MARKET LOGISTCS

EXECUTIEVE SUMMARY
This paper aims to study about market logistics and its importance under the
current turbulent market where competition is high in every aspect. We also touch
upon the concept of Supply Chain Management (SCM) and how the market
logistics has evolved into SCM. Finally we see the objectives of market logistics
and how it is linked to marketing plan.

INTRODUCTION
Marketing logistics simply means effective physical distribution of goods and
services. Marketing logistics mainly focus on planning, controlling and monitoring
the flow of products and services to market and also materials and necessary
information which is needed to full fill consumer demands. These demands must
be met, keeping in mind the profit and organization revenue aspect. The whole
process starts from the factory where the product is made. Managers are the ones
who decide on the set of warehouses and transportation options. These decisions
must be made taking into consideration, the final destination and time-cost
constrains. In the present market conditions logistics cover a broader perspective
called as Supply Chain Management (SCM). SCM also include strategically
procuring the right input and converting it to output efficiently. SCM is a strong
concept nowadays and require integration collaboration and coordination across
different industries and supply chains. Thus SCM involves inter-organizational and
intra-organizational integration. Todays highly competitive market demands
efficient and effective logistics. Marketing and market logistics can be merged
together as companies are looking for higher customer satisfaction which can lead
to customer loyalty. There are challenges that must be met as a complete customer
satisfaction and cost efficient package is difficult to be found. Often one is done in
the expense of other. Thus capable managers who are willing to go out of the box
to consider all possible alternatives must be employed for planning. Every business
however small or large comes across these challenges every day. Anyone can put a
product on store for sale but the delivery and services are the factors that often
makes difference.

GOODS DISTRIBUTION
The decisions in distribution area and product area must be in coherent. The
decisions in distribution channel must be made with a clear perspective of product
delivery to stores, type of store, location of store and the form of sales. These
decisions are likely to find solutions for distribution hardships.

Connection between production and sales activities are also taken into
consideration. For example a firm might find direct delivery to the suppliers or
even customers through their own retail stores more profitable since the middle
mens commission is absent in the case. While there may be a situation where a
firm might find it easier to include more middlemen in distribution activities
because of the lack of resources or to reduce the risk of distribution. Thus an
appropriate strategy is made by the key decision makers of the firm depending on
the market environment and condition if the firm itself.

SUPPLY CHAIN MANAGEMENT
Supply chain include the procurement of raw materials, transformation of raw
materials to finished goods and final physical distribution (along with sufficient
feedback). Supply chain management is the integration of all these activities
through improved relationship to attain a competitive advantage. There are 2
subdivisions for SCM namely physical supply and Physical distribution. The
physical supply refers to the time and space gap between companys raw materials
and processing plant while the physical distribution refers to the time and space
gap between processing unit and its customers. This process is pictorially
represented below.

We can take an example of a firm to better understand the working of supply
chain.

Here the inputs are taken and are converted to finished goods in the lever industry
and then these product are transported to warehouse for storage. From warehouse
these products are transported to store for sales.
LOGISTICS DECISION MAKAING
Developing a logistic strategy may be compared to developing a cooperate
strategy. It is widely accepted that logistic strategy has 3 major objectives.
1. Cost Reduction
Minimizing the cost associated with transportation and storage of
goods.
(Warehouse locations and alternative transport methods are generally
taken into account)
2. Capital Reduction
Minimizing the level of assets on logistic systems
Maximizing the return on logistic assets
(Delivering direct to customers to avoid warehousing, choosing public
warehouses more and avoid stocking to inventory approach)
3. Service Improvement
Recognize the importance of logistic service and its impacts on
revenue of the firm
As in any plans the logistic planning also pass through 3 phases namely strategic,
tactical and operational. Four major decisions that should be taken are based on the
following questions.
1. How should we handle orders (Oder processing)
Most companies nowadays are trying to shorten the order to payment cycle.
Thus the elapsed time between order receipt, delivery and payment is
shortened. This leads to improved customer satisfaction and increased
revenue for the firm
2. Where should we locate our stock (warehousing)
Every firm must store their finished goods somewhere since the production
and distribution cycles rarely meet. Higher number of warehouse means
more inventory and thus products can be delivered to consumers at a fast
pace. But more warehouse means more investment for the firm which can
hamper the profit margin of the firm. Thus the warehouses must be carefully
chosen according to the means of transport available and the consumption
pattern of the customers.
3. How much stock should we hold (Inventory)
This is often an important question that needed to be answered particularly
in terms of perishable products. Optimum amount of products that can be
safely stored without compromising in quality is measured and accordingly
decisions are taken. Too much inventory is unnecessary expense for the
firm.

4. How should we ship goods (Transportation)
Transportation of finished goods to warehouses, stores and consumers is the
final process of market logistics decision making. A firm might choose from
the verity of options available like railway, seaway and airway depending on
cost and time constrains. Containerization is extensively used nowadays
since it is possible to ship products in boxes or containers which are easy to
transport between two points.

LOGISTICS AND MARKETING
Marketing and logistics are interrelated and they are often called as a single term
(Marketing Logistics). Logistics are termed as a crucial part of marketing strategy
as they provide a competitive edge. Marketing includes all the activities that have
direct or indirect effect over firms success. Because of the following changes that
happened in the 21
st
century companies are viewing logistics as an important part
of their marketing plan.
Market Differentiation (diversification, individualization of market
segments, products, differentiation of customers needs and
preferences etc.)
Competition in the area of customer benefits and customer service
that enhances customer loyalty.
A shorter product life-cycle
Growth of new technologies in the field of production, storage and
distribution.
Growth of innovativeness and entrepreneurship.
Integration and globalization of markets.



CONCLUSION
Market logistics and supply chain management has become powerful concepts in
the current scenario. An amicable logistic plan is mandatory for a firms success.
Let us consider this with some examples. Amul has grown from a small scale
cooperative society to a big time multinational company. Amul has become Indias
largest food brand and has spread its wings to overseas also. Amul collects its raw
materials from over 2 million milk produces spread all over the country.

There are some global giants who follow the same tread to succeed in the market.
FedEx has hyped their logistics and sincerity for the promotion of the firm. Service
and maintenance is a key factor to retain customer loyalty. Truly loyal customers
are the only consistent costumers who are going to stay with you. It is studied that
95% of the customers are likely to buy the same product if the complaint is
rectified within the time constrain. There is a widely accepted mantra that says in
order to increase the revenue you have to reduce the cost. For this an effective
Supply chain management has to be introduced. For a firm Raw materials,
transportation and warehousing add to the majority of the total cost consumed.
Equation for market logistic cost is given as
M =T +FW +VW +S
M = Total market logistic cost of proposed system
T = Total freight cost of proposed system
FW = Total fixed warehouse cost of proposed system
VW = Total variable ware house cost
S = Total cost of lost sales due to average delivery delay