HITESH VERMA

50614901717
BBA(G) SEC(B) SHIFT 1
SALES AND DISTRIBUTION MANAGEMENT
ASSIGNMENT 3

Q. Short notes on the following.

1. Channel Design Strategies
2. Channel Conflict
3.Channel Dynamics
4. Inventory Management
5. Warehousing
6. Logistics and its Objectives
7. Supply Chain Management and its functions

ANSWER
1.A channel strategy is a vendor's plan for moving a product
or a service through the chain of commerce to the end
customer. The purpose of a channel strategy In the business-
to-business (B2B) world, a channel strategy aims to provide
the best way to expose a company's products or services to
potential customers. A company with a simple product that is
easy for a customer to install and requires little support may
focus on web sales or retail sales via brick-and-mortar stores
as its channel strategy. On the other hand, a company with a
complex product that requires expertise to properly
implement and calls for a high level of support to ensure a
positive customer experience may turn to value-added
resellers (VARs) or systems integrators (SIs) as its channel
strategy.
In a broader context, a channel strategy may be a component
of a business's go-to-market strategy. The go-to-market
approach typically defines a business's target market,
determines the buyer (IT manager vs. C-level executive, for
example), outlines the product's value proposition and sets
forth the channel strategy.
Types of channel strategies
Product manufacturers and service providers have a number
of channel options from which to choose.
Direct sales-The simplest approach is the direct channel in
which the vendor sells directly to the customer. The vendor
may maintain its own sales force to close deals with
customers or sell its products or services through an e-
commerce website. Direct selling via catalog represents
another possibility, although this business has been largely
subsumed by e-commerce.
Indirect sales -Vendors can also pursue sales via indirect
channels involving one or more intermediaries. Indirect sales
models include retail, which can involve selling through a
physical store or an online e-tailing company. In addition,
vendors can sell through VARs, companies that bundle a
vendor's product or service with other products and services
to provide an overarching solution for customers. The
vendor-to-VAR-to-customer channel is sometimes referred to
as a one-tier distribution channel strategy. In two-tier
distribution, the vendor sells to a distributor, which, in turn,
provides the vendor's products and services to a network of
VARs.
In addition to retailers, VARs and distributors, managed
service providers (MSPs), consultants, SIs, original equipment
manufacturers (OEMs), independent software vendors (ISVs),
wholesalers and distributors may also serve as channel
partners. A vendor pursuing indirect channels will often
create a partner program to manage relationships with its
business allies.
Consumer sales-Businesses selling to consumers, as opposed
to B2B vendors, may take a somewhat different channel
strategy approach, in which direct and indirect sales typically
have different meanings. In multichannel marketing, for
example, companies may create direct channels, such as
catalogs, direct mail pieces or email campaigns, and/or
indirect channels in which they hope to attract buyers
through websites or social media. With omnichannel
marketing, meanwhile, a business tries to provide buyers
with a seamless shopping experience, regardless of whether
the buyer is shopping online from a desktop or mobile
device, placing an order on a telephone or visiting brick-and-
mortar stores.
Although these sales and marketing tactics are often
associated with consumer sales, B2B companies may also use
channels such as direct mail and social media when
attempting to land business customers.
Retail or eCommerce- Perhaps one of the most traditional
marketing channel strategy options, retail involves either
opening local physical locations that your customers can visit
or creating a website through which people can buy your
goods and services. Many modern businesses now combine
their eCommerce and retail operations for a two-factor
approach. For instance, retail locations can offer additional
customer service for online orders, while eCommerce
channels can provide additional support for local stores.
Digital sales and SEM-For companies who are selling directly
to customers and other brands, search engine marketing and
SEO have become common components of a strong
marketing channel strategy. “SEM” or search engine
marketing is a combination of pay-per-click advertising and
search engine optimisation intended to drive attention for
your company. SEM and SEO are all about getting a brand in
front of their customers using digital channels, rather than
speaking directly to customers or partners.
Social media marketing and personal selling-Although
search engine campaigns are designed to suit the specific
preferences and language of your target audience, they’re
not as personal or intimate as some channel strategy options.
Social media marketing is one of the many ways that today’s
companies are adapting their channel marketing strategy to
suit customers that want to form deeper connections with
brands. Through social campaigns and personal selling,
brands can actively promote themselves and engage with
consumers at the same time.
Email marketing and direct mail-Rather than waiting for
your consumers to find you through content that you post
online, or in-person store advertisements, you can always
take the right information to them. Email marketing and
direct mail marketing are standard parts of many channel
strategy template designs. So much more than just sending
messages to your contacts, mail-based marketing is about
nurturing your audience and maintaining relationships
through valuable, ongoing interactions. These campaigns
take place over a period to build your brand awareness and
trust.
PR and marketing partners-Speaking of raising brand
awareness, when you’re new to an industry or niche, one of
the best ways to upgrade your marketing channel strategy is
to work with partners. Marketing affiliates, ambassadors, and
even PR partners help to drive attention towards your
company by securing media coverage through a range of
outlets. The more partners you build in the right
environments, the easier it will be to reach customers.

