Designing a Marketing Logistics System

Vijay Kumar Pampana

Agenda
Define Logistics

Logistics Model
Importance of Logistics Define Marketing Logistics Need for Logistics in Marketing Marketing & Logistics Interface Objectives of Marketing Logistics Future Steps Time-line

Define Logistics
Business planning framework for the management of material, service, information and capital flows. It includes the increasingly complex information, communication and control systems required in today's business environment.

Logistics Model

Factors raising Logistics Importance

Raise in transportation cost

Production efficiency is reaching a peak

Product line proliferated Computer technology Fundamental change in inventory philosophy Increased public concern of products Growth of several new, large retail chains or mass

merchandise with large demands & very sophisticated logistics services, by pass traditional channel & distribution Growing power of retailers Globalization

How Globalization affects Logistics?

Efficient logistics systems throughout the world

economy are a basis for trade and a high standard of living for all of us
Lands, as well as the people who occupy them,

are not equally productive

Examples
Japans electronics industry, the agricultural,

computer and aircrafts industries of United States and various countries dominance in supplying raw materials such as oil, gold, bauxite, and chromium

Why Effective Logistics?

Contributes immensely to the achievements of the business and

marketing objectives of a firm

It creates time and place utilities in the products and thereby

helps in maximizing the value satisfaction to consumers

By ensuring quick deliveries in minimum time and cost, it

relieves the customers of holding excess inventories

It also brings down the cost of carrying inventory, material

handling, transportation and other related activities of distribution

In a nutshell, an efficient system of physical distribution/logistics has a great potential for improving customer service and reducing costs there-by contributing to the profit maximization objective of a firm!

A Marketers Logistic Dilemma!

A single product would tend towards a minimum

cost solution within production department but would generate only a small percentage of potential realizable revenue from the market
On other hand, a wide & diverse product range

would lift costs of production whilst satisfying marketing departments desire to maximize customer satisfaction and therefore revenue

Define Marketing Logistics

Analysis, Planning, Organizing and Controlling of all movement and storage operations connected with flow of finished goods from end of production line to their satisfactory arrival in the market place, and of the associated channels of distribution required to arrange and complete the transactions between Physical Distribution Marketing company and its selected markets Logistics
Management

Physical flow involved in distribution activities Eg how many warehouses? , public or private vehicle fleet?

Physical facilities + selection & management of channels of distribution Eg What types of retail outlet?, Wholesaler vs Retailer?

Why logistics for Marketing?

Technological Advancement
Advancement in the fields of information processing,

communication, transportation and material handling So managers can now update sales and inventory planning faster and more frequently Factories can respond with more flexibility to volatile market conditions
Product life cycles are contracting
Companies that have gone all out to slash costs by

turning to large scale batch production regularly find themselves saddled with obsolete stocks and are unable to keep pace with competitors new-product launches

Contd..
Product lines are proliferating
More and more product line variety is needed to satisfy

the growing range of customer tastes and requirements, and stock levels in both field and factory inevitably rise.
Shift in Distribution Management
The balance of power in distribution chain is shifting

from the manufacturers to the trader

Change in Customers Attitude
Transform in the customers attitude towards the total

cost approach rather than direct cost approach Customers expectations of service has increased

Contd..
Increasing Distribution Costs
In many industries, the value added by

manufacturing is declining as the cost of materials and distribution climbs

Globalization & Economies of Scale
Companies are centralizing production to gain

economies of scale Most of the MNC organizations are restructuring their production facilities on a global basis

Marketing & Logistics Interface

Marketing Activities Marketing Research Product Mix Pricing Promotion Sales Force Management Logistics Activities Demand Forecasting Transportati on Packaging Storage Order Fulfillment Marketing Logistics interface Customer Service Transport Inventory Processing Material Handling /Distribution Information

**Sustainable competitive advantage => superior logistic performance => Integrate Manufacturing, Marketing & Distribution at strategic level**

Objectives of Marketing Logistics

Improving customer service

Rapid Response
Reduce total distribution costs Generating additional sales Creating time and space utilities Price Stabilization Quality Improvement Movement consolidation
*Will discuss in detail while presenting

Future Steps
S.No. 1 STEP Scope of Marketing Logistics DATE 15th Nov

2
3 4

System Elements of Logistics

Advantages of Efficient MarketingLogistics System Planning Principles and Process

24th Nov
24th Nov 2nd Dec

Marketing Logistic System Model

20th Dec (6th Term Beginning)

20th Dec 20th Dec

6 7

Role of Modern Distribution Channels Final Presentation

 The development of interest in logistics after industrial

revolution and world war II contributed to the growth in scope of logistical activities. The following areas are the major scope of logistics: Demand forecasting Distribution communication Inventory Control Material Handling Order Processing Part & Service Support Plant and Warehouse side selection Procureme

Salvage & scrap disposal Traffic & transportation Warehousing & Storage Time & Place Utility Efficient Movement to Customer Return goods handling Customers Service

 The following are the system elements of

logistics: 1. Order processing 2. Warehousing 3. Inventory control 4. Transportation 5. Information monitoring 6. Facilities

References
Effective Marketing Logistics book by Graham

Buxton
Basics of Distribution Management A Logistical

Approach - book by Sastish K. Kapoor and Purva Kansal Collaboration in the Supply Chain journal by Alexander E. Ellinger Management - Pierre David, Biztantra 2003

Improving Marketing/Logistics Cross-Functional

International Logistics Marketing & Supply Chain

http://www.splogistics.info/2011/01/marketing-

 Martin Christopher Logistics & Supply Chain!

THANK YOU

Questions?