Strategic and Financial Logistics

Only available on StudyMode
  • Download(s) : 309
  • Published : April 7, 2013
Open Document
Text Preview
CHAPTER 3 Strategic and Financial Logistics

© Portions Argee Logistics and Pearson Education, Inc. publishing as Prentice Hall

Learning Objectives
• To appreciate how logistics can influence an organization’s strategic financial outcomes • To review basic financial terminology

© Pearson Education, Inc. publishing as Prentice Hall

3-2

Learning Objectives
• To understand how the Strategic Profit Model can demonstrate the financial impact of logistics activities • To become aware of some of the more common measures of logistics performance

3-3 © Pearson Education, Inc. publishing as Prentice Hall

Strategic and Financial Logistics Key Terms • Assets • Asset turnover • Balanced scorecard (BSC) • Balance sheet • Cost leadership strategy • Differentiation strategy • Expenses (costs) • Focus strategy

© Pearson Education, Inc. publishing as Prentice Hall

3-4

Strategic and Financial Logistics Key Terms • • • • Income statement Liabilities Net profit margin Owner’s equity • Return on assets (ROA) • Revenues (sales) • Strategic Profit Model (SPM)

© Pearson Education, Inc. publishing as Prentice Hall

3-5

Connecting Strategy to Financial Performance
• Logistics managers must find ways to:
– communicate how logistics capabilities provide value – support corporate strategy and success in financial terms.

• Logistics resides at the functional level of the organization. • Functional units must translate corporate and business unit strategies into discrete action plans.

© Pearson Education, Inc. publishing as Prentice Hall

3-6

Connecting Strategy to Financial Performance
• Three generic strategies that can be pursued by an organization – Cost leadership strategy
• Become a low cost producer at a quality level

– Differentiation strategy
• Unique product or service from competitors

– Focus strategy
• Narrow market to achieve cost/differentiation advantage

© Pearson Education, Inc. publishing as Prentice Hall

3-7

Connecting Strategy to Financial Performance
• Functional level strategies exist in:
– Marketing
• Product availability, packaging, customer service levels

– Finance
• To meet income goals

– Manufacturing
• JIT, MRP, Productivity

– Logistics
• Warehousing, transportation, inventory

© Pearson Education, Inc. publishing as Prentice Hall

3-8

Connecting Strategy to Financial Performance
• Logistic strategy decisions involve:
– – – – Determining the number and location of warehouses Selecting appropriate transportation modes Deploying inventory Investments in technology that support logistics activities

© Pearson Education, Inc. publishing as Prentice Hall

3-9

Connecting Strategy to Financial Performance
• Logistics strategy is directly influenced by strategic decisions in functional areas of: – Marketing
• Product availability, desired customer service levels, and packaging design directly influence logistics decisions

– Manufacturing
• Strategic decisions by manufacturing to implement just-intime system would influence logistics decisions in warehousing, transportation and inventory management

© Pearson Education, Inc. publishing as Prentice Hall

3-10

Connecting Strategy to Financial Performance
• Logistics function can positively affect the financial outcome of an organization by designing a strategy to optimally support the requirement of the business.

© Pearson Education, Inc. publishing as Prentice Hall

3-11

Basic Financial Terminology
• Income statement shows for a period of time:
– Revenues – Expenses – Profit

• Also referred to as a profit and loss (P&L) statement

© Pearson Education, Inc. publishing as Prentice Hall

3-12

Figure 3-1: Example Income Statement

© Pearson Education, Inc. publishing as Prentice Hall

3-13

Basic Financial Terminology
• Balance sheet reflects at any given point in time:
– Assets
• Current • Long term

– Liabilities
• Current • Log...
tracking img