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