Logistical considerations

Logistical considerations have always played a strategic role in business. Among retailers and wholesalers, they transcend inventory management and transportation to include one of the most critical factors in business success—location in relation to markets or sources of supply. Among manufacturers, logistics concerns itself with matters as basic as plant location, sourcing of raw materials, and standards of customer service. In recent years, changes in the business environment have forced companies both large and small to pay particularly close attention to how this function relates to others. Government regulation, the health of the nation’s transportation system, energy restrictions, and technological developments all represent important considerations in the formulation of a business strategy. As the author shows in this article, many companies have responded to these challenges by developing competitive strategies based in part on such concepts as postponement and speculation, standardization, consolidation, and differentiation. These are companies in which management has conducted either formal or informal logistics audits, has redesigned systems to provide more effective support for corporate strategies, and has taken steps to ensure continued appraisal of opportunities over the long run.