In the past, logistics was viewed as a cost center, but the article's author, James L. Heskett, argued that logistics is not just an operational necessity but a strategic asset that must be integrated with strategic planning since logistics can heavily influence business success. By integrating logistics with strategic planning, companies can gain a substantial competitive edge over those companies that take for granted logistics influence in their operations.
For example, consider a mid-sized electronic company competing in a highly saturated market where the company is focused on cutting down production costs by relying on third-party logistic providers to distribute its products. However, this type of approach can sometimes encounter challenges, sure you save cost since relying on third-party logistic providers allows you to avoid significant capital investments, but it can also impact the company if the third-party providers are not doing their jobs properly, such as delay in shipments, high inventory holding cost, and being inconsistent in their delivery times, increasing the rate of dissatisfied customer and lost of potential sales.
By applying the principles of Heskett's, the company can redesign its entire supply chain and integrate logistics into its strategic decision-making. One step that can help the company is to relocate its distribution centers closer to its larger customer base; using data-driven insights will reduce transportation costs and delivery time. Additionally, implementing the postponement strategy where the final product will not be fully assembled in the factory but in the regional warehouses will allow the assembly team to add last-minute customization based on local demands and trends, reducing excess inventory while also improving the order fulfillment speed.
Beyond these improvements, the company could also leverage itself by sharing transportation services with other manufacturers in its industry, optimizing shipment consolidation, and lowering overall logistics expenses. These strategic logistics decisions would lower costs and enhance or improve customer satisfaction, leading to stronger brand loyalty and increased market share. In conclusion, Heskett's argument underscores that logistics is not just a mere business function but a core element for a corporate strategy that can be efficient, responsive, and have a long-term competitive advantage over other companies that are selling similar products.