Mark 3000 1st Edition Lecture 19 Outline of Last Lecture I Marketing Strategy II Steps of the Marketing Plan Outline of current lecture I Supply chain management II Elements of Logistics III Trends in supply chain management IV Relationships of logistics to marketing mix Current Lecture Supply Chain management Integration of suppliers manufacturers warehouses stores and transportation intermediaries into a seamless operation to get the product in the right place in right quantities at right time and at the right price 1 Channel management the set of approaches and techniques firms employ to efficiently and effectively integrate their suppliers 2 Logistics management physical movement of goods and information from point of raw material supply to point of consumption Objectives of Logistics To give the customer channel member or consumer the needed level of customer service at the lowest cost Can be measured in terms of 1 Order cycle time how long it takes for the order to be filled 2 Order Accuracy how accurate the orders are 3 Flexibility terms of flexibility in orders 1 Ex If I usually get delivery on Thursdays but this week I need the goods on Tuesdays will the supplier be flexible enough to satisfy my need 4 Information the degree of information the supplier has about the products Elements of Logistics These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute 1 Sourcing and Procurement Obtain the needed supplies in right quantity at lowest cost a Also look at developing long term relationships with suppliers 2 Transportation Means of getting the goods from point A to point B a Railroads most used form of transportation for goods in the US i Can be very fast but overall slower than motor carriers b Motor Carriers include 18 wheelers and trucks i Used to get the goods from the railroads and transfer it over to retail stores ii Faster than railroads c Pipelines mainly used for gasoline products d Water Used for international shipping of goods e Airways Efficient for high value items that are light in weight i Very expensive so only worth it for high value items ii Not very efficient if the product is only being shipped short distances 3 Inventory control Maintaining the correct amounts of inventory a Goal is to meet product availability standards while keeping costs low b Push inventory based on historical forecasts results in consistent inventory levels i Easier to manage ii Works well for items with little variation in demand c Pull Inventory Orders based upon real time sales data i More likely to have what customer wants Requires more flexibility ii Just in time inventory Designed to deliver less merchandise on a more frequent basis than traditional inventory stems 1 Firm gets inventory just it time for it to be used or sold 2 It reduces lead time and also increases product availability 3 Leads to a lower inventory investment 4 Order processing system for easily receiving orders and accurately and quickly filling them a Vendor Managed Inventory Manufacturer is responsible for maintaining retailer s inventory levels in each of its store by using real time sales data b Electronic Data Interchange computer to computer exchange of business documents from a retailer to a vendor and store on that day i For each item a pick ticker and shipping label is created 1 Pick ticket document or display on a screen in a forklift truck indicating how much of each item to get from specific areas 5 Storing and sorting of the goods a Warehouses are responsible for receiving sorting storing finding and getting the goods ready for shipment b Ticketing and marketing c Increasingly firms are forcing suppliers to ship floor ready merchandize Trends in Supply chain management RFID Radio Frequency Identification Tags Tiny computer chips that automatically transmit to special scanner all the information about a containers contents of individual products Outsourcing of Logistic functions Outsourcing the logistics functions to other firms in order to improve efficiency Electronic distribution Using technology to distribute the goods Relationship of logistics to marketing mix Product characteristics can significantly impact logistics costs Logistics must be aware of upcoming promotions Effective logistics can reduce prices and or increase revenue