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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
Manufacturer-Sponsored
Retailer Franchise System
Manufacturer-Sponsored
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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