Strategic Logistic plan

Strategic logistics planning is defined as a unified, comprehensive, and integrated planning process
to achieve competitive advantage through increased value and customer service, which results in
superior customer satisfaction, by anticipating future demand for logistics services and managing the
resources of the entire supply chain
Strategic logistics planning carried out within the framework of the overall corporate goals and plan. It
therefore requires an in-depth understanding as to how the different elements and logistics activities
relate in terms of trade-offs and the total cost to the organisation. Logistics can therefore best formulate
its own strategy only by understanding the overall corporate strategy.
Formulating the Strategic Logistics Plan
The development of the strategic logistics plan is dependent on the marketing, manufacturing,
finance/accounting and logistics functional areas. Marketing provides information about product or
service offerings, pricing and promotion for each channel. This includes planned sales volume per
month, type of customer, and regional areas; product introductions and deletions; and customer service
policies for various types of customer and geographical area. Manufacturing provides information such
as locations of current and planned production facilities, and planned volume and product mix for each
site. When the same product is produced at multiple locations, logistics can determine how to serve
each market most efficiently. Finance/accounting provides cost forecasts related to inflation rates and
growth assumptions that need to be built into the planning process to project future costs, and as well
the data for performing cost trade-off analysis. It is also responsible for capital budgeting, which
determines the availability of capital to finance expenditures to improve logistics equipment and
infrastructure.
Logistics itself provides data and analysis related to the existing logistics network to the other functions,
including current storage and distribution facilities owned and rented, both at manufacturing locations
and in the field; equipment and capabilities at each location; and current transportation arrangements
between various channel members. Logistics must identify the costs associated with these activities and
the various channels used and proposed.
Management needs to put the logistics plan into operation through the channel members it chooses.
Channel members should be judged and selected according to predetermined criteria designed to meet
logistics objectives, such as reliability, consistency, geographical coverage, variety of service offerings,
use of information technology and cost.
Components of Strategic Logistics Plan
The strategic logistics plan should consist of the following:
1. A management overview that describes the logistics strategy in general terms and its
relationship to the other major business functions.
2. A statement of the logistics objectives and how it relates to cost and service for both product
and customer.
 3. A description of the individual customer service, inventory, warehousing, order processing and
transportation strategies necessary to support the overall plan.
4. An outline of the major logistics programs or operational plans described in sufficient detail to
document plans, related costs, timing, and their business impact.
5. A forecast of the necessary workforce and capital requirements.
6. A logistics financial statement detailing operating costs, capital requirements, and cash flows.
7. A description of the business impact of the logistics strategy, in terms of corporate profits,
customer service performance, and the impact on other business functions.
Elements of Strategic Logistics Planning
There are a number of elements that every supply chain or logistics management professional should
consider for logistics planning or for creating a logistics strategy. While the key considerations can vary
depending on the business model and use cases, the most critical elements to be considered are
mentioned below.
1. Inventory Management
Having and maintaining inventory accuracy is crucial for both – internal operations and customer-facing
systems. In a global survey done on technology and business stakeholders, 40% of respondents voted
inventory management to be the most promising AI.
However, inventory management is a gamble if done poorly – order more goods, and you face the risk
of losses owing to less demand; or order less and you are losing business because you don’t have goods
to sell!
Mastering the dilemma requires a careful study of the data from the market, customers, sales, and
inventory and finding out patterns and trends for strategic management. Smart logistics management
platforms with in-built AI/ML algorithms can help businesses to get predictive insights and manage the
inventory and inventory movement smartly.
2. Storage and Distribution
Whether you are selling the goods or sourcing them, storage and distribution are a duo that has a
detrimental impact on your profits. No strategic logistics planning can be complete without considering
the storage and distribution of the goods such that the fuel cost is minimum, the fleet cost is minimum
and asset utilization is optimal.
While storage might not be that critical for goods such as apparel, shoes, etc. it becomes a game changer
in the fresh produce and chemical industry. The same is true for cold chain logistics where improper
