International Logistics Management

Definition- Logistics is the process of planning, implementing,

and controlling the efficient, effective flow and storage of raw
materials, work-in-progress inventory, finished goods, and the
related services and information originating from a firms tiers
of vendors and culminating with its ultimate customers.
Seven Rs - right product, right quantity, right condition, right
place, right time, right customer, right price
Logistics Network

Vendors

Plants

Distribution
Centers

Customers

Vorravee Pattaravongvisut

What
What is
is aa Distribution
Distribution Channel?
Channel?
A set of interdependent organizations
(intermediaries) involved in the process of
making a product or service available for use
or consumption by the consumer or business
user.
Channel decisions are among the most
important decisions that management faces
and will directly affect every other marketing
decision.

Distribution
Distribution Channel
Channel
Functions
Functions
Risk
Risk Taking
Taking

Information
Information

Financing
Financing

Promotion
Promotion

Physical
Physical
Distribution
Distribution

Contact
Contact

Negotiation
Negotiation

Matching
Matching

Consumer
Consumer Marketing
Marketing Channels
Channels &
&
Levels
Levels
Channel Level - A Layer of Intermediaries that Perform Some Work in
Bringing the Product and its Ownership Closer to the Buyer.
Channel 1

Direct
Direct

M
M

CC

Indirect
Indirect

Channel 2
M
M

RR

CC

RR

CC

RR

CC

Channel 3
M
M

W
W

Channel 4
M
M

W
W

JJ

Channel
Channel Behavior
Behavior &
& Conflict
Conflict
The channel will be most effective when:
each member is assigned tasks it can do best.
all members cooperate to attain overall
channel goals and satisfy the target market.
When this doesnt happen, conflict occurs:
Horizontal Conflict occurs among firms at the
same level of the channel.
Vertical Conflict occurs between different
levels of the same channel.
For the channel to perform well, conflict must be
managed.

Types
Types of
of Vertical
Vertical Marketing
Marketing Systems
Systems
Greater

Corporate
Corporate
Common
Common Ownership
Ownership at
at Different
Different
Levels
Levels of
of the
the Channel
Channel

Degree
Degree
of
of
Direct
Direct
Control
Control

Contractual
Contractual
Contractual
Contractual Agreement
Agreement Among
Among
Channel
Channel Members
Members

Administered
Administered
Lesser

Leadership
Leadership is
is Assumed
Assumed by
by One
One or
or
aa Few
Few Dominant
Dominant Members
Members

Vertical
Vertical Marketing
Marketing Systems
Systems
Vertical
Vertical
Marketing
Marketing
Systems
Systems (VMS)
(VMS)

Contractual
Contractual
VMS
VMS

Corporate
Corporate
VMS
VMS

Wholesaler
Wholesaler
Sponsored
Sponsored
Voluntary
VoluntaryChain
Chain

Retailer
Retailer
Cooperatives
Cooperatives

ManufacturerManufacturerSponsored
Sponsored
Retailer
Retailer
Franchise
FranchiseSystem
System

ManufacturerManufacturerSponsored
Sponsored
Wholesaler
Wholesaler
Franchise
FranchiseSystem
System

Administered
Administered
VMS
VMS

Franchise
Franchise
Organizations
Organizations

Service-FirmService-FirmSponsored
Sponsored
Franchise
FranchiseSystem
System

Channel
Channel Design
Design Decisions
Decisions
Analyzing
Analyzing Consumer
Consumer Service
Service Needs
Needs
Setting
Setting Channel
Channel Objectives
Objectives &
& Constraints
Constraints
Identifying
Identifying Major
Major Alternatives
Alternatives

Intensive
Intensive
Distribution
Distribution

Selective
Selective
Distribution
Distribution

Exclusive
Exclusive
Distribution
Distribution

Evaluating
Evaluating the
the Major
Major Alternatives
Alternatives

 Provide a Targeted Level of Customer Service at

the Least Cost.
Maximize Profits, Not Sales.
Higher Distribution Costs/
Higher Customer Service
Levels

Lower Distribution Costs/ Lower

Customer Service Levels

Logistics
Logistics Systems
Systems
Order
OrderProcessing
Processing

Costs
Costs

Submitted
Submitted
Processed
Processed
Shipped
Shipped

Minimize
MinimizeCosts
Costsof
of
Attaining
AttainingLogistics
Logistics
Objectives
Objectives

Logistics
Transportation

Functions

Warehousing
Warehousing
Storage
Storage
Distribution
Distribution

Water, Truck,
Rail,
Pipeline & Air

Inventory
Inventory

When
Whento
toorder
order
How
much
to
How much toorder
order
Just-in-time
Just-in-time

