Topic 10 – Strategic Logistics Planning
Outline
1.1
What is Strategic Planning?
1.2
The Importance of Planning
1.3
The Corporate Planning Process
1.1 What is Strategic Planning?

Definition of strategic planning:
“The process of identifying the long-term goals of the entity
(where we want to be) and the broad steps necessary to
achieve these goals over a long-term horizon (how to get
there), incorporating the concerns and future expectations
of the major stakeholders.”
Source:
Cooper, M.C., Innis, D.E. and Dickson, P., (1992), Strategic
Planning for Logistics, Oak Brook, Illinois : Council of
Logistics Management : p. 3.
1.1 What is Strategic Planning?

Definition of logistics strategic planning:
“A unified, comprehensive, and integrated planning process to
achieve competitive advantage through increased value and
customer service, which results in superior customer satisfaction
(where we want to be), by anticipating future demand for logistics
services and managing the resources of the entire supply chain (how
to get there). This planning is done within the context of the overall
corporate goals and plan”
Source:
Cooper, M.C., Innis, D.E. and Dickson, P., (1992), Strategic Planning
for Logistics, Oak Brook, Illinois : Council of Logistics Management :
p. 4-5.
1.1 What is Strategic Planning?
 Definition covers three major elements:
a. long-term goals – customer satisfaction, competitive
advantage, supply chain management
b. the means to achieving these goals – value, customer
service
c. the process for achieving these goals – anticipate,
manage, relate to company goals
 The strategic plan covers a period of five or more years.
1.2 The Importance of Planning
 Minimizes risk in a Changing Environment
a. anticipating change and developing strategies to deal
with it
 Basically two types of plans:
a. Operating Plan – covers a period of one or two years
b. Strategic Plan – covers a period of five or more years
1.2 The Importance of Planning (con’t)
 Strategic plan “can be thought of as a set of guideposts
which keeps the operating plan on the path to meeting
objectives.
It is the operating plan which must be
programmed in fine detail to demonstrate how the objectives
will be reached and to justify the expenditures of the …
budget.”
Source:
Stern, M.E., (1966), Marketing Planning
Approach, New York : McGraw-Hill : p.4.
:
A Systems
1.3 The Corporate Planning Process

Planning must take place within the following constraints:
a. Political & legal environment
b. Social & economic environment
c. Technological environment
d. Competitive environment
1.3 The Corporate Planning Process
 Evaluation of the Consumer & Identification of Potential Target
Markets
a. Who, when, what, why, how analysis
b. Competitive analysis by market segment
meaningful than an overall competitive analysis.
is
more
1.3 The Corporate Planning Process
 Evaluation & Selection of Target Markets
a. Requires a preliminary profitability analysis
b. Only those costs that would change by adding or
dropping a segment should be included in the profitability
analysis.
1.3 The Corporate Planning Process
 Formulation of Supply Chain Objectives & Strategies
a. Supply chain objectives flow from a firm’s marketing
objectives, e.g market coverage and customer service
levels.
b. Supply chain strategy is the specific plan to achieve
these objectives, e.g. push versus pull inventory strategy.
1.3 The Corporate Planning Process
 Identification & Evaluation of Supply Chain Structure
Alternatives
a. Supply chain structure affects:
 Speed and consistency of delivery & communication
 Control of performance
 Cost of operations
b. Evaluate alternatives
outsourcing
available for
in-house
versus
1.3 The Corporate Planning Process
 Selection of Supply Chain Structure
a. Potential
structure
profitability
is
important
when
selecting
b. Program various components of marketing mix – time,
place and possession utility
1.3 The Corporate Planning Process
 Formulation of the Strategic Logistics Plan
a. Marketing Input
 Proposed product
 Pricing
 Promotional strategies
 Sales forecasts by geographic area, by account type, by
customer
 Customer service
geographic area
policies
by
account
type
and
1.3 The Corporate Planning Process
 Formulation of the Strategic Logistics Plan
b. Manufacturing Input
 Location of production facilities
 Manufacturing capabilities at each facility
 Planned production for each product
1.3 The Corporate Planning Process
 Formulation of the Strategic Logistics Plan
c. Purchasing Input
 Supplier network
 New technologies
 Potential new materials or services
 New sources of supply for existing materials & services
1.3 The Corporate Planning Process
 Formulation of the Strategic Logistics Plan
d. Finance/Accounting Input
 Cost data required to perform segmental analysis
 Cost data required to perform logistics trade-off analysis
 Availability of capital to finance logistics assets
 Corporate hurdle rates
1.3 The Corporate Planning Process
 Formulation of the Strategic Logistics Plan
e. Logistics Input
 Existing product storage locations
 Current transportation links
 Operating characteristics of distribution centers : size,
volume, product mix
 Fixed & variable costs associated with materials flow &
storage
1.3 The Corporate Planning Process
 Formulation of the Strategic Logistics Plan
f. Requirements of a strategic logistics plan:
 Alignment with corporate strategies & marketing plans
 Competitive customer service study
 Total cost analysis
1.3 The Corporate Planning Process
 Formulation of the Strategic Logistics Plan
Components of the strategic logistics plan:
 Management overview
 Statement of logistics objectives
 Description of individual customer service, inventory,
warehousing, order processing & transportation
strategies to support the overall plan
 Outline of major logistics program or operational plans
 Forecast of workforce & capital requirements
1.3 The Corporate Planning Process
 Formulation of the Strategic Logistics Plan
(Components of the strategic logistics plan)
 Logistics financial statement
 Description of business impact of the logistics strategy
1.3 The Corporate Planning Process
 Evaluation & Selection of Supply Chain Members
a. Selection criteria must support operational objectives and
procedures.
1.3 The Corporate Planning Process
 Performance Evaluation & Supply Chain Modification
a. Measure
analysis
by
customer
segments
using
profitability
b. Modification can involve:
 Changing existing processes
 Changing supply chain members
 Changing supply chain structure
c. A logistics audit program should be conducted on a
routine basis.
Topic 10
Summary
and
Conclusion
1.
Logisticians must be become involved in the corporate strategic
planning process in order to meet and overcome the challenges
placed on logistics to facilitate the achievement of corporate
objectives.
2.
Generally, a strategic logistics plan flows from and support an
organization’s marketing objectives.
3.
Strategic logistics planning must seek and consider inputs from
marketing, manufacturing, purchasing, finance/accounting and the
various logistics functional areas.
4.
The planning process is a dynamic one and requires logisticians to
continuously audit and measure performance against efficiency and
profitability goals.
5.
Changes may be made to existing processes, supply chain
members or the logistics structure itself to correct gaps in
performance.