storage and distribution can lead to unimaginable losses. Smart end-to-end logistics management
ensures that all the quality constraints are positively enforced and bound by contracts and the
distribution happens in an optimized as well as cost-effective manner.
3. Distribution Partners
Having the right distribution partners in terms of logistics is the key to happy customers and profitable
businesses. Generally, when it comes to choosing the right distribution partner, businesses generally
end up doing manual comparisons in terms of rates, availability, volume commitments, deals, etc.
However, all these comparisons are done for a few variables, mostly money. This tends to affect the
overall robustness of the logistics network and productivity. On the other hand, smart logistics
management software solutions help businesses manage every single aspect, person, company, or
stakeholder involved in the entire logistics ecosystem in a smart manner.
These platforms automate the mundane processes of comparing the service providers on the basis of
multiple criteria that can be chosen in a custom manner. Further, all the service providers are ranked on
the basis of previous performances and all the documents & billings are tackled digitally.
4. Material Handling
Packing, bagging, labeling, creating a dispatch, and sending out the same – there are multiple
considerations when it comes to material handling. While enterprise-level organizations tend to
outsource these processes, they tend to lose visibility into the operations by doing so.
Also, when it comes to customer communication or real-time status checks, the service providers fail
to offer granular insights into shipment movements. This affects the overall user experience and mars
the CX as well.
Automated logistics management software solutions can curb this challenge by offering a centralized
integrated dashboard for all the stakeholders and parties involved. These solutions automate the label
generation process which simplifies the shipment tracking process.
5. Route Planning & Optimization
The shortest route is not the ideal solution always. When businesses are looking for delivering multiple
orders in one trip or clubbing the returns with deliveries or so, creating the optimal route with a cluster
of delivery locations is the right answer.
Manual management fails here as route optimization is a dynamic process that is done keeping the real-
time traffic and road conditions in mind. Automated solutions for route planning and optimization help
businesses to monitor, manage, track and control delivery movements in real-time.
6. Asset Optimization
Finally, strategic logistics planning also involves planning for assets (vehicles and drivers) such that
they are used in an optimal manner. Asset optimization ensures higher cost savings via:
 Lower fuel costs
 More number of orders delivered per trip
 Maximum vehicle capacity utilization
 Lower rider costs
 Real-time asset management and monitoring
 Better fleet management during rush, seasonal spike, etc.
Investing in smart logistics management solutions automates this process and helps businesses cut down
their operational costs.
Now that we have discussed the various elements of strategic logistics planning, let us move on to the
strategies for efficient and sustainable supply chains.
Strategic Logistics Planning – Top 10 Strategies for Efficiency and Sustainability in 2023
1. Smart Automation Done Smartly
Automating a single component, process or operation leads to partial benefits and can also pose
disruptive challenges to the management. The best approach is to automate the entire logistics
ecosystem where all the stakeholders have a unified platform for collaboration, communication, and
operational management.
Invest in platforms that offer integrated management for all the parties involved in goods movement.
Also, ensure that this platform offers digitized document management, automated invoicing and billing,
status standardization for better shipment management, and analytics & reporting to gain actionable
insights for core business decision making.
2. Choose the Right Automation
The next strategy is to invest in the right automation. Every business has a different set of use cases for
customers, business, and automation. These user cases require different solutions to unlock operational
efficiencies and profitability. This means that buying an off-the-shelf automation solution for your
logistics is a mistake!
While the entire world is embracing automation, the real benefits are being unlocked only where the
right automation is being implemented over the right use cases.
Hence, invest in custom automation that scales up or down as per the evolving business needs.
3. Measure to Improve
You cannot improve what you cannot measure. Hence, start measuring the processes, people, tasks,
efficiency, productivity, and everything else that has a direct say in your profits.
Setting KPIs, tracking & monitoring them, and measuring them against set parameters – this is how you
embark on the endless journey of becoming better, more profitable, and smarter.
Every phase of logistics movement – first, middle and last mile – should have a different set of KPIs
for all the processes, and people, including the third-party service providers such as 3PLs. This is how
strategic logistics planning helps you run your operations in a better and smarter way.
4. Integrated Operations
Now that we have discussed the importance of “measuring things”, the next step is to measure,
understand and optimize the working of related things. While 3PL service providers and packaging are
