Sales and Distribution Exam Prep PDF

**Functions and Flows in Distribution Channels** - Essential functions for transferring goods: - Market research. - Establishment of contacts. - Adjustment and negotiation. - Physical distribution. - Financing and risk assumption. - Transfer flows result in v...

**Functions and Flows in Distribution Channels** - Essential functions for transferring goods: - Market research. - Establishment of contacts. - Adjustment and negotiation. - Physical distribution. - Financing and risk assumption. - Transfer flows result in value transfer between producers and customers. **Rating of Participants in the Channel** - Effective management requires: - Evaluation, selection, and motivation of channel participants. - Long-term partnerships and evaluation standards. - Common evaluation standards: - Sales quotas achieved. - Average inventory levels. - Delivery times. - Number of complaints. - Handling of damaged goods. - Cooperation in promotions and education. **Conflicts in Distribution Channels** - Causes of conflicts: - Mismatched goals. - Undefined roles and rights. - Differing interests and high interdependence. - Resolution strategies: - Setting shared higher objectives. - Exchanging personnel between channel levels. - Co-opting individuals in advisory roles. - Mediation by third parties for chronic issues. **Participants in the Distribution Process** - Key participants: - Producers. - Trading companies. - Trade service providers. - Consumers. - Impact: Enhance sales and distribution quality without significantly increasing costs. **Changes in Wholesale Trade** - Driven by IT advancements: - Wholesalers adapting to formats like: - Cash & Carry. - Rack jobbing. - Catalog and truck wholesale. - Wholesale faces redundancy in certain contexts due to distribution cost increases. **Retail Trade Companies** - Sell directly to consumers through: - Classic stores, mobile stores. - Supermarkets, hypermarkets. - Boutiques, vending machines. - Catalog and discount stores. **Retail and Wholesale** - Advantages over earlier trade forms: - Better connection between production and consumption. - Higher productivity. - Improved capacity utilization. **Commercial Service Companies** - Includes: - Trade agencies. - Public warehouses. - Forwarding companies. - Advertising agencies. - Specialized distribution companies. - Provide critical trade-related services like quality testing and logistics. **Market Institutions** - Types of institutions: - Stock exchanges. - Auctions. - Sample fairs. - Role: Facilitate trade through structured platforms. **Elements of the Logistics and Distribution System** - Composed of interconnected elements: - Ordering and delivery. - Storage and inventory management. - Handling and transportation. - Information logistics systems. **Orders and Deliveries of Goods** - Key aspects: - Order flow time constitutes up to 75% of total delivery time. - Goals: - Shorten order-to-delivery time. - Improve communication between customers and suppliers. - Protect goods from damage and theft. - Ensure delivery accuracy. - Strategies: - Use modern IT solutions (e.g., JIT systems). - Develop logistics-oriented organizations. **Shortening Order Times** - Examples of improvements: - KARSTADT (JIT system): Reduced delivery time to 40 hours. - AHLSTROM: Reduced processing time from 6 weeks to 1 week. - NASHUA: Reduced preparation time from 8 hours to 1 hour. - Fast delivery as a competitive advantage: - Orders placed by 5 PM delivered next day in developed markets. **Communication Links Between Customers and Suppliers** - Enhanced communication via: - Electronic systems like EDI (e.g., Wal-Mart). - Integrated distribution centers equipped with advanced conveyor belts. - Results: - Reduced costs (e.g., Wal-Mart\'s distribution costs at 3% of turnover). - Increased efficiency. **Protection of Goods** - Focus on: - Packaging and handling during transport. - Choosing appropriate carriers and materials for sensitive goods. - Example: - EU companies follow strict standards for packing and handling various goods. **Ensuring Accurate Deliveries** - Importance: - Delays can harm manufacturing schedules and customer satisfaction. - Supplier reputation depends on timely deliveries. **Logistics-Oriented Order Flow Organization** - Globalization necessitates: - Centralized logistics teams for order flow control. - Efficient production and assembly networks spanning multiple countries. - Example: Computer parts produced globally and assembled in key markets. **Manipulation of Goods** - Activities to facilitate movement within the logistics system: - Packaging goods in suitable materials like boxes, containers, or tubes. - Functions of packaging: - Safeguard goods from theft, damage, and environmental factors. - Ease storage and transport. - Enhance product presentation to attract consumers. - Inform consumers about product details (e.g., composition, expiration). **Packaging Types and Criteria** - Classification criteria: - **Role in logistics system**: Transport vs. retail packaging. - **Service life**: Disposable vs. reusable. - **Material type**: Metal, wood, glass, plastic, etc. - **Amount of product**: Individual vs. collective packaging. - Examples: - Packaging costs vary by product (e.g., sugar in bulk 1% vs. coffee packets 50%). **Waste Management in Packaging** - Challenges: - Packaging waste becomes useless after unpacking. - Developed countries emphasize recycling and waste reduction. - Examples: - EU regulations mandate recycling for products