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LOGISTICS MANAGEMENT

MARKETING CHANNELS

LOGISTICS AND SUPPLY CHAIN


MANAGEMENT

Asst. Prof. Dr. Gül Denktaş


Şakar
To start with….
“Logistics and supply chain management are
not new ideas. From the building of the
pyramids to the relief of hunger in Africa, the
principles underpinning the effective flow of
materials and information to meet the
requirements of customers have altered a
little”

Martin Stopford
Before discussing the supply chain
management concept, we need to
understand the marketing channels…
• “sets of interdependent organizations involved
in the process of making a product or service
available for use or consumption.”

• Ownership channel
– Manufacturers
– Wholesalers
– Retailers
Relationship of Logistics to
Marketing and Production

LOGISTICS
Sample
activities: MARKETING
PRODUCTION/ •Transport Interface Sample
OPERATIONS • Inventory
Interface activities: activities:
Sample activities: • Order • Customer
• Quality control activities: • Promotion
• Product processing service • Market
• Detailed production
scheduling • Materials standards research
scheduling • Plant • Pricing
• Equipment maint. handling • Product
location • Packaging
• Capacity planning mix
• Purchasing • Retail • Sales force
• Work measurement
location management
& standards

Production-
logistics Marketing-
interface logistics
interface

Internal Supply Chain


Five Business Systems - Tightly Interconnected
Within The Organization
Manageme

}
nt Systems Strategic Product Process
Decisions Design Design
Decisions Decisions
Engineering
Measuremen Systems

}
t Decisions
Product
Decisions
Reward
Decisions Price
Decisions
Promotion
Decisions
Marketin
g
Place (How,

{ }
where, how Systems
much)

Production
Inventory Capacity
Decisions Decisions

Logistics Transportation Production


Manufacturin
Scheduling
Systems Decisions
Decisions g Systems

Sourcing Shop Floor


Decisions Decisions
Relationship of Logistics to Marketing

Product
Marketing

Promotion
Price

Place-Customer
service levels

Transport
Logistics

Inventory
carrying costs costs

Lot quantity Warehousing


costs Order processing costs
and information
costs
Marketing Channels

• Negotiations channel
– Buy and sell agreements are reached
• Financing channel
– Payments for goods
• Promotions channel
– Promoting a new or existing product
• Logistics channel
– Moving and storing product
throughout the channel
Channel Intermediaries/
Facilitators
• Ownership channel
– Banks, public warehouses
• Negotiations channel
– Brokers
• Financing channel
– Banks, insurance companies
• Promotions channel
– Advertising agencies, public relations agencies
• Logistics channel
– Freight forwarders
Main differences between marketing
channels and the supply chain
• Reengineering: While the marketing channel
appears to concentrate on existing products,
the supply chain includes more room for
considering the reengineering of products
and processes.

• With the supply chain concept, it is desirable


to negotiate engineering and design changes
in products to make them more compatible
with the needs of other chain members.
• Inventory management:
• Inventories have shifted from push to pull
systems.
• Push strategy:
– Manufacturers used long production runs to gain
efficiencies of scale
– This minimizes unit costs and optimizing utilization of
their production and distribution assets.

Although the push strategy can strengthen


manufacturer’s profits, it also results in excess
inventory and inefficient supply chain management
Push to pull systems…
• Under the pull scenario, the system listens
to the customer through the retailer,
transmits preferences back up the
information pipeline and quickly responds
with the merchandise demanded.
• The objective across the supply chain is to
reduce the inventory buffer for all trading
partners.
Any strategy that comes to your
mind?
• A postponement strategy aims at delaying
some supply chain activities until customer
demand is revealed in order to maintain both
low system wide cost and fast response.
• Logistics postponement
• Products in semi-finished forms and can be
customized quickly in production facilities
close to customers
SUPPLY CHAIN MANAGEMENT DEFINITION:

Supply chain management (SCM) refers to the


integration of both transportation and logistics into a
seamless flow of physical goods, associated information
and funds as goods move from raw materials sourcing to
the final delivery of final products to consumers.
Some more definitions…..
SCM creates value through each of its steps,
which take place across organizational boundaries
as required by the market.

The supply chain includes all participants in the


transportation and commercial transactions of
trade.
Some more definitions…..
• Supply chain management is
“the systemic, strategic coordination of the
traditional business functions and the tactics
across these business functions within a
particular company and across businesses in
the supply chain, for the purposes of improving
the long-term performance of the individual
companies and the supply chain as a whole.”
What is the difference?
• Supply chain management is a wider concept than
logistics.

• Logistics is essentially a planning orientation and


framework that seeks to create a single plan for the
flow of product and information through a business.

• Supply chain management builds upon this framework


and seeks to achieve linkage and coordination
between the processes of other entities in the pipeline
such as suppliers, customers and the organization
itself.
Evolution of Supply Chain Management

Activity frag
How shipping affects international
logistics and supply chains?
1)During the first stage of supply chain
evolution (fragmentation to physical
distribution), international maritime
industry restricted its activities to sea leg,
concentrating on operating vessels, fleet
scheduling and stowage planning (these
were invisible to the shipper).
How shipping affects international
logistics and supply chains?
2)With the advent of the second stage
(integrated logistics management), the
shipping industry started offer through
IN WHAT
transport WAYS including
services AND HOW? the
development of intermodal transport.
3) The third stage of supply chain
management has seen the shipping
industry becoming more integrated into the
shipper’s supply chain.
Different Supply Chain Configurations
Supply Chain - Major Decisions

Location Decisions

Production Decisions

Inventory Decisions

Transportation Decisions

All 4 decisions mentioned above are interlinked and are


critical to the success of a modern organization. To make a
supply chain successful one needs to take all location,
production, inventory & transportation decisions based on
facts providing concrete trade off between cost & service
Supply Chain Schematic
Successful Supply Chains
have…
• an enterprise-to-enterprise point of
view
• a systems approach across all
organizations in the supply chain
– Companies recognize interdependencies
(coordination)
– Goals and objectives are compatible
SUPPLY CHAIN ELEMENTS
• Supply Chain Design
Strategic • Resource Acquisition
• Long Term Planning (1 Year ++)

• Production/ Distribution Planning


• Resource Allocation
Tactical
• Medium Term Planning (Qtrly,Monthly)

• Shipment Scheduling
Operational • Resource Scheduling
• Short Term Planning (Weekly,Daily)
Globalization of Supply

Chains
Increasing globalization
– Lower priced materials and labor
– Global perspective of companies
– Development of global competition
• Extremely difficult to execute due
to differences
– Cultural, economic, and technological
– Political, spatial, and logistical
How long is the supply chain?
• For many firms, the supply chain extends from their suppliers’
suppliers to their customers’ customers and beyond.

• In the textile and apparel industry, a company like Levi’s may


manage a supply chain consisting of:

• A fiber provider
• A yarn manufacturer
• A textile manufacturer
• A clothing design firm
• A textile launderer
• Distributors
• Retailers
• Firms supplying transportation, information or distribution
services to any of Levi’s partners in the supply chain.
Supply
Chain for
Milk
Products
Supply chain:
structure and tiering
Supply chain can be fairly
complex. The supply
chain for a car
manufacturer includes
hundreds of suppliers,
dozens of manufacturing
plants (for parts) and
assembly plants (for
cars), dealers, direct
business customers,
wholesalers, customers,
and support functions
such as product
engineering and
purchasing.
Barriers to Supply Chain
Management
• Regulatory and political
considerations
• Lack of top management
commitment
• Reluctance to share, or use,
relevant data
• Incompatible information systems
• Incompatible corporate cultures
That’s all for today…

Thanksss

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