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Project on : “MARKET
32 - MBA
• Market logistics ( defination )
• Objectives of logistic management
• Integrated logistics systems
• Market-logistics objectives
• Market-logistics decisions
• Logistics for business excellence
• Scope of logistic
• Logistics process of CIPLA
Market logistics includes planning the infrastructure to meet
demand, then implementing and controlling the physical flows
of materials and final goods from points of origin to points of
use, to meet customer requirements at a profit.
• Interrelated Aspects Associated with Market Logistics:
– Physical distribution
– Supply chain management (SCM)
– Value network
– Demand chain planning
– Market logistics
– Integrated logistics systems (ILS)
Inbound Logistics Out bound logistics
Material flow Material flow
Market logistics planning has four steps
Deciding on the company's value proposition to its customers. (What
on-time delivery standard should we offer? What levels should we
attain in ordering and billing accuracy?)
Deciding on the best channel design and network strategy for reaching
the customers. (Should the company serve customers directly or
through intermediaries? What products should we source from which
manufacturing facilities? How many warehouses should we maintain
and where should we locate them?)
Developing operational excellence in sales forecasting, warehouse
management, transportation management, and materials management
Implementing the solution with the best information systems,
equipment, policies, and procedures
Integrated Logistics Systems
• It includes material management, material flow system&
physical distribution, aided by information technology.
• It plays a crucial role in managing market logistic, especially
through computers, point of sale terminals, uniform product
bar codes, satellite tracking, electonic data interchange,&
electronic funds transfer.
It means “getting the right goods to the right places at the right
time for the least cost.”
Market-logistics costs interact and are often negatively related.
• The traffic manager favors rail shipment over air shipment
because rail costs less. However, because the railroads are
slower, rail shipment ties up working capital longer, delays
customer payment, and might cause customers to buy from
competitors who offer faster service.
• The shipping department uses cheap containers to minimize
shipping costs. Cheaper containers lead to a higher rate of
damaged goods and customer will.
Given the market-logistics objectives, the company must
design a system that will minimize the cost of achieving these
Each possible market-logistics system will lead to the
M= T+ FW+ VW+ S
M = total market-logistics cost of proposed system
T = total freight cost of proposed system
FW = total fixed warehouse cost of proposed system
VW= total variable warehouse costs
(including inventoly) of proposed system
S = total cost of lost sales due to average
delivery delay under proposed system
• In a manufacturing org. the business process starts with the
flow of material from the suppliers, progress to the plant, then
to the customer through the distribution channel the
department may excel in their respective function but org. as a
whole their performance may be dismal.
Lack of Co ordination in their activities
They have different goal to cherish
There is no single agency that coordinates their functions and
How to overcome ?
Use of Logistic as a system
The firm must make four major decisions about its
How should we handle orders (order processing)?
Where should we locate our stock (warehousing)?
How much stock should we hold (inventory)?
How should we ship goods (transportation)?
• Involve following activities
Order checking for any deviation in agreed on negotiated term
Technical details;price;delivery period;payment terms;taxes etc
Checking the availability of material in stock (material requisition)
Production & material scheduling for shortage
Acknowledging the order, indicating deviation if any
• It is routine operation but require great deal of planning training of
people involved and investment to bring about efficiency & accuracy
• In a large organization a system capable of handling thousands of
voluminous orders with minimum human involvement or without
human involvement is a must involving shortened order fulfillment
cycle to have edge over rivals
• A storage place wherein finished goods are stored till they are
sold.Effectiveness of an organization`s marketing strategy
depends on making the right decision regarding warehouse.
• Warehouse are treated as switching facilities rather than
storage place.It is a major cost center, many customer problem
are the direct result of improper warehousing management.
• Major decision of ware house are as follows:-
Location ,Size & Number of warehousing facilities
Design of building
Ownership of the warehouse
• Management needs to know how much sales & profits would
increase as a result of carrying larger inventories & promising
faster order fullfillment times , & then make a decision.
• Determine reorder point, relevant cost comparison, optimal
• For the movement of goods from supplier to buyer ,
transportation is the most fundamental and important
component of logistic.
• E.g. for low unit value products the transportation cost
component is 20% of the product cost.
• In logistic cost its share varies up to 65-70% in case of mass
consumed very low unit price products.
Mode of transportation ( Cost & time factor)
Own fleet or Outsourcing
• Are the few decision which are involved in transportation
Logistics for Business Excellence
• For Business Excellence logistics operation need to be
integrated on the following two fronts
Integration of logistic into business
Integration of components of logistics
• To achieve the objective of making available right product at
the right place and at a right time at low cost , every business
is required to integrate logistics into the business process.
• For logistic operation to run smoothly, proper integration
amongst the component of logistic process is a must.
Scope of Logistic
• It is of critical importance to the organization how it delivers
products & services to the customer , whether the product is
tangible or intangible.
• Effective & efficient Physical movement of the tangible
product will speak of intangible services associated with the
product and the organization which is delivering it.
• In Case of intangible product , the delivery of tangibles at the
right place & right time will speak about its quality.
• On the macro level infrastructure such as various modes of
transport , transportation equipment, storage facilities,
connectivity & information processing are contributing to a
large extent in the physical movement of goods produced in
manufacturing , mining & agriculture Sectors.
• “ Public distribution system in the country needs logistical
support for delivering goods at right place on time and the
• At Micro Level logistic plays a critical role in the value
delivery system of business organization to provide superior
customer service i.e. to achieve a desired level of delivered
services and quality at the lowest possible cost.
• In a nutshell any productivity improvement that could be
achieved in any part of logistic system,at the micro or
macro level would help in cost reduction and proper
deployment of scare national resources to the productive
Amongst most of the Indian companies logistics
outsourcing has now become an accepted trend for the
• Cost Saving
• Focus on core Business
• Paucity of funds
• Reduction in liabilities
• Wider Geographical coverage
• Cross pollination of better available practice
• Marketing management – A South Asian Perspective By Philip
Kotler, Kelvin Lane Keller, Abraham Koshy & M Jha,14th
• Marketing management by Dr. K Karunakaran , Himalaya