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INTEGRATING SUPPLY CHAIN

AND LOGISTICS MANAGEMENT

16CHAPTER

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• Explain what supply chain and logistics management are and how they relate to marketing strategy.

• Understand the distinction between supply chain responsiveness and efficiency.

AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:

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• Explain how managers trade off different “logistics costs” relative to customer service in order to make a supply chain decision.

• Recognize how customer service in logistics decisions contributes to customer value and successful marketing programs.

AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:

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• Describe the key logistics functions of transportation, warehousing and materials handling, order processing, and inventory management and the role of third-party logistics providers.

AFTER READING THIS CHAPTERYOU SHOULD BE ABLE TO:

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SNAP! CRACK! POP! EVEN WORLD-CLASS COMPANIES CAN FEEL THE BULLWHIP’S STING.

INTEGRATING SUPPLY CHAIN AND LOGISTICS MANAGEMENT

© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

• Relating marketing Channels, Logistics, and Supply Chain Management

Logistics Logistics management Supply chain Supply chain management

SIGNIFICANCE OF SUPPLY CHAIN AND LOGISTICS MANAGEMENT

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• Sourcing, Assembling, and Delivering a New Car: The Automotive Supply Chain

SIGNIFICANCE OF SUPPLY CHAIN AND LOGISTICS MANAGEMENT

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• Supply Chain Management and Marketing Strategy• Aligning a Supply Chain with Marketing

Strategy Understand the customer Understand the supply chain Harmonize the supply chain with

the marketing strategy

SIGNIFICANCE OF SUPPLY CHAIN AND LOGISTICS MANAGEMENT

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• Supply Chain Management and Marketing Strategy (cont)• Dell Computer Corporation: A Responsive

Supply Chain• Wal-Mart, Inc.: An Efficient Supply Chain

Cross docking

SIGNIFICANCE OF SUPPLY CHAIN AND LOGISTICS MANAGEMENT

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Concept Check

1. What is the principal difference between a marketing channel and a supply chain?

A: The supply chain differs in membership because it includes suppliers of raw materials as well as those suppliers which deliver finished products to a company.

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Concept Check

2. The choice of a supply chain involved what three steps?

A: 1. Understand the customer2. Understand the supply chain3. Harmonize the supply chain with the marketing strategy

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• Information’s Role in Supply Chain Responsiveness and Efficiency• Electronic data interchanges

• Total Logistics Cost Concept

INFORMATION AND LOGISTICS MANAGEMENT OBJECTIVE

IN A SUPPLY CHAIN

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• Customer Service Concept

INFORMATION AND LOGISTICS MANAGEMENT OBJECTIVE

IN A SUPPLY CHAIN

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• Customer Service Concept (cont)• Lead Time

Quick response Efficient consumer response

• Dependability• Communication• Convenience

• Customer Service Standards

INFORMATION AND LOGISTICS MANAGEMENT OBJECTIVE

IN A SUPPLY CHAIN

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1. The objective of information and logistics management in a supply chain is to ____________________ __________________________________________________________

minimize logistics cost while delivering maximum customer service.

Concept Check

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Concept Check

2. How does consumer demand information increase supply chain responsiveness and efficiency?A: Because firms are better able to forecast

customer needs and produce, transport, and store the required amount of inventory.

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Concept Check

3. What is the relationship between the number of warehouses a company operates, its inventory costs, and its transportation costs?A: As the number of warehouse

increases, its inventory costs increase and its transportation costs decrease.

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• Third-party logistics providers• Transportation

KEY LOGISTICS FUNCTIONS IN A SUPPLY CHAIN

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• Transportation (cont)• Railroads

Intermodal transportation

KEY LOGISTICS FUNCTIONS IN A SUPPLY CHAIN

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• Transportation (cont)• Motor Carriers• Air Carriers and Express Companies• Freight Forwarders

• Warehousing and Materials Handling• Order Processing

KEY LOGISTICS FUNCTIONS IN A SUPPLY CHAIN

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• Inventory Management• Reasons for Inventory• Inventory Costs• Supply Chain Inventory Strategies

Just-in-time (JIT) concept Vendor-managed inventory

• CLOSING THE LOOP: REVERSE LOGISTICS

KEY LOGISTICS FUNCTIONS IN A SUPPLY CHAIN

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CLOSING THE LOOP:REVERSE LOGISTICS

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Concept Check

1. What are the basic trade-offs between the modes of transportation?

A: A comprehensive comparison is shown in Figure 16-5. A general trade-off is cost versus time and dependability.

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Concept Check

2. What types of inventory should use storage warehouses and which type should use distribution centers?

A: Goods which will not be needed for substantial periods of time, such as excess or seasonal inventory, are best suited for storage warehouses which hold goods for substantial periods of time. Distribution centers are used when products need to keep moving toward the consumer.

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Concept Check

3. What are the strengths and weaknesses of a just-in-time system?

A: Strengths: Save money on inventory; forces better planning of vendor selection, transportation selection, forecasting, scheduling, etc.Weaknesses: Can cause stockouts, production disruptions, and higher costs if weak links appear.