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Logistics and Competitive Strategy, Competitive Advantage - Gaining Competitive Advantage Through Logistics

This document discusses logistics and competitive strategy, focusing on gaining competitive advantage through superior logistics capabilities. It describes logistics competency as offering low-cost, high-quality customer service. Firms can strategically position themselves by creating value, planning, controlling operations, and generating success. Logistics must be managed as a core competency. Competitiveness depends on factors like cost, quality, differentiation, and customer service. The value chain analyzes a company's primary and support activities to understand how value is created for customers.

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Hemasri Chinnu
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43 views12 pages

Logistics and Competitive Strategy, Competitive Advantage - Gaining Competitive Advantage Through Logistics

This document discusses logistics and competitive strategy, focusing on gaining competitive advantage through superior logistics capabilities. It describes logistics competency as offering low-cost, high-quality customer service. Firms can strategically position themselves by creating value, planning, controlling operations, and generating success. Logistics must be managed as a core competency. Competitiveness depends on factors like cost, quality, differentiation, and customer service. The value chain analyzes a company's primary and support activities to understand how value is created for customers.

Uploaded by

Hemasri Chinnu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Logistics and Competitive strategy,

Competitive advantage - Gaining


Competitive advantage through logistics
Logistical Competency
• Logistical Competency is a relative assessment of a firm’s capability to offer
competitively superior customer service at the lowest possible total cost.
• The characteristics of firms having superior logistics performance or
competency are:
• Alternative Logistical Capabilities
• Emphasis on flexibility
• Time-based performance
• Operational control
• Commitment to perfect customer service performance
Firms seeking Strategic positioning focus on how to compete on the
basis of four processes essential to success.
These processes are:
Creation of customer value
Planning
Control
Succession generation
• Logistics must be managed as a core competency of the firm seeking
creation of superior customer value.
Competitiveness and Competitive Advantage

Competitiveness refers to “how effectively an organization meets the


needs of customers relative to other firms which offer similar goods
and services.
Dimensions of Competitiveness:
• Cost/Price
• Quality
• Product/ Service Differentiation
• Dependability as a Supplier
• Flexibility/Service
• Time
• Customer Service
• Employee Productivity and Managerial Expertise
Strategy and Competition
Three generic or Business strategies classified by Michael Porter are:
• Overall Cost Leadership strategy
• Differentiation strategy
• Focus or Market segmentation strategy
Firms need either a cost Advantage or a Value Advantage to be
successful in their business.
Successful firms either have a Productivity Advantage or Value
Advantage.
Productivity Advantage can be had by a firm which is a low-cost
producer and largest sales volume or market share.
Logistics Management provides Value Advantage to the firm
implementing the same.
Customers view Products as a bundle of benefits and they do not buy
products: they buy benefits
Value of a product is enhanced by
• Form utility
• Time utility
• Place utility
• Possession utility
Gaining competitive Advantage and Three C’s
What is a Value Chain Analysis?
The value chain also known as Porter’s Value Chain Analysis is a business
management concept that was developed by Michael Porter.
Value chain refers to the sequence of activities that, when combined, define a
business process.
 A value chain is a collection of activities that are performed by a company to create
value for its customers. 
Value Creation creates added value which leads to competitive advantage.
Supply chains are sometimes referred to as value chains, a term that reflects the
concept that value is added as goods and services progress through the chain.
It has two components :
Supply component
Demand component
Porter’s Value Chain Analysis
The Value Chain activities
Porter’s Value Chain Analysis consists of a number of activities, namely primary activities and support activities.
Primary activities have an immediate effect on the production, maintenance, sales and support of the products
or services to be supplied. These activities consist of the following elements:
Inbound Logistics
These are all processes that are involved in the receiving, storing, and internal distribution of the raw materials
or basic ingredients of a product or service. The relationship with the suppliers is essential to the creation of
value in this matter.
Production
These are all the activities (for example production floor or production line) that convert inputs of products or
services into semi-finished or finished products. Operational systems are the guiding principle for the creation
of value.
Outbound logistics
These are all activities that are related to delivering the products and services to the customer. These include,
for instance, storage, distribution (systems) and transport.
Marketing and Sales
These are all processes related to putting the products and services in the markets including managing and
generating customer relationships. The guiding principles are setting oneself apart from the competition and
creating advantages for the customer.
Service
This includes all activities that maintain the value of the products or service to customers as soon as a
relationship has developed based on the procurement of services and products. The 
Service Profit Chain Model is an alternative model, specific designed for service management and
organizational growth.
Support activities of the Value Chain Analysis
Support activities within the Porter’s Value Chain Analysis assist the primary activities and they form the basis
of any organization. In the figure dotted lines represent linkages between a support activity and a primary
activity. A support activity such as human resource management for example is of importance within the
primary activity operation but also supports other activities such as service and outbound logistics.
Firm infrastructure
This concerns the support activities within the organization that enable the organization to maintain its daily
operations. Line management, administrative handling, financial management are examples of activities that
create value for the organization.
Human resource management
This includes the support activities in which the development of the workforce within an organization is the
key element. Examples of activities are recruiting staff, training and coaching of staff and compensating and
retaining staff.
Technology development
These activities relate to the development of the products and services of the organization, both internally
and externally. Examples are IT, technological innovations and improvements and the development of new
products based on new technologies. These activities create value using innovation and optimization.
Procurement
These are all the support activities related to procurement to service the customer from the organization.
Examples of activities are entering into and managing relationships with suppliers, negotiating to arrive at the best
prices, making product purchase agreements with suppliers and outsourcing agreements. Organizations use
primary and support activities as building blocks to create valuable products, services and distinctiveness.

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