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

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

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 Quality of Individual link of logistics system 1.Facility location 2.Operations strategy 3.Inventory management 4.Information systems 5.Material handling 6.Traffic & transportation 7.Planning & control 8.Organisation Business goals & strategies Customer service requirements 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 Logistics System Changing costs Pressure for financial performance Pressure to reduce inventory Constantly improving IT availability Regulatory change New customer Service requirements 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 Customer Service Sales & Marketing Production Finance & Control High revenue through:  High levels of availability  Rapid introduction of new products Cost effective production: !High constant capacity utilisation !Longer production runs, Fewer set up costs Tight budgets for: !Stocks !Cost Logistics Higher Lower Disrupting factors in production More Fewer Stocks Higher Lower Conflicts of Interest Adapted from Capacito, W., & Rosenfield, D.B., (1984), “Analytical Tools for Strategic Planning”, 15(3), pp47-61, Council of Logistics Management USA. Logistics

9 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 Analytical Methods

10 Decentralised Inventory Centralised Inventory Breadth of product line NarrowBroad Service consists of a range of dimensions A basis for competitor comparison on two dimensions Shapiro Grid framework Logistics costs Service costs or Delivery Time, etc Cost Service Curves 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

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, Cited in Christopher, M., (1998), “Logistics and Supply Chain Management. Strategies for Reducing Cost and Improving Service”, Financial Times Pitman Publishing, London.