training and other activities are requested to send their e-mail addresses. Visit SCMAP’s website at:www.scmap.org
