Inter Logistics M

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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 therelated services and information originating from a firm s tiersof vendors and culminating with it s ultimate customers.Seven Rs - right product, right quantity, right condition, rightplace, right time, right customer, right priceLogistics Network

PlantsDistribution

CentersVendors Customers

Vorravee Pattaravongvisut


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What is a Distribution Channel?

What is a Distribution Channel?

A set of interdependent organizations

(intermediaries) involved in the process ofmaking a product or service available for useor consumption by the consumer or businessuser.

Channel decisions are among the mostimportant decisions that management facesand will directly affect every other marketingdecision.


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Distribution ChannelFunctions

Distribution ChannelFunctions

Contact

Contact

Financing

Financing

Information

InformationRisk Taking

Risk Taking

Promotion

Promotion

Matching

MatchingNegotiation

Negotiation

PhysicalDistribution

PhysicalDistribution


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Consumer Marketing Channels & Levels

Consumer Marketing Channels &

Levels

Direct

Indirect

Direct

Indirect

MM WW JJ RR CC

MM WW RR CC

MM RR CC

MM CCChannel 1

Channel 2

Channel 3

Channel 4

Channel Level - A Layer of Intermediaries that Perform Some Work inBringing the Product and it s Ownership Closer to the Buyer.


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Channel Behavior & Conflict Channel Behavior & Conflict The channel will be most effective when:

each member is assigned tasks it can do best.all members cooperate to attain overallchannel goals and satisfy the target market.

When this doesn t happen, conflict occurs:Horizontal ConflictHorizontal Conflict occurs among firms at thesame level of the channel.

Vertical Conflict Vertical Conflict occurs between differentlevels of the same channel.

For the channel to perform well, conflict must bemanaged.


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Types of Vertical Marketing SystemsTypes of Vertical Marketing SystemsCorporate

Common Ownership at DifferentLevels of the Channel

CorporateCommon Ownership at Different

Levels of the Channel

Contractual

Contractual Agreement AmongChannel 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

Degree

of DirectControl

Degreeof

DirectControl


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Vertical Marketing SystemsVertical Marketing SystemsVertical

MarketingSystems (VMS)

VerticalMarketing

Systems (VMS)

CorporateVMS

CorporateVMS

ContractualVMS

ContractualVMS

AdministeredVMS

AdministeredVMS

Retailer Cooperatives

Retailer Cooperatives

FranchiseOrganizations

FranchiseOrganizations

Wholesaler Sponsored

Voluntary Chain

Wholesaler Sponsored

Voluntary Chain

Service-Firm-Sponsored

Franchise System

Service-Firm-Sponsored

Franchise System

Manufacturer-Sponsored

Wholesaler Franchise System

Manufacturer-SponsoredWholesaler

Franchise System


Retailer Franchise System


Retailer Franchise System


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Channel Design DecisionsChannel Design Decisions

Analyzing Consumer Service Needs Analyzing Consumer Service Needs

Setting Channel Objectives & ConstraintsSetting Channel Objectives & Constraints

Exclusive

Distribution

Exclusive

Distribution

Selective

Distribution

Selective

Distribution

Intensive

Distribution

Intensive

Distribution

Identifying Major AlternativesIdentifying Major Alternatives

Evaluating the Major AlternativesEvaluating the Major Alternatives


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Provide a Targeted Level of Customer Service atthe Least Cost.

Maximize Profits, Not Sales.

Higher Distribution Costs/Higher Customer Service

Levels

Lower Distribution Costs/ LowerCustomer Service Levels


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Logistics Systems Logistics Systems

InventoryWhen to order

How much to order Just-in-time

InventoryWhen to order

How much to order Just-in-time

CostsMinimize Costs of

Attaining LogisticsObjectives

CostsMinimize Costs of

Attaining Logistics

Objectives

WarehousingStorage

Distribution

WarehousingStorage

Distribution

Order ProcessingSubmittedProcessed

Shipped

Order ProcessingSubmittedProcessed

Shipped

Logistics

FunctionsTransportationWater, Truck,

Rail,Pipeline & Air


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Transportation ModesTransportation Modes

RailNation s largest carrier, cost-effectivefor shipping bulk products, piggyback

RailNation s largest carrier, cost-effectivefor 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

