LO1  Recognize the relationship between marketing channels, logistics, and supply chain management.

A marketing channel relies on logistics to make products available to consumers and industrial users. Logistics involves those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost. The performance of these activities is logistics management—the practice of organizing the cost-effective flow of raw materials, in-process inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirements. A supply chain is a sequence of firms that perform activities required to create and deliver a good or service to consumers or industrial users. It differs from a marketing channel in terms of membership. A supply chain includes suppliers that provide raw material inputs to a manufacturer as well as the wholesalers and retailers that deliver goods. The management process is also different. Supply chain management is the integration and organization of information and logistics activities across firms in a supply chain for the purpose of creating and delivering goods and services that provide value to consumers.

LO2  Describe how a company's supply chain aligns with its marketing strategy.

A company's supply chain follows from a clearly defined marketing strategy. The alignment of a company's supply chain with its marketing strategy involves three steps. First, a supply chain must reflect the needs of the customer segment being served. Second, a company must understand what a supply chain is designed to do well. Supply chains range from those that emphasize being responsive to customer requirements and demands to those that emphasize efficiency with the goal of supplying products at the lowest possible delivered cost. Finally, a supply chain must be consistent with the targeted customer's needs and the company's marketing strategy. The Dell, Wal-Mart and 7-Eleven examples in the chapter illustrate how this alignment is achieved by three market leaders.

LO3  Identify the major logistics cost and customer service factors that managers consider when making supply chain decisions.

Companies strive to provide superior customer service while controlling logistics cost. The major customer service factors include the length of time between orders and deliveries, dependability in replenishing inventory, communication between buyers and sellers, and convenience in buying from the seller. Logistics cost factors include transportation, materials handling and warehousing, order processing, inventory, and stockouts.

LO4  Describe the key logistics functions in a supply chain.

The four key logistics functions in a supply chain include transportation, warehousing and materials handling, order processing, and inventory management. Transportation provides the movement of goods necessary in a supply chain. The five major transportation modes are railroads, motor carriers, air carriers, pipelines, and water carriers. Warehousing and materials handling include the storing, sorting, and handling of products at storage warehouses or distribution centers. Order processing includes order receipt, delivery, invoicing, and collection from customers. Inventory management involves minimizing inventory-carrying costs while maintaining sufficient stocks of products to satisfy anticipated customer needs. Two popular inventory management practices are just-in-time (JIT) and vendor-managed inventory (VMI) systems.