The need for enterprise logistics capabilities to be directly linked to some objective (rather than subjective) enterprise performance indicators is a recurring theme in logistics management research. In addition, this direction advocates that logistics managers must constantly find ways to make logistics capabilities create value and ultimately support corporate strategy and financial success. In fact, an international survey of manufacturing companies showed that about 70 percent of respondents believe that logistics performance is important or very important for businesses to gain a competitive advantage.
The logistics ability of enterprises needs to be directly related to some objective (but not subjective) enterprise performance measurement indicators, which is a recurring theme in logistics management research. In addition, this direction suggests that logistics managers must constantly discover ways to enable logistics capabilities to create value and ultimately support corporate strategy and financial success. In fact, an international survey of manufacturing companies showed that about 70% of the respondents thought that logistics performance is important or very important for companies to win a competitive advantage.
The formulation of strategy can be divided into three levels: enterprise strategy, business unit strategy and functional strategy. Corporate strategy is dedicated to identifying business goals, the types of businesses in which companies compete, and how to manage the business. Typically, companies seek to create value by effectively managing their business portfolios and ensuring that each business achieves financial success.
The formulation of strategy can be mainly divided into three levels: enterprise strategy, business unit strategy and functional strategy. Corporate strategy is committed to determining enterprise objectives, business types that enterprises participate in competition, and ways to manage the enterprise. Often, companies try to create value by effectively managing their business portfolio and ensuring that each business achieves financial success.
The business strategy focuses primarily on the products and services offered to customers and is committed to ways to discover and maintain a sustainable competitive advantage. Renowned strategy management guru Michael. Michael Porter proposes that companies can chase three strategies: cost leadership, differentiation, and focus. Costleadership strategies require companies to engage in activities that enable them to become low-cost producers of the industry at a given level of quality. Differentiation strategies require companies to develop products and services that offer unique attributes that have customer value and are differentiated from those offered by competitors. Finally, a focus strategy is when a business focuses on a particular segment to achieve cost leadership or differentiation. Leveraging logistics leverage contributes to the realization of these strategies, allowing businesses to gain a competitive edge.
The operating unit strategy focuses on products and services provided to customers and on approaches to discovering and maintaining a sustained competitive advantage. Famous master of strategic management, Michael. Porter (Michael Porter) proposed that enterprises can pursue three strategies, namely, cost-leading strategy, differentiation strategy and focus strategy. The Cost Lead Strategy (costleadershipstrategy) requires companies to pursue activities that can make them low-cost producers in the industry at a given quality level. The Differentiation Strategy (differentiation strategy) requires companies to develop products and services that offer customer value and unique attributes that are distinct from competitor offerings. Finally, focusstrategy (focusstrategy) means that companies focus on a particular market segment to achieve cost lead or differentiation advantages. Using logistics leverage contributes to the realization of these strategies, thus enabling companies to win a competitive advantage.
Logistics strategy is a functional strategy. Strategic issues at the functional level relate to business activities that support the achievement of higher-level objectives set by the company's strategy and the strategy of the operating unit. The hierarchical nature of the strategy requires that the various functional departments of the enterprise must provide losers for the strategic construction at other levels. These losers can be represented by information on the resources and capabilities available to the business. After developing corporate and business unit strategies, functional departments] must translate these strategies into a variety of unrelated action plans that must be completed to ensure the success of higher-level strategies.
Logistics strategy is a functional strategy. Strategic issues at the functional level involve those business activities that achieve the higher level of goals set to support the company's strategy and business unit strategy. The hierarchy of strategy requires that the various functional departments of the enterprise must provide losers for the strategic construction of other levels. These losers can be represented as information on the resources and capabilities available to the enterprise. After developing the enterprise strategy and operating unit strategies, the functional departments] have to translate these strategies into various unrelated plans of action that must be completed to ensure the success of a higher-level strategy.
Functional strategy involves marketing, finance, manufacturing, procurement, logistics and other functional areas. Logistics strategic decisions include the number and location of warehouses, the choice of suitable modes of transportation, the arrangement of inventory, the investment in technology to support logistics activities, etc. In addition to being influenced by corporate objectives and business unit strategies, the formulation of functional strategies is also directly affected by strategic decisions in marketing, finance, production, procurement and other functions. Marketing objectives such as product availability, desired customer service levels, packaging design, etc. directly influence the development of relevant logistics decisions that must support or inform the strategic development of these aspects. The minimum ROI can affect whether you choose to manage the warehouse yourself or use a third party to manage it. Similarly, strategic decisions by manufacturing departments to implement just-in-time production systems will influence logistics decisions in warehousing, transportation, inventory management. In terms of linkages with procurement strategies, the decision to shift from domestic to global procurement will certainly affect the choice and use of new modes of transport.
Functional strategy involves marketing, finance, manufacturing, procurement, logistics and other functional fields. Logistics strategic decisions include the number and location of warehouses, the choice of appropriate transportation modes, the arrangement of inventory, the technical investment to support logistics activities, etc. The formulation of functional strategies is not only affected by the enterprise objectives and the strategies of business units, but also directly affected by strategic decisions in marketing, finance, finance, production and procurement. Marketing goals in product availability, desired customer service level, and packaging design will directly affect the development of relevant logistics decisions that must support the realization of marketing goals or inform strategic development in these aspects. The minimum ROI may affect whether to choose to manage the warehouse itself or using a third party. Similarly, manufacturing departments] implementing strategic decisions on on-time production systems will affect logistics decisions in warehousing, transportation and inventory management. In connection to procurement strategies, decisions to move from domestic to global procurement will certainly affect the choice and use of new transport models.