According to (Florence, 2001) logistics is a constituent of the supply chain management process, and it is comprised of planning, implementation and efficient control of the storage of goods and services between the points of origin to the point consumption. (Brink & Berndt, 2004) Further broadens the definition to capture the aspect of time, information and include customer satisfaction as the overall goal of the logistics process. For logistics process to be efficient, proper management of the decision-making process is needed. Logistics is very wide yet the overall goal is aimed at attaining maximum efficiency in delivering customer expectation. As such, there are different logistics decisions key to the achievement of its purpose. This paper seeks to discuss two logistical decisions: definition of customer service and level of integration and outsourcing.
Strategic level of decision making comprises of a high-level logistical decision. One such vital strategic logistic decision is defining the customer’s service and the associated measured requirements. In such a case, the process entails identification of the customer’s service and establishing measurable aspects. Knowledge of customer’s expectation is crucial in the definition of the customer service (Langevin & Riopel, 2005). The customer primarily focuses on service quality and satisfaction. Five measurable aspects of quality are reliability, responsiveness, assurance, empathy and tangibles. On the other hand, customer satisfaction measurable includes; emotional responses, attribution to service success or failure and perception of equity or fairness (Brink & Berndt, 2004). Given a transport company which chooses to offer first class and second class bus seats, aspects such as seats comfort, price about service delivery and the discrimination factor of the two types are vital to the customer in establishing whether the firm has correctly identified customer service or not.
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Another critical logistic decision is the degree of vertical integration and outsourcing. Vertical integration is a strategy used by firms in which the businesses incorporate different steps on the same production path. On the other hand, outsourcing refers to the use of already established experts in a one production path. The overall goal to be achieved determines the degree of Vertical integration and outsourcing varies depending on the overall goal to be achieved. For instance, a firm may combine production processes in-house to realise a faster turn-around time, increased profit margins or improved responsiveness to customers. Similar effects can be achieved by the degree of outsourcing since the different level of integration works differently depending on the situation (Harrigan & Harrigan, 2003). For instance, a firm’s choice to use established transportation company instead of transporting its products by itself demonstrates outsourcing. On the contrary, the decision to carry its goods by itself proves a degree of vertical integration.
In conclusion, it is clear that logistics is a broad and a fundamental unit of the supply chain management. Usage of decision-making strategies in definition of customer service and determining the level of integration and outsourcing is paramount to its overall success of a business. The guiding principle of the decisions is attaining profitability and maintaining relevance to the customer.
References
Brink, A., & Berndt, A. (2004). Customer relationship management & customer service . Landsdowne,
Florence, KY. (2001). The management of business logistics : Thomson Learning.
Harrigan, K. R., & Harrigan, K. R. (2003). Vertical integration, outsourcing, and corporate strategy . Washington, D.C: Beard Books. South Africa: Juta.
Langevin, A., & Riopel, D. (2005). Logistics Systems: Design and Optimization .
