Chapter 2
Logistics/Supply Chain Strategy and Planning

Level of Planning:

Decision Area	Strategic	Tactical	Operation
Facility location	No. size  and location of warehouse
Inventories	Stocking location, control policy	Safety stock level	Replenishment quantities and timing
Transportation	Mode selection	Seasonal equipment leasing	Routing, dispatching
Order processing	Order entry, transmittal, and processing system design		Processing order, filling back orders
Customers service	Setting standards	Priority rules for customer orders	Expediting deliveries
Warehousing	Handling equipment selection, layout design	Seasonal space choices and private space utilization	Order picking and restocking
Purchasing	Development of supplier buyers relationship	Contracting, vendor selection, forward buying	Order releasing and expediting supplies.

Major Planning:

1)      Customer service levels

2)      Facility location

3)      Inventory decision

4)      Transportation decision

When to Plan;

ü  Demand

ü  Customer service

ü  Product Characteristics

ü  Logistics Costs

ü  Pricing Policy

Guidelines for Strategy Formulation;

ü  Total Cost Concept

ü  Differentiated Distribution

ü  Mixed Strategy

ü  Postponement

ü  Consolidation

ü  Standardization

The Proper Channels Strategy

Supply Chain Type	Channel Design Characteristics
Efficient Supply chain Supply-to-Stock	ü  Economical production runs ü  Finished goods inventories ü  Economical buy quantities ü  Large shipment sizes ü  Batch order processing
Responsive supply chain Supply-to-Order	ü  Excess capacity ü  Quick changeover ü  Short lead time ü  Flexible processing ü  Premium transportation ü  Single order processing