Chapterfo

unda

tions

of ChapterM A R K E T I N G

Supply Chain and Logistics Management

17

Chapter

Objectives

1. Relate the supply chain management to the other variables of the marketing mix.

2. Explain the role of supply chain and logistics management in an effective marketing strategy.

3. Describe the objectives of logistics.4. Identify and compare the major components of the logistics

system.5. Discuss some of the basic concepts involved in making

transportation decisions.6. Relate the major transportation alternatives to such factors

as efficiency, speed, dependability, and cost.7. Discuss the problem of suboptimization in logistics.

Supply Chain and Logistics Management 17

17-1

Chapter

Supply Chain

• A network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers.

Supply Chain and Logistics Management 17

17-2

Chapter

A Simple Supply Chain

Supply Chain and Logistics Management 17Figure 17.1

17-3

LegendMaterial flow/ Raw materials Manufacturing Distribution Retailers/transportation supplier plant centre customers

downstream

upstream

Chapter

Supply Chain Management (SCM)

• The systematic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole.

Supply Chain and Logistics Management 17

17-4

Chapter

Logistics

• That part of the supply chain process that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers’ requirements.

Supply Chain and Logistics Management 17

17-5

Chapter

Logistics• Customer service

– What level of customer service should be provided?• Transportation.

– How will the products be shipped?• Materials handling and protective packaging.

– How do we develop efficient methods of handling products in the factory, warehouse, and transport terminals?

• Order Processing– How should orders be handled?

• Inventory control– How much inventory should be maintained at each location?

• Warehousing– Where will the products be located? – How many warehouses should be used?

Supply Chain and Logistics Management 17

17-6

Chapter

Total-Cost Approach

• Holds that relevant factors in physically moving and storing products should be considered as a whole and not individually.

Supply Chain and Logistics Management 17

17-7

Chapter

Suboptimization

• A condition in which the manager of each physical distribution function attempts to minimize costs, but due to the impact of one physical distribution task on the others, the results are less than optimal.

Supply Chain and Logistics Management 17

17-8

Chapter

Cost Tradeoffs

• Approach that assumes that some functional areas of the firm will experience cost increases while others will have cost decreases.

Supply Chain and Logistics Management 17

17-9

Chapter

Logistics Concept

• The integration of the total-cost approach, the avoidance of suboptimization, and the use of cost tradeoffs.

Supply Chain and Logistics Management 17

17-10

Chapter

Logistics Management: The Systems Concept and the Total-Cost Approach

Supply Chain and Logistics Management 17Figure 17.2

17-11

Transportation

Materials Handling

Order processing

Inventory control

Warehousing

Packaging

Management viewsLogistics as a system of Interrelated components

Systems Concept

Basic Components of a Logistics System

Total-Cost Approach

Management attemptsto minimize the costof using the components taken as a whole

Source: From Marketing Channels; A Management View, 6th ed., by Bert Rosenbloom, p 404. Copyright © 1999. Reprinted with permission of South-Western, a division of Thomson Learning: www.thomsonrights.com. Fax 800-730-2215.

Chapter

Third-Party Logistics Provider

• Specialist firm that performs virtually all of the logistical tasks that manufacturers or other channel members would normally perform themselves.

Supply Chain and Logistics Management 17

17-12

Chapter

Classes of carriers

• Common

• Contract

• Private

Supply Chain and Logistics Management 17

17-13

Chapter

Common Carrier

• Transportation carrier that provides service to the general public, and is subjected to regulatory authority including fee setting.

Supply Chain and Logistics Management 17

17-14

Chapter

Contract Carrier

• Transportation carrier that serves only customers it has contracts with. Contracts include rates to be charged.

Supply Chain and Logistics Management 17

17-15

Chapter

Private Carrier

• Transportation carrier that provides transportation services for a particular firm and may not solicit other transportation business.

Supply Chain and Logistics Management 17

17-16

Chapter

Economic Order Quantity (EOQ)

• A model that emphasizes a cost tradeoff between inventory holding costs and order costs.

Supply Chain and Logistics Management 17

17-17

Chapter

The EOQ Model

Supply Chain and Logistics Management 17Figure 17.3

17-18

Inventory Holding Cost per Unit

Co

sts

0

Total Cost

Quantity of Units

Order Cost per Unit

Chapter

Just in Time (JIT)

• An approach to minimizing inventory costs through identify minimal inventory levels and arranging with suppliers to replenish stocks just in time to be used in production.

Supply Chain and Logistics Management 17

17-19

ChapterSupply Chain and Logistics Management 17

17-20

Protective Packaging and Materials HandlingUnitization

• Combining as many packages as possible into one load.

Containerization

• Combining several unitized loads.

Chapter

Distribution Warehouse

• Designed to assemble and then redistribute products.

Supply Chain and Logistics Management 17

17-21

Chapter

Break-Bulk Warehouse

• Receives consolidated shipments from a central distribution centre, and then distributes them in smaller shipments to individual customers in more limited areas.

Supply Chain and Logistics Management 17

17-22

Chapter

Storage Warehouse

• Stores products for moderate to long periods of time in an attempt to balance supply and demand for products and purchasers.

Supply Chain and Logistics Management 17

17-23

Chapter

Freight Forwarder

• Wholesaling intermediary that specializes in international logistics.

Supply Chain and Logistics Management 17

17-24

Chapterfo

unda

tions

of ChapterM A R K E T I N G

Thank you for using our slides!

Logon ‘www.tactguys.com’ & enjoy more and more…