Marketing Logistics and Supply Management Carlise V. Miles

Marketing Logistics and Supply Management
Carlise V. Miles
Embry-Riddle University
Marketing Logistics and Supply Management
Definition
Logistics management is considered as a subset of supply chain management as it involves planning, implementation as well as effective and efficient management of warehousing and related function between a point of origin and the destination point where consumption takes place. Logistics encompasses diverse activities that encompass transportation (two-way), fleet management, warehousing, handling, logistics network operation, inventory, demand management, procurement, scheduling, supply others (Prajogo & Olhager, 2012) (Kozlenkova et al., 2015). Logistics encompasses different aspects of planning and execution such as strategic planning, operational and tactical functions. In this respect, logistics management is an integrated function that entails the coordination and maximization of logistical activities and incorporation with other operations within the organization (Li, 2014).
Marketing logistics and collaborative integration
The success of marketing logistics largely depends on successful collaborative integration with other departments. Most notably, the collaborative relational potential of the supply chain management plays a critical role. The effectiveness of collaborative efforts between marketing logistics and supply chain management largely depends on the advancement of collaborative technologies that necessitate the inter-departmental integration (Madhani, 2017). Still, there exists a positive association between logistics and production and logistics and marketing based on a collaboration model.
Moreover, there is a positive association between the integration level between logistics and marketing as well as the level of external integration (Ellinger, 2010). Internal integration is an important facet of departmental integration, even though internally, inter-departmental integration is not apparent. Thus the merging of marketing and logistics and the subsequent collaborative integration first takes place internally before moving externally. However, different firms are at different levels of collaborative integration with some having internal integration, whereas others have attained both internal and external integration (Kozlenkova et al., 2015).
Evolution of logistics in supply chain
Logistics has its roots in the military where it was used in managing military fleets and supplies. Its adoption into business was prompted by the lack of integration and coordination between diverse organizational functions that characterized the 1970s and 80s (Bennett & Klug, 2012). This rather myopic functional model metamorphosed into integrated logistics management which integrated the different organizational functions during the 1980s, thus making it possible for different departments to pursue a single vision. Supply chain management adopted logistics as it moved to incorporate customers and suppliers. This rather coordinated and integrated approach was instrumental in the management of information and raw materials right from procurement to the delivery of finished goods (Ellinger, 2010). Although logistics and supply chain management have been previously used interchangeably, the two are like green and yellow oranges. Whereas logistics is largely operational- oriented, supply chain management is strategic as it incorporates the supply chain, supplier contracts, relationship management, selection, and information and material management among others (Madhani, 2017).
Interrelationships between logistics and supply chain
Supply chain management (SCM) and logistics are core organizational functions that require integration of various standalone processes. This performance appraisal of the supply chain is essential since it helps determine where the organization stands against the competition and the necessary remedial or improvement strategies. There exist diverse SCM performance appraisal systems. The most common SCM appraisal model is the Supply Chain Operations Reference (SCOR) model developed by the Supply Chain Council (SCC) for purposes of linking different processes, metrics, best practices and other SCM related aspects (Prajogo & Olhager, 2012). SCOR makes use of five management processes, namely Plan, Source, Make, Deliver and Return processes. The second SCM performance appraisal model is SCM Management which was developed by Global Supply Chain Forum (GSCF).
Supply chain management activities and their relationship to logistics
Supply chain management (SCM) comprises of many activities that include purchasing, materials handling, logistics, transportation (distribution), and inventory control. The core activities of SCM are customer relationship management (CRM), customer service management (CSM), demand management, order fulfillment, production flow, procurement, product development and returns management (Madhani, 2017). For example, CRM is important since business needs to know logistics such as the type, location, and needs of logistics activities such as customer satisfaction, service requirements and the changing customer needs. On the other hand, demand management is an essential logistical function that determines other SCM activities such as transportation and inventory. Production flow is important as it also helps in scheduling other logistical activities such as distribution, inventory, and warehousing. Both SCM and logistics are interrelated since they share certain activities such as warehousing, transportation, supply and inventory management.
Logistics and consumer satisfaction
Logistics play a pivotal role in determining the level of customer satisfaction. Both inbound and outbound logistics ensure consumer satisfaction. Client Relationship Management (CRM) is an important logistical activity that directly improves customer satisfaction. This because CRM enables firms to manage supplier and customer relationships thus synchronizing demand and supply, which ensures stability in supply and pricing of goods. Firstly, logistics ensures that service delivery is flexible as it enables companies to provide on-demand or schedule orders besides management of distribution channels. Secondly, reliability and communication is a core product of logistics. Reliability in the delivery of goods and optimal use communication strategies helps improve consumer satisfaction, whereas trackability in the supply chain management enables customers to track their orders (Madhani, 2017). Through advanced and real-time tracking technologies, companies can provide inventory visibility, manage and timely respond to customer queries.
Reward systems and their role in consumer satisfaction
Through incentive schemes, firms can reward their employees to motivate them to offer services that offer high customer satisfaction. Based on CRM and CSM systems, the firms can be able to monitor the level of customer satisfaction and reward employees who make a tradeoff between short and long-term goals in the best interest of customers (Madhani, 2017). Although it has been proven that financial incentives alone cannot motivate employees to perform at higher levels, they can still be integrated into the incentive scheme. Thus, companies can either use periodic performance rewards or a reward system that is based on performance merit. Periodic performance rewards can be used to motivate employees who demonstrate an exemplary level of customer service. Periodic reward systems can either be monthly, quarterly or annually and can target both management and non-management personnel.
Components of logistics in marketing and supply chain
Customer service
Companies can improve customer satisfaction through evaluation of recruitment, retention, and turnover since labor is often the largest cost of outbound freight. Firms can also improve customer services by holding pre-work communication meetings (PCMs) that involve key supply chain and logistics department staff. Secondly, customer services can be improved through the minimization of product handling costs. This can be attained through a review of the supply chain and incorporation of best industry practices to cut down handling and touches. The third strategy is to use seamless picking and packaging since these accounts for up to 50% direct labor cost. This can be fulfilled by selecting the best picking and packaging models since weight is an important SCM logistical component. Also, on-demand packaging can be utilized where the shipping boxes are right-sized as per each order requirement as this drastically cuts down the cost of packaging and transportation, hence improved customer service (Madhani, 2017).
Packaging
Packaging design is an integral part of marketing logistics since it serves as an effective brand identity that differentiates a product from the competition. Therefore, collaborative integration between packaging, production and marketing systems cannot be overstated. Logistics demands for flexible packages for ease of handling throughout the supply chain, whereas marketing demands that appealing packages be used to communicate the brand and engage the consumers(Kozlenkova et al., 2015).On the other hand, production requires one size of packaging for all products to reduce production time and labor. Nonetheless, an appropriate packaging strategy can ensure that all these aspects are taken care of while still engaging the consumer in testing the product (Juttner, Christopher &Godsell, 2010). Firms can use creative packages that should adhere to three cardinal characteristics of a perfect packaging namely market function, flow function, and environmental function.
Inventory management
Ordinarily, supply chain management is believed to lead to significant cost savings through inventory cost-cutting strategies. Research suggests that inventory and transportation costs have drastically declined since 1982. Motivated by these cost savings, companies are now pursuing different inventory cost-saving strategies so as to achieve customer satisfaction. Nonetheless, firms need effective logistical planning and thorough understanding of various supply chain processes such as inventory management and demand forecasting (Kozlenkova et al., 2015). Therefore, companies can use three inventory management strategies, namely inventory control, flow management (for...