2. Channel conflict can be explained as any dispute,

difference or discord arising between two or more channel
partners, where one partner’s activities or operations affect
the business, sales, profitability, market share or similar goal
accomplishment of the other channel partner. As we know
that every manufacturing company needs to plan its
distribution and marketing channel appropriately, to ensure
market captivity and customer satisfaction along with growth
and profitability. In the process of the constant supply of
products in the market, several channel partners and
intermediaries join the supply chain of the brand. Any clash
and disturbance among these trading partners can be
considered as a channel conflict.
Types of Channel Conflict
The channel conflict can be classified majorly into the
following four categories depending upon its flow and the
parties involved:
Vertical Level Conflict-In the vertical level conflict, the
channel partner belonging to a higher level enters into a
dispute with the channel member of a lower level or vice-
versa. For instance, channel conflict between dealers and
retailers or wholesalers and retailers.
Horizontal Level Conflict-The conflict among the channel
partners belonging to the same level, i.e., issues between
two or more stockiest or retailers of different territories, on
the grounds of pricing or manufacturer’s biases, is termed as
horizontal level conflict.
Inter-type Channel Conflict- These type of conflicts
commonly arise in scrambled merchandising, where the large
retailers go out of their way to enter a product line different
from their usual product range, to challenge the small and
concentrated retailers.
Multi-channel Level Conflict-When the manufacturer uses
multiple channels for selling the products, it may face multi-
channel level conflict where the channel partners involved in
a particular distribution channel encounters an issue with the
other channel.
Conflict Magnitude-The level to which the conflict is
considered critical or needs the attention of the channel
leader, i.e., manufacturer, is known as its magnitude. The
magnitude of conflict can be determined through the proper
analysis of the change in market share and the company’s
sales volume in a particular area or region.
Causes of Channel Conflict
Role Ambiguity: The uncertain act of an intermediary in a
multi-channel arrangement may lead to disturbance in the
channel of distribution and cause conflict among the
intermediaries.
Incompatible Goals: When the manufacturer and the
intermediaries do not share the same objectives, both work
in different directions to meet their ends, this results in
channel conflict.
Marketing or Strategic Mis-Alignment: Sometimes, two-
channel partners promote the manufacturer’s product in a
different manner, which created two different images of the
same product in the consumers’ mindset, which creates
conflicting brand perception.
Difference in Market Perception: The manufacturer’s
understanding of the potential market and penetration into a
specific region or territory, may vary from the perception of
the intermediaries, which can create conflict and reduce the
intermediary’s interest in capturing that particular market.
Change Resistant: When the channel leader plans to modify
the distribution channel, the intermediaries may or may not
accept this change. Thus, it may result in a condition of
discord or non-cooperation.
Improper Geographic or Demographic Distribution: If the
sales territory has a narrow consumer base, and the channel
leader allows many selling partners, they tend to lose
interest soon because of low profit and limited sales.
Consequences of Channel Conflict
Now that we know about the causes of such conflicts, we
must also understand how dangerous these may prove to be
for an organization. Given below are some of these
outcomes:
Price Wars: Due to channel conflict, the partners compete
with each other on the grounds of price, and therefore, the
consumer may defer the purchase searching for the best
deal.
Customer Dissatisfaction: If there exists a channel conflict,
then the distributors or retailers may show much interest in
the company’s products and resist to assist the consumers,
which results into their resentment towards the brand.
Sales Deterioration: Conflicts can adversely affect the sales
of the products due to the decline in distributors’ interest
and an increasing number of consumers shifting to
competitors’ products.
Distributors Exit: For the manufacturers, it is essential to
retain the distributors or partners to increase product sales.
When there is a channel conflict, the chances of various
distributors leaving the channel increases.
Poor Public Relations: The unsatisfied distributors may
negatively publicize the brand and its products as a result of
manufacturer’s unhealthy public relations with them.
Channel Conflict Management
It is a universal fact that the conflicts cannot be eliminated,
though these can be handled smartly to reduce its negative
impact on business. Following are some of the ways to
manage the channel conflicts:
Mediation, Arbitration and Diplomacy- To resolve a dispute,
the manufacturer can adopt the strategy of intervention
where a third person intervenes to create harmony. The
other option is arbitration, where an arbitrator listens to the
argument of the parties involved in a conflict and declares a
decision. Or, the parties can resort to diplomacy where the
representatives of both the parties conversate and find a
solution.
Co-optation -The manufacturer should hire an expert who
has already gained experience in managing the channel
conflicts in other organizations, as a member of the grievance
redressal committee or board of directors, for addressing
