Strategic and Financial Logistics

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