JBL 2000 Bowersox et al

JBL 2000 Bowersox et al - JOURNAL OF BUSINESS LOGISTICS,...

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JOURNAL OF BUSINESS LOGISTICS, Vol. 21, No. 2, 2000 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 1 TEN MEGA-TRENDS THAT WILL REVOLUTIONIZE SUPPLY CHAIN LOGISTICS by Donald J. Bowersox David J. Closs and Theodore P. Stank Michigan State University The goal of integrated supply chain logistics is to enhance end-customer value. The term end-customer is used to identify the last point in a supply chain where a specific product/service bundle is purchased for consumption. The end-customer could be a consumer or an intermediate channel member who purchases a product or a component as an industrial input. Traditionally, supply chains created value through low prices and broad product assortment. Today, however, supply chains managers are learning how to accommodate customers who demand greater control of the buying process, have the financial ability to make choices, and are willing to utilize a variety of ways to purchase goods and services to satisfy their lifestyle requirements. Understanding that the end-customers will increasingly define value in the context of a technology driven competitive environment is critical to supply chain success. In an end- customer’s context, value is the measure of desire for a product and its related services. If desire is high, a product/service bundle will be perceived as valuable and it will be purchased. Determining how to provide meaningful product/service offerings to enhance end-customer value, however, is difficult. In the extreme, it means generating a unique product/service offering for each end-customer. This, of course, is in direct contrast to principles of mass marketing. Reconciling this paradox is increasingly becoming a key element of success. The answer in part is to fully understand that end-customers have at least three different perspective regarding value. The first perspective is economic value. Economic value employs economies of scale in operations to generate efficiency . It is epitomized by cost trade-off analyses that have supported volume procurement over the past 30 years. Two operational initiatives that can help achieve economic value include product profitability and lowest total landed cost. Product service creation is also fundamental to economic value in the sense that the logistics of merchandising must be efficient. The end-customer take-away of economic value is low price.
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JOURNAL OF BUSINESS LOGISTICS, Vol. 21, No. 2, 2000 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 2 A second value perspective, market value, builds upon effectiveness of channel relationships. The market value perspective focuses on economies of scope to achieve product service positioning . The end-customer take-away of market value is assortment and convenience. Both economic and market value perspectives are important to end-customers and
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JBL 2000 Bowersox et al - JOURNAL OF BUSINESS LOGISTICS,...

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