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International Logistics Management
Definition- Logistics is the process of planning, implementing, and controlling the efficient, effective flow and storage of rawmaterials, work-in-progress inventory, finished goods, and the related services and information originating from a firms tiers of vendors and culminating with its ultimate customers.Seven Rs - right product, right quantity, right condition, right place, right time, right customer, right priceLogistics Network
Plants Distribution CentersVendors Customers
Vorravee Pattaravongvisut
What is a Distribution Channel?What is a Distribution Channel?
A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption by the consumer or business user.
Channel decisions are among the most important decisions that management faces and will directly affect every other marketing decision.
Distribution Channel FunctionsDistribution Channel Functions
ContactContact
FinancingFinancing
InformationInformationRisk TakingRisk Taking
PromotionPromotion
MatchingMatchingNegotiationNegotiation
PhysicalDistribution
PhysicalDistribution
Consumer Marketing Channels & LevelsConsumer Marketing Channels & Levels
Direct
Indirect
Direct
Indirect
MM WW JJ RR CC
MM WW RR CC
MM RR CC
MM CC
Channel 1
Channel 2
Channel 3
Channel 4
Channel Level - A Layer of Intermediaries that Perform Some Work in Bringing the Product and its Ownership Closer to the Buyer.
Channel Behavior & ConflictChannel Behavior & ConflictThe channel will be most effective when:
each member is assigned tasks it can do best.all members cooperate to attain overall channel goals and satisfy the target market.
When this doesnt happen, conflict occurs:Horizontal Conflict Horizontal Conflict occurs among firms at the same level of the channel.Vertical Conflict Vertical Conflict occurs between different levels of the same channel.
For the channel to perform well, conflict must be managed.
Types of Vertical Marketing SystemsTypes of Vertical Marketing SystemsCorporate
Common Ownership at Different Levels of the Channel
CorporateCommon Ownership at Different
Levels of the Channel
ContractualContractual Agreement Among
Channel Members
ContractualContractual Agreement Among
Channel Members
AdministeredLeadership is Assumed by One or
a Few Dominant Members
AdministeredLeadership is Assumed by One or
a Few Dominant Members
Greater
Lesser
Degreeof
DirectControl
Degreeof
DirectControl
Vertical Marketing SystemsVertical Marketing SystemsVertical
Marketing Systems (VMS)
Vertical Marketing
Systems (VMS)
CorporateVMS
CorporateVMS
ContractualVMS
ContractualVMS
AdministeredVMS
AdministeredVMS
RetailerCooperatives
RetailerCooperatives
FranchiseOrganizations
FranchiseOrganizations
WholesalerSponsored
Voluntary Chain
WholesalerSponsored
Voluntary Chain
Service-Firm-Sponsored
Franchise System
Service-Firm-Sponsored
Franchise System
Manufacturer-SponsoredWholesaler
Franchise System
Manufacturer-SponsoredWholesaler
Franchise System
Manufacturer-Sponsored
RetailerFranchise System
Manufacturer-Sponsored
RetailerFranchise System
Channel Design DecisionsChannel Design Decisions
Analyzing Consumer Service NeedsAnalyzing Consumer Service Needs
Setting Channel Objectives & ConstraintsSetting Channel Objectives & Constraints
ExclusiveDistributionExclusive
DistributionSelective
DistributionSelective
DistributionIntensive
DistributionIntensive
Distribution
Identifying Major AlternativesIdentifying Major Alternatives
Evaluating the Major AlternativesEvaluating the Major Alternatives
Provide a Targeted Level of Customer Service at the Least Cost.
Maximize Profits, Not Sales.