Water Low cost for shipping bulky, low-value

goods, slowest form

Water Low cost for shipping bulky, low-value

goods, slowest form

Pipeline

Ship petroleum, natural gas, and chemicalsfrom sources to markets

PipelineShip petroleum, natural gas, and chemicals

from sources to markets

Air High cost , ideal when speed is needed or to

ship high-value, low-bulk items

Air High cost, ideal when speed is needed or to

ship high-value, low-bulk items


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Choosing Transportation Modes

Choosing Transportation

Modes

1. Speed.2. Dependability.

3. Capability.4. Availability.5. Cost.

Checklist for Choosing

Transportation Modes


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Integrated Logistics Management Integrated Logistics Management Concept Recognizes that Providing Better Customer

Service and Trimming Distribution Costs RequiresTeamworkTeamwork, Both Inside the Company and Among All

the Marketing Channel Organizations.

Cross-Functional Teamwork insidethe Company

Cross-Functional Teamwork insidethe Company

Building Channel PartnershipsBuilding Channel Partnerships

Third-Party LogisticsThird-Party Logistics


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Supply Chain Activities

Demand ForecastingOrder ProcessingProcurement

Plant and WarehouseSite LocationWarehousing andStorage

Traffic andTransportationProduction PlanningMaterials HandlingInventory Control

Customer ServiceIndustrial PackagingDistribution

CommunicationsReturn Goods HandlingParts and Service

SupportSalvage and ScrapDisposal


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Supply Chain Management

SCM entails managing the flow of material andinformation in a sequence beginning with supplierand ending with customers.

For the purpose clarity and transparency the SCMsequence is often broken up into smaller segmentsbeginning with inbound logistics (materialsmanagement), followed by operational logistics which

concerns the issues while the goods are beingproduced, and ending with outbound logistic(customer service and distribution channels)


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Materials ManagementFunctions

Materials planning andcontrolProcurementTransportationMaterial receivingInbound quality control

Inbound warehousingProduction planning andcontrolOutbound qualitycontrolOutbound warehousingSalvage and scrapdisposal

Materials management concerns the planning and control ofinbound materials, the work-in-process, and the storage of thefinished goods. Typical activities include the following:


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Procurement Activities

Needs analysisDefine userrequirementsMake or buy analysisIdentify type ofpurchase (rebuy,modified rebuy, new

buy)Market analysis onsupply sourceGenerate supplier list

Prescreen suppliersEvaluate suppliersSelect supplier

Delivery andperformancemeasurement

Performance evaluation


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Vendor Selection Criteria

Necessary CriteriaQualityReliability

CapabilityFinancial considerations

Desirable CriteriaLocationReputation

TrainingSupport

Final selection of vendors can be facilitated by scoringvendors based on a factor-based scoring system


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Warehousing

Issues in warehousing for inbound raw materials,sub-assemblies and supplies is similar to issues inwarehousing outbound finished goods warehousing.They differ primarily in terms of the following:type of facility usedvalue of materialperish ability


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Production Planning and Control

Demand ForecastingProduction Scheduling- quantities, timingResource Allocation

machineslabormaterialbudget


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Transportation

The transportation activities concern bridging thespatial and temporal gaps between the vendor andthe firm and the firm and it s customers.Some issue that need to be addressed include:

controltransportation moderates and cost analysis

routescarrier servicesclaims handling


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Receiving and Quality Control

ReceivingInspection- variancechecking between order

and shipmentPhysical damage-claims, legal issues

Quality Controlquality benchmarksvariance measurement

and analysisstatistical quality control


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Channels of Distribution

A series of cooperating entities who facilitate the flowof goods and services from the producer to the enduser. Wholesaler, retailers, producers sales branches,agents, brokers etc are examples of such entities

Primary benefits include cost efficiencies andcustomer convenienceConventional channel versus Vertical MarketingSystem

Intensive, Exclusive and Selective DistributionCooperation, conflict and Competition within andbetween channels


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People

Training Learning - KnowledgeTeam Work Cross-Functionality

Buy-inManagementWorkers


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Technological

Information SubstitutionE-commerceE-logistics

E-procurementMaterials Substitution

Greener MaterialsPackaging Advances

Delivery Mechanisms


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Documents

Inter Logistics M