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LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 16, YOU SHOULD BE ABLE TO: Recognize the relationship between marketing channels, logistics, and supply chain management. LO1 Describe how a company’s supply chain aligns with its marketing strategy. LO2 16-2

Describe the key logistics functions in a supply chain. LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 16, YOU SHOULD BE ABLE TO: Identify the major logistics cost and customer service factors that managers consider when making supply chain decisions. LO3 LO4 Describe the key logistics functions in a supply chain. 16-3

ACER USES ADVANCED SUPPLY CHAIN TECHNOLOGY TO SERVE CUSTOMERS IN EUROPE 16-4

Recognize the relationship between marketing channels, logistics, and supply chain management. 5

SIGNIFICANCE OF SUPPLY CHAIN AND LOGISTICS MANAGEMENT KEY CONCEPTS Cost-Effective Flow Customer Requirements = Service 16-6

SIGNIFICANCE OF SUPPLY CHAIN AND LOGISTICS MANAGEMENT KEY CONCEPTS Supply Chain Management 16-7

FIGURE 16-1 Relating logistics management and supply chain management to supplier networks and marketing channels 16-8

SIGNIFICANCE OF SUPPLY CHAIN AND LOGISTICS MANAGEMENT KEY CONCEPTS FIGURE 16-2 The automotive supply chain includes thousands of firms that provide the 5,000 or so parts in a typical car 16-9

Describe how a company’s supply chain aligns with its marketing strategy. LO2 10

SUPPLY CHAIN MANAGEMENT AND MARKETING STRATEGY LO2 Aligning a Supply Chain with Marketing Strategy Understand the Customer Understand the Supply Chain Harmonize the Supply Chain with the Marketing Strategy 16-11

SIGNIFICANCE OF SUPPLY CHAIN AND LOGISTICS MANAGEMENT SUPPLY CHAIN MANAGEMENT AND MARKETING STRATEGY Aligning a Supply Chain with Marketing Strategy Dell: A Responsive Supply Chain Wal-Mart: An Efficient Supply Chain 7-Eleven: Effective Use of Information Technology 16-12

Identify the major logistics cost and customer service factors that managers consider when making supply chain decisions. LO3 13

INFORMATION AND LOGISTICS MANAGEMENT IN A CUSTOMER-DRIVEN SUPPLY CHAIN Information’s Role in Supply Chain Responsiveness and Efficiency Electronic Data Interchanges (EDIs) Extranet 16-14

INFORMATION AND LOGISTICS MANAGEMENT IN A CUSTOMER-DRIVEN SUPPLY CHAIN Total Logistics Cost Concept Customer Service Concept 16-15

FIGURE 16-3 How total logistics cost varies with the number of warehouses used based on inventory costs and transportation costs 16-16

FIGURE 16-4 Supply chain managers balance total logistics cost factors against customer service factors 16-17

Time Lead Time Quick Response Efficient Consumer Response INFORMATION AND LOGISTICS MANAGEMENT IN A CUSTOMER-DRIVEN SUPPLY CHAIN CUSTOMER SERVICE FACTORS LO3 Time Lead Time Order Cycle Time Replenishment Time Quick Response Efficient Consumer Response

Dependability Communication Convenience INFORMATION AND LOGISTICS MANAGEMENT IN A CUSTOMER-DRIVEN SUPPLY CHAIN CUSTOMER SERVICE FACTORS LO3 Dependability Communication Convenience 16-19

INFORMATION AND LOGISTICS MANAGEMENT IN A CUSTOMER-DRIVEN SUPPLY CHAIN CUSTOMER SERVICE STANDARDS LO3 16-20

Out-of-Stock (%) and On-Time-Delivery (%) USING MARKETING DASHBOARDS Diagnosing Out-of-Stocks and On-Time Delivery for Organic Produce Out-of-Stock (%) and On-Time-Delivery (%) 16-21

Describe the key logistics functions in a supply chain. 22

KEY LOGISTICS FUNCTIONS IN A SUPPLY CHAIN TRANSPORTATION LO4 Third-Party Logistics Providers Service Criteria Costs Dependability Time Accessibility Capability Frequency 16-23

FIGURE 16-5 Advantages and disadvantages of five modes of transportation 16-24

KEY LOGISTICS FUNCTIONS IN A SUPPLY CHAIN TRANSPORTATION LO4 Railroads Intermodal Transportation Piggy-Back or Trailer on Flatcar (TOFC) Containers 16-25

KEY LOGISTICS FUNCTIONS IN A SUPPLY CHAIN TRANSPORTATION LO4 Motor Carriers Air Carriers and Express Companies Freight Forwarders/ Express Companies 16-26

KEY LOGISTICS FUNCTIONS IN A SUPPLY CHAIN TRANSPORTATION LO4 Pipelines Water 16-27

KEY LOGISTICS FUNCTIONS IN A SUPPLY CHAIN WAREHOUSING AND MATERIALS HANDLING LO4 Storage Warehouses Distribution Centers Materials Handling 16-28

KEY LOGISTICS FUNCTIONS IN A SUPPLY CHAIN ORDER PROCESSING LO4 Order Processing Backorder EDI/EFT 16-29

KEY LOGISTICS FUNCTIONS IN A SUPPLY CHAIN INVENTORY MANAGEMENT LO4 Reasons for Inventory Inventory Costs Capital Costs Storage Costs Inventory Service Costs Risk Costs 16-30

KEY LOGISTICS FUNCTIONS IN A SUPPLY CHAIN INVENTORY MANAGEMENT LO4 Supply Chain Inventory Strategies Just-in-Time (JIT) Concept Vendor-Managed Inventory (VMI) 16-31

CLOSING THE LOOP: REVERSE LOGISTICS 16-32