Logistics as a Customer-Focused Strategy - Essay Example

As the world of business and trade continue to expand globally, surviving in such a competitive market is no longer enough to buy the right goods at the right cost - business must also get them to the right place at the right time, and with the right operational costs. Doing this well requires the best possible logistics, combining the information that establish buying decisions with how the product arrives to customers at the most cost-effective way. In view of this, the vice president for logistics and electronic commerce for Asia-Pacific at FedEx, William Conley stressed that one of the four areas represented the future of the logistics industry is time compression, along with globalisation, electronic commerce and supply chain management.

He said companies needed to understand essentially what logistics was and how it could benefit customers (Panozzo, 1999, p. 6).In further elaboration, logistics is centred on creating value, not just for customers and suppliers of the firm, but also value for the firm's stakeholders. Value in logistics is primarily expressed in terms of time and place. Products and services have no value unless they are in the possession of the customers when (time) and where (place) they wish to consume them (Ballou 2004, p. 6). However, value is added when customers are willing to pay more for a product or service than the cost to place it in their hands.

To many firms throughout the world, logistics has become an increasingly important value-adding process for a numerous reasons. Looking at logistics through the perspective of the total supply chain, the ultimate Bowersox, Closs & Cooper (2002) emphasized that the customer is the end user of the product or service whose needs or requirements must be accommodated. It has historically been useful to distinguish between two types of end users. According to them, the first is a consumer, an individual or a household who purchases products and services to satisfy personal needs.

When a family purchases an automobile to be used for personal transportation, that family is the consumer of the supply chain. The second type is an organizational end user, whose purchases are made by organizations or institutions to allow an end user to perform a task or job in the organization. When a company buys an automobile for a sales person or buys tools to be used by an assembly worker in a manufacturing plant, the company is considered to be a customer and the salesperson or assembly worker is the end user of the supply chain's products.

A supply chain management perspective demands that all firms in the supply chain focus on meeting the needs and requirements of end users, whether they are consumers or organizational end users (p. 66). Moreover, Bowersox, Closs & Cooper (2002) insisted that the customer being serviced should be the first priority and the driving force in establishing logistical performance requirements, regardless