Logistics component parts being ordered and delivered to
Logistics management covers every stage of the physical distribution process, from raw materials and component parts being ordered and delivered to the factory, materials handling and storage, stock control, sales forecasting from which the forecasts of individual components parts, transport and storage requirements are derived.Other functions include order processing, the purchasing and replenishment of stock, packing, delivery, achievement of set service levels, warehouse location, fleet management and scheduling and the management and operation of a logistics information system which acts as a recording system, aids forecasting, scheduling, model building and produces the myriad of documentation needed for the efficient management of the system. This total concept is sometimes referred to as ‘total business logistics management’ or ‘total physical distribution management’.
Marketing has many definitions, one of which relates to the process of getting the right goods to the right place at the right time. This is a simplistic definition, but it does encapsulate the importance of time and place. It has been said by many writers on the subject that it is the mission of the marketing orientated firm to produce goods and/or services that satisfy the needs and wants of specifically defined target markets more efficiently and effectively than competitors.Products can be viewed as a ‘bundle of attributes’, many of which are implied attributes created by branding, packaging and advertising.
The core product or service is just a part of the total product offering. In order for the value of goods and services to be fully realised they need to be available to customers at the right place and at the right time. What the right place and the right time is will, of course, depend on the nature of the product or service.
The importance of time and place will also depend on the nature of the product or service and the situation or occasion in which they are used.For example, if you walk into a pub or a cafe for a drink of beer, you expect the beer to be available there and then. A Christmas present really only has maximum value on Christmas day. If you order flowers by telephone to send to someone on Valentines Day they are of little use if they are delivered the day after. On the other hand, if you are ordering a new car from a showroom you may be prepared to place an order and wait several weeks in order to get exactly the car you want delivered from the factory in terms of colour, engine size, trim and other specifications.In the case of the Valentines Day flowers or the glass of beer, the time and the place of consumption form an intrinsic part of what the customer perceives to be the ‘total product offering’. For other types of products and services time and place are less important.
Hence, for some product and service categories, time and place produce a great deal of value or utility to the consumer. 2 Business logistics, or total physical distribution as it is still often referred to, plays a key role in the creation and delivery of this notion of time and place utility.In many industrial markets, factors such as stock availability and reliability of delivery are just as important, if not more important, than price. The speed at which a supplying firm can process an order and deliver goods to the necessary location at the required time, with the desired level of reliability, over the longterm may well be the deciding factors in awarding a contract even if the supplying firm is less competitive on price. Different industrial sectors and segments have differing service sensitivities.The level of service offered by the supplying firm is often the key marketing variable in obtaining business.
You can see from this example that logistics management is much more than simply managing transport and distribution. It can provide the company with a long term competitive advantage and as such must be viewed for what it really is, a long-term strategic tool. In order to be truly effective all of the functions within the logistics function must be fully integrated, which is what is at the heart of ‘Total Business Logistics’.Because the activities making up logistics management are often complex and highly specialised, they need to be managed by professional staff. To illustrate this, the use of fork lift trucks, cranes, gantries and lifts can be a very dangerous business. Such equipment forms the tools of materials handling.
The improper use of such equipment can result in serious injury and damage or even death. Consequently, the people in charge of such operations must be fully qualified and professional. Likewise, those in charge of transport must have technical expertise.The proper loading of vehicles, the securing of loads, the correct weight distribution of loads, the handling of dangerous and hazardous material all require specialised knowledge and expertise. No one would expect a marketing manager or director, no matter how experienced, to be qualified in all of these specialist areas.
Although it is becoming increasingly likely that senior marketing staff might have come from a physical distribution background, specialist staff will still be needed. It is not intended that marketing should dictate the day-to-day management policy of the logistics function.This should be left to those individuals who are qualified to make the correct decisions and judgments. However, because logistics has such an important long-term strategic dimension within marketing strategy it is necessary for overall logistics policy to emanate from senior marketing staff. Overall logistics decisions must form part of the overall strategic marketing plan.
Logistics management does not operate in a vacuum, but has a vital, intrinsic part to play in the long-term marketing strategy of the firm.