Logistics Strategy and the Logistics Value Proposition

CSCP presents logistics as the work required to move and position inventory throughout the supply chain. Logistics should be designed as an integrated system rather than as isolated transportation or warehousing activities.

Why it matters

Focusing on the lowest cost of one logistics activity can increase total supply chain cost or reduce service. The logistics value proposition therefore considers customer service and total logistics cost together.

Core concepts

• Logistics supports sourcing, manufacturing and customer accommodation through the movement and positioning of inventory.

• Integrated logistics coordinates warehousing, transportation, inventory positioning and information flows.

• The logistics value proposition balances service performance with total logistics cost.

• Customer requirements, product characteristics, geography and network design influence logistics strategy.

• A logistics network should support the wider business and supply chain strategy.

• Performance should be considered across the network because cost reductions in one activity can create additional cost elsewhere.

• Logistics service providers can be used where external capability, scale or specialization improves the value proposition.

Remember for the exam

• Logistics is more than transportation.

• Optimize total logistics performance rather than one isolated cost element.

• Service and cost must be considered together.

• Logistics network design should follow supply chain strategy.

Apply it

• Use this concept in a practical decision by asking: Logistics Strategy and the Logistics Value Proposition

• Then check the decision against this principle: CSCP presents logistics as the work required to move and position inventory throughout the supply chain. Logistics should be designed as an integrated system rather than as isolated transportation or warehousing activities.

Exam trap

Watch for questions that test this distinction or principle: CSCP presents logistics as the work required to move and position inventory throughout the supply chain. Logistics should be designed as an integrated system rather than as isolated transportation or warehousing activities.

Key takeaway

Logistics integrates warehousing, transportation and related flows so the supply chain can meet customer service requirements at an appropriate total cost. The logistics value proposition balances service and cost in support of strategy.