UNIT F MANAGEMENT OF DISTRIBUTION, PROMOTION, AND SELLING Summarize management of the distribution process.

2 Marketing logistics Marketing logistics (physical distribution): The tasks involved in managing the physical flow of materials, final goods, and related information to ensure that products are delivered to the right place, at the right time, and in the right quantity to meet customer requirements while generating a profit. –Past logistics managers started with the product in the plant and looked for a way to get it to the consumer. –Currently, logistics managers start with a focus on the marketplace and work backward to the factory and the sources of supply.

3 Marketing logistics (cont.) Supply chain management: The system for coordinating inbound, outbound, and reverse distributions.

4 Marketing logistics (cont.) –Inbound distribution – moving products and materials from suppliers to the factory. Example: fabrics, threads, and elastics shipped to the factory to be used in manufacturing undergarments

5 Marketing logistics (cont.) –Outbound distribution – moving products from the factory to resellers and ultimately to customers. Example: from Jockey to Belk to consumer

6 Marketing logistics (cont.) –Reverse distribution – moving broken, unwanted, or excess products returned by consumers or resellers. Example: A consumer returns a flawed item to the retailer and the retailer then returns it to the manufacturer.

7 Marketing logistics (cont.) The logistics manager –Coordinates the activities of suppliers, purchasing agents, marketers, channel members, and customers –Those activities include forecasting, information systems, purchasing, production planning, order processing, inventory, warehousing, and transportation planning.

8 Importance of logistics Competitive advantage Cost savings Need for improved management of more products Greater distribution efficiency through use of improved information technology Third largest expense for most businesses

9 Major logistics functions 1.Order processing 2.Warehousing a.Storage warehouse: A large building used to store goods for moderate to long periods of time until they can be sold. b.Distribution center: A large, highly automated warehouse designed to receive goods from various plants and suppliers, take and fill orders efficiently, and deliver goods to customers as quickly as possible.

10 Major logistics functions (cont.) 3.Stock handling – receiving, checking, and marking items for sale 4.Inventory management a.Delicate balance between too much and too little stock b.Just-in-time logistics system – shipment of new stock exactly when needed, in exactly the amount needed

11 Major logistics functions (cont.) 5.Transportation a.Choice of carrier is important because customer satisfaction is affected by pricing, delivery performance, and condition of the goods. b.A balance among speed, dependability, availability, cost, and special handling is necessary. c.Transportation modes include truck, rail, air, pipeline, and water. d.Intermodal transportation: Combining two or more modes of transportation. Examples: fishyback, trainship, and airtruck

12 Integrated logistics management The logistics concept that emphasizes teamwork, both inside the company and among all the marketing channel organizations, to maximize the performance of the entire distribution system.

13 Integrated logistics management (cont.) Aspects of integrated logistics management –Cross-functional teamwork: Working together inside the company to coordinate logistics decisions related to marketing, sales, finance, operations, and purchasing to create high market satisfaction at a reasonable cost. –Logistics partnerships: Working with channel partners outside the company to meet goals of efficiency and lower costs while satisfying customers and improving the whole- channel distribution. –Third-party logistics provider (3PL): An independent logistics provider that performs any or all of the functions required to get the client’s product to market. (To send out work to an outside provider to cut costs or to relieve some of the workload is called outsourcing.)