Higher Distribution Costs/ Higher Customer Service
Levels
Lower Distribution Costs/ Lower Customer Service Levels
Logistics SystemsLogistics Systems
InventoryWhen to order
How much to orderJust-in-time
InventoryWhen to order
How much to orderJust-in-time
CostsMinimize Costs ofAttaining Logistics
Objectives
CostsMinimize Costs ofAttaining Logistics
Objectives
WarehousingStorage
Distribution
WarehousingStorage
Distribution
Order ProcessingSubmittedProcessed
Shipped
Order ProcessingSubmittedProcessed
Shipped
LogisticsFunctionsTransportation
Water, Truck, Rail,
Pipeline & Air
Transportation ModesTransportation Modes
RailNations largest carrier, cost-effective for shipping bulk products, piggyback
RailNations largest carrier, cost-effective for shipping bulk products, piggyback
TruckFlexible in routing & time schedules, efficient
for short-hauls of high value goods
TruckFlexible in routing & time schedules, efficient
for short-hauls of high value goods
WaterLow cost for shipping bulky, low-value
goods, slowest form
WaterLow cost for shipping bulky, low-value
goods, slowest form
PipelineShip petroleum, natural gas, and chemicals
from sources to markets
PipelineShip petroleum, natural gas, and chemicals
from sources to markets
AirHigh cost, ideal when speed is needed or to
ship high-value, low-bulk items
AirHigh cost, ideal when speed is needed or to
ship high-value, low-bulk items
Choosing Transportation ModesChoosing Transportation Modes
1. Speed.2. Dependability.3. Capability.4. Availability.5. Cost.
Checklist for ChoosingTransportation Modes
Integrated Logistics ManagementIntegrated Logistics ManagementConcept Recognizes that Providing Better Customer Service and Trimming Distribution Costs Requires
TeamworkTeamwork, Both Inside the Company and Among All the Marketing Channel Organizations.
Cross-Functional Teamwork inside the Company
Cross-Functional Teamwork inside the Company
Building Channel PartnershipsBuilding Channel Partnerships
Third-Party LogisticsThird-Party Logistics
Supply Chain Activities
Demand ForecastingOrder Processing ProcurementPlant and Warehouse Site LocationWarehousing and StorageTraffic and TransportationProduction PlanningMaterials HandlingInventory Control
Customer ServiceIndustrial PackagingDistribution CommunicationsReturn Goods HandlingParts and Service SupportSalvage and Scrap Disposal
Supply Chain ManagementSCM entails managing the flow of material and information in a sequence beginning with supplier and ending with customers.For the purpose clarity and transparency the SCM sequence is often broken up into smaller segments beginning with inbound logistics (materials management), followed by operational logistics which concerns the issues while the goods are being produced, and ending with outbound logistic(customer service and distribution channels)
Materials Management Functions
Materials planning and controlProcurementTransportationMaterial receivingInbound quality control
Inbound warehousing Production planning and controlOutbound quality controlOutbound warehousingSalvage and scrap disposal
Materials management concerns the planning and control of inbound materials, the work-in-process, and the storage of thefinished goods. Typical activities include the following:
Procurement ActivitiesNeeds analysisDefine user requirementsMake or buy analysisIdentify type of purchase (rebuy, modified rebuy, new buy)Market analysis on supply sourceGenerate supplier list
Prescreen suppliersEvaluate suppliersSelect supplierDelivery and performance measurementPerformance evaluation
Vendor Selection CriteriaNecessary Criteria
QualityReliabilityCapabilityFinancial considerations
Desirable CriteriaLocationReputationTrainingSupport
Final selection of vendors can be facilitated by scoring vendors based on a factor-based scoring system
WarehousingIssues in warehousing for inbound raw materials, sub-assemblies and supplies is similar to issues in warehousing outbound finished goods warehousing. They differ primarily in terms of the following:type of facility usedvalue of materialperish ability
Production Planning and ControlDemand ForecastingProduction Scheduling- quantities, timingResource Allocation
machineslabormaterialbudget
TransportationThe transportation activities concern bridging the spatial and temporal gaps between the vendor and the firm and the firm and its customers.Some issue that need to be addressed include:
controltransportation moderates and cost analysisroutescarrier servicesclaims handling
Receiving and Quality ControlReceiving
Inspection- variance checking between order and shipmentPhysical damage-claims, legal issues
Quality Controlquality benchmarksvariance measurement and analysisstatistical quality control
Channels of DistributionA series of cooperating entities who facilitate the flow of goods and services from the producer to the end user. Wholesaler, retailers, producers sales branches, agents, brokers etc are examples of such entitiesPrimary benefits include cost efficiencies and customer convenienceConventional channel versus Vertical Marketing System
Intensive, Exclusive and Selective DistributionCooperation, conflict and Competition within and between channels
PeopleTraining Learning - KnowledgeTeam Work Cross-FunctionalityBuy-in
ManagementWorkers
TechnologicalInformation Substitution
E-commerceE-logisticsE-procurement
Materials SubstitutionGreener MaterialsPackaging Advances
Delivery Mechanisms
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