Distribution Customer Service and Logistics

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Distribution Customer Service and Logistics

  1. 1. CHAPTER TWELVE Distribution Customer Service and Logistics For use only with Perreault and McCarthy texts. © 2005 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin www.mhhe.com/fourps
  2. 2. Physical Distribution Gets It to Customers Logistics or Physical Distribution © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
  3. 3. Physical Distribution Gets It to Customers Logistics is the transporting, storing, and handling of goods to match target customers’ needs with a firm’s marketing mix. Physical distribution (PD) is another name for logistics Key Issues •Physical distribution provides time and place utility and makes possession utility possible. •Physical distribution activities typically make up half or more of total marketing costs. •By making physical distribution more efficient, an organization can increase its profits, cut prices, improve service, or achieve some combination of all three. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
  4. 4. Physical Distribution Concept Focuses on the Whole Distribution System Info on Product Availability Online Status Information Order Processing Time Advance Info on Delays Backorder Procedures Inventory Storage Factors Affecting PD Service Levels Delivery Time Compliance with Customers Order Accuracy Defect – Free Deliveries Damage in Transit Handling Adjustments/ Returns © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
  5. 5. Exhibit 12-3 A Cost Comparison of Alternative Systems © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
  6. 6. Coordinating Logistics Activities Shifting and Sharing Conflict Handling JIT Chain of Supply © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
  7. 7. •Chain of supply: • the complete set of firms, facilities and logistics activities involved in procuring materials, transforming them into intermediate and finished products, and distributing them to customers. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
  8. 8. Better Information Helps Coordinate PD Continuously Updated Information Systems Electronic Data Interchange Areas Where Computers Help PD Service Internet © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
  9. 9. Ethical Issues May Arise Coordination of PD Product Availability • • Selling products that are not available • Running out of popular products © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin • Intentional delays in order confirmation • False expectations about delivery speed Shifting the burden of holding inventory
  10. 10. Exhibit 12-4 The Transporting Function Adds Value to a Marketing Strategy © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
  11. 11. Exhibit 12-5 Which Transporting Alternative Is Best? + © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
  12. 12. Water Transportation + © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
  13. 13. Airfreight Is Expensive but Fast and Growing + © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
  14. 14. Economies of Scale in Transporting High Shipping Cost $ Low Low High Shipping Quantity © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
  15. 15. Economies of Scale in Transporting Most transporting rates are based on the idea that large quantities can be shipped at a lower cost per pound than smaller quantities. There are often significant cost differences between full loads and smaller loads. Key Issues •Freight forwarders accumulate economical shipping quantities. »They combine the small shipments from many shippers and reship them in larger quantities to obtain lower transportation rates. »Freight forwarders are especially useful in international shipping. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
  16. 16. Economies of Scale in Transporting •A key question for some firms is, “Should you do it yourself?” »Some companies have their own fleets of trucks, ships, or even airplanes. »Taking on the transportation function increases the amount of control a firm has over its physical distribution and may save money. © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
  17. 17. The Storing Function and Marketing Strategy Needed When Production Doesn’t Match Consumption Keeps Prices Steady Achieves Production Economies of Scale Builds Channel Flexibility © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
  18. 18. Exhibit 12-6 Goods Are Stored at a Cost © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
  19. 19. Exhibit 12-7 Specialized Storing Facilities May Be Required + © 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

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