DISTMAN

• Operational factors


  External factors that may need to be considered when contemplating the international context of modal choice, including infrastructure, trade barriers, export controls, law and taxation, financial institutions, communication systems, culture, and climate
• Customer characteristics


  Factors related to the customer that can affect modal choice, including service level requirements, delivery point constraints, credit rating, terms of sale preference, order size preference, customer importance, and product knowledge
• Physical nature of the product

  Factors related to the product that can affect modal choice, including volume to weight ratio, value to weight ratio, substitutability, and special characteristics like hazard, fragility, perishability, time constraints, and security
• Other logistics components


  Factors related to the company's distribution structure that can affect modal choice, including supply points, production plants, warehouses and storage facilities, depots, marketing plans and policies, supply philosophy, and existing delivery system
• Conventional sea freight


  • Cost economics - economical for bulk goods and large packaged consignments going long distances
  • Availability - can accommodate most cargo types
  • Speed - very slow due to port turnaround time and voyage time
  • Need for double-handling - disadvantaged by slow handling methods
  • Delay problems - pre-shipment delays, delays at discharge port, unexpected delays
• Unit load sea freight


  • Speed - faster than conventional sea freight
  • Reliability - more reliable than conventional sea freight
  • Damage - less damage than conventional sea freight
  • Cost - more expensive than conventional sea freight
• Air freight


  • Speed - fastest mode of freight transport
  • Reliability - very reliable
  • Damage - low risk of damage
  • Cost - most expensive mode of freight transport
• Road freight


  • Flexibility - can deliver door-to-door
  • Speed - faster than sea freight but slower than air
  • Cost - less expensive than air freight
• Rail freight


  • Cost - less expensive than road or air
  • Capacity - can handle large volumes
  • Speed - slower than road or air
• All major modes of transport can be considered for the movement of goods internationally
• The selection of the most appropriate transport mode is a fundamental decision for international distribution and logistics management, the main criterion being the need to balance costs with customer service
• Sea freight


  • Availability - Most types of cargo can be accommodated
  • Speed - Very slow due to slow turnaround time in port and slow voyage time
  • Need for double-handling - Conventional sea freight is disadvantaged by slow handling methods
  • Delay problems - Pre-shipment delays, delays at discharge port, and unexpected delays due to bad weather, missed tides, etc.
  • Damage - More prone to damage for both products and packaging due to double-handling
• Road freight


  • Quick service - Ferry and tunnel schedules can be carefully timed
  • Cost competitive for complete unit loads with single origin and destination
  • Reduced need to double-handle and trans-ship goods
  • Packaging costs can be kept to a minimum
  • Provides regular, scheduled services due to flexibility of road-vehicle scheduling
  • Loses speed advantage for less than lorry-sized loads (LTL)
• Rail freight


  • Prone to severe shunting shocks that can cause damage - Requires costly packaging
  • Need to double-handle many loads as first and last leg is often by road
  • Limited number of railheads available, making direct origin-to-destination journeys rare
  • Very slow, particularly when having to fit around passenger train schedules
  • Unreliable, with batches of wagons arriving at irregular intervals
  • Compatibility issues for international movements due to variations in track gauge, bridge heights, and lack of electrification
• Air freight


  • Very quick airport-to-airport transit times over longer distances
  • Can be slowed by airport congestion, handling, paperwork and customs delays
  • Provides "lead-time economy" - Ability to move goods quickly reduces need for inventory holding
  • Allows for market flexibility by quickly reaching many countries and markets
  • Reduced packaging requirements as consignments are not prone to damage
  • Very expensive compared to other modes, but cost is of little consequence for certain goods
  • Affected by security concerns, leading to growth in all-freight aircraft
• Containers and intermodal systems

  • Enable consolidation of small packages into large single-unit loads
  • Reduce handling of goods from origin to destination
  • Reduce individual packaging requirements
  • Reduce damage to products caused by other cargo
  • Lower insurance charges due to reduced damage potential
  • Reduce handling costs at docks and other modal interfaces
  • Provide quicker turnaround and improved port utilization
  • Deliver faster overall transit times and higher service levels
  • Require special and costly facilities and handling equipment, limiting transfer points
  • High initial cost of containers, though often owned by shipping lines
  • Return of empty containers can be an expensive problem
  • Containers may leak, causing damage due to rain or seawater
• Consignment factors


  • Routing and through transit
  • Distance
  • Type of cargo
  • Quantity
  • Unit load
  • Priority
  • Commodity value
  • Regular shipments
• Cost and service requirements

  The familiar logistics trade-off between cost and service, considering operational factors, transport mode characteristics, and consignment factors
• Speed of delivery and service reliability may override purely economic factors in the choice of transport mode
• International logistics will be influenced by the choice of transport mode
• Marketing channels


  Sets of interdependent organizations involved in the process of making a product or service available for use or consumption
• Channel strategy


  The design and management of intermediaries such as wholesalers, distributors, brokers, and retailers
• Channel design


  The process of creating a distribution channel system that allows a company to efficiently deliver its products or services to customers
• Channel design process


  1. Identifying customer needs and preferences

  2. Assessing strengths and weaknesses of different distribution channels

  3. Selecting the most appropriate channels

  4. Creating a plan for managing and optimizing the channels over time
• Channel types


  • Direct channels
  • Indirect channels
• Direct channels


  Selling through personal contacts from the company to prospective customers by mail, phone, electronic means, in-person visits, and so forth
• Indirect channels


  Selling through third-party intermediaries such as agents or broker representatives, wholesalers or distributors, and retailers or dealers
• Factors for channel design

  • Product information needs
  • Product customization
  • Product quality assurance
  • Purchase lot size
  • Logistics
  • Broad assortment
  • Availability
  • After-sales service
• Manufacturers rarely use only a single type of channel
• Hybrid channel design


  Using multiple channel types
• The risk in designing a hybrid channel system is having too many channels (leading to conflict among channel members or a lack of support), or too few channels (resulting in market opportunities being overlooked)
• The goal is to maximize channel coverage and effectiveness while minimizing channel cost and conflict
• Retailers


  Have the most visible and direct contact with customers and therefore have the greatest opportunity to affect brand equity
• Retailers strive to create their own brand equity by establishing awareness and strong, favorable, and unique associations
• Retailers can have a profound influence on the equity of the brands they sell, especially in terms of the brand-related services they can support or help create
• The interplay between a store's image and the brand images of the products it sells is an important one
• Push strategy


  Manufacturers devote their selling efforts to the channel members themselves, providing direct incentives for them to stock and sell products to the end consumer
• Pull strategy


  Manufacturers devote marketing efforts to the end consumer, so consumers use their buying power and influence on retailers to "pull" the product through the channel
• The most successful marketers skillfully blend push and pull strategies
• Channel support


  Services provided by channel members that can enhance the value to consumers of purchasing and consuming a brand name product