Strategic Logistics Management
While looking at logistics management
strategically, it is essential to examine the
classic approach to formulating a logistics
strategy that begins with the firm’s overall
strategy and then defining the logistics
strategy that will enable the firm to reach
its overall objectives.
It is a subset of the overall corporate
strategy that deals with the management of
the flow of materials/product in downward
Step of Strategic Logistics
1) Corporate Visioning
2) Strategic Logistics Analysis
3) Logistics planning and evolution
It start with definition of the
corporate vision about objectives
behind the potential use of logistics
for gaining differential advantage and
long term performance of the firm.
It reflect corporate mindset about
logistics in term of planning process,
identification of potential, alternative
Key element of corporate vision
towards strategic logistics
1. Recognition of service requirement for
different market segment.
2. Understanding of key external
environmental forces along with their
Strategic logistics analysis
There are three key function of the step
are as follow.
1. Development of various strategic alternatives
2. Evaluation and review of each developed
alternatives for their capabilities for attainment
of corporate vision, risk involved and additional
3. Final selection of the best alternatives and
formulation of detailed logistics plan.
Logistics planning and evalution
Logistics Planning is blueprint of total
logistics systems in term of:
Functional goals to achieve.
Programme and procedures for implementation
of new logistics system.
Time for framework.
Authorities and responsibility
Continuous evaluation and measurement of
performance for further improvement.
It is a physical route through which
product move from point of
production to point of consumption.
To make the product available at the
right place and at the right time with
less cost is the key objective of any
Types of distribution system
Direct distribution system
(Field force, own retail outlet, direct
mailing, personal selling, telemarketing,
Indirect distribution system
(Marketing intermediaries such as C & F,
Distribution System for Pharma
C & F
Carry n Forward Agent (C & F)
C & F agent is distribution agency
which manage all distribution function
Its work virtually like a company
It is appointed by the company on
mutually acceptable agreement.
Function of C & F agent
To store company goods safely as
specified in various schedule of drugs.
To execute order to company.
To follow up documentation
To provide all detail about sales to
To dispatch the company’s
promotional material to company’s
To submit sales tax and other
returns to respective authority.
To provide all feedback regarding all
matters concerning the business.
Why C & F agent
1) To manage distribution system
2) To provide better service to all
3) To reduce cost of distribution and
company cost because
No sales transaction taking place
To avoid trade margin
Wages are very less of staff
Stickist is main channel partner of
company which is appointed for a
specific area to resell company
product to chemist or retailer.
Function of stockist
Maintenance of adequate stocks of
the company product, at all time, to
prevent stock out.
To provide proper storage facilities in
term of maintaining the specific
To resell company product among
retailers, nursing homes and hospital.
To provide details regarding sales and
stocks held by them at the end of
To collect the returned goods from
retailers and other parties.
To provide feedback regarding
consumer reactions to company.
Retailers in the Indian pharmaceutical
industry is also known as the chemists.
Retailer who dispenses the prescription of a
medical practitioner and sell medicines to a
Retailers is very important source of
information regarding the prescribing
behaviors of doctors and competitor
Function of retailer
To hold ready stocks of various
important and essential medicines
needed to cater to the prescription of
To provides supplementary
information required by patient
regarding the dosage and side effect.
Expectation of channel partner
Extend full assurance for best ROI.
Commitment for long run association.
Efforts for continuous improvement in
quality if service.
Availability of goods as per requirement
No stock-out situation
Fixed and smaller order
Offering zero defect delivery
Point to point information sharing
Value Added Factors
Financial support to its channel member.
Flexibility in credit policy
Organisation of training programmes
from time to time for channel partners.
Assignment of certain power to channel
partners for settlement of warranty claim
on the spot.
Changing Face of distribution system
1) Distribution system in E-commerce
Reducing transactional cost through sales
Opportunity to enter in new market.
Elimination of physical limitation.
Fast promotional communication at least cost.
E-commerce for consumer
Wider product portfolio
Conscious about purchase decision
Utilisation of time.
2) Cash & carry system
It is used for better movement of goods
from one location to another location.
Objective of logistics and supply chain
management is to make available the right
quantity of right product at the right time
and place at least cost.
Share of transportation cost is 40% of total
In era of rapid innovation of in the field
of information and communication
technologies, their has been a
phenomenal growth in
E-commerce and online selling which
need more specific and value-added
transportation services like tracking of
shipment, in order to meet delivery
Mode of Transport
Goods are transported by air.
Quick delivery of product.
Prefer for perishable goods or for
Cost is very high.
Goods are transported through the
water medium by ship.
This mode has acquired for cheapest,
having a larger capacity and
To efficiently transport large
quantities of goods over long distance
Tariff of railways is very low, which
encourage large shipment for longer
distance, product like fertiliser,
cement, food grains and petroleum
The reliability and economy of this mode is
gradually increasing due to continuous
improvement in the quality of motor
vehicles and the condition of road.
These facilitate in the achievement of
logistics objective like lower transit time,
lower total logistical cost and improved
Functional requirement and
Functional Req. Location Preferred mode
Vendor to plant Rail / Road
Replenishing stock Plant to warehouse Rail / Road
Balancing stock Warehouse to
Distribution service Warehouse to
Export / import Country to country Sea / Air
Emergency service Plant to customer Air
Selection of transportation mode
The strengths and weakness of the firm in
term of financial and production resources.
Market information including the
competitive scenario, geographical
Product features and suitability to various
modes of transportation such as Weight,
Quantity to be transported each time.
Distance to be covered.
Total transportation cost of various
mode of transportation.
Carrier performance in term of speed,
availability, flexibility, frequency,
reliability, safety and logistics service