Why manufacturing companies need a logistics strategy
More and more manufacturing companies are realizing the need for a logistics strategy within their organization. It is important to keep in mind that any particular manufacturing company may need to develop different logistics strategies depending on the number of product lines, number of customers they service, or even countries they are located in. The main reason for developing a logistics strategy is that most manufacturing businesses will be constantly changing and therefore it will affect their logistics. In order to address the dynamic nature of any particular supply chain, manufacturing companies will need to put together and put in place a complete and fully developed logistics strategy. One of the main benefits of doing this will be that any manufacturing company will be able to anticipate changes in the market and make the necessary adjustments without sacrificing the quality of the product they produce.
There are several steps that are involved in developing a logistics strategy. Manufacturing business experts have identified 4 different levels within the logistics of any business. These levels are-
1. Strategic-This is the goal setting level of developing a logistics strategy. Management should take a close look at the objectives of the manufacturing business. They will then determine how the logistics of the organization are contributing or not contributing to the highest level of objectives within the manufacturing business.
2. Structural-At this level of the logistics strategy management will look closely at the actual physical components of the logistics strategy. This should include but is not limited to: determining the right number of warehouses, or distribution centers, developing shipping policies, or deciding if different products should be produced at different manufacturing locations.
3. Functional-At this level of the logistics strategy each of the separate functions of the current logistics methods will be examined to determine if they are functioning at peak efficiency. Changes will then be proposed to help insure that any processes used within the logistics strategy are helping to promote the highest levels of productivity.
4. Implementation-At this level all of the components of a logistics strategy will be put into place throughout the manufacturing company. This will then be monitored in order to determine the effectiveness of the new logistics strategy. This can include but is not limited to: new policies and procedure, a new way to manage logistics, or a change in the physical space where logistics occurs.
It is important that management is closely looking at all of the components of the 4 levels of logistics. Each part of the logistics strategy should be closely examined to insure that it will bring about the highest level of cost savings and profitability.
There are different areas of the manufacturing company that can have a logistics strategy used within them. While each manufacturing company has different components some are fairly common between companies. Areas where logistics should be measured include but are not limited to:
- Transportation-It is important to know if the current logistics used in transportation are helping to promote better service and efficiency or taking away from it. You can choose to include shipping in this category or form a separate category for a logistics review.
- Outsourcing-If outsourcing is used it should be closely examined to see if the current partnerships contribute to the efficiency of the manufacturing organization. Many times outsourcing is found to be a hindrance to efficient logistics.
- Supply chain organization-This is perhaps the biggest area within any manufacturing company where logistics should be considered. It is crucial to have a supply chain that is run with the highest level of efficient logistics in order to save both time and money.