Market logistics is a critical component of successful marketing strategy and a major cost element for company operations. The goal of market logistics is to provide a targeted level of customer services at the least cost. I need to assume I work for a large department store that operates 275 department stores across the US. As today's staff meeting the Chief Financial Officer asked whey the Marketing Department just doesn't use the least expensive option for each of the logistics activities (order processing) warehousing, inventory, and transportation). Assume my company wants to provide a high level of customer service. I need to briefly explain the relationship of the costs of the different logistics activities (for example, if I try to lower warehousing costs, what does that do for the order processing transportation , and inventory costs?)
Logistics can be defined as:
'Logistics is the process of strategically managing the procurement, movement and storage of materials, parts and finished inventorty (and related information flows) through the organisation and its marketing channels in such a way that current and future profitability are maximised through the cost effective fulfillment of orders.'
Marketing and logistics play an important role in satisfying the customers. Logistics leverage is the "ability to effectively influence market demand through the application of excellent logistics systems, techniques and programs."
Porter's value chain clearly points out how both marketing and logistics functions are important and linked in a firm's efforts to create value, which suggests that these two functional areas be coordinated in order to maximize value creation.
Effective customer service is achieved through the logistics system that enable the consistent delivery of service ...
This discusses the concepts related to Market logistics