such conflicts.
Dealer Councils and Trade Associations -To handle the
horizontal or vertical conflicts, the manufacturer forms a
dealer council where the dealers can unanimously put up
their problems and grievances in front of the channel leader.
To bring in unity among the channel partners or
intermediaries, they can be added as members in trade
association which safeguards their interest.
Superior Goals - Establishing a supreme goal of the
organization and aligning it with the individual goals or
objectives of the channel partners, may reduce the channel
conflicts.
Regular Communication - The channel leader should take
regular feedback from the channel partners through formal
and informal meetings to know about market trends and
dynamics. Also, the channel partner’s issues and conflicts can
be addressed through frequent interactions.
Legal Procedure - When the conflict is critical and
uncontrollable by the channel leader, the aggrieved party can
seek legal action, by filing a lawsuit against the accused party.
Fair Pricing - Most of the channel conflicts are a result of the
price war, and therefore, these can be resolved by ensuring
that products are equally priced in all the territories and a
fair margin is provided to the channel partners.
3. CHANNEL DYNAMICS -Product of any company should be
sent to sale centers for selling out. The way used to send
goods/product to consumers is called distribution channel. In
the ever-changing marketing environment, distribution
channels do not stand still. New wholesaling and retailing
institutions emerge, and new channel systems evolve.
Changing of channels according to time is called Channel
Dynamics. It also remain changing and developing according
to time and is applied accordingly.
Types of dynamism in the channel system
There are two types of dynamism in the channel system ;
They are
1) Structural dynamism 2) Behavioral dynamism.
Structural Dynamism: Structural dynamism refers to the
modern marketing distribution channels. Traditionally,
producers, wholesalers and retailers work their business
independently but now-a-days, they work in unified
structural way of system. It concerned with the emergence of
new distribution system such as vertical, horizontal and multi
channel system.
a)Vertical Channel System : A conventional marketing
channel comprises an independent producer, wholesaler(s),
and retailer(s). Each is a separate business seeking to
maximize its own profits, even if this goal reduces profit for
the system as a whole. No channel member has complete or
substantial control over other members. A vertical marketing
system (VMS), comprises the producer, wholesaler(s), and
retailer(s) acting as a unified system. One channel member,
the channel captain, owns the others or franchises them or
has so much power that they all cooperate. The channel
captain can be the producer, the wholesaler, or the retailer.
VMSs arose as a result of strong channel members’ attempts
to control channel behavior and eliminate the conflict that
results when independent channel members pursue their
own objectives. They achieve economies through size,
bargaining power, and elimination of duplicated services.
b)Horizontal Marketing Channel System: Another channel
development is the horizontal marketing system, in which
two or more unrelated companies of wholesalers or retailers
put together resources or programs to exploit an emerging
marketing opportunity. Each company lacks the capital,
know-how, production, or marketing resources to venture
alone, or it is afraid of the risk. The companies might work
with each other on a temporary or permanent basis or create
a joint venture company.
c)Multi channel marketing System: Multichannel marketing
occurs when a single firm uses two or more marketing
channels to reach one or more customer segments. It
becomes more appropriate system when a manufacturer is
selling the same product to consumer as well as industrial
market.
Behavioral Dynamics: It is concerned with changes in the
role and power of channels members which create either co-
operation of conflicts among them. Cooperation helps them
to achieve overall channel goals as well as members’ goal but
conflict may destroy the channel. It is consists of following:
a) Channel role: Each channel members has certain role to
play in the channel system. Each member also has certain
role expectations from other channel members. Role of
channel member can be leading or following role. This
changing role may bring cooperation as well conflict.
b) Channel Power: The capacity that can change channel
members involved in distribution is called channel power. It
is the ability to influence other channel member’s goal
achievement. It consists of following:
Reward power: The capacity to give financial or non-financial
reward to the channel members involved in distribution is
called reward power. Producers gain this type of power in
channel system.
Coercion power: The power to punish, frighten, threaten etc
to all channel members is called coercion power. Such power
can be used by producers against wholesaler and retailers.
Referent Power: Referent power emerges from a channel
member’s desire to join a particular channel system. Many
marketing intermediaries show strong desire to sell strong
and popular brands.
Expert Power: Expert power is acquired from long experience
and special knowledge. Every channel member cannot use
this power. Only those who have special knowledge and
experience can use this power.
Legitimate Power: The power which can influence and
control channel members is called legitimate power. This
power is based on financial strengths and ownership of
strong brands of channel members. Legitimate power
provides authority to influence and control.

