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M10_FULL rev 23NOV10

M10_FULL rev 23NOV10 - Marketing Principles and Processes...

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Marketing Principles and Processes M odule 10 Distribu ti on Order-taking, picking, and packing process quality and costs Transportation process quality and costs Inventory-holding process quality and costs Customer-service process quality and cost The key to distribution, customer service and cost control is to create a distribution management process that manages each of the above four processes together and improves the entire system of processes rather than improves each individually. Any improvement in one of these four must involve consideration of the effect of the improvement on the other three processes. The growth of new global supply chains and distribution channels has increased the importance of such holistic process thinking and distribution QFD (quality function deployment). Peter R. Dickson ©Backbone Press 2009
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Go with Fit, Flow and Trust 1 . D istribution is, first, choosing channel partners (all the intermediaries between the producer and the end users) with positioning and implementation skills that fit the seller, regardless of its position in the supply chain. It is also designing a smooth and efficient physical flow of product along that supply chain. Efficient distribution requires trust and cooperation between business partners. Distribution is about fit, flow and trust. 1. Basic Channel Functions In What is Marketing, we learned about how distribution innovations have enabled new foreign competition to enter both mature and developing markets around the world and how retailers and distributors around the world are searching for new sources of interesting new products, higher quality products and lower cost existing products. The world is becoming a flatter playing field. In Segmentation, Targeting and Positioning, you learned about how important distribution channel or contact segmentation is in focusing on reaching and serving your customers. In this module we study the supply chain process in detail, and again we discover the importance of process innovation. Time and again, distribution process innovation has shaped the prosperity of nations and companies. The first major cities were sea and river ports because it was far less expensive (less than one tenth the cost) 1 to move cargo by boat than by camel, mule or ox trains. They naturally became trade hubs, the first major centers of trade and capitalism. And the most cleverly designed cities such as Venice and Amsterdam were far ahead of their time in that their innovative canal systems enabled incoming ships and barges to unload directly into a merchant’s warehouse and then directly load outgoing ships and barges that took the cargo to other ports or up river systems. It cut handling costs, breakage and theft by roughly half because the cargo did not need to be loaded from boat to wagon and then wagon to warehouse inbound, and then warehouse to wagon and wagon to boat outbound. These cities enabled their merchants to be far more efficient. They were the giant Walmart distribution centers of their time.
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