Logistics services do not manage themselves. Instead, they respond to events and decisions at every node and link in each supply service. Therefore, a response is emergent, and this requires functions within the service to respond to emerging situations and adapt their approach to the affected supply market.
This adaptability must extend to the development of strategies by each discipline working within supply chains. Strategy requires two levels: the strategic plan and the logistics strategy. In this article, you'll learn about each of these strategies and also about many tools that can help your business.
Strategic plan and short plan
This will address approximately two years of operationalizing and improving current supply services and associated functional departments. However, there are also strategies that address the next five years for the changing elements, both internal and external, of the network that influence the organization of a logistics business. While the short horizon of the strategic plan allows for a detailed action plan for operating and improving logistics, the strategy for change should have a more general scope.
For the Logistics strategy, the primary requirement is to identify the internal processes and external influences on logistics that require change. The timeline and approach to change are not explicitly defined, but the research and testing needed to further define the approach are identified. When the most effective approach is agreed upon, the required action is transferred to the short-term strategic plan for implementation in defined stages over the next two-year horizon.
Many professionals in the logistics services market have identified the complexity of national and international supply chains as a major challenge for companies. The way things are done affects systems, processes, and people's thinking. Therefore, the overall goal of your logistics strategy should be to reduce complexity and become more efficient.
What is the complexity factor of the organization?
The complexity of an organization can be market-driven, which by default also means driven by the marketing department. This is to satisfy each perceived market segment. Alternatively, a business can be finance-driven, engineering-driven, or other product-driven. These drivers are not necessarily bad and may have been developed with the best intentions. However, over time, they build their own complexities. For marketing, there are new product introductions, product line extensions, and promotions. All of these can negatively impact logistics.
Supply chain strategy model for the coming years
supply chains change that your organization should consider, along with the documentation that supports and informs these actions. The terms apply equally to logistics strategies, operations planning, and procurement:
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Sustainable and Resilient, supported by Digitalization: These approaches can enable a company to be adaptable and flexible. If your business focuses on inventory management, it should be responsive, with short order processing cycles.
If your business is manufacturing to order or assembling to order, you must be agile to minimize the impact of lead-time variability experienced across supply chains.
Steps in developing the strategy
Developing a logistics strategy to transform logistics services requires identifying objectives. Defining how the customer experience can be improved when the organization has connected and aligned supply chains. In addition, establishing a standard definition for the organization regarding supply chains, their role in the business, and the proposed structure of the Supply Chains group.
At ToolRides, we consider it to extend from the mine and raw material farm to the end user of the item. However, a recent article defined "end-to-end" between manufacturing and the customer. It's best to avoid using buzzwords and terms that could be outdated within twelve months. By establishing the degree of alignment required across functions for effective supply chains, we can help you understand the importance of this.
Identify the expected visibility required across supply chains
Visibility is defined by the flow of goods, money, transaction data, and information through supply chains. Understanding these flows allows you to focus your logistics strategy from a functional perspective to a flow perspective. This approach can change the way a company operates and requires time and effort to implement.
Identify the extent to which data should be used across logistics services. From the organization to Tier 1 customers and suppliers.
Training is very important for the creation of a platform for employees, customers, and suppliers to enable access to and use of a single version of the truth. Logistics, operations planning, and purchasing strategies must be consolidated into the logistics service strategy. These strategies, coupled with a tool like ToolRides, can influence the central supply market.
