Distribution Management

• Total Logistics Concepts


  Aims to treat the many different elements that come under the broad category of distribution and logistics as one single integrated system
• Trade Off


  A situation that involves losing one quality or aspect of something in return for gaining another quality or aspect
• Four different levels of trade-off

  • Within distribution components
  • Between distribution components
  • Between company functions
  • Between the company and external organization
• Within distribution components


  • Those trade-offs that occur within single functions
• Between distribution components


  • Those trade-offs between the different elements in distribution
• Between company functions


  • There are a number of areas of interface between company functions where trade-offs can be made
• Between the company and external organization


  • Where a trade-off may be beneficial for two companies that are associated with each other
• Strategic


  A set of procedures for making decisions about the organization's long-term goals and strategies
• Strategic plans


  • Have a strong external orientation
  • Cover major portions of the organization
• Tactical


  A set of procedures for translating broad strategic goals and plans into specific goals and plans that are relevant to a distinct portion of the organization, such as a functional area like marketing
• Operational


  The process of identifying the specific procedures and processes required at lower levels of the organization
• Tactical plans


  • Focus on the major actions a unit must take to fulfil its part of the strategic plan
• Logistics


  The management of all activities which facilitate movement and the coordination of supply and demand in the creation of time and place utility
• Key components of distribution and logistics

  • Storage, warehousing and materials handling
  • Packaging and unitization
  • Inventory
  • Transport
  • Information and control
• Logistics management


  The planning, implementation and control of the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customer requirements
• Integrated logistics


  System-wide management of entire logistics chain as a single entity, instead of separate management of individual logistical functions
• Logistics


  The art and science of managing and controlling the flow of goods, energy, information and other resources
• Direct product profitability

  A technique of allocating all of the appropriate costs and allowances to a given product
• Materials requirements planning


  An inventory control technique for determining dependent demand for manufacturing supply
• Distribution requirements planning systems


  Operate by breaking down the flow of material from the source of supply through the distribution network of depots and transportation modes
• Materials requirements planning - manufacturing resource planning


  Developed with the objective of improving productivity through the detailed planning and control of production resources
• MRP/DRP systems


  Sophisticated, computerized planning tools that aim to make the necessary materials or inventory available when needed
• Logistics


  The positioning of resource at the right time, in the right place, at the right cost, at the right quality
• Marketing channel


  The route taken by a product as it moves from the producer to the consumer or other ultimate user
• Just-in-time


  A production system that eliminates all activities that neither add value to the final product nor allow for the continuous flow of material, eliminating the costly and wasteful elements within a production process
• Marketing channel


  The path taken by the title to goods as it moves through various agencies
• Marketing channel


  A set of practices or activities to transfer the ownership of goods from the point of production to the point of consumption
• The three basic divisions of the marketing channel

  • Producers and manufacturer
  • Intermediaries
  • Final users
• Basic levels of operations

  • Wholesale
  • Retail
• Producers and Manufacturers


  Firms involved in extracting, growing or making products
• Intermediaries, or Middlemen


  Independent businesses that assist producers and manufacturers (and final user) in the performance of negotiatory functions and other distribution tasks
• Types and Kinds of Wholesalers

  • Merchant wholesalers
  • Agents, brokers, and commission merchants
  • Manufacturers sales branches and offices
• Wholesale Intermediaries


  Businesses engaged in selling goods for resale or business use to retail, industrial, commercial, institutional, professional or agricultural firms, as well as to other wholesalers
• Merchant wholesalers


  Firms engaged primarily in buying, taking title to, usually storing and physically handling products in relatively large quantities
• Agents, brokers, and commission merchants


  Independent middlemen who do not, for all or most of their business, take title to the goods in which they deal
• Merchant wholesalers


  Firms engaged primarily in buying, taking title to, usually storing and physically handling products in relatively large quantities
• Manufacturers sales branches and offices


  Owned and operated by manufacturers but physically separated from manufacturing plants
• Providing market coverage


  • Merchant wholesalers provide this to manufacturers because the markets for the products of most manufacturers consists of many customers spread over large geographical areas
• Sales contact


  • Valuable service provided by merchant wholesalers, If a manufacturers product is sold to many customers over a large geographical area, the cost of covering the territory with its sales force can be prohibitive
• Holding inventory


  • Merchant wholesaler take title to, and usually stock, the products of the manufacturers whom they represent