4. In any business or organization, all functions are interlinked

and connected to each other and are often overlapping.
Some key aspects like supply chain management, logistics
and inventory form the backbone of the business delivery
function. Therefore, these functions are extremely important
to marketing managers as well as finance controllers.
Inventory management is a very important function that
determines the health of the supply chain as well as the
impacts the financial health of the balance sheet. Every
organization constantly strives to maintain optimum
inventory to be able to meet its requirements and avoid over
or under inventory that can impact the financial figures.
Inventory is always dynamic. Inventory management requires
constant and careful evaluation of external and internal
factors and control through planning and review. Most of the
organizations have a separate department or job function
called inventory planners who continuously monitor, control
and review inventory and interface with production,
procurement and finance departments.
Defining Inventory
Inventory is an idle stock of physical goods that contain
economic value, and are held in various forms by an
organization in its custody awaiting packing, processing,
transformation, use or sale in a future point of time.
Any organization which is into production, trading, sale and
service of a product will necessarily hold stock of various
physical resources to aid in future consumption and sale.
While inventory is a necessary evil of any such business, it
may be noted that the organizations hold inventories for
various reasons, which include speculative purposes,
functional purposes, physical necessities etc.
From the above definition the following points stand out with
reference to inventory:
-All organizations engaged in production or sale of products
hold inventory in one form or other.
-Inventory can be in complete state or incomplete state.
-Inventory is held to facilitate future consumption, sale or
further processing/value addition.
-All inventoried resources have economic value and can be
considered as assets of the organization.
Inventory management and supply chain management are
the backbone of any business operations. With the
development of technology and availability of process driven
software applications, inventory management has undergone
revolutionary changes. In the last decade or so we have seen
adaptation of enhanced customer service concept on the
part of the manufacturers agreeing to manage and hold
inventories at their customers end and thereby effect Just In
Time deliveries. Though this concept is the same in essence
different industries have named the models differently.
Manufacturing companies like computer manufacturing or
mobile phone manufacturers call the model by name VMI -
Vendor Managed Industry while Automobile industry uses
the term JIT - Just In Time where as apparel industry calls
such a model by name - ECR - Efficient consumer response.
The basic underlying model of inventory management
remains the same.
CASE STUDY
Let us take the example of DELL, which has manufacturing
facilities all over the world. They follow a concept of Build to
Order where in the manufacturing or assembly of laptop is
done only when the customer places a firm order on the web
and confirms payment. Dell buys parts and accessories from
various vendors. DELL has taken the initiative to work with
third party service providers to set up warehouses adjacent
to their plants and manage the inventories on behalf of
DELL’s suppliers. The 3PL - third party service provider
receives the consignments and holds inventory of parts on
behalf of Dell’s suppliers. The 3PL warehouse houses
inventories of all of DELL’s suppliers, which might number to
more than two hundred suppliers. When DELL receives a
confirmed order for a Laptop, the system generates a Bill of
material, which is downloaded at the 3PL, processed and
materials are arranged in the cage as per assembly process
and delivered to the manufacturing floor directly. At this
point of transfer, the recognition of sale happens from the
Vendor to Dell. Until then the supplier himself at his expense
holds the inventory. Let us look at the benefits of this model
for both Dell as well as Its Suppliers:
*With VMI model, Dell has reduced its inbound supply chain
and thereby gets to reduce its logistics and inventory
management costs considerably.
*DELL gets to postpone owning inventory until at the time of
actual consumption. Thereby with no inventories DELL has no
need for working capital to be invested into holding
inventories.
*DELL does not have to set up inventory operations and
employ teams for operations as well as management of
inventory functions.
Supplier Benefits
*Supplier gets to establish better relationship and
collaboration with DELL with long-term business prospect.
*By agreeing to hold inventories and effect JIT supplies at the
door to DELL, supplier will be in a better position to bargain
and get more business from DELL.
*With VMI model, supplier gets an opportunity to engage in
better value proposition with his customer DELL.
*Supplier gets confirmed forecast for the entire year with
commitments from DELL for the quantity off take.
*VMI managed is managed by 3PL and supplier does not
have to engage himself in having to set up and manage
inventory operations at DELL’s premise.
*3PL Managed VMI holds inventories of all suppliers thereby
charges each supplier on per pallet basis or per sq.ft basis.
Supplier thereby gets to pay on transaction basis without
having to marry fixed costs of inventory operations.

