Marketing

2 Pages 439 Words

Supply Chain and Logistics Management

• Supply chain-organizations which create and deliver products
• Logistics management-transportation and storage of goods to serve customer needs



Total Logistics Cost Concept

• Minimize the cost of moving and storing goods, while providing an acceptable level of customer service

• Three keys----1)movement of goods 2)storage of goods 3)acceptable customer service


Acceptable customer service

• Deliver product when and where customer wants it

• Factors 1)lead time-time from order of product to delivery for sale 2)inventory on hand 3)customer demand-fluctuating or stable


Lead time, inventory and demand

• If demand is stable, or predictable, lead time unimportant (can order 2 months in advance) and proper inventory can be calculated

• If demand fluctuates—how much inventory?

• Lower inventory, lower costs—storage, investment, may become obsolete

Adequate Customer Service

• Bananas
• 25 29 30 24 22 31 30 25
• 28 28 29 26 32 29 28 31
• 100 29 30 27 10

• How many to order? If only last one day, then worthless? How high a level of customer service?


Perfect Customer Service

• Very expensive—never run out!!!

• When?

• Hospital-blood, medicine

• Steak house

• Wendy’s-key items

• Most businesses try to satisfy most customer demand days


Logistics-Movement and Storage

• Trade-off----Each store has a huge warehouse, no transportation—but very costly—building, equipment, investment in inventory, etc.
• Many stores, but only one warehouse—cheaper, but high transportation costs, higher lead time
• Compromise-warehouse for a group of stores (Wal-Mart-each store within one day’s drive of a warehouse)

Movement

• Water-Boats, barges-require little energy to move, so: 1)cheap, 2)high capacity; but 1)slow, 2)limited are...