What is involved in developing a logistics strategy?

First, be strategic. Start by examining your company’s objectives to understand how supply chain decisions contribute to them.

An effective logistics strategy should examine the structural components of your supply chain – the number of warehouses and distribution centers, the types of manufactures you work with, what products should be produced where, and what modes of transportation you will leverage if the product is produced abroad in China or some other country other than domestically.

Function is equally as important – you should always be reviewing how each specific link in your supply chain interacts with each other.

And finally, implementation. You must establish how your logistics strategy will be implemented across the organization – this includes configuration of information systems, introduction of new policies, procedures and management, or other organizational aspects that may need to be overhauled.

When developing a logistics strategy, you must examine all parts of the operation to better understand where cost benefits can be achieved, and where you should be focusing your efforts. Specific component areas include:

    Outsourcing: Where does it make sense to tap a 3PL and what can you do in-house?

    Transportation: How do current transportation strategies effect service and end-to-end supply chain optimization.

    Systems: Are you getting the correct data to make informed decisions on your logistics strategy? What kind of analytics should you be looking at?

    Information: Are you getting the right information to adequately assess your strategy and ensure supply chain visibility.

It’s a good idea to review your logistics strategy from time to time to account for changes in political landscapes, priorities gleaned from demand planning and CRM and where your resources are located.

How to develop an effective logistics strategy.

The ultimate goal of a logistics strategy is to optimize and strengthen your supply chain to account for unforeseen issues and evolutions in customer demand and supply chain management. Generally it is recommended that you have a specific logistics strategy for different product lines, customers or countries.

Because the supply chain constantly changes and you must adapt to the flexibility of the supply chain, it is essential for companies to implement a formal logistics strategy. Learn about the key metrics for supply chain management.