Why talk about logistics?

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It’s not the first thing you would expect a speaker to say at a logistics conference: “Why talk about logistics – logistics is the least important part”.

However, when the speaker is Professor Jose Luis Nueno and he is quoting the owners of retail chain Zara, then it has to be worth listening.

The event was the Extended Supply Chain conference held in London last month, and Professor Nueno was one among an outstanding line up of speakers. Coincidentally, another of the speakers, Kevin O’Marah of AMR Research, set out to argue that supply chain should be seen as a competitive weapon. Could you get two views that appear more diametrically opposed?

Zara, part of the Spanish group Inditex, is renowned for using the agility of its supply chain to out-manoeuvre and out-perform its competitors. New designs are put into the stores on a weekly basis and the company can respond to the latest catwalk fashions in days.

In fact, listening to Professor Nueno I was left with the distinct impression that this agility could also be used to unnerve the competition.

That really is a competitive edge. So why did Professor Nueno talk about logistics as the least important part?

This all comes down to how you define “important”. Of course Inditex is very serious about its supply chain – the point Professor Nueno was making is that for a fashion retailer the starting point has to be getting the product right.

O’Marah’s argument is that, all too often, supply chain is seen as simply a cost centre. And while some more forward-thinking organisations might think of it as an enabler, too few understand the potential of effective supply chain management to achieve competitive advantage. He could reasonably point to Zara to show how that advantage can be achieved.

The need to find ways of improving the efficiency of logistics has never been more important than in the current economic climate. For many companies, reducing costs and releasing cash is critical. The question is: does this compromise the competitive edge?

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