International Logistics Management
Definition- Logistics is the process of planning, implementing,
and controlling the efficient, effective flow and storage of raw
materials, work-in-progress inventory, finished goods, and the
related services and information originating from a firm’s tiers
of vendors and culminating with it’s ultimate customers.
Seven Rs - right product, right quantity, right condition, right
place, right time, right customer, right price
Logistics Network
Vendors
Plants
Distribution
Centers
Customers
Vorravee Pattaravongvisut
What
What is
is aa Distribution
Distribution Channel?
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
Distribution Channel
Channel
Functions
Functions
Risk
Risk Taking
Taking
Information
Information
Financing
Financing
Promotion
Promotion
Physical
Physical
Distribution
Distribution
Contact
Contact
Negotiation
Negotiation
Matching
Matching
Consumer
Consumer Marketing
Marketing Channels
Channels &
&
Levels
Levels
Channel Level - A Layer of Intermediaries that Perform Some Work in
Bringing the Product and it’s Ownership Closer to the Buyer.
Channel 1
Direct
Direct
M
M
CC
Indirect
Indirect
Channel 2
M
M
RR
ฎ
CC
RR
ฎ
CC
RR
ฎ
CC
Channel 3
M
M
ฎ
W
W
Channel 4
M
M
ฎ
W
W
ฎ
JJ
ฎ
Channel
Channel Behavior
Behavior &
& Conflict
Conflict
The 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 doesn’t happen, conflict occurs:
Horizontal Conflict occurs among firms at the
same level of the channel.
Vertical Conflict occurs between different
levels of the same channel.
For the channel to perform well, conflict must be
managed.
Types
Types of
of Vertical
Vertical Marketing
Marketing Systems
Systems
Greater
Corporate
Corporate
Common
Common Ownership
Ownership at
at Different
Different
Levels
Levels of
of the
the Channel
Channel
Degree
Degree
of
of
Direct
Direct
Control
Control
Contractual
Contractual
Contractual
Contractual Agreement
Agreement Among
Among
Channel
Channel Members
Members
Administered
Administered
Lesser
Leadership
Leadership is
is Assumed
Assumed by
by One
One or
or
aa Few
Few Dominant
Dominant Members
Members
Vertical
Vertical Marketing
Marketing Systems
Systems
Vertical
Vertical
Marketing
Marketing
Systems
Systems (VMS)
(VMS)
