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Distribution Customer Service and LogisticsDistribution Customer Service and Logistics

For use only withPerreault/Cannon/McCarthy or Perreault/McCarthy texts.© 2008 McGraw-Hill Companies, Inc.McGraw-Hill/Irwin

CHAPTER ELEVEN

CH 12: Retailers, CH 12: Retailers, Wholesalers & Their Wholesalers & Their Strategy Planning Strategy Planning

Logistics customer Logistics customer serviceservice

• What it is• Level to offer• Cost • JIT and EDI

TransportingTransporting• Transport modes• Benefits and

limitations

StoringStoring• Inventory costs• Storing facilities

and distribution centers

CH 11: Distribution Customer Service & Logistics

CH 10: Place and CH 10: Place and Development of Development of Channel SystemsChannel Systems

Marketing Strategy Planning for Place (Exhibit 11-1)

Physical Distribution Concept Focuses on the Whole Distribution System

Info on Product Availability

Info on Product Availability

Order Processing Time

Order Processing Time

Backorder ProceduresBackorder

Procedures

Inventory Storage

Inventory Storage

Order AccuracyOrder Accuracy

Damage in Transit

Damage in Transit

Online Status Information

Online Status Information

Advance Info on Delays

Advance Info on Delays

Delivery TimeDelivery Time

Compliance with Customers

Compliance with Customers

Defect – Free Deliveries

Defect – Free Deliveries

FactorsAffecting PD

ServiceLevels

FactorsAffecting PD

ServiceLevels

Handling Adjustments/

Returns

A Cost Comparison of Alternative Systems (Exhibit 11-4)

The Transporting Function Adds Value to a Marketing Strategy (Exhibit 11-5)

Which Transporting Alternative Is Best? (Exhibit 11-6)

Achieves Production Economies of Scale

Achieves Production Economies of ScaleAchieves Production Economies of Scale

Achieves Production Economies of Scale

Keeps Prices SteadyKeeps Prices SteadyKeeps Prices SteadyKeeps Prices Steady

Needed When Production Doesn’t Match Consumption

Needed When Production Doesn’t Match Consumption

Needed When Production Doesn’t Match Consumption

Needed When Production Doesn’t Match Consumption

Builds Channel Flexibility

Builds Channel Flexibility

The Storing Function and Marketing Strategy

Handling costsHandling costsHandling costs

Cost of inventory becoming obsolete

Cost of inventory becoming obsolete

Cost of risksCost of risksCost of risks

Cost of damage while in

inventory

Cost of damage while in

inventory

Cost of damage while in

inventory

Cost of storage facilities

Cost of storage facilities

Cost of storage facilities

Interest expense &

opportunity cost

Interest expense &

opportunity cost

Interest expense &

opportunity cost

Interest expense &

opportunity cost

Total Inventory Cost (Exhibit 11-7)

TotalInventory

Cost

TotalInventory

Cost

Specialized Storing Facilities May Be Required (Exhibit 11-8)