5. A Warehouse may be defined as a place used for the

storage or accumulation of goods. The function of storage
can be carried out successful with the help of warehouses
used for storing the goods. Warehousing can also be defined
as assumption of responsibility for the storage of goods. By
storing the goods throughout the year and releasing them as
and when they are needed, warehousing creates time utility.
Functions of Warehousing:
Storage: This is the basic function of warehousing. Surplus
commodities which are not needed immediately can be
stored in warehouses. They can be supplied as and when
needed by the customers.
Price Stabilization: Warehouses play an important role in the
process of price stabilization. It is achieved by the creation of
time utility by warehousing. Fall in the prices of goods when
their supply is in abundance and rise in their prices during the
slack season are avoided.
Risk bearing: When the goods are stored in warehouses they
are exposed to many risks in the form of theft, deterioration,
exploration, fire etc. Warehouses are constructed in such a
way as to minimize these risks. Contract of bailment operates
when the goods are stored in wave-houses. The person
keeping the goods in warehouses acts as boiler and
warehouse keeper acts as boiler. A warehouse keeper has to
take the reasonable care of the goods and safeguard them
against various risks. For any loss or damage sustained by
goods, warehouse keeper shall be liable to the owner of the
goods.
Financing: Loans can be raised from the warehouse keeper
against the goods stored by the owner. Goods act as security
for the warehouse keeper. Similarly, banks and other
financial institutions also advance loans against warehouse
receipts. In this manner, warehousing acts as a source of
finance for the businessmen for meeting business operations.
Grading and Packing: Warehouses nowadays provide the
facilities of packing, processing and grading of goods. Goods
can be packed in convenient sizes as per the instructions of
the owner.
Importance of Warehousing In the Development of Trade
and Commerce:
Warehousing or storage refers to the holding and
preservation of goods until they are dispatched to the
consumers. Generally, there is a time gap between the
production and consumption of products. By bridging this
gap, storage creates time utility.
There is need for storing the goods so as to make them
available to buyers as and when required. Some amount of
goods is stored at every stage in the marketing process.
Proper and adequate arrangements to retail the goods in
perfect condition are essential for success in marketing.
Storage enables a firm to carry on production in anticipation
of demand in future. A warehouse is a place used for the
storage or accumulation of goods. It may also be defined as
an establishment that assumes responsibility for the safe
custody of goods. Warehouses enable the businessmen to
carry on production throughout the year and to sell their
products, whenever there is adequate demand. Need for
warehouse arises also because some goods are produced
only in a particular season but are demanded throughout the
year. Similarly, certain products are produced throughout the
year but demanded only during a particular season.
Warehousing facilitates production and distribution on a
large scale.
Benefits from Warehouses:
Regular production: Raw materials need to be stored to
enable mass production to be carried on continuously.
Sometimes, goods are stored in anticipation of a rise in
prices. Warehouses enable manufacturers to produce goods
in anticipation of demand in future.
Time utility: A warehouse creates time utility by bringing the
time gap between the production and consumption of goods.
It helps in making available the goods whenever required or
demanded by the customers. Some goods are produced
throughout the year but demanded only during particular
seasons, e.g., wool, raincoat, umbrella, heater, etc. on the
other hand, some products are demanded throughout the
year but they are produced in certain region, e.g., wheat,
rice, potatoes, etc. Goods like rice, tobacco, liquor and
jaggery become more valuable with the passage of time.
 Store of surplus goods: Basically, a warehouse acts as a
store of surplus goods which are not needed immediately.
Goods are often produced in anticipation of demand and
need to be preserved properly until they are demanded by
the customers. Goods which are not required immediately
can be stored in a warehouse to meet the demand in future.
Price stabilization: Warehouses reduce violent fluctuations in
prices by storing goods when their supply exceeds demand
and by releasing them when the demand is more than
immediate productions. Warehouses ensure a regular supply
of goods in the market. This matching of supply with demand
helps to stabilize prices.
Minimization of risk: Warehouses provide for the safe
custody of goods. Perishable products can be preserved in
cold storage. By keeping their goods in warehouses,
businessmen can minimize the loss from damage, fire, theft
etc. The goods kept in the warehouse are generally insured.
In case of loss or damage to the goods, the owner of goods
can get full compensation from the insurance company.
Packing and grading: Certain products have to be
conditioned or processed to make them fit for human use,
e.g., coffee, tobacco, etc. A modern warehouse provides
facilities for processing, packing, blending, grading etc., of the
goods for the purpose of sale. The prospective buyers can
inspect the goods kept in a warehouse.
 Financing: Warehouses provide a receipt to the owner of
goods for the goods kept in the warehouse. The owner can
borrow money against the security of goods by making an
endorsement on the warehouse receipt. In some countries,
warehouse authority’s advance money against the goods
deposited in the warehouse. By keeping the imported goods
in a bonded warehouse, a businessman can pay customs duty
in installments.
TYPES
Private Warehouses: The private warehouses are owned and
operated by big manufacturers and merchants to fulfill their
own storage needs. The goods manufactured or purchased
by the owner of the warehouses have a limited value or
utility as businessmen in general cannot make use of them
because of the heavy investment required in the construction
of a warehouse, some big business firms which need large
storage capacity on a regular basis and who can afford
money, construct and maintain their private warehouses. A
big manufacturer or wholesaler may have a network of his
own warehouses in different parts of the country.
Public Warehouses: A public warehouse is a specialized
business establishment that provides storage facilities to the
general public for a certain charge. It may be owned and
operated by an individual or a cooperative society. It has to
work under a license from the government in accordance
with the prescribed rules and regulations.
Bonded Warehouses: Bonded warehouses are licensed by
the government to accept imported goods for storage until
the payment of custom duty. They are located near the ports.
These warehouses are either operated by the government or
work under the control of custom authorities.

6. Objectives of Logistics Management in SCM

The primary objective of logistics management is to move the
inventory in a supply chain effectively and efficiently to
extend the desired level of customer service at the least cost
as done parallel with waste management. To achieve this,
the following subsets of the above broader objective need to
be achieved in supply chain management.
Inventory reduction -Inventory is the biggest culprit in
adversely affecting the objectives of logistics management at
the bottom line of an enterprise. Through a financial
accountancy perspective, inventory is an asset and does not
cause any appreciable disadvantage even when it is stocked
in an excess quantity. Traditionally, firms have carried an
excess of inventory for the purpose of extending excellent
customer service. However, inventory as an asset requires
investment to possess it. The funds invested are blocked and
cannot be used for any other productive purpose. Moreover,
there is a capital cost associated with it. The carrying cost will
be equivalent to the interest on the funds at the bank
borrowing rates currently applicable to be strict to the
objectives of logistics management. The carrying cost will be
drained on the enterprise profits. Hence, the price objective
goal can be managed through small, but frequent supplies. A
higher transportation cost will be much lower than the
inventory carrying cost resulting in better margins.
Reliable and consistent delivery performance
On-time delivery is crucial to the customer to maintain his
production schedule. The customer is not interested in a
faster delivery of the material ahead of the production
schedule. This area of operation is subject to variance.
However, proper planning on transportation modes and
inventory availability along with a variation factor will reduce
the variance. The other objectives of logistics management
should be consistency in delivery performance; this will help
build customer confidence for keeping a long-term
relationship.
Freight economy- Freight is a major cost element in logistics
cost. This can be reduced by adopting measures such as
freight consolidation, transport mode selection, route
planning, load unitizing and long-distance shipments.
Minimum product damages- Product damages add to the
logistics cost. The reason for product damages is improper
logistical packaging, frequent consignment handling the
absence of load unitizing, and so on. Use of mechanized
material handling equipment, load unitization, and proper
logistical packaging will reduce the product damage and fulfil
the objectives of logistics management.
Quick response
This is related to the capability of a firm to extend the service
to the customer in the shortest time frame. Use of the latest
technologies in information processing and communications
will enhance the decision-making capability in terms of
accuracy and time, enabling the enterprise to be flexible
enough to fulfil the customer requirements in volumes and
varieties in the shortest time frame, hence fulfil the
objectives of logistics management also. For example, smaller
shipments could be delivered rapidly at the point of
consumption. This will also maintain time management.

7. Supply chain management maintains the balance between

the demand and supply and involves activities right from
procurement of materials and converting them into finished
goods to ensuring delivery at the right time to reach the end-
consumer. Hence, supply chain management is the lifeline of
an organization. It needs to be really efficient to keep the
operations running like a well-oiled machine. A streamlined
supply chain management chain can enhance customer
relationship, lower down operational costs.
Aligning flows: As money, materials, and information are
passed between customers and suppliers, supply chain
management keeps them flowing up and down a supply
chain.
Integrating functions: Supply chain management connects
the activities of logistics, purchasing, and operations to
ensure that they focus on goals that benefit overall
performance.
Coordinating processes: Supply chain management increases
profitability by aligning the processes used to plan, source,
make, deliver, and (when necessary) return a company’s
products and services.
Designing complex systems: Simulation tools can predict
how a supply chain will behave and show how small changes
can cause major disruptions in the flow of materials.
Managing resources: Supply chain managers are responsible
for using people, processes, and technology to meet the
needs of customers.
Purchasing-This is the first function of supply chain
management. It pertains to procuring raw materials and
other resources that are required to manufacture the goods.
It requires coordination with suppliers to deliver the
materials without any delays.
Operations- The operation team engages in demand
planning and forecasting. Before giving raw material
purchase order, the organization has to anticipate the
possible market demand and number of units it needs to
produce. Accordingly, it further sets the ball rolling for
inventory management, production and shipping. If the
demand is over anticipated, then it could result in excess
inventory cost. If the demand is under anticipated, the
organization wouldn’t be able to meet customer demand,
thereby leading to revenue loss. So, operations function plays
a critical role in supply chain management.
Logistics-This function of supply chain management requires
immense coordination. The manufacturing of products has
commenced. It needs space for storage until it is shipped for
delivery. This calls for making local warehouse arrangements.
Let’s say; the products are to be delivered outside the city,
state or country limits. This brings transportation in the loop.
There will also be a need for outstation warehouses. Logistics
ensures that products reach the end-point delivery without
any glitches.
Resource Management-Any production consumes raw
materials, technology, time and labor. However, all the
processes need to be efficient and effective. This phase is
taken care of by the resource management function team. It
decides the allocation of resources in the right activity at the
right time to optimize the production at reduced costs.
Information Workflow- Information sharing and distribution
is what really keeps all other functions of supply chain
management on track. If the information workflow and
communication are poor, it could break apart the entire
chain and lead to mismanagement. If you are planning to
pursue a career as a retailer, you must invest in a supply
chain management course to gain more knowledge.