two disparate entities in a logistics ecosystem, inefficiency or errors in one can creep into the other.
If a package is labeled incorrectly, the dispatch is going to take it to some other location, and would
eventually end up bringing it back to the origin or to some other hub or warehouse. This would not only
degrade the customer experience but also escalate the fuel costs, create operational complexities and
spur complaints or queries from the customer.
This is how related or dependent processes can affect the overall productivity of the logistics system.
Having an integrated operations management interface takes care of such interdependencies and helps
in strategic logistics planning.
5. Business Intelligence from Business Data
Every organization generates terabytes of data in various forms and from various sources. However,
this data is unstructured and complex making it impossible to use it for business decision-making. The
irony is cruel in this regard, as the key to efficiency and profitability lies in this data only!
Smart end-to-end logistics management solutions help businesses make the most of this data via in-
built ML-based data processing algorithms. These algorithms make the sense of the huge amounts of
data being generated to identify the core operational loopholes, cost bleeds, inefficiencies, and much
more.
Advanced analytics and reporting features render the inferences in the human-readable form to help
business decision-making be smarter, better, and more efficient.
6. Sustainability
Sustainability is a key agenda in every strategic logistics planning across the globe. Recent years have
seen a huge paradigm shift in terms of logistics and business operations and every stakeholder is
concerned with the carbon footprint of every shipment they are associated with.
Right from eco-friendly alternative fuels to autonomous deliveries, and from fuel savings to trapping
fuel-wasting activities in logistics – there are multiple ways to unlock sustainability in logistics
operations.
The best way is to cut down the wastage of fuel via improved route planning, asset optimization, and
carbon emission tracking.
7. Gaining 360-Degree Visibility
Which shipment is traveling via which carrier and which shipment is vulnerable to demurrage? Which
shipment is taking longer than expected for delivery and whether all the system-suggested rules are
being followed or not?
These questions tend to bug the logistics and supply chain professionals like nothing else. Having a
360-degree view of all the logistical movements helps ensure that all the components are working as
expected and any disruption is caught well before it evolves into business risk.
Smart logistics management platforms offer granular visibility into multiple logistical components.
Thus, businesses can have extremely precise control over the operations and processes right from the
start, such as RFQs, spot inquiries, documentation, billings, invoicing, and tracking.
These platforms offer granular tracking of key milestone events, that can be relayed to the customers
for highly engaging and insightful information regarding dynamic ETAs. So, all the stakeholders can
check and track every milestone, such as shipment pick-up, shipment loaded, shipment reached the port,
shipment pick-up done at the destination port, etc.
8. Working With Multiple Carriers
Working with multiple carriers or logistics service providers help businesses scale their operations, and
diversify their service offerings. The online delivery landscape is highly diverse and has multiple
delivery types, such as same-day delivery, next-day delivery, time-bound delivery (2-hour, 90-minute,
slotted and 10-minute delivery), and express delivery.
One 3PL partner might not be able to cater to all types of deliveries but working with multiple delivery
providers can obviously help. When businesses are working with multiple carriers, they can streamline
the delivery operations for multiple locations.
Thus, they can minimize the risks related to deliveries such as delays, by simply choosing the other
partners’ services in case one fails to do so.
9. Optimizing Multiple Variables
As discussed above, the best way to automate the logistics processes is to implement it for the entire
ecosystem. Likewise, when it comes to optimization, it is important to optimize multiple variables in
one go.
Inventory, transportation, routing – all these are immensely important for newly emerging delivery
models, such as hyperlocal deliveries. Similarly, freight procurement, carrier management, bidding, and
container tracking are extremely important for the manufacturing industry.
Hence, it is important to consider multiple connected variables for optimization during strategic
logistics planning.
10. Binding the Loose Ends
To create a self-nurturing and highly integrated logistics ecosystem, strategic logistics planning should
consider the extremes of every process, such as seller and customer in a typical delivery scenario.
Ignoring these ends leads to inefficiencies and process loopholes, such as unhappy customers leading
to churn or untrapped fake deliveries, leading to business losses. We recommend investing in solutions
that ensure the management of both the extremes – the origin of shipment and delivery point via smart
and custom touchpoints, such as proof of delivery (ePoD), NDR (non-delivery reason) management,
cash conciliation, delivery status confirmation and multiple checks for delivery accuracy.

