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Marketing logistics (physical distribution) involves planning, implementing, and controlling the physical flow of goods, services, and related information from points of origin to points of consumption to meet consumer requirements at a profit
Outbound distribution: Moving products from the factory to resellers and consumers Inbound distribution: Moving products and materials from suppliers to the factory Reverse distribution: Moving broken, unwanted, or excess products returned by consumers or resellers
managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers
Importance of logistics
Competitive advantage by giving customers better service at lower prices Cost savings to the company and its customers Product variety requires improved logistics Information technology has created opportunities for distribution efficiency
minimize costs.
Firms must first weigh the benefits of higher service
Logistics objective
Getting the right goods at the right place at the
Order Processing
Transportatio n
Functions
Warehousing
Inventory
ORDER PROCESSING
The starting point of physical distribution activities is the processing of customers orders. In order to provide quicker customer service, the orders received from customers should be processed within the least possible time. Order processing includes receiving the order, recording the order, filling the order, and assembling all such orders for transportation, etc.
FUNCTIONS
1. Order planning: designing and efficient order
handling system.
2. Order transmittal: a series of events that occur
between the customer order and firm receive the orders. 3. Order handling: recording of transaction then allocation of product at time specified.
4. Order picking and assembly: giving
of products
7. Shipping scheduling: determine the time when the order is to take place.
8. Order editing and modification: modify the order according to requirement of the customer
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warehousing
Meaning : it is the act of holding the goods until the customer is ready to buy them. it is a place where surplus goods can be kept for future use.
Storage warehouses are designed to store goods, not move them Distribution centers are designed to move goods, not store them Automated warehouse are designed to move and store the goods both.
Functions
1.
2.
3. 4. 5.
Classification of warehouse
1.
Utility criteria
a.) product
- Explosive store house and magazine - FOL depots with storage tankers - secured warehouse
ownership
a.) govt warehouse b.) private warehouse c.) public warehouse d.) cooperative warehouse
IMPORTANCE OF WAREHOUSING
Helps in financing the trade Removes the urgency of paying custom duty
Transportation
Transportation is the main artery of logistics and supply chain management. It refers to movement
TRANSPORTATION
Rail Nations largest carrier, cost-effective for shipping bulk products, piggyback Truck Flexible in routing & time schedules, efficient for short-hauls of high value goods Water Low cost for shipping bulky, low-value, non-perishable goods, slowest form Pipeline Ship petroleum, natural gas, and chemicals from sources to markets Air High cost, ideal when speed is needed or distance markets have to be reached
ADVANTAGES
Reduction in transit time for minimisation of
inventory cost. Less damages, en route handling and pilferages for minimum insurance charges. Curtailment of protective packaging costs. Availiability of point to point information regarding the status of the shipment.
It provides protective storage during transit. It ensures cost efficient better customer services. It creates core competency by preventing stock outs. It ensure speedier and timely physical movement of
goods
from
point
of
inseption
to
point
of
consumption.
Three factors are fundamental to transportation performance: (1) cost, (2) speed, (3) consistency.
INVENTORY CONTROL
the inventory decisions which hold the key to success of physical distribution especially where
Kinds of inventory
Raw materials,
Inventory management balances carrying too little and too much inventory Just-in-time logistics systems RFID Just-in-time logistics systems allow producers and retailers to carry small amounts of inventories of parts or merchandise
RFID (radio frequency identification devices) are small transmitter chips embedded in or placed on products or packages to provide greater inventory control
and finished goods Replenishment policy (just in time, push or pull strategies) Inventory cost Product price at stocking price Number ,location and size of stocking policy Approach towards safety stock , reorder point and lot size
The reasons for inventory control are: Helps balance the stock as to value, size, color, style, and price line in proportion to demand or sales trends. Help plan the winners as well as move slow sellers Helps secure the best rate of stock turnover for each item. Helps reduce expenses and markdowns. Helps maintain a business reputation for always having new, fresh merchandise in wanted sizes and colors.
STEP 1: Inventory Planning STEP 2: Establish order cycles STEP 3: Balance Inventory Levels STEP 4: Review Stocks STEP 5: Follow-up and Control
Storage
Issue of material
Models
1. EOQ model: cost of placing and receiving an order
are the same for each other and independent of the no. of units ordered
total costs = (no of order*cost per order)+(average inventory * annual carrying cost per unit)
5. ABC classification: the maintaining appropriate control according to the saving associated with proper level of control. This approach is a means of categorising inventory items into A,B and C acc. to potential amount of control 6. FSN classification: Items are classified according to their assumption pattern. It is fast moving, slow moving and non moving.
Reorder point should balance the risks of stockouts against costs of overstocking Company needs to balance ordering costs vs inventory carrying costs
inventory
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