Developing a Comprehensive Logistics Strategy Matrix : A Retail Example

The role of a robust strategy has increased in today’s environment

“Retail Apocalypse” continues to claim victims every few months. Whenever a retailer declares bankruptcy, we blame Amazon and move on till another one bites the dust. Remember, Amazon came into existence more than two decades ago and clearly emerged as a disruptor a decade ago. However, we still blame Amazon for these bankruptcies whereas the fact is- it was the failure of these companies to strategize and evolve to tackle the Amazon challenge. To be candid, ten years is a long time for a large retailer to re-haul their Logistics strategy, but that did not happen.

Why did that not happen?

Companies, like people, are manifestations of all the decisions ever made. They are the result of years of accumulating employees, acquiring businesses, inheriting assets, systems, cultures, etc. Prior to Amazon, retail giants had a typical way to “change”. These companies, what they are today, are the aggregation of countless alterations, additions, patches and workarounds that have accumulated over years. Each incremental change is based on sound thinking and the realities of each moment and each one allows the business to “just work”.

The unfortunate fact is that these companies never really developed a 10 year plan. Their mission statement is probably one that kept everyone happy, not one that was surgically focused and empowering, unlike their nemesis (Amazon).

Defining a comprehensive Logistics strategy has become extremely critical

Retail and Logistics managers need to understand strategy in order to make the decisions about logistics systems given their strategic objectives. Some may argue that retail managers can use a systems approach to analyze cost and other trade-offs to make informed business decisions; however, without a good understanding of corporate strategy and a corresponding logical systems strategy, they may not always make optimal decisions.

Retail and Logistics managers need to understand strategy in order to make the decisions about logistics systems given their strategic objectives. Some may argue that retail managers can use a systems approach to analyze cost and other trade-offs to make informed business decisions; however, without a good understanding of corporate strategy and a corresponding logical systems strategy, they may not always make optimal decisions.

Defining a Logistics Strategy Matrix

Before we jump into Logistics strategy, remember that Strategy formulation too has a hierarchy. The illustration below shows where Logistics strategy fits within that hierarchy.

Elements of Logistics strategy matrix

In my perspective, there are two key elements of this Matrix:

1. Strategy planning horizon

  • Strategic (>3 years)
  • Tactical (1-3 years)
  • Operational (<1 year)

2. Logistics activities

  • Transportation
  • Warehousing
  • Inventory Management
  • Information Technology Management
  • Order Processing
  • Talent Management

Approaches for each grid

The next step then is to formulate your goal for each of the grids. The illustrative grid below is just an example of Fashion retail that I have created. I am always a strong proponent of having a customized everything so my suggestion will be to use this purely as a guide to define a customized strategy based on your industry and unique ecosystem.

Get creative with it

As mentioned earlier, the grid is one man’s perspective (which is me) and you should not accept this as a template but should work to use the grid as a starting point to create a Logistics strategy matrix that aligns closely with your organization’s unique operating nuances.