marketing - Industrial Engineering

466 PART 6 DELIVERING VALUE
In shipping goods to its warehouses, dealers, and customers, the company can choose
among five transportation modes: rail, air, truck, waterway, and pipeline. Shippers consider
such criteria as speed, frequency, dependability, capability, availability, traceability, and
cost. For speed, air, rail, and truck are the prime contenders. If the goal is low cost, then the
choice is water or pipeline.
Shippers are increasingly combining two or more transportation modes, thanks to containerization.
Containerization consists of putting the goods in boxes or trailers that are
easy to transfer between two transportation modes. Piggyback describes the use of rail and
trucks; ftshyback, water and trucks; trainship, water and rail; and airtruck, air and trucks.
Each coordinated mode offers specific advantages. For example, piggyback is cheaper than
trucking alone, yet provides flexibility and convenience.
Shippers can choose from private, contract, and common carriers. If the shipper O\Nns its
own truck or air fleet, it becomes a private calTieJ: A contract carrier is an independent organization
selling transportation services to others on a contract basis. A common carrier provides
services between predetermined points on a scheduled basis and is available to all
shippers at standard rates.
To reduce costly handing at arrival, some firms are putting items into shelf-ready packaging
so they don't need to be unpacked from a box and placed on a shelf individually. In
Europe, P&G uses a three-tier logistic system to schedule deliveries of fast- and slow-moving
goods, bulky items, and small items in the most efficient way.7 9
Organizational Lessons
Market-logistics strategies must be derived from business strategies, rather than solely from
cost considerations. The logistics system must be information intensive and establish electronic
links among all the significant parties. Finally, the company should set its logistics
goals to match or exceed competitors' service standards and should involve members of all
relevant teams in the planning process. Getting logistics right can have a big payoff.
PEPSI BOTTLING GROUP
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In 2002, Pepsi Bottling Group-Pepsi's largest independent bottler and distributor-was saddled with a creaky
supply chain that resulted in many stockouts. It completely overhauled its supply chain, from order taking to
truck loading to store deliveries. The new program included technology upgrades, revised work schedules, and
a renewed focus on customer service. Warehouse workers, called "pickers," began to wear headsets and barcode
scanners on their wrists to create "certified pallets" with close to 100% accuracy. By 2006, stockouls had
decreased significantly as a result. As one Pepsi Bottling employee said, "It was almost like when Iwenl to bed
Iwas Fred Flintsone and when Iwoke up Iwas George Jetson."80
Today's stronger demands for logistical support from large customers will increase suppliers'
costs. Customers want more frequent deliveries so they don't have to carry as much
inventory. They want shorter order-cycle times, which means that suppliers must carry high
in-stock availability. Customers often want direct store delivery rather than shipments to
distribution centers. They want mixed pallets rather than separate pallets. They want tighter
promised delivery times. They may want custom packaging, price tagging, and display
building.
.Suppliers can't say no to many of these requests, but at least they can set up different
logistical programs with different service levels and customer charges. Smart companies will
adjust their offerings to each major customer's requirements. The company's trade group
will set up differentiated distribution by offering different bundled service programs for different
customers.