Market Logistics of SCM

Market Logistics:-

Physical distribution starts at the factory. Managers choose a set of warehouses (stocking points) and transportation carriers that will deliver the goods to final destinations in the desired time or at the lowest total cost. Physical distribution has now been expanded into the broader concept of supply chain management (SCM). Supply chain management starts before physical distribution and means strategically procuring the right inputs (raw materials, components, and capital equipment), converting them efficiently into finished products, and dispatching them to the final destinations. An even broader perspective looks at how the company’s suppliers themselves obtain their inputs. The supply chain perspective can help a company identify superior suppliers and distributors and help them improve productivity and reduce costs. Consumer goods manufacturers admired for their supply chain management include P&G, Kraft, General Mills, PepsiCo, and Nestlé; noteworthy retailers include Walmart, Target, Publix, Costco, Kroger, and Meijer.Firms are also striving to improve the environmental impact and sustainability of their supply chain by shrinking their carbon footprint and using recyclable packaging. Johnson & Johnson switched to Forest Stewardship Council (FSC)–certified paperboard for its BAND-AID brand boxes. As one executive noted, “Johnson & Johnson and its operating companies are positioned to make paper and packaging procurement decisions that could help influence responsible forest management.” Market logistics includes planning the infrastructure to meet demand, then implementing and controlling the physical flows of materials and final goods from points of origin to points of use, to meet customer requirements at a profit. Market logistics planning has four steps:

1. Deciding on the company’s value proposition to its customers. (What on-time delivery standard should we offer? What levels should we attain in ordering and billing accuracy?)

2. Selecting the best channel design and network strategy for reaching the customers. (Should the company serve customers directly or through intermediaries? What products should we source from which manufacturing facilities? How many warehouses should we maintain and where should we locate them?)


3. Developing operational excellence in sales forecasting, warehouse management, transportation management, and materials management 4. Implementing the solution with the best information systems, equipment, policies, and procedures Studying market logistics leads managers to find the most efficient way to deliver value. For example, a software company might traditionally produce and package software disks and manuals, ship them to wholesalers, which ship them to retailers, which sell them to customers, who bring them home to download onto their PCs. Market logistics offers two superior delivery systems. The first lets the customer download the software directly onto his or her computer. The second allows the computer manufacturer to download the software onto its products. Both solutions eliminate the need for printing, packaging, shipping, and stocking millions of disks and manuals.

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