The Logistics Planning Process

Step 1: Assessment of Current Logistics Operations

Effective logistics planning begins with a thorough evaluation of existing operations. This critical first
step involves delving into the strengths and weaknesses of current logistics processes, including
inventory management practices, distribution, and transportation efficiency. It’s essential to review the
technology and tools currently used to identify areas ripe for improvement.

Step 2: Defining Logistics Objectives and Goals

Once the current state of logistics operations is understood, the next step is to define clear, measurable,
and achievable logistics objectives that align with the overarching business goals. This step involves
setting specific targets for enhancing delivery speed and accuracy, reducing operational costs and waste,
and improving customer service and satisfaction levels.

Step 3: Analysis of Supply Chain Network

An in-depth analysis of the supply chain network is vital. This includes reviewing the locations and
capacities of 3PL warehouses, evaluating transportation networks and routes, and assessing potential
vulnerabilities and risks within the supply chain. Such an analysis helps identify logistical bottlenecks,
areas for cost savings, and opportunities for performance improvement.

Step 4: Technology Integration and Automation

This step involves implementing advanced warehouse inventory management software, adopting
transportation management systems, and incorporating automation in warehousing and order
fulfillment. These technological advancements increase efficiency, accuracy, and cost savings in
logistics operations.

Step 5: Forecasting and Demand Planning

By analyzing historical sales data and understanding market trends and seasonality, businesses can
anticipate customer demand more accurately.

Step 6: Development of a Strategic Logistics Plan

Creating a strategic logistics plan is a key step in this process. This comprehensive plan should integrate
logistics objectives with the business’s overall strategy. It involves establishing key performance
indicators (KPIs) to measure logistics performance and detailing resource allocation and budgeting.

Step 7: Supplier and Partner Collaboration

Step 8: Implementation of the Logistics Plan

The implementation phase brings the logistics strategy to life. It involves staff training and development
to ensure everyone is aligned with the new processes and technologies. The implementation should be
phased and closely monitored, allowing for adjustments as necessary to ensure the strategy delivers the
desired results.

Step 9: Continuous Monitoring and Improvement

Logistics planning is an ongoing process. Continuous monitoring and improvement are essential for
adapting to changes in market conditions and business needs. Regularly reviewing logistics KPIs and
incorporating feedback from stakeholders and customers helps to fine-tune the logistics strategy.

Operating objectives of logistics planning

Rapid response
Imagine you’re ordering a gift online for a friend’s birthday that’s just a few days away. You expect the
delivery to be quick and timely. This expectation is met through the logistics objective of rapid response.
It’s all about the ability of the supply chain to respond swiftly to customer demand. But what does it
take to achieve such responsiveness?
 Advanced information systems: These systems predict demand patterns, hence allowing
businesses to be proactive rather than reactive.
 Flexible supply chain networks: These networks can adjust to changes quickly, ensuring that
fluctuations in demand are met without significant delays.
Minimum variance
Consistency is key in logistics. Minimum variance refers to the objective of reducing any disruption or
inconsistency in the supply chain. Variance can occur due to delays, damages, or inaccuracies, and it’s
crucial to minimize these to maintain a smooth operational flow.
 Reliable suppliers: Partnerships with reliable suppliers and transporters ensure fewer
disruptions.
 Contingency planning: Well-considered contingency plans can mitigate unexpected events
that could cause variance.
 Minimum inventory
Stockpiling goods can be expensive, and too much inventory can tie up a business’s capital. The goal
here is to minimize inventory levels without impacting customer service levels. This is achieved through
strategies such as:
 Just-in-time (JIT) systems: These systems allow businesses to reduce inventory by receiving
goods only as they are needed in the production process.
 Demand forecasting: Accurate demand forecasting helps prevent overproduction and excess
inventory.
Movement consolidation
Shipping costs can be a significant expense for businesses. One way to reduce these costs is through
movement consolidation—combining smaller shipments into a larger one to take advantage of
economies of scale. This might involve:
 Centralized distribution: Centralizing distribution can create opportunities to consolidate
movements and reduce transportation costs.
 Collaborative logistics: Working with other businesses to share transportation can also lead to
consolidation benefits.
Quality improvement
The pursuit of continuous quality improvement in logistics management cannot be overstated. It’s not
just about moving goods; it’s about moving them well, ensuring they arrive in perfect condition and
meeting customer expectations. Quality improvement can be facilitated through:
 Technology: Using technology to enhance tracking and handling can significantly reduce
errors and damage.
 Employee training: Well-trained staff are less likely to make mistakes that could affect quality.
Life-cycle support
Products have a life-cycle, from introduction to decline, and logistics must support each phase
appropriately. This might involve different strategies for new product launches compared to established
products. Life-cycle support ensures that:
 Product availability: Matches the stage of the product life-cycle, with more aggressive
distribution for new launches and more balanced approaches as products mature.
 Reverse logistics: Is in place for end-of-life products, which includes returns, recycling, or
disposal.
The synergy of operational objectives
These operational objectives don’t work in isolation. They are interrelated and often synergistic. For
example, rapid response can lead to reduced variance, while movement consolidation can contribute to
quality improvement by reducing handling. Understanding and managing the interplay between these
objectives is key to achieving optimal logistical performance.
 Strategic management in logistics
To effectively implement these objectives, strategic management is essential. This involves:
 Aligning objectives with business goals: Ensuring that logistical operations support the wider
business strategy.
 Performance measurement: Tracking key performance indicators (KPIs) to assess how well
the logistics objectives are being met.