Competitive Advantage Chapter 2 Part 1

• Efficiency (Logistics context)


  Being low cost in all logistic activities (e.g. transport, warehousing, inventory, communication)
• Effectiveness (Logistics context)


  Satisfying your customers by ensuring the logistics functions (transport, warehousing etc.) are working to meet the retailer's customers' needs
• Logistics should be efficient and effective


  Across the entire supply chain to reduce costs and create value for customers, but not at the expense of service quality
• Competitive advantage


  What makes your business different or unique compared to competition, and if that difference is something valuable to customers
• Ways a competitive advantage can be achieved

  • Cost leadership
  • Differentiation strategy
  • Focus strategy
• Cost leadership


  A retailer can have a competitive edge through low prices
• Differentiation strategy


  Offering unique products, features, benefits, packaging, location, availability, store image, distinct marketing, service quality, after sales service
• Focus strategy


  Targeting niche markets that have been overlooked or underserved by competition
• How logistics can offer a competitive advantage

  By keeping logistics costs as low as possible to strengthen a low cost strategy, and by ensuring goods are always available at the right place, price and quality to strengthen a differentiation strategy
• How to measure the success of a retailer's logistics system

  • Speed of response
  • Variance
  • Profitable inventory
  • Transportation
  • Customer service
  • Continual support
• Speed of response


  How fast are goods moved from manufacturers or suppliers to warehouses and retailers' stores to ensure availability
• Variance


  How often is the retailer out of stock, due to factors like manufacturer/supplier disruptions, damage, theft, wrong goods sent, or COVID-19 delays
• Profitable inventory


  Can the retailer sell its stock quickly (stock turn), not keeping too much or too little stock to balance logistics costs
• Transportation


  Does the retailer have access to the right transport (trucks, rail, ship, plane) to move goods effectively and efficiently based on the type of retailer and goods
• Customer service


  Can the retailer ensure no repeat orders due to mistakes, to maintain service quality and customer satisfaction
• Continual support


  Can the retailer handle customer returns effectively and efficiently, including recycling or disposing of unrepairable goods