Total Cost Savings Incurred Mkt315 Week 7 Discuss
Week 7 Discussion 2
“Logistics” Please respond to the following:
- Examine the role of logistics in marketing channels and factors that can make the task of logistics complex and expensive.
- Examine the components of logistics systems and propose ways to cut costs for each component.
AND RESPOND TO THIS POST DIRECTLY:
Hilborn
RE: Week 7 Discussion 2
Professor and Classmates,
Just like shipping any good from its manufacture to the consumer shelf, marketing channels buy and take
possession of physical items which must be moved. To explain the logistics components and how each effect
each other in terms of costs, channel member selection is crucial. The example that comes to mind which
involves every aspect of a logistics system is the actions behind the scenes which enable a consumer to go
online, order an item, and it be delivered to the destination of their choice; when they want it.
Using this example, of the aspects involved in the logistical system, order processing starts the journey that encompasses the intermediaries who are tasked specific to physically move a desired object from one place to another after a transaction has been completed. In the event an order is fulfilled by a company like Amazon, they are responsible for inventory control, i.e, ensuring they have the item within their enterprise resource system to meet the end goal of that items’ timely delivery to its destination.
“Fulfilled by Amazon” is acting as both wholesaler who holds goods, and the retailer who has sold the goods. This capability saves negotiation efforts and shortens the marketing supply channel. From an order processing perspective, at this point the cost savings to Amazon are in searching their inventory using the ERP to find a product whose physical whereabouts are closest to the address on the shipping label. Once located in a warehouse, and packaged, material handling costs are saved because the item is in house and does not have to be outsourced to have the item prepared and protected for shipping. To complete the logistics supply chain, transportation selection is the next cost savings due to the physical location of the item demanded, to its consumer, and its predetermined expected date of delivery. As most transportation costs are the most expensive incurred along a logistics supply chain, the shortest route to meet customer expectations probably is.
However, when a company takes into consideration the total cost savings incurred logistically between the order
processing stage and delivery, that shorter route ensures a consumer is happy, and is more cost effective
overall.