like car tires and electronics. - Germany's "Green Dot" system ensures packaging recyclability. - Costs: Waste packaging disposal in Germany averages €400 per ton. **Palletization** - Definition: - System for transporting goods on pallets to create efficient transport units. - Benefits: - Reduces labor force needs by up to 75%. - Saves space and reduces handling costs by up to 35%. - Types of pallets: - Differ by shape, dimensions, material, and durability. - Examples: - Modular packaging systems optimize pallet space utilization. **Containerization** - Definition: - Transporting goods in standardized containers for efficiency. - Economic advantages: - Saves packaging costs (up to 80% for sea transport). - Reduces damage and theft risks. - Streamlines customs processes. - Examples: - Lower insurance premiums due to reduced risks. **Transportation as an Element of Business Logistics** - Classification of transport based on: - **Infrastructure**: Land (road, rail, pipeline), water (sea, river), and air. - **Logistics role**: Internal vs. external. - **Organization**: Linear vs. occasional (charter). - **Territorial feature**: Domestic vs. international. **Pros and Cons of Various Transport Modes** - **Truck**: - Pros: Adaptable, affordable, reliable, relatively fast. - Cons: High environmental pollution. - **Rail**: - Pros: Economical for heavy/bulky shipments over long distances. - Cons: Slow, requires frequent transshipments, prone to theft. - **Ship**: - Pros: Low cost for bulk goods. - Cons: Slow, sensitive to timing constraints. - **Airplane**: - Pros: Fast, safe, low packaging costs. - Cons: High costs, limited for heavy or large items. - **Pipeline**: - Pros: Economical, eco-friendly. - Cons: Limited flexibility for locations and goods types. **Road Transportation** - Benefits: - Cost-effective for short distances. - Direct delivery eliminates transshipment. - Versatile vehicle options for specific goods. - Limitations: - High fuel consumption. - Weather-dependent. - Higher environmental impact. - Factors influencing transport mode selection: - Cargo type (weight, value, perishability). - Distance and route characteristics. - Transport economy and past experiences. **Rail Transport** - Advantages: - Economical for large shipments over long distances. - Low energy consumption compared to road transport. - Weaknesses: - Slow and requires transshipment. - Risk of goods damage during handling. - Emerging importance: - Increasing focus due to energy cost and environmental concerns. **Water-Based Transport** - Suitable for bulk goods of low individual value. - Types: - River, canal, and maritime. - Benefits: - Cost-effective. - Limitations: - Slow and unsuitable for high-value or time-sensitive goods. **Inventory Management** - Key components: - Managing raw materials, work-in-progress, and finished goods. - Ensuring continuity of production and meeting customer needs. - Functions: - Reduce shortages and optimize procurement. - Balance demand and supply. - Minimize costs and maximize efficiency. - Trends: - Use of advanced inventory management software. - Predictive analytics for demand forecasting. - Sustainability efforts to reduce waste. **Inventory Valuation Methods** - Common methods: - **FIFO**: First-in, first-out; values older stock first. - **LIFO**: Last-in, first-out; values newer stock first. - **Average cost method**: Weighted average cost per unit. - **Specific identification**: Tracks cost per unit individually. - Impact on financial statements: - Influences assets, liabilities, revenue, and profit. **Inventory Management Techniques** - Key methods: - **EOQ (Economic Order Quantity)**: - Balances ordering and holding costs. - Determines optimal order quantities. - **JIT (Just-in-Time)**: - Minimizes inventory by syncing production with demand. - Reduces waste and storage costs. - **MRP (Material Requirements Planning)**: - Ensures timely availability of materials for production. - Optimizes inventory and procurement processes. **Critical Inventory Management Points** - Key elements: - **Minimum inventory levels**: Avoid shortages and lost sales. - **Maximum stock levels**: Prevent overstocking and storage costs. - **Reorder point**: Trigger automatic restocking orders. - **Delivery time**: Manage time between order and arrival. - **Inventory turnover**: Optimize stock levels based on product movement. - Example: - Electronics store sets: - Minimum inventory: 20 units. - Reorder point: 10 units. - Ensures steady stock while avoiding overstocking. **Trends in Inventory Management** - Emerging trends: - **Automation and digitalization**: Inventory tracking and order automation reduce errors and increase efficiency. - **Predictive analytics**: Advanced algorithms forecast inventory needs. - **Eco-awareness**: Emphasis on reducing waste and using sustainable materials. - **Fast delivery**: Close proximity of distribution centers to consumers. - **Supply chain collaboration**: Sharing inventory data with partners for better planning. - Example: - E-commerce company uses: - Automated inventory management. - Seasonal demand forecasting. - Recycled packaging materials. **Inventory and Financial Impacts** - **Balance Sheet**: - Inventory shown as current assets. - Increase in inventory = higher assets; decrease = lower assets. - **Profit and Loss Account**: - Inventory purchases impact costs. - Proper inventory management ensures a balance between costs and revenue. - Example: - Increased inventory leads to higher assets but also higher storage costs.