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Logistics Interface with production and marketing

Logistics Interface with production and marketing Increasingly, organizations are recognizing the importance of integrating their marketing and logistics activities. According to recent trade publications, "whatever the definition, warehousing and distribution are critical to the successful marketing of products: if the product is not where customers want it, when they want it, it is unlikely to sell." Also, increasingly, marketing managers are operational managers, balancing complex trade-offs along the line."

At a conceptual level, managers may well understand and agree to the importance of integrating marketing and logistics activities, but at a practical level integration is often quite difficult to achieve. Firms that are integrated can expect to provide higher levels of customer service, at lower costs, as well as create more satisfied customers and increase profits over the long term. This comes about through both improved efficiencies as well as effectiveness in both the marketing and logistics areas and at their interface points throughout the organization. For firms that focus on developing supply chain competencies, process integration and information sharing across firms is necessary to long-term success. Internal integration of a firm's processes has been identified as a key component of achieving supply chain success! Marketing theory, in the form of the marketing concept or its more modern conceptualization of market orientation, provides a rationale for integration, and research supports a direct, positive relationship between integration and performance success or achievement of a competitive advantage. Although there is a strong rationale for integrating marketing and logistics functions, the process is often left to practitioners to figure out for themselves. The purpose of this article is an empirical investigation of issues relating to marketing-logistics integration within a firm. Little is known about what contributes to or detracts from a firm's ability to these functions. This study does not seek to confirm the integrationperformance link but more practically to address how a firm might go about becoming more integrated. The specific research problem is to identify factors related to inter-functional integration that are managerially relevant.

The marketing discipline itself emerged early in the 20th century as a catalyst for solving the "distribution problem" that existed because of the geographic separation of the manufacturer and customer. This physical separation created the need for strategy development in distribution activities at a time when attention was squarely focused on production methods. Although marketing was originally conceived as including activities related to demand creation (personal selling, advertising, sales promotion) and demand supply (physical distribution), the discipline has evolved to focus primarily on demand creation (product management, promotional activities). A new discipline called logistics has emerged to address the demand supply activities inherent in the physical distribution functions. This disciplinary split has been reflected in business practice as well. Marketing and logistics functions have evolved separately in most organizations, where logistics is now often a major corporate function, distinct and separate from marketing and production functions. Yet, both marketing and logistics functions play an important role in creating satisfied customers. Marketing focuses on demand creation through product, price, and promotion mixes whereas logistics typically is more operationally focused on demand satisfaction, which is, getting the right product to the right place at the right time. The typical interface between the two is in the area of customer service.

Logistics usually is an operational function within an organization, but its strategic importance is increasingly recognized, particularly as part of demand creation activities. 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. Indeed, as Bowersox et al. argue, integration of marketing and logistics functions is necessary in order to achieve the demand creation capabilities of the logistics function. A reason for integrating these functions can also be found in the marketing concept, which emerged about forty years ago as "a corporate state of mind that insists on the integration and coordination of all of the marketing functions which, in turn, are melded with all other corporate functions, for the basic objective of producing maximum long-range corporate profits. More recent manifestations of the marketing concept have re-emerged in discussion of market orientation, stemming mainly from the work of Kohli and Jaworski and Narver and Slater. The exact interpretation of market orientation differs across these two groups of work, but each focuses on the core pillars of the marketing concept in some way. Functional integration forms an important part of the market orientation construct in both conceptualizations.

HOW TO MEASURE A LOGISTICS SYSTEM..?

Measures of Logistics To establish, that logistics is properly addressed throughout its life cycle, one must establish the appropriate measurements to support requirements in the early stages of conceptual design. These measures are;

1. Reliability factors the profitability that a system or product will perform in a satisfactory manner for a given period of time, under specified operating conditions. Reliability is highly depended on the Frequency of maintenance of that item. When frequency of maintenance decreases reliability increases and vice versa. Extensive maintenance is required for unreliable systems.

2. Maintainability factors - maintainability means an inherent design characteristic dealing with the ease, accuracy, safety, and economy in the performance of maintenance functions. Maintainability factors can be measured in terms of elapsed time, personal labour hour rates, maintenance frequencies, maintenance cost, related logistics support factors.

Corrective maintenance unscheduled actions, initiated as a result to restore a system to its required level of performance. These activities are troubleshooting, disassembly, and repair, remove & replace reassembly. Preventive maintenance scheduled actions necessary to retain a system at a specified level of performance. Theses activities include periodic inspections, servicing, calibration, and condition monitoring. Elapsed time can be reduced by applying additional human resources. The objective is to maintain a proper balance between elapsed time, labour time and personnel skills at a minimum maintenance cost.

3. Supply support factors It includes the spare parts and the associated inventories for the accomplishment of maintenance actions. 1. Spares are major replacement items that are repairable, whereas the repair parts are non-repairable smaller components. 2. At each maintenance level, one must determine the type of spare parts, quantity to be purchased and stocked, frequency of ordering and order lot.

3. An additional stock level should be maintained in order to meet the following situations; i. ii. iii. To compensate for the procurement lead times required for item acquisition To compensate for repairable items in the process of undergoing maintenance To compensate for the condemnation or scrapage of repairable items

4. Transport, packaging, and handling factors It includes the movement of human and material resources, in support of both operational and maintenance activities. The factors to be considered are; Transportation route, both national and international Transportation capability or capacity Transportation time, cost and made Products transported must e designed in such a way to eliminate damage, possible degradation etc. 5. Does the package incorporate the desired strength and material characteristics 6. Can it stand rough handling or long term storage without degradation 7. Does the package provide adequate protection against various environmental conditions such as rain, temperature etc. 1. 2. 3. 4.

8. Is the package sufficient with existing transportation and handling method

5. Test and support equipment factors These factors include precision electronic best equipments, mechanical test equipments, ground handling equipments, special jigs and fixtures, maintenance stands etc. The objective is to provide the right item for the job intended, at the proper location, and in quantity required.

6. Organizational factors These factors includes 1. 2. 3. 4. 5. 6. Direct maintenance labor time Indirect labor time required Personnel attrition rate Personnel training rate Number of maintenance work orders Average administrative delay time.

The right personnel quantities and skills must be available when required, and the individuals trained and motivated. 7. Facility factors Different factors in facility are;

1. Item process time or turn around item it is the elapsed time necessary to process an item for maintenance, returning it to full operational status. 2. Facility utilization it is the ratio of time utilized to the time to the time available for use, perfect utilization in terms of space occupancy and so on. 3. Energy utilization is the process of maintenance. 4. Total facility cost for the system operation and support.

8. Software factors Software can be suppliment to many of the maintenance functions. Thus it should be evaluated in terms of language levels or complexity, number of programs, cost per maintenance etc. 1. Software cannot degrade in the same way as equipment; the reliability is important and must be measured. 2. Software reliability is the probability of failure free operation of a software component or system in a specified environment for a specified time.

9. Technical data and information system factors The objectives of these factors are to; 1. Simplify the task of generating and processing technical data through;

Better packaging, eliminating redundancies, reducing processing time, and accessible of information to all organizations. 2. It provides a means for the introduction of design changes and for better implementation of configuration management requirements. 3. It also enables faster, timely, accurate and more reliable communications between multiple locations on a current basis.

10.

Availability factors

It is often used as a measure of system readiness (i.e. the probability that a system will be readily available when required for use). They are of 3 types; 1. Inherent 2. Achieved 3. Operational

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