MKT 320F Chapter 12

or physical distribution; it is the placement part of the marketing mix; important to both firms and consumers
% of health care supplies logistics
developing companies spend on logistics
customer service level of physical distribution
how rapidly and dependently a firm can deliver merchandise in demand through the appropriate channel; may result in lose of sale and high costs
physical distribution
invisible to most consumers, invisible to most consumers in the US, involves trade offs between costs, consumer service levels, and sales. Says that all transporting, sorting, and product-handling activities of a business channel which should seek to minimize the cost of distribution
total cost approach
includes transportation costs, helps find lowest total cost, uses tools of cost accounting, involves evaluating each possible physical distribution
Just in time systems JIT
reduces PD costs for business customers and suppliers, shifts more responsibility to suppliers and less to business customers; requires that a supplier be able to respond to the customer’s production schedule
supply chain
includes all the activities involved in procuring materials, transforming them into products and distributing them to customers- the complete set of firms, facilities and logistics involved in procuring materials; requires skill in coordinating activities among many different firms
Electronic data interchange EDI
puts info in a standardized format, makes inventory info more accessible, is common in both domestic and international markets
adds value by making products available when needed, helping achieve economies of scale in production, making products available when needed
low transporting costs as a percentage of the selling price
sand and gravel
highest transporting cost as a percentage of selling price
fast delivery, flexibility, reliability in meeting delivery schedule, low price handling a variety of goods. 75% of all freight shipped in the US; serve the most locations
slowest mode of transportation, least expensive transporting mode for heavy freight
shipping by air
most expensive transporting mode; more useful for smaller higher-value items, may reduce the total cost of physical distribution; quickest
commonly used for international shipments from japan; air express companies place many small packages into specially designed cylinders that conform to the interior dimensions of a cargo plane- protects the smaller packages
loading truck trailers on railcars to increase flexibility; trailer are then offloaded, attached to truck tractors and driven to their final destination
necessary when production does not match consumption
the amount of goods being stored; costs of damage to products, risks, inventory becoming obsolete all contribute to inventory cost
private warehouse
may have low unit costs if the volume is high; has less flexibility than a public warehouse
public warehouse
useful for manufacturers that must maintain stock in many locations, including foreign countries; provides flexibility
distribution center
speed the flow of products and avoid unnecessary storing costs, designed to facilitate the flow of products through the channel

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