Transportation
Transportation Modes
Modes
Rail
Rail

Nations
Nationslargest
largestcarrier,
carrier,cost-effective
cost-effective
for
forshipping
shippingbulk
bulkproducts,
products,piggyback
piggyback

Truck
Truck

Flexible
Flexiblein
inrouting
routing&&time
timeschedules,
schedules,efficient
efficient
for
forshort-hauls
short-haulsof
ofhigh
highvalue
valuegoods
goods

Water
Water

Low
Lowcost
costfor
forshipping
shippingbulky,
bulky,low-value
low-value
goods,
slowest
form
goods, slowest form

Pipeline
Pipeline

Ship
Shippetroleum,
petroleum,natural
naturalgas,
gas,and
andchemicals
chemicals
from
fromsources
sourcesto
tomarkets
markets

Air
Air

High
Highcost,
cost,ideal
idealwhen
whenspeed
speedis
isneeded
neededor
orto
to
ship
shiphigh-value,
high-value,low-bulk
low-bulkitems
items

Choosing
Choosing Transportation
Transportation
Modes
Modes
Checklist for Choosing
Transportation Modes
1. Speed.
2. Dependability.
3. Capability.
4. Availability.
5. Cost.

Integrated
Integrated Logistics
Logistics Management
Management
Concept Recognizes that Providing Better Customer
Service and Trimming Distribution Costs Requires
Teamwork,
Teamwork Both Inside the Company and Among All
the Marketing Channel Organizations.
Cross-Functional
Cross-Functional Teamwork
Teamwork inside
inside
the
the Company
Company
Building
Building Channel
Channel Partnerships
Partnerships
Third-Party
Third-Party Logistics
Logistics

Supply Chain Activities

Demand Forecasting
Order Processing
Procurement
Plant and Warehouse
Site Location
Warehousing and
Storage
Traffic and
Transportation
Production Planning
Materials Handling
Inventory Control

Customer Service
Industrial Packaging
Distribution
Communications
Return Goods Handling
Parts and Service
Support
Salvage and Scrap
Disposal

Supply Chain Management

SCM entails managing the flow of material and
information in a sequence beginning with supplier
and ending with customers.
For the purpose clarity and transparency the SCM
sequence is often broken up into smaller segments
beginning with inbound logistics (materials
management), followed by operational logistics which
concerns the issues while the goods are being
produced, and ending with outbound logistic
(customer service and distribution channels)

Materials Management
Functions

Materials management concerns the planning and control of

inbound materials, the work-in-process, and the storage of the
finished goods. Typical activities include the following:

Materials planning and

control
Procurement
Transportation
Material receiving
Inbound quality control

Inbound warehousing
Production planning and
control
Outbound quality
control
Outbound warehousing
Salvage and scrap
disposal

Procurement Activities
Needs analysis
Define user
requirements
Make or buy analysis
Identify type of
purchase (rebuy,
modified rebuy, new
buy)
Market analysis on
supply source
Generate supplier list

Prescreen suppliers
Evaluate suppliers
Select supplier
Delivery and
performance
measurement
Performance evaluation

Vendor Selection Criteria

Necessary Criteria
Quality
Reliability
Capability
Financial considerations

Desirable Criteria
Location
Reputation
Training
Support

Final selection of vendors can be facilitated by scoring

vendors based on a factor-based scoring system

Warehousing
Issues in warehousing for inbound raw materials,
sub-assemblies and supplies is similar to issues in
warehousing outbound finished goods warehousing.
They differ primarily in terms of the following:
type of facility used
value of material
perish ability

Production Planning and Control

Demand Forecasting
Production Scheduling- quantities, timing
Resource Allocation
machines
labor
material
budget

Transportation
The transportation activities concern bridging the
spatial and temporal gaps between the vendor and
the firm and the firm and its customers.
Some issue that need to be addressed include:
control
transportation mode
rates and cost analysis
routes
carrier services
claims handling

Receiving and Quality Control

Receiving
Inspection- variance
checking between order
and shipment
Physical damageclaims, legal issues

Quality Control
quality benchmarks
variance measurement
and analysis
statistical quality control

Channels of Distribution
A series of cooperating entities who facilitate the flow
of goods and services from the producer to the end
user. Wholesaler, retailers, producers sales branches,
agents, brokers etc are examples of such entities
Primary benefits include cost efficiencies and
customer convenience
Conventional channel versus Vertical Marketing
System
Intensive, Exclusive and Selective Distribution
Cooperation, conflict and Competition within and
between channels

People
Training Learning - Knowledge
Team Work Cross-Functionality
Buy-in
Management
Workers

Technological
Information Substitution
E-commerce
E-logistics
E-procurement

Materials Substitution
Greener Materials
Packaging Advances

Delivery Mechanisms