Strategy formulation refers to the process of achieving the organisational vision through most

appropriate course of action for the realisation of goals and objectives that make the vision a
reality. Strategic management is essential for organisations to ensure competitive advantage
in the market and sustained growth. In a way it is a long-range planning process containing
set of managerial decisions and action that determine the long-term performance of the
organisations. Strategy formulation is one of the most important component in the overall
strategy management process covering environmental scanning (external and internal),
strategy formulation (strategic or long range planning), strategy implementation and
evaluation and control. They emphasize the analysing and evaluating of external
opportunities and threats in terms of organisations strength and weakness. Any strategy
formulation process will certainly contain the following key steps. The steps sequence can
change or overlap depending upon specific circumstances and nature of organisation.

1. Defining a corporate vision and mission

2. Specifying achievable objectives
3. Developing strategies
4. Setting policy guidelines

For a logistic business organisation, we can set vision and mission as follows :

A vision statement is expected to describe what the company would like to become in future.

“To become a world class, excellent logistic company ensuring timely and effective logistic
management”

Objective/ Final results of planned activity

Goal

Strategic programs- corporate level, divisional level and functional level

Policy- this describe the major rules and guidelines that express the limits in which
organisations action should occur. Policy ensure that the employees make appropriate
decisions that support company’s mission objectives and strategies.

Logistic strategies are important in the overall strategic management as this will help
company save lot of money even up to 40% by way of reduction of logistics cost through
quick and informed decisions. As supply chain is constantly changing, the development and
implementing formal logistic strategy also need to be flexible to the decision-making process.
To design a new logistic strategy, we have to analyse the existing logistics process by finding
answers to following:

 Do you have a way to handle expedited shipping differently than slower moving shipments?
Would it be beneficial to do so?
 Is there a plan that defines when an item should be inventoried and when an item should be
sent directly to a customer?
 Would it be more effective to have a third-party logistics (3PL) company manage some or all
aspects of your logistics functions? What financial and service considerations must you take
into account before making this decision?
 Can your distribution network be improved?
 Could a change of carrier or mode save money or improve service in outbound
transportation?
 Do you carry too much inventory? Too little?
 What are your specific customer service goals? Is it easy item returns? Delivery speed?
Safety?
 What future business operations will affect logistics functions and are you prepared to
handle them?