Effective Marketing Logistics: The Analysis, Planning and Control of Distribution Operations

250 Pages·1975·24.276 MB·English

by  Graham Buxton (auth.)

EFFECTIVE MARKETING LOGISTICS
EFFECTIVE
MARKETING
LOGISTICS
The Analysis,
Planning and
Control of
Distribution
Operations
Graham Buxton
M
© Graham Buxton 1975
Softcover reprint of the hardcover 1st edition 1975 978-0-333-15500-4
All rights reserved. No part of this publication may be
reproduced or transmitted, in any form or by any means,
without permission.
First edition 1975
Reprinted 1977
Published by
THE MACMILLAN PRESS LTD
London and Basingstoke
Associated companies in Dehli Dublin Hong Kong
Johannesburg Lagos Melbourne
New York Singapore Tokyo
ISBN 978-1-349-02103-1 ISBN 978-1-349-02101-7 (eBook)
DOI 10.1007/978-1-349-02101-7
Typeset in Great Britain by
PREFACE LTD
Salisbury, Wilts
This book is sold subject
to the standard conditions
of the Net Book Agreement
TO GILL
Contents
Foreword by Professor Bernard J. La Londe xi
Preface xiii
PART ONE THE CONCEPTUAL FOUNDATION 1
1 The Nature and Scope of Marketing Logistics 3
The Systems Approach to Management 3
The Meaning of Marketing Logistics 5
The Marketing Logistics System 6
The Cost of Distribution Activity 8
The Diffusion of the Marketing Logistics Concept 10
Interaction between Logistics and Marketing 11
Product Availability 13
The Corporate Role of Marketing Logistics 15
Marketing Channel Theory 18
The Discrepancy of Assortments 19
Task Flows and the Structure of Distribution Channels 23
2 Designing a Marketing Logistics System 26
The Principles of Planning 26
The Planning Process 27
The Design Model for a Marketing Logistics System 31
Marketing Logistics Objectives 32
Internal Logistics Audit 36
External Logistics Audit 39
The UK Channel Environment 42
Marketing Logistics Systems and the Channel Environment 46
Logistics Systems Analysis: a Summary Comment 47
3 Costs, Revenues and Trade-offs 50
The Problem of Costs in Phy:;ical Distribution Management 50
Identification of P~ysical Distribution Costs 52
Allocating Physical Distribution Costs 54
Estimating Marketing Logistics Costs 56
The Cost Trade-off Concept and Total Cost Analysis 58
Dynamic Total Cost Analysis 62
Revenue and Investment Implications in Logistics Analysis 65
The Incorporation of Channel Costs 66
Total System Performance Analysis 70
vii
viii Contents
PART TWO THE ANALYSIS OF STRATEGY 73
4 Retail and Depot Location 75
The Location of Facilities in the Marketing Logistics System 75
The Retail Trading Area Concept 76
The Empirical Approach to Defining a Trading Area 77
The Gravitational Approach to Defining a Trading Area 79
Measuring Potential within a Retail Trading Area 81
Specific Site Location within a Trading Area 83
Warehouse Location: the Depot-Market Relationship 85
Factors Affecting the Location of Depots 86
Spatial versus Temporal Considerations in Depot Location 88
The Infinite Set Approach to Depot Location 88
The Feasible Set Approach to Depot Location 94
5 Basic Principles of Inventory Control 99
The Role of Sales Forecasting in Inventory Control 99
The Costs of Inventory in Marketing Logistics Systems 102
Categories of Inventory and Inventory Policy 105
Inventory Control in the Single-Order Situation 110
Demand Certainty and the Optimum Order Quantity 111
Optimum Order Quantity and Re-order Point under Risk 113
Optimum Service Policy under Risk 118
Multi-item Inventory Investment 119
6 Warehouse Management and Materials Handling 125
Movement, Storage and the Warehousing Function 125
Centralised and Decentralised Warehousing 127
Alternative Warehousing Policies 128
The Assessment of Warehouse Investment Requirements 131
Internal Warehouse Layout and Inventory Location 135
Warehouse Equipment Requirements 139
Technological Change - a Threefold Impact 141
7 Management of the Transportation Function 145
Alternative Transport Modes 145
Transport Cost and Performance Characteristics 149
Integrated Systems and the Through Transport Concept 153
Alternative Road Transport Policies 154
Sizing and Routeing the Company-owned Vehicle Fleet 155
Techniques of Vehicle Routeing 159
Maintaining a Vehicle Fleet 166
Contents ix
PART THREE IMPLEMENTATION AND CONTROL 169
8 Information and Communication Systems 171
Information Needs for Planning and Control 171
The Structure of Information Flows in Marketing Logistics 173
The Effect of Time Lags in the Flow of Information 176
The Design of a Marketing Logistics Information System 178
Controlling Marketing Logistics Operations - Basic Concepts 179
The Measurement of Marketing Logistics Performance 182
Controlling the Performance of Distribution Channels 185
The Role of the Computer in Marketing Logistics Management 187
9 Organisational Implementation of the Marketing Logistics Concept 189
Organisational Problems in Marketing Logistics 189
Some Basic Concepts in Organisation Theory 191
Organisational Structure of the Physical Distribution Function 193
Organisation Within a Corporate Perspective 196
Some Illustrative Organisational Structures 198
Co-ordination of the Total Marketing Logistics System 202
CASE STUDY 205
Eleven-Minus Ltd 207
Notes and References 223
Index of Names 237
Index of Subjects 239
Foreword
In the industrialised parts of the world, the thinking of managers tends to follow
a logical progression in its primary business orientation. The industrial
revolution forced a focus on production and a concern with rationalising the
elements of the production process to achieve higher levels of output. A second
stage usually involves increased interest in the financial aspects of managing the
enterprise. The enormous demands for capital concentration required by
substituting horsepower for manpower encouraged an intensified interest in
sources and application of financial resources. The third stage in management
orientation applies to the marketing efforts of the firm. When the industrial
machine is running smoothly it begins to outstrip demand and the problem focus
shifts from supply deficiency to demand deficiency. While this brief, over·
simplified description of industrial development does not apply to all economies,
it perhaps sets the stage for a text on effective marketing logistics.
By the early 1950s most industrialised countries had passed through the first
two stages of management thinking. In point of fact, many countries had passed
through the first two stages twice, once prior to 1930 and again after 1945.
In the early 1950s the 'Marketing Concept' developed in response to the
increased production capacity of the industrialised nations. The Marketing
Concept was concerned with profitably balancing production with demand in
such a way that consumer or user satisfactions would be maximised.
From a corporate viewpoint, the task of fulfilling the corporate marketing
mission may be viewed as the twin objectives of demand creation and physical
supply. While this is by no means an original concept, it took until the early to
mid-1960s before management began to place increasing emphasis on the
physical supply function as an integral part of the total marketing mission of the
firm.
This new corporate concern with efficient flow and storage of materials is
probably the fourth stage in the evaluation of business orientation. This logistics
orientation is not unique to the United Kingdom. Research, writing, and
professional activity in this regard is practised in many European countries, the
United States and Japan among others. The methodology and approaches
present an international management language as evidenced by the professional
meetings where corporate executives from many different countries are in
attendance and by the multilingual journals which have been developed in recent
years.
The author of this text has made an important contribution to this
developing area of logistics. He is to be commended for his recognition and
xi
xii Foreword
skilful blending of this new literature and current research into a text which will
be useful to the classroom instructor and to the practitioner.
BERNARD J. LA LONDE
James R. Riley Professor of
Marketing and Logistics
The Ohio State University
Columbus. Ohio.