Taxonomy of Logistics Decisions

Taxonomy of Logistics Decisions

The implementation of logistics structures is the outcome of decisions related to the usage of production, transport, and distribution capabilities. Since the requirements of each supply chain are different, the decisions about how to use these capabilities will result in different strategies:

  • Production structures. Concerns the materials management aspects of logistics with locational decisions related to factors such as available land, labor costs, and the regulatory framework. The outcome is the choice of production locations and their capacity. This will influence the transport and distribution aspects of logistics.
  • Transport structures. Concerns the physical distribution aspect of logistics with decisions concerning the choice of modes and terminals along the transport chain linking different components of the supply chain. This choice is commonly related to the nature of what is being transported in terms of load units.
  • Distribution structures. Concerns how the distribution of resources, parts, and finished goods associated with the supply chain will take place. This particularly relates to the frequency and timing of distribution, with the location and setting of distribution centers an important aspect.
  • Logistics structures. Taking all of the above into consideration, decisions are made to use production, transportation, and distribution structures to fulfill strategic goals such as cost reduction, access to new markets, improve service efficiency, or reduce response time (cycle or lead). As making decisions about the setting and operation of supply chains can be a complex task, corporations often contract in whole or in part the management of their supply chains to third-party logistics providers.