Logistics Systems: Service Levels, Strategies, and Supply Chains

Logistics Systems: Service, Strategy, and Supply Chains

Service Level

• Delivery Time (3-5 days)
  • Time between placing of order by the customer and the reception of goods.
  • Influenced by order processing, transport, storage, and maybe same-day deliveries.
• Delivery Quality
  • Customer requirements in relation to the characteristics and composition.
  • Value-added services (security of transport).
  • Influenced by condition and kind + quality.
  • Quality of transport, packaging, storing, loading, packing, etc.
• Delivery Flexibility
  • Ability to adapt delivery to customer requirements.
  • Able to guarantee customer wishes.
  • Influenced by order processing, packing, and transport.
• Readiness to Deliver
  • Probability of processing an order within a given time.
  • Influenced by inventory management.

Logistics Systems

Logistics is characterized by thinking in processes, value chains, and networks. It includes parameters such as performance, quality, value, and cost. The efficient organization of the logistics systems allows for the development of rationalization potential, which may give a company a sustainable competitive advantage.

Competitive Strategies

• Cost Leadership
  • Based on a large market share, on the basis of which economies of scale in the procurement, production, and distribution stages are to be implemented.
• Differentiation
  • Companies pursuing a differentiation strategy try to achieve a unique selling point for a customer's highly-valued demands.
  • It's often possible for a company to establish higher prices by reaching a unique selling point for certain products or services.
  • Achieve more customer loyalty and fast delivery services, or additional disposal services.
• Focus Scope in individual market segments.

Supply Chains and Networks

• Objective: To influence the physical and informational transactions of the logistics processes in a manner that meets the specific requirements and efficiently combines the elements and methods, consuming as few resources as possible and at the lowest cost.
• Competitive Advantage:
  • Cost Advantage: Through low factor consumption, low information cost, and high productivity.
  • Value Advantage: Through the increase in value of the products during the logistics process by means of timely or fast availability, additional treatment of the goods, or additional services associated with the goods.

Management of Logistics Systems

• The basic management strategies derive from marketing strategies:
  • Push Principle: Supply goods to the market without demand (low-value goods).
  • Pull Principle: First demand, and then goods supply (high-quality investment goods).
• Organizational Variables in Logistics Systems
  • Logistical task management and supply chain management require a corresponding organization of these functions within a company.
  • It's crucial to set up a structure for the allocation of tasks and competencies within the respective areas of responsibility.
  • The functions and processes need to be structured in organizational structures (organograms) or/and operational structures (labor, specialization).