DISTRIBUTION

STRATEGIES
Functions, logistics and their
functions
 Table of
CONTENTS
01 02 03 04
Nature of Importance of Goals of logistics Major logistics
marketing logistics marketing logistics system functions

4A 4B 4C 4D
Order processing Warehousing Inventory Transportation
management
 Marketing logistics-
also called physical distribution-involves planning,
implementing, and controlling the physical flow of goods,
services, and related information from points of origin to

Nature
points of consumption to meet customer requirements at a
profit.

of logistics
It involves getting the right product to the right customer in
the right place at the right time.

(INVOLVES THE ENTIRE SUPPLY CHAIN MANAGEMENT-

MANAGING UPSTREAM AND DOWNSTREAM).
Marketing logistics involves not only outbound distribution (moving
products from the factory to resellers and ultimately to customers)
but also inbound distribution (moving products and materials from
suppliers to the factory) and reverse distribution (moving broken,
unwanted, or excess products returned by consumers or resellers).
Importance
of
logistics
CUSTOMER
SATISFACTION
Customer service and satisfaction have
become the cornerstones of marketing
strategy in many businesses, and distribution
is an important customer service element.
Companies are finding that they can win and
keep more customers by giving faster
delivery, better service or lower prices through
more effective logistics. On the other hand,
companies may lose customers when they fail
to supply the right products on time
COST
ELEMENT
Logistics is a major cost element for most
companies. About 15 per cent of an average
product's price is accounted for by shipping
and transport alone. Companies that do not
take advantage of modern decision tools for
coordinating inventory levels, transportation
modes, warehouse and store locations make
poor logistics decisions that result in higher
costs. Improvements in physical distribution
efficiency can yield tremendous cost savings
for both the company and its customers.
PRODUCT
VARIETY
The explosion in product variety has created a
need for improved logistics management.
Earlier, the product variety was limited. But
Today, the average store carries a bewildering
stock of thousands of items. Ordering,
shipping, stocking and controlling such a
variety of products presents a sizeable
logistics challenge.
INFORMATION
TECHNOLOGY
Finally, developments in information
technology have created opportunities for
positive gains in distribution efficiency. The
increased use of computers, electronic point-
of-sale scanners, uniform product codes,
satellite tracking, electronic data interchange
(EDI) and electronic funds transfer (EFT) has
allowed companies to create advanced
systems for order processing, inventory
control and handling, and transportation routing
and scheduling levels and needs, and can
respond faster than by using traditional manual
methods
GOALS OF MARKETING LOGISTICS
The starting point for designing a
marketing logistics system is to
study the service needs of
customers. They may want
several distribution services from
suppliers: fast and efficient order
processing, speedy and flexible
delivery, presorting and
protagging ot' merchandise,
order-tracking Information, and a
willingness to take back or
replace defective goods
Unfortunately, few companies can
achieve the logistic objective of
both maximizing customer service
and minimizing distribution costs.
Maximum customer service
implies rapid delivery, large
inventories, flexible assortments,
liberal returns policies all of which
raise distribution costs. In
contrast, minimum distribution
cost implies slower delivery, small
inventories and larger shipping
lots - which represent a lower
level of overall customer service.
Instead, the goal of the marketing
logistics system should be to
provide a targeted level of
customer service at the least cost
by identifying the importance of
various distribution services that
customers require and then setting
desired service levels for each
segment. The ultimate objective is
to maximize profits, not sales.
Therefore, the company must weigh
the benefits of providing higher
levels of service against the costs.
 MAJOR
LOGISTICS
FUNCTIONS
 ORDER
PROCESSING
The logistics process starts with the firm getting an order from the customer. Orders can be submitted
in many ways - by mail or telephone, through salespeople, or via computer and electronic data
interchange (EDI).
Once received, orders must be processed quickly and accurately.
The order-processing system prepares invoices and sends order information to those who need it. The
appropriate warehouse receives instructions to pack and dispatch the ordered items. Products out of
stock are back-ordered. Shipped items are accompanied by shipping and billing documents, with
copies going to various departments. Both the company and its customers benefit when the order-
processing steps are carried out efficiently.
Most companies now use computerized order-processing systems to speed up the order-shipping-
billing cycle. Such modern computing systems enable firms to reduce distribution costs, while
speeding up activities and increasing the level of service to customers.
 WAREHOUSING
Production and consumption cycles
01 rarely match. Hence, most companies
must store their tangible goods while
03
they wait to be sold. The storage
function overcomes differences in
needed quantities and timing, ensuring
that products are available when
customers are ready to buy them.
The more warehouses the company
02 uses,the more quickly goods can he
delivered to customers and the
04
higher the service level. However,
more locations mean higher
warehousing costs.
Storage warehouses can be of two categories-
Public warehouses and owned warehouses
Companies have more control over owned warehouses, but
that adds up their capital and is less flexible to change to
desired locations.
In contrast, public warehouses charge for the rented space
and provide additional services for inspecting, packaging,
shipping and invoicing them. By using public warehouses,
companies also have a wide choice of locations.
Companies may use distribution centres, which are
designed to move goods rather than just store
them. They are large and highly automated
warehouses designed to receive goods from
various plants and suppliers, take orders, fill them
efficiently, and deliver goods to customers as
quickly as possible.
 Managers must maintain the delicate balance between carrying too little
inventory and carrying too much. With too little stock, the firm risks not
having products when customers want to buy. To remedy this, the firm
may need costly emergency shipments or production. Carrying too much
inventory results in higher-than-necessary inventory-carrying costs and
stock obsolescence. Thus, in managing inventory, firms must balance the
costs of carrying larger inventories against resulting sales and profits.

Inventory Many companies have greatly reduced their inventories and related costs
through just-in-time logistics systems. With such systems, producers and

Management retailers carry only small inventory. New stock arrives exactly when
needed, rather than being stored in inventory until being used. Just-in-time
systems require accurate forecasting along with fast, frequent, and flexible
delivery so that new supplies will be available when needed

Marketers are always looking for new ways to make inventory management
more efficient. Handling inventory will soon become fully automated. For
example, RFID or "smart tag" technology, by which small transmitter chips
are embedded in or placed on products and packaging may be used.
 TRANSPORTATION
Transportation decisions have a critical impact on logistics costs. The choice of transportation affects the pricing of
products, delivery performance and condition of the goods when they arrive - all of which will ultimately affect
customer satisfaction. In shipping goods to its warehouses, dealers and customers, the company can choose among
four transportation modes: road, rail, water, and air.

ROAD RAIL WATER AIR

Road transport is most
suitable for carrying
goods of medium bulk
and weigh over short
distances and for
providing point to point
services. It is widely used
for transporting
perishable commodities
like vegetables, fruit, and
milk products.
Rail transport is the best Water transport is most Air transport is most
means of transport for suitable for bulky goods suitable for carrying
carrying bulky goods price which can bear valuable, perishable and
over long distances handling and hazards of less bulky articles like
within the country. Its joumey and when time is gold, jewellery,
speed is higher than road the least consideration. medicines and spare
and water transport parts where speed is the
greatest consideration or
where other means of
transport cannot reach
the particular place
THANK YOU
MADE BY-
ISHIKA GOYAL-22/51051
DIVYANSHI - 22/51038