mkt 12
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Distribution Customer Service and LogisticsDistribution Customer Service and Logistics
For use only withPerreault/Cannon/McCarthy or Perreault/McCarthy texts.© 2008 McGraw-Hill Companies, Inc.McGraw-Hill/Irwin
CHAPTER ELEVEN
CH 12: Retailers, CH 12: Retailers, Wholesalers & Their Wholesalers & Their Strategy Planning Strategy Planning
Logistics customer Logistics customer serviceservice
• What it is• Level to offer• Cost • JIT and EDI
TransportingTransporting• Transport modes• Benefits and
limitations
StoringStoring• Inventory costs• Storing facilities
and distribution centers
CH 11: Distribution Customer Service & Logistics
CH 10: Place and CH 10: Place and Development of Development of Channel SystemsChannel Systems
Marketing Strategy Planning for Place (Exhibit 11-1)
Physical Distribution Gets It to Customers
Logisticsor
PhysicalDistribution
Physical Distribution Customer Service
Trade-Offs of Costs, Service and Sales (Exhibit 11-2)
Physical Distribution Concept Focuses on the Whole Distribution System
Info on Product Availability
Info on Product Availability
Order Processing Time
Order Processing Time
Backorder ProceduresBackorder
Procedures
Inventory Storage
Inventory Storage
Order AccuracyOrder Accuracy
Damage in Transit
Damage in Transit
Online Status Information
Online Status Information
Advance Info on Delays
Advance Info on Delays
Delivery TimeDelivery Time
Compliance with Customers
Compliance with Customers
Defect – Free Deliveries
Defect – Free Deliveries
FactorsAffecting PD
ServiceLevels
FactorsAffecting PD
ServiceLevels
Handling Adjustments/
Returns
The Total Cost Approach
A Cost Comparison of Alternative Systems (Exhibit 11-4)
Shifting and SharingShifting and SharingShifting and SharingShifting and Sharing
JITJITJITJIT
Conflict HandlingConflict HandlingConflict HandlingConflict Handling
Supply ChainSupply Chain
Coordinating Logistics Activities
Better Information Helps Coordinate PD
Electronic Data
Interchange
Electronic Data
Interchange
Electronic Data
Interchange
Electronic Data
Interchange
Continuously Updated
Information Systems
Continuously Updated
Information Systems
Continuously Updated
Information Systems
Continuously Updated
Information Systems Key
Areas WhereComputers
Help PDService
KeyAreas WhereComputers
Help PDService
ProductAvailability
ProductAvailability
• False expectations about delivery speed
• Selling products that are not available
• Running out of popular products
Coordinationof PD
Coordinationof PD
• Intentional delays in order confirmation
• Shifting the burden of holding inventory
Ethical Issues May Arise
The Transporting Function Adds Value to a Marketing Strategy (Exhibit 11-5)
Which Transporting Alternative Is Best? (Exhibit 11-6)
Water Transportation
Airfreight Is Expensive but Fast and Growing
© 2008 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Interactive Exercise: Transport Modes
The best transportation alternative for shipping chickens from farms in West Virginia to processing plants in Maryland would be:
A. air.B. truck.C. rail.D. water.E. none of the above.
Checking your knowledge
Achieves Production Economies of Scale
Achieves Production Economies of ScaleAchieves Production Economies of Scale
Achieves Production Economies of Scale
Keeps Prices SteadyKeeps Prices SteadyKeeps Prices SteadyKeeps Prices Steady
Needed When Production Doesn’t Match Consumption
Needed When Production Doesn’t Match Consumption
Needed When Production Doesn’t Match Consumption
Needed When Production Doesn’t Match Consumption
Builds Channel Flexibility
Builds Channel Flexibility
The Storing Function and Marketing Strategy
Handling costsHandling costsHandling costs
Cost of inventory becoming obsolete
Cost of inventory becoming obsolete
Cost of risksCost of risksCost of risks
Cost of damage while in
inventory
Cost of damage while in
inventory
Cost of damage while in
inventory
Cost of storage facilities
Cost of storage facilities
Cost of storage facilities
Interest expense &
opportunity cost
Interest expense &
opportunity cost
Interest expense &
opportunity cost
Interest expense &
opportunity cost
Total Inventory Cost (Exhibit 11-7)
TotalInventory
Cost
TotalInventory
Cost
Specialized Storing Facilities May Be Required (Exhibit 11-8)
Which of the following statements indicates a reasonable approach to the management of inventory and storage?
A. “Inventory that sits in a warehouse doesn’t do any harm; besides, it might be needed someday.”
B. “Inventory and storage costs should be minimized, regardless of the impact on customer service.”
C. “The cost of stockouts always exceeds the cost of carrying inventory.”
D. “Always have a large safety stock of inventory to eliminate the possibility of stockouts.”
E. Have enough inventory on hand to meet the expected level of customer service required, but don’t carry too much.”
Checking your knowledge
• Logistics
• Physical distribution
• Customer service level
• Physical distribution concept
• Total cost approach
• Supply chain
• Electronic data interchange (EDI)
• Transporting
• Containerization
• Piggyback service
• Storing
• Inventory
• Private warehouses
• Public warehouses
• Distribution center
Key Terms