Not long ago, the distribution manager was the only person who had ownership of his organization's logistics program. Today, this series of interrelated activities and processes has crept into the boardroom and requires the attention of the chief executive.

The CEO now appreciates that logistics processes impact sales, profits, production, information technology, human resources – and expansion of the business.

The chief executive knows there can be a significant drain on sales and profits if there is waste or inefficiency in the supply chain where materials acquisition, production processing and finished goods distribution are concerned. This especially comes to light when expansion plans hit the drawing board. One of the many components to expansion is logistics.

Speed–To–Market

Logistics is "the right product to the right user at the right time." Your search for the best logistics strategy should start with an analysis of what "right time" means in terms of your product, company and customers.

Some products are more perishable than others. Perishables such as fruits and vegetables have a very short time to get to customers before they become unusable. And seasonal products, like the hot Spring apparel styles, have only a short time to reach destination before they're old news.

Such factors will mean stricter standards for on–time delivery. What's more, some customers are more demanding than others. A health care facility waiting for a replacement part for its diagnostic machine isn't going to be pleased with a one week turnaround time as that could mean thousands of revenue dollars lost. On the other hand, a cosmetics company's customers may find it acceptable to have orders shipped within 72 hours of filling their online shopping cart.

There is no hard rule of thumb when it comes to the issue of time. It varies from industry to industry and even from company to company.

Distribution Center Debate

Another consideration is determining how many distribution centers you need. This will affect the cities you choose as distribution points and the size of the facilities you'll need in each location.

If you're thinking about having a single distribution point, your distribution center (DC) will probably end up in a major population area (like Atlanta, Chicago, Dallas, etc.) or in a city near the center of the country (like Kansas City). But you could easily choose geographically–dispersed markets like Salt Lake City, Phoenix or Columbus depending on cost and service. The more centers you use, the smaller the square footage each center will need.

There is no standard answer to the ideal number of DCs, even when you're looking at companies operating in the same industry. The best answer is usually reached by employing a complex algorithm that considers specifics like budget and customer needs, along with your comfort level and ability to pay inventory–carrying costs.

In Close Proximity

Comparing specific distribution markets can become one of the most time–consuming and pain–staking tasks in the entire expansion process. Among the things you must look at are:

• Proximity to your customers
• The price of reaching customers from a particular market
• Proximity to your manufacturing sites
• Access to a good selection of transportation providers
• The potential quality of a workforce in a given area; larger markets tend to have a bigger and more diverse labor infrastructure
• The quality and availability of a market's distribution real estate
• The quality of a market's transportation infrastructure
• Weather

Evaluating all of these factors can take weeks or months. However, there are some excellent logistics network software packages which are available. These packages can run several scenarios, such as a two or three facility network, to help build the product dispersion network which will enable you to be the most competitive. And they can help point out the most desirable distribution markets based on service preferences, performance standards and budget parameters. When these factors have been evaluated, you can begin to search for and compare individual facilities.

There are many other variables for the CEO to be aware of and consider when it comes to logistics, but those cited here are certainly issues that can most acutely impact your business strategy and passion for growth.

Mike Williams is the Chief Operating Officer of Sunteck Transport Group.