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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