When you finish this chapter, you should: Understand why physical distribution (logistics) is such an important part of Place and marketing strategy planning; understand why the physical distribution customer service level is a key marketing strategy variable; understand the physical distribution concept and why it requires coordination of storing, transporting, and related activities;...
Chapter 12: Distribution Customer Service and Logistics For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Chapter 12 Objectives When you finish this chapter, you should 1. Understand why physical distribution (logistics) is such an important part of Place and marketing strategy planning 2. Understand why the physical distribution customer service level is a key marketing strategy variable 3. Understand the physical distribution concept and why it requires coordination of storing, transporting, and related activities. 122 4. See how firms can cooperate and share logistics activities to improve value to the customer at the end of the channel 5. Know about the advantages and disadvantages of the various transporting methods 6. Know how inventory decisions and storing affect marketing strategy 7. Understand the distribution center concept 8. Understand the important new terms For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Understanding Physical Distribution Total Cost of PD Costs ($) Inventory Cost Lost Sales Transporting Cost 0 90% Customer Service Level Exhibit 121 123 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Coordinating Logistics Activities ???? ???? ???? ???? ???? 124 Sharing and Shifting Reducing Conflict JIT Chain of Supply Better Information-EDI and Internet For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Transporting Function Rail Truck Modes of Transportation Air Pipeline 125 Water For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Storing Function Price Stability Flexibility Costs Specialized Function 126 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Comparing Private and Public Warehouses Type of warehouse Characteristics Public Private Fixed Investment Very high No fixed investment High if volume is low Very low if volume is very high Low High Low managerial control Adequacy Highly adequate May not be convenient Flexibility Low High Unit Cost Control Exhibit 126 127 For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Key Terms Physical Distribution (PD) Logistics Customer Service Level PD Concept Total Cost Approach Chain of Supply Electronic Data Interchange Transporting Pool Car Service Diversion in Transit 128 Containerization Piggyback Service Freight Forwarders Storing Inventory Private Warehouses Public Warehouses Distribution Center JIT For use only with Perreault and McCarthy texts © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill ... McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill The Transporting Function Rail Truck Modes of Transportation Air Pipeline 12 5 Water For use only with Perreault and McCarthy texts © The McGraw-Hill... storing, transporting, and related activities. 12 2 4. See how firms can cooperate and share logistics activities to improve value to the customer at the end of the channel 5. Know about the advantages ... Low managerial control Adequacy Highly adequate May not be convenient Flexibility Low High Unit Cost Control Exhibit 12 6 12 7 For use only with Perreault and McCarthy texts © The McGraw-Hill