Michael Quayle (University of Glamorgan, UK)
Copyright: © 2006 |Pages: 39
DOI: 10.4018/978-1-59140-899-4.ch010


Shipping, transport, and distribution in terms of supply chain management can be grouped under one heading: Logistics. Logistics planning involves not only the transportation side of distribution but also provides the “place element” in the marketing mix by helping to ensure that products arrive in sufficient quantities and in saleable condition at points from which the consumer can most easily buy them. Thus, logistics management includes forecasting demand and then matching supply to meet that demand through procurement of materials, production scheduling, inventory management, order processing, warehousing, and transportation. In international systems, the logistics planning function comprises a number of subsystems that have central points-of-reach territory. There is a further subsystem for the management of local logistics (i.e., the transport and distribution systems used by the importer to move products to customers in the market concerned). Logistics, as well as being essential for moving goods to their destinations, is also a key marketing activity. As such it requires marketing management’s attention. Logistics contributes to a major portion of costs, particularly in international business. Logistic planning also plays a major role in creating a good relationship with customers, ensuring that sales opportunities are not lost because of stock outs (which allows competitors to eat away at the company’s market share). In assessing the real cost of transportation, you should be concerned with factors relating to reliability, time, and price. Decisions in choosing methods of transport and distribution therefore will be based on “trade-offs” between these factors. Transportation costs are often peculiar in that they frequently bear little relation to distance. Competition and volume are the key factors in cargo pricing. For example, the rate of goods transported from the Far East to the East Coast of the United States costs less than the transport rate of goods going the other way. Costs from the United States to South America are frequently lower than costs of transport among South American countries. All transport costs have increased, however, largely due to increased security operations.

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