Reformulating a Logistics Strategy: A Concern for the Past, Present and Future

Abstract

The design of logistical systems historically has been responsive to the economic climate and market requirements of the times. When the cost of money rose dramatically during the 1960s, companies reacted by reducing the number of stocking points in their distribution systems. This was a proper response considering that capital costs represent a high proportion of inventory carrying costs. On the other hand, warehouse storage and handling, transportation, and production costs had much smaller relative increases. Consider just how dramatic the warehousing change was for two companies.