This document discusses how logistics can provide competitive advantage through lower costs and differentiated value. It identifies two methods - productivity advantage through economies of scale and value advantage by segmenting markets. Firms can gain advantage by performing logistics activities like transportation and inventory management more efficiently than competitors. Strategic logistics planning integrates logistics goals with corporate strategy and considers factors like customers, costs, networks and service levels.

1. ROLE OF LOGISTICS IN
COMPETITIVE STRATEGY

2. COMPETITIVE ADVANTAGE
 According to Christopher (2011), the source of
competitive advantage is found firstly in the
ability of the organisation to differentiate itself,
in the eyes customer, from its competition, and
secondly by operating at a lower cost and hence
at greater profit.
 The most profitable competitor is any industry
sector tends to be the lowest-cost provider or the
supplier providing a product with the greatest
perceived differentiated values.

3. THE TWO METHODS OF
COMPETITIVE ADVANTAGE:
 Productivity advantage
 - In any industry we will find that there is one
company that is able to achieve highest sales and
thereby also achieve the lowest cost per unit due
to economies of scale. There is substantial
evidence to prove that in these cases that 'big is
beautiful' when it comes to cost advantage.
 It has been accepted that one of the principle
ways of improving cost advantage is through
greater production and sales. However, through
logistics we will demonstrate that there are
multiple methods and means of improving cost
efficiency through better logistics management.

4. VALUE ADVANTAGE
 The values of the market can only be fully
realized by segmenting the market and creating
distinct value segments. In other words different
groups in different markets place different values
to benefits.
 Adding value through differentiation is a
powerful way of achieving a defensible advantage
in the market.

5. GAINING COMPETITIVE
ADVANTAGE THROUGH
LOGISTICS
 One of the distinguishing features of the value
chain is to postpone the final creation of the
product as much as possible.
 The idea behind this is that maximum flexibility
can be achieved through postponement by
obtaining time place and form utility.
 This can be achieved by aggregating production
systems rather than catering to individual
customer requirements.

6. GAINING COMPETITIVE
ADVANTAGE THROUGH
LOGISTICS
 A firm can gain competitive advantage only when it
performs its strategically important
activities (designing, producing, marketing
delivering and supporting its product) more
cheaply or better than its competitors.
 Value chain activity disaggregates a firm into its
strategically relevant activities in order to understand
behavior of costs and existing and potential sources of
differentiation. They are further categorized into two
types
• (i) Primary – inbound logistics, operation
outbound logistics, marketing and sales, and service
• (ii) Support – infrastructure, human resource
management, technology development and
procurement

7. GAINING COMPETITIVE
ADVANTAGE THROUGH
LOGISTICS
To gain competitive advantage
over its rivals, a firm must
deliver value to its customers
through performing these
activities more efficiently than
its competitors or by performing
these activities in a unique way
that creates greater
differentiation.

8. NUMBER OF SOLUTIONS THAT IF USED
WILL HELP A COMPANY GAIN THE
COMPETITIVE ADVANTAGE:
 Shipper Associations / Consortiums: By
being a part of a shippers association, a business
can benefit from lower transportation rates due
to the competitive negotiations and economies of
scale.
 Transportation Management Systems
(TMS): Such platforms allow a business to
manage their data flow more efficiently and
allows for visibility of performance and cost.
Keeping an eye on costs, transit times, delivery
performance, freight claims, and compliance will
allow for strategic thinking and put a company a
step in front of its competitors.

9. NUMBER OF SOLUTIONS THAT IF USED
WILL HELP A COMPANY GAIN THE
COMPETITIVE ADVANTAGE:
 Auto-Tender Functionality: This feature
allows freight to be tendered directly to carriers,
greatly reducing the time spent scheduling a
shipment. When set up using a least cost carrier,
the savings combined with the efficiency gain
provide a great advantage.
 Advanced Tracking: Visibility and
transparency are becoming more and more
important in business. Advanced tracking
features have been adopted to give customers
real-time information on where their goods are.

10. STRATEGIC LOGISTICS PLANNING
 Cooper et al (1992) defined logistics
strategic planning 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.

11. STRATEGIC LOGISTICS PLANNING
 Logistics strategic planning is done within
the context of the overall corporate goals
and plan, and requires an understanding
of how the different elements and
activities of logistics interact in terms of
trade-offs and the total cost to the
organisation.
 Logistics can therefore best formulate its
own strategy only by understanding the
corporate strategy.

12. TYPES OF COMPLEXITY IN
ENVIRONMENT ARE:
 Market-facing with regard to product
development and channel selection.
 Internal operating decisions and practice.
 External factors such as competitors and
government.
 Organisational factors such as corporate
governance, IT and cross-functional capabilities.

13. COMPONENTS OF STRATEGIC
LOGISTICS PLAN:
 A management overview, describing the logistics
strategy in general terms and its relationship to
the other major business functions.
 A statement of the logistics objectives related to
cost and service for both product and customer.
 A description of the individual customer service,
inventory, warehousing, order processing and
transportation strategies necessary to support
the overall plan.
 An outline of the major logistics programs or
operational plans described in sufficient detail to
document plans, related costs, timing, and their
business impact.

14. COMPONENTS OF STRATEGIC
LOGISTICS PLAN:
 A forecast of the necessary workforce and capital
requirements.
 A logistics financial statement detailing
operating costs, capital requirements, and cash
flows.
 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.

15. DEVELOPING THE STRATEGIC
LOGISTICS PLAN:
 A thorough grasp and support of corporate
strategy and supporting marketing plans in order
to optimize cost-service trade-offs.
 A thorough understanding of how customers view
the importance of various customer service
elements and the performance of the firm
compared with its competitors.
 Knowledge of the cost and profitability of channel
objectives.

16. STEPS IN LOGISTICS PLANNING
PROCESS
 Initiate and plan the process.
 Evaluate the current logistics activities.
 Identify product manufacturing requirement.
 Determine the impact of business growth.
 Develop a profile of competitive logistics networks.
 Develop customer service requirement.
 Rationalize the logistics network.
 Review and recommend improvement.
 Formulate performance measurement and service
levels.
 Review and recommend steps to improve
organizational responsibilities.
 Document the plan and prepare an implementation
plan.