Term
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Definition
| Planning, implementing, and controlling the physical flows of materials and final goods from points of origin to points of use to meet customers’ needs at a profit. Also termed supply chain management. The underlying principle emphasized is the building of strong cooperation among channel members through effective interorganizational management. |
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Term
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Definition
| The movement of the right amount of the right products to the right place at the right time is the essence of the role of logistics in the marketing channel. |
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| Efficient Consumer Response (ECR) |
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Definition
| An initiative by the grocery industry to improve the logistics of food distribution from farm to consumer. |
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Term
| Logistics Systems, Costs, and Components |
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Definition
| This includes transportation, materials handling, inventory control, warehousing, and packaging of goods. Decisions or actions affecting one component could have implications for other components of the logistical system. Those in charge of managing logistics seek to find the optimum combination of basic logistics components (transportation, materials handling, order processing, inventory control, warehousing, and packaging) to meet customer service demands. |
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Term
| In a commercial or profit-making context, the logistics manager attempts to achieve this. |
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Definition
| The desired level of customer service at the lowest cost by applying the concept of the total cost approach. This is a logical extension of the systems concept because it addresses all the costs of logistics taken together, rather than the cost of individual components taken separately, and seeks to minimize the total cost. Consequently, when designing a logistics system, a company must examine the cost of each component and how it affects other components. |
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Term
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Definition
| This is often the component accounting for the highest percentage of the total cost of logistics. Decisions in this area require specialized knowledge and expertise not only of logistics systems but also of the specialized needs of the industry involved and of the latest technologies available. |
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Term
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Definition
| This encompasses the range of activities and equipment involved in the placement and movement of products in storage areas. Issues that must be addressed when designing these systems include: how to minimize the distances products are moved within the warehouse during the course of receiving,storage, and shipping; what kinds of mechanical equipment should be used; and how to make the best use of labor involved in receiving, handling, and shipping products. |
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Definition
| The importance of this area of logistics lies in its relationships with order cycle time, which is the time between when an order is placed and when it is received by the customer. |
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Term
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Definition
| This refers to the firm’s attempt to hold the lowest level of inventory that will still enable it to meet customer demand. Average inventory carrying costs rise in direct proportion to the level of inventory, while average ordering costs decrease in rough proportion to the size of the order. Thus, a trade-off must be made between these two costs to find the optimum levels for both. This point, called the economic order quantity (EOQ) occurs at the point at which total costs (inventory carrying costs plus ordering costs) are lowest. |
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Term
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Definition
| The storage component of a logistics system – is concerned with the holding of products until they are ready to be sold. This involves several key decisions, such as (1) the location of warehouse facilities, (2) the number of warehousing units, (3) the size of the units, (4) the design of the units including layout and internal systems, and (5) the question of ownership. |
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Term
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Definition
| This area and the costs associated with it are relevant as a component of the logistics system because packaging can affect the other components, and vice-versa. Packaging is far more than a promotional device for fostering product differentiation and attracting consumer attention. Packaging has an important logistics dimension that can make a significant difference in the effectiveness and efficiency of the logistics system. |
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Term
| Nine categories of logistics service standards include: |
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Definition
1. Time from order receipt to order shipment
2. Order size and assortment constraints
3. Percentage of items out of stock
4. Percentage of orders filled accurately
5. Percentage of orders filled within a given number of days from receipt of the order
6. Percentage of orders filled
7. Percentage of customer orders that arrive in good condition
8. Order cycle time (time from order placement to order delivery
9. Ease and flexibility of order placement |
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Term
| Four Key Areas of Interface between Logistics and Channel Management |
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Definition
1. Defining the Logistics Service Standards that Channel Members want
2. Making sure that the proposed logistics program designed by the manufacturer meets the channel member service standards
3. Selling channel members on the logistics program
4. Monitoring the results of the logistics program once it has been instituted. |
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Term
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Definition
| is subsidiary to the broader area of channel management. |
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Term
| Channel Management is involved with the administration of these four major channel flows |
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Definition
| product flow, negotiation flow, ownership flow, information flow, and promotion flow |
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Term
| Logistics is concerned mainly with which of the four major channel flows? |
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Definition
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| Why channel management and logistics are interdependent |
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Definition
| Because a well-designed and administered marketing channel cannot exist without an efficient flow of products to the channel members and final target markets, in the right quantities and at the right times and places. Channel management and logistics management go together to provide effective and efficient distribution. This requires good coordination. |
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Term
| Defining Logistics Service Standards |
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Definition
| In general, the higher the standards, the higher the cost will be. Costs must be covered either indirectly in the price it charges, or by passing them along to channel members in the form of service charges. The key issue is to determine precisely the types and levels of logistics service desired by the channel members. To do this effectively, the channel manager need to obtain channel members’ views about what kind of standards they want before the manufacturer develops the logistics program. |
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Term
| 3. Selling the Channel Members on the Logistics Program |
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Definition
1. Minimizing Out-of-Stock occurrences
2. Reducing Channel Member Inventory Requirements
3. Strengthening the Manufacturer-Channel Member Relationship |
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Term
| 4. The most effective way of monitoring |
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Definition
| To conduct a survey of a sample of channel members. |
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