Contractual
Contractual
VMS
VMS
Corporate
Corporate
VMS
VMS
Wholesaler
Wholesaler
Sponsored
Sponsored
Voluntary
VoluntaryChain
Chain
Retailer
Retailer
Cooperatives
Cooperatives
ManufacturerManufacturerSponsored
Sponsored
Retailer
Retailer
Franchise
FranchiseSystem
System
ManufacturerManufacturerSponsored
Sponsored
Wholesaler
Wholesaler
Franchise
FranchiseSystem
System
Administered
Administered
VMS
VMS
Franchise
Franchise
Organizations
Organizations
Service-FirmService-FirmSponsored
Sponsored
Franchise
FranchiseSystem
System
Channel
Channel Design
Design Decisions
Decisions
Analyzing
Analyzing Consumer
Consumer Service
Service Needs
Needs
Setting
Setting Channel
Channel Objectives
Objectives &
& Constraints
Constraints
Identifying
Identifying Major
Major Alternatives
Alternatives
Intensive
Intensive
Distribution
Distribution
Selective
Selective
Distribution
Distribution
Exclusive
Exclusive
Distribution
Distribution
Evaluating
Evaluating the
the Major
Major Alternatives
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
Logistics Systems
Systems
Order
OrderProcessing
Processing
Costs
Costs
Submitted
Submitted
Processed
Processed
Shipped
Shipped
Minimize
MinimizeCosts
Costsof
of
Attaining
AttainingLogistics
Logistics
Objectives
Objectives
Logistics
Transportation
Functions
Warehousing
Warehousing
Storage
Storage
Distribution
Distribution
Water, Truck,
Rail,
Pipeline & Air
Inventory
Inventory
When
Whento
toorder
order
How
much
to
How much toorder
order
Just-in-time
Just-in-time
Transportation
Transportation Modes
Modes
Rail
Rail
Nation’s
Nation’slargest
largestcarrier,
carrier,cost-effective
cost-effective
for
forshipping
shippingbulk
bulkproducts,
products,piggyback
piggyback
Truck
Truck
Flexible
Flexiblein
inrouting
routing&&time
timeschedules,
schedules,efficient
efficient
for
forshort-hauls
short-haulsof
ofhigh
highvalue
valuegoods
goods
Water
Water
Low
Lowcost
costfor
forshipping
shippingbulky,
bulky,low-value
low-value
goods,
slowest
form
goods, slowest form
Pipeline
Pipeline
Ship
Shippetroleum,
petroleum,natural
naturalgas,
gas,and
andchemicals
chemicals
from
fromsources
sourcesto
tomarkets
markets
Air
Air
High
Highcost,
cost,ideal
idealwhen
whenspeed
speedis
isneeded
neededor
orto
to
ship
shiphigh-value,
high-value,low-bulk
low-bulkitems
items
Choosing
Choosing Transportation
Transportation
Modes
Modes
Checklist for Choosing
Transportation Modes
1. Speed.
2. Dependability.
3. Capability.
4. Availability.
5. Cost.
Integrated
Integrated Logistics
Logistics Management
Management
Concept Recognizes that Providing Better Customer
Service and Trimming Distribution Costs Requires
Teamwork,
Teamwork Both Inside the Company and Among All
the Marketing Channel Organizations.
Cross-Functional
Cross-Functional Teamwork
Teamwork inside
inside
the
the Company
Company
Building
Building Channel
Channel Partnerships
Partnerships
Third-Party
Third-Party Logistics
Logistics
Supply Chain Activities
Demand Forecasting
Order Processing
Procurement
Plant and Warehouse
Site Location
Warehousing and
Storage
Traffic and
Transportation
Production Planning
Materials Handling
Inventory Control
Customer Service
Industrial Packaging
Distribution
Communications
Return Goods Handling
Parts and Service
Support
Salvage and Scrap
Disposal
Supply Chain Management
SCM 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 management concerns the planning and control of
inbound materials, the work-in-process, and the storage of the
finished goods. Typical activities include the following:
Materials planning and
control
Procurement
Transportation
Material receiving
Inbound quality control
Inbound warehousing
Production planning and
control
Outbound quality
control
Outbound warehousing
Salvage and scrap
disposal
Procurement Activities
Needs analysis
Define user
requirements
Make or buy analysis
Identify type of
purchase (rebuy,
modified rebuy, new
buy)
Market analysis on
supply source
Generate supplier list
Prescreen suppliers
Evaluate suppliers
Select supplier
Delivery and
performance
measurement
Performance evaluation
Vendor Selection Criteria
Necessary Criteria
Quality
Reliability
Capability
Financial considerations
Desirable Criteria
Location
Reputation
Training
Support
Final selection of vendors can be facilitated by scoring
vendors based on a factor-based scoring system
Warehousing
Issues 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 used
value of material
perish ability
Production Planning and Control
Demand Forecasting
Production Scheduling- quantities, timing
Resource Allocation
machines
labor
material
budget
Transportation
The transportation activities concern bridging the
spatial and temporal gaps between the vendor and
the firm and the firm and it’s customers.
Some issue that need to be addressed include:
control
transportation mode
rates and cost analysis
routes
carrier services
claims handling
Receiving and Quality Control
Receiving
Inspection- variance
checking between order
and shipment
Physical damageclaims, legal issues
Quality Control
quality benchmarks
variance measurement
and analysis
statistical quality control
Channels of Distribution
A 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 entities
Primary benefits include cost efficiencies and
customer convenience
Conventional channel versus Vertical Marketing
System
Intensive, Exclusive and Selective Distribution
Cooperation, conflict and Competition within and
between channels
People
Training – Learning - Knowledge
Team Work – Cross-Functionality
Buy-in
Management
Workers
Technological
Information Substitution
E-commerce
E-logistics
E-procurement
Materials Substitution
Greener Materials
Packaging Advances
Delivery Mechanisms