Synergy Between Warehousing and Logistics Strategy

Graphic Source: http://www.planetfulfillment.com

The trends in supply chain management demand carefully crafted strategies to keep the performance of the organization ahead of the competition. Strategic logistics planning allows the organization to align operations with overall business objectives and prepare to meet technology changes, globalization, and the demands of a more interactive supplier community. Strategies in inventory management, production scheduling, transportation, and organizational communications can create optimized distribution networks, competitive advantage, and result in bottom line improvement.

The basic Logistics objectives of any organization would be:

1. To maximize Customer satisfaction through efficient logistics operations;
2. To minimize the cost of operations;
3. To maximize the profitability;
4. To minimize the lead time to the market place.

In my opinion all other objectives are related to one of the objective mentioned above.  In order to achieve company objectives, warehouse and distribution operations perform the following service for the company.

1. The first service is to geographically consolidate the customer’s demand for goods or to achieve economies of scale.  With today’s communication network, this service allows the warehouse, distribution planning and transportation activities to handle a great number of customers and to reduce order pick, handling and transportation costs.
2. The second service is to provide geographic distribution of the goods to the customers.  This service assures the company that the customer is receiving the best transportation cost for the goods.
3. The third warehouse and distribution service is to provide the means for the company to warehouse goods that are produced throughout the year to accommodate the customer’s seasonal demand for the goods.  This service allows the company to reduce the costs by purchasing large quantities of goods.  This provides the customer with the lowest cost for the goods.
4. The fourth service is to provide the means for the company to warehouse goods which are produced from seasonal (short-time-period) production such as foods.  This service allows the customer’s year-round demand for the goods satisfied by the warehouse and distribution operations.

In order to achieve these company objectives, one aims to maximize the efficient use and production allocation of the warehouse, distribution and transportation scarce resources.  The resources that are available to any one would include facility lay-out; material handling equipment; employees (labor/human resources); land and building (owned or leased); management team, technology; vendors; external consultants and industry groups or associations (cartel).

The below table aligns WH Strategy with Logistics Strategy: