INTERNATIONAL MARKETING

1. INTERNATIONAL MARKETING SUPPLY CHAIN MANAGEMENT HIGHER NATIONAL DIPLOMA Supply Chain Logistics: An Introduction: DL5E 34 / VSC 116

2. EĞİTİMCİ HAKKINDA BİLGİÖMER PESEN • Darüşşafaka Lisesi mezunu • Makine Mühendisi • Tekstil & Pazarlama yüksek lisans – Bradford Üniversitesi / UK • 29 yıldır dış ticaret ile uğraşıyorum • 22 yaşında bir firma sahibiyim – ATCO Dış Ticaret Ltd. Şti. • 12 yıldır eğitim veriyorum • İzmir Ekonomi Üniversitesi’nde öğretim görevlisiyim • Cep : 0542 533 15 35 • E-mail : opesen@superonline.com

3. DURING THE COURSE …… • 1xMid-term Exam  20% • ( Questions + Cases ) • Class / Homework Assignments  20% • Single or Group work – evaluated as quizes ( Q1,Q2,Q3,Q4,....) • 1xPresentation  30% • Sectoral Project – Field work • Final Exam  30% • ( Questions + Cases )

4. DURING THE COURSE …… • Attendance is very very important for you . We will learn in the class . You will be responsible from everything discussed and said in the class . • No talking in the class . • Anybody wants to talk with friends can do this without any problems outside . I need people who wants to learn something from a businessman . • No attendance in class work , no evaluation and no second chance .

5. WHAT IS THE COURSE ABOUT ? • Supply Chain Logistics • Logistics and Service Operations • Logistics and Customer Scheduling • Materials Management in Services • Supply Chain Management • Supply Chain Relationships • Logistics and Customer Needs • Logistics and Operations Management • The Marketing Mix • Customer Relationship Management • Logistics: The Value Chain • Logistics and Cost Classification • Distribution Logistics • Warehouse Operation • Reverse Logistics

6. INTRODUCTION • This unit Supply Chain Logistics: An Introduction will assist you to become familiar with the basic logistics’ concept and have an understanding of how they are used in the management of the supply chain. • You should also be able to demonstrate the role played by the customer in organising the logistics to meet customer needs as well as the importance of managing the supply chain operations to provide value to the organisation.

7. INTRODUCTION There are three outcomes for this unit: • Identify the competitive advantages that can be obtained through the application of logistics. • Describe the customer role in determining how the logistics are organized to meet the customer needs. • Explain how logistic costs can be managed to provide value to the stakeholders

8. HOW TO FOLLOW ..... Sections 1- 6 This first part of the Unit should enable you to describe the competitive advantages that can be achieved through the application of Logistics. This part will cover: • Definition, structure and purpose of a supply chain • Relationships in a supply chain • Customer needs • Definition of logistics • Performance objectives of the supply chain • Competitiveness of the supply chain • Logistics strategy

9. HOW TO FOLLOW ..... Sections 7- 10 The second part of the Unit should enable you to describe how the customer has a strong influence on the design and organisation of the Logistics process to meet their needs. This part will cover: • Customer service levels • Marketing mix • Order winners and qualifiers • Logistics contribution to marketing • Customer relationship management • Customer retention

10. HOW TO FOLLOW ..... Sections 11-15 The third part of the Unit should enable you to explain the management and control of Logistics costs in order to provide value to the stakeholders. These sections will cover: • Return on assets (current assets, fixed assets, sales, profit margin, price) • Value added • Standard costing • Activity based costing

11. Supply Chain Logistics

12. Logistics and Supply Chain Management: Typical Definitions Supply Chain Management Supply Chain Managementencompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all Logistics Management activities. Importantly, it also includes co-ordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies.

13. Logistics and Supply Chain Management: Typical Definitions Supply Chain Management: Boundaries & Relationships Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It includes all of the Logistics Management activities, as well as manufacturing operations. In addition it drives co-ordination of processes & activities with and across: • Marketing • Sales • Product design • Finance • Information technology.

14. Logistics and Supply Chain Management: Typical Definitions Logistics Management Logistics Management is that part of Supply Chain Management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements.

15. Logistics and Supply Chain Management: Typical Definitions Logistics Management: Boundaries & Relationships Logistics Management activities typically include: • inbound and outbound transportation management • fleet management • warehousing • materials handling • order fulfilment • logistics network design • inventory management • supply/demand planning • management of third party logistics services providers.

16. Logistics and Supply Chain Management: Typical Definitions • To varying degrees, the logistics function also includes sourcing and procurement, production planning and scheduling, packaging and assembly, and customer service. • It is involved in all levels of planning and execution: strategic, operational and tactical. • Logistics Management is an integrating function, which co-ordinates and optimises all logistics activities, as well as integrating logistics activities with other functions including marketing, sales manufacturing, finance and information technology. • So in essence Logistics presents a big challenge to organisations, but done right a source of competitive advantage.

17. Logistics and Supply Chain Management: Typical Definitions Example A large supermarket chain continues to grow in an intensely competitive market. Why is this the case? This organisation describes its core purpose as being to create value for customers to earn their lifetime loyalty. To do this the organisation must: • understand its customer needs and how they can best be served • ensure their products are recognised by its customers as representing outstanding value for money • ensure that the products, required by its customers, are available on the shelf at each of its stores at all times, day and night.

18. Logistics and Supply Chain Management: Typical Definitions The task of planning and controlling the purchase and distribution of this organisation’s huge product range from suppliers to stores falls to Logistics. Logistics is the task of providing: • Material Flow of the physical goods from suppliers through the distribution centres to stores • Information Flow of the demand data from the consumer back to purchasing and to suppliers so that material flow can be accurately planned and controlled.

19. Logistics and Supply Chain Management: Typical Definitions • The logistics task of managing material flow and information flow is a key part of the overall task of supply chain management. • Supply chain management is concerned with managing the entire process of raw material supply: the manufacturing, packaging and distribution to the end customer. • This particular supermarket chain supply chain structure comprises three main functions:

20. Logistics and Supply Chain Management: Typical Definitions • Distribution is the operations and support task of managing the distribution centres (DC’s), and the distribution of products from the DC’s to the associated stores • Network and Capacity Planning is the task of planning and implementing sufficient capacity in the supply chain to ensure that the right products can be procured in the right quantities now and in the future • Supply Chain Development is the task of improving the overall supply chain so that its processes are stable and in control, that it is efficient, and that it is correctly structured to meet the logistics needs of material flow and information flow.

21. Logistics and Supply Chain Management: Typical Definitions • So we can see logistics plays a large part in the overall supply chain challenge acting as a key enabler. • The alignment of the various partners in a supply chain is critical in order to deliver superior value to the end customer at less cost to the supply chain as a whole.

22. Logistics and Supply Chain Management: Typical Definitions Management Strategy The focus of management strategy for the supply chain as a whole is on alignment between supply chain members, of which the end customer is the key one. As Gattorna (1998) puts it: Materials and finished products only flow through the supply chain because of consumer behaviour at the end of the [chain].

23. Logistics and Supply Chain Management: Typical Definitions • The proper management, of material flow and information flow, along the supply chain is critical in influencing the consumer satisfaction with the end product. • Late or wrong delivery, or missing bits from a product, can put the whole supply chain at risk from competitors who can perform the logistics task better.

24. Logistics and Supply Chain Management: Typical Definitions If we go back to our example we can see the large supermarket chain is in no doubt about the opportunities here. A breakdown of costs in their UK supply chain is as follows: Supplier delivery to distribution centre (DC) 18% DC operations and deliver to store 28% Store replenishment 46% Supplier replenishment systems 8%

25. Logistics and Supply Chain Management: Typical Definitions • Nearly half of the supply chain costs are incurred in-store. • In order to reduce these in-store costs, they have realised that the solution is to spend more upstream and downstream to secure viable trade-offs in store replenishment. • In simple terms if a product is not available on the shelf, then the sale is lost. • By aligning external manufacturing and distribution processes with its own, they seek to deliver superior value to the consumer at less cost to the supply chain as a whole.

26. Logistics and Supply Chain Management: Typical Definitions Material Flow The aim within a supply chain must be to keep materials flowing from source to end customer in a timely and regulated manner. Supply Chains can be complex with many organisations involved, therefore it is essential that the material flow be properly managed as a process. This will help prevent local build-ups of inventory and material shortages at points in the chain.

27. Logistics and Supply Chain Management: Typical Definitions • A company that produces motorcars, for example, will have thousands of components and sub-assemblies distributed through the supply chain, at any point in time. • Yet these must be co-ordinated to come together for final assembly in order to ultimately deliver a gleaming car to the end consumer.

28. Figure1: Simple example of a Supply Chain

29. Figure1: Simple example of a Supply Chain • Figure 1, above illustrates in simple terms the supply chain and its lower level suppliers. • In real terms for a motorcar it is probably much larger which in turn introduces complexity. • A key challenge is managing this complexity through the effective co-ordination of the different suppliers to deliver material on time to the next step in the chain. • A key enabler to reducing the complexity is the effective management of information flow between the various tiers of suppliers.

30. Logistics and Supply Chain Management: Typical Definitions Information flow Synchronising material flow and movement however is only part of the equation. Another fundamental requirement is the timely and accurate flow of data and information down and across the various levels of the supply chain. Ultimately it is the demand of the end customer that triggers the supply chain to respond.

31. Logistics and Supply Chain Management: Typical Definitions By sharing the end-customer demand information across the supply chain, we create a demand chain, directed at providing enhanced customer value. Information technology enables the rapid sharing of demand and supply data at increasing levels of detail and sophistication. The aim is to integrate such demand and supply data so that an increasingly accurate picture is obtained about the nature of business processes, markets and consumers. Such integration provides increasing competitive advantage.

32. Logistics and Supply Chain Management: Typical Definitions • The greatest opportunities for meeting demand in the marketplace with a maximum of dependability and a minimum of inventory come from implementing such integration across the supply chain. • In today’s integrated world organisations cannot become ‘world class’ by themselves.

33. Let us look again at the motorcar example to see how this is applied. Figure 2: Example of a Demand Chain

34. Logistics and Supply Chain Management: Typical Definitions • The data and information is often referred to as the glue that binds the supply chain processes together.

35. Competing through Logistics • Organisations of today have to be adept at managing a number of goals and objectives to be successful. • Often these goals and objectives appear to be at conflict with one another. • For example an organisation does not want to incur the monetary cost of carrying a high level of inventory but at the same time it must carry enough in order to be responsive on delivery to any reasonable rise in unforecasted customer demand. • Against this backdrop customers, once they have decided to purchase, typically want the product or service now and at minimum cost. • These factors have a strong influence on the design of the supply chain.

36. Competing through Logistics • To be successful and gain that crucial competitive advantage the various partners must come together to identify the critical success factors for the supply chain as a whole and the key capabilities they must each individually have or develop through investment in training, processes, quality etc.

37. Competing through Logistics • Organisations cannot do everything all of the time. • They have a finite level of resource that means they have to develop their ability to prioritise and focus on the right activities. • This brings us back to the need for alignment across the supply chain. • Let us look at the competitive priorities that can be delivered by logistics in the supply chain.

38. Competitive Advantage There are various ways in which products compete in the marketplace. For example; • Quality • Price • Technical features • Brand name

39. Competitive Advantage • Product availability in the marketplace at low cost is a key advantage provided by logistics, as shown in the supermarket chain example. • Logistics supports competitiveness of the supply chain as a whole by: • …meeting end customer demand through supplying what is needed, in the form it is needed, when it is needed, at a competitive cost.

40. The Quality Advantage • The most fundamental objective, in that it is a foundation for all the other, is to carry out all processes across the supply chain so that the end product does what it is supposed to do. • Quality is the most visible aspect of the supply chain. • Business processes must be designed to not just meet the needs of customers, but to delight them.

41. The Quality Advantage Many things influence customer loyalty: • product does what it is supposed to do • value for money • quality of processes • way the customer is treated • quality of the staff in the organisation • organisation makes a commitment and keeps that commitment

42. The Quality Advantage • Product unavailability, defectsand late deliveries are all symptoms of quality problems in supply chain processes. • Such problems are visible to the end customer, and negatively influence that customer’s loyalty.

43. The Quality Advantage • Robust processes are at the heart of supply chain performance. • Through the adherence to process management, defects or errors will be highlighted earlier reducing the impact on customer and cost. • Commitment to quality and a customer-centred attitude must start at senior management and permeate down through, all levels of the organisation and every organisation in the supply chain.

44. The Speed Advantage • The time a customer has to wait to receive a given product or service is measured. • Volkswagen calls this time the customer lead-time: that is, the time it takes from the moment a customer places an order to the moment that customer receives the car they have specified. • Such lead-times can vary from zero (the product is immediately available, such as goods on a supermarket shelf) to months or years (such as the construction of a new building).

45. The Speed Advantage • Companies that have learned that some customers don’t want to wait can use time to win orders. • They are prepared to pay a premium to get what they want quickly. • An example is Vision Express, which offer prescription spectacles, ‘in about one hour’. Technicians machine lenses from blanks, on the premises. Staff are given incentives to maintain a 95% service level against the one-hour target. • Vision Express has been successful in the marketplace by re-engineering the supply chain so that parts and information can flow rapidly from one process to the next. • Compare this with other opticians in the high street, who must send customer orders to a central factory.

46. The Speed Advantage • Under the remote factory system, orders typically take about 10 days to process. • An individual customer’s order must be dispatched to the factory and then compete in a queue with orders from all the other high street branches around the country. • Once it has been processed, it must return to the branch that raised the order. • While this may be cheaper to do (a single, remote factory replaces many small factories in the branches), it takes much longer .

47. The Dependability Advantage Time is not just about speed. It is also about meeting promises. Organisations can do themselves a power of good by adopting one clear but very simple message: make a promise and keep that promise. Questions an organisation should be asking itself: • are we always meeting our delivery promises • do we answer calls when we said, how we said and answer what the customer wanted • reflect the right standards and commitments, can I make promises knowing that the company will be able to fulfil them.

48. The Dependability Advantage • Firms who do not offer instantaneous availability need to tell the customer when the product or service will be delivered. • Delivery dependability measures how successful the firm has been in meeting those promises. • For example, the UK based Royal Mail offers a first class service for letters where there is a 92% chance that a letter posted today will reach its destination tomorrow.

49. The Dependability Advantage • It is important to measure dependability in the same end to end way that speed is measured. • Although Vision Express offers a one-hour service for prescription glasses, the 95% service level target is a measure of the dependability of that service. • Dependability measures are widely used in industries such as train and air services to monitor how well published timetables are met. • In manufacturing firms, dependability is used to monitor a supplier’s performance in such terms as: > On time (% orders delivered on time) > In full (% orders delivered complete)

50. The Dependability Advantage • An organisation needs robust and predictable processes to provide the foundation for supply chain processes. • This is no different for dependability if the organisation wants to gain an important advantage. • Toyota UK manages inbound deliveries of parts from suppliers in southern Europe by a process called chain logistics. • Trailers of parts are moved in four-hour cycles, they are then exchanged for the returning empty trailer on its way back from the UK.