Chapter 12: Logistics, Distribution and Customer Service.

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Presentation transcript:

Chapter 12: Logistics, Distribution and Customer Service

Coordinating Logistics Activities Better Information-EDI and Internet Chain of Supply JIT Reducing Conflict Sharing and Shifting 12-4

Transportation Transportation - marketing function of moving goods (330). For low value to weight products, transportation costs are very high

Full Car Loads Full Car Load - if we have a full car (truck, trail car, etc…) then the time to handle transportation/delivery falls a lot. Containerization (328) & Freight Forwarders (329) BOTH help to achieve full car loads and lower transportation costs

The Transporting Function 12-5 Modes of Transportation Water Air Rail Truck Pipeline

The Storing Function Price Stability Flexibility Costs Specialized Function 12-6

Storing & Inventory Storing - marketing function of holding goods (330) Inventory - amount of goods being stored (330). Holding Inventory can be very costly. Finance Cost Example - Car dealer has 150 cars on the lot, each costs the dealer $15,000. This is $2,250,000 in inventory. If the interest rate is 12%, the annual cost of holding inventory is $22,500. Also, have costs of damage, theft and getting obsolete

Exhibit 12-8 Comparing Private and Public Warehouses Adequacy Control Fixed Investment Characteristics Private Highly adequate High Very high Flexibility Low Public May not be convenient Low managerial control No fixed investment High Type of warehouse Unit Cost High if volume is low Very low if volume is very high Low

Just In Time Can Lower Inventory Storage Costs Can Lower Handling Costs Stockout Costs Go Up Total Distribution Costs May Go Up or May Go Down