Marketing channel reflection
CHAPTER Logis.cs and Channel Management
Lecture 10
Part 2 Developing the Marke.ng Channel
Learning Objec-ves 1. The defini.on of logis&cs
2. The meaning of supply chain management
3. The role of logis.cs
4. The systems concept of logis.cs
5. Logis.cs system components
6. Key interface areas between logis.cs and channel management
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Logistics
Definition: Planning, implementing, and
controlling the physical flows of materials and
final goods from points of origin to points of
use to meet customers’ needs at a profit.
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Supply Chain Management 2
Definition: Logistical systems that
emphasize close cooperat ion and
comprehensive inter-organizational
management to integrate the logistical
operations of the different firms in the
channel.
What is Supply Chain Management?
The Role of Logistics
Its Essence
The movement of the right amount of
the right products to the right place
at the right time
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Third-Party Logistics Providers (3PLs)
Specialize in performing most or all of the logistical tasks that manufacturers
or other channel members would normally perform themselves
Provide service at lower cost than the firms who hire third-party providers
Currently growing rapidly into a major industry
3PL Logis.cs
Systems Concept
Warehousing
Order
Processing
Materials Handling
Inventory Control
Transportation
Packaging
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Interrelated components
of a system
Total Cost Approach
Total Cost Approach
Management attempts to minimize the cost
of using the components taken as a whole
Basic components of A logistics system
Systems Concept
Management views logistics as a system of Interrelated components
Logistics System Components 5
Transportation
Materials Handling
Order Processing
Inventory Control
Warehousing
Packaging
Transportation
• Most fundamental and necessary component
• Accounts for the highest percentage of the total cost of logistics
• Overriding issue facing the firm: Choosing the optimum mode of transportation to meet customer service demands
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DHL lower shipping costs?
Materials Handling
Range of activities & equipment involved in the placement & movement of products in storage areas
Issues:
1. Minimizing the distances products are moved within the warehouse during the course of receiving, storage, & shipping
2. Choosing the kinds of mechanical equipment that should be used
3. Making the best use of labor when receiving, shipping, & handling products
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Order Processing
Its importance in logistics lies in its relationship with order cycle time—the time between when an order is placed & when it is received by the customer. Issue:
Developing an efficient order processing system
Inventory Control
The firm’s attempt to hold the lowest level of inventory that will still enable it to meet customer demand Issue:
Keeping inventory at the lowest possible level while concurrently placing orders for goods in large quantities
Warehousing
The holding of products until they are ready to be sold
Issues:
1. The location of warehouse facilities
2. The number of warehousing units
3. The size of the units
4. The design of the units
5. The question of ownership
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Kiva Warehouse Robo.cs
Packaging
Packaging & its associated costs can affect the other components of the system Issue:
Using packaging to make a significant difference in the effectiveness & efficiency of the logistics system
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Tetra Pak Packaging
The Output of a Logistics System
Customer service is the collection of activities
performed in filling orders and keeping
customers happy or creating in the customer’s
mind the perception of an organization that is
easy to do business with.
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Zara Just In Time
Logistics Service Standards
1. Time from order receipt to order shipment 2. Order size & assortment constraints 3. Percentage of items out of stock 4. Percentage of orders filled accurately 5. Percentage of orders filled within a given
number of days from receipt of the order 6. Percentage of orders filled 7. Percentage of customer orders that arrive in good
condition 8. Order cycle time 9. Ease & flexibility of order placement
(9 Standards developed by Heskett, Galskowsky, & Ivie)
Key Elements of Customer Service
LaLonde Classification of Customer Service:
1. Product availability
2. Order cycle time
3. Distribution system flexibility
4. Distribution system information
5. Distribution system malfunction
6. Post-sale product support
Logistics Management
Logistics
Management
Concerned
specifically
with product flow
Channel
Management
The administration
of all the major
channel flows
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Key Interface Areas between Logistics & Channel Management
Interface 1 Defining of logistics service standards
Interface 2 Making sure the logistics program meets channel members’ service standards
Interface 3 Selling the logistics program
Interface 4 Monitoring the results of the logistics program
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Defining Logistics Service Standards
The higher the service standards,
the higher the costs.
Key issue for Channel Manager:
Determining precisely the types and levels
of logistics service desired by channel
members
If included as a major component of the manufacturer’s overall approach for supporting
channel member needs, the logistics program may be the key feature of a strategic alliance.
Key issue for Channel Manager:
Ensuring that the program the experts prepare is what the channel members want.
Evaluating the Logistics Program
1. Minimize out-of-stock occurrences. 2. Reduce channel member inventory requirements. 3. Strengthen the manufacturer-channel member
relationship.
Key issue for Manufacturers:
Extending superior logistics capabilities to help
channel members improve their logistics
and marketing capabilities.
Selling the Logistics Program
Logistics systems must be continually monitored, both in terms of how successfully
they are performing for the manufacturer and how well they are meeting changing
channel member needs.
Key issue for Channel Manager:
Continually monitoring the channel members’
reactions to logistics programs.
Monitoring the Logistics System
1. Globalisa.on 2. Integrated logis.cs 3. Green logis.cs 4. Informa.on Technology 5. Security
Supply Chain Management Trends
Summary
• Logistics involves planning, implementing and controlling the physical supply of goods from point of origin to points of use to meet customers needs at a profit.
• Basic role tight product in the right place • Logistics systems change over time to meet
changing needs and problems. • Careful monitoring required to spot
deficiencies
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