ISM textbook

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Sales environment
Another example shows the dramatic consequences of a lack of integration
between sales and operations. 17 In a major clothing company, the sales manager
was instructed to increase sales targets irrespective of production capacity.
Encouraged by his sales manager, a salesperson secured a major order from a
national retailer. The result was that production could not deliver, the customer
was furious, the salesperson was demotivated, and the sales manager was acutely
embarrassed.
Having examined the major forces that impact on the sales function, we will now
consider the specific settings where selling takes place, and some of the activities,
such as sales promotions and exhibitions, that support selling activities.
4.2 SALES CHANNELS
Distribution channels involve two separate, yet closely connected, activities: logistics,
or physical distribution management (PDM), and channels of distribution.
Historically, distribution was simple, with producers selling to their immediate
neighbours, who often collected goods themselves. Modern-day manufacturing,
more cosmopolitan consumers, better transportation and communications, and business
specialisation have meant that channel decisions are now quite complex. Distribution
costs have risen relative to production. However, as a result of automation
and computerisation, production costs as a percentage of total cost are now considerably
lower than they were only a few years ago. Each of the two elements of distribution
is now considered.
Logistics or physical distribution
management (PDM)
The terms logistics and PDM are interchangeable, although some writers infer that
logistics is more concerned with strategic issues whereas PDM relates to tactics. Basically,
logistics means the effective and economic planning, implementation and control
of the physical flow of materials in their unprocessed state through to finished
goods from the point of origin to delivery to the end-consumer. Logistics conventionally
starts with customers and works back towards the original source of supply.
The term supply chain integration (SCI) is sometimes used to describe its effective
co-ordination, and this is discussed in detail in Chapter 10.
The logistics mix describes the functional elements involved in this process and
each of these is now considered:
1. Order processing: this first stage calls for close liaison with the customer. A welldesigned
system should have simple administrative procedures and be speedy
and effective.
2. Materials handling: this is usually a function of the product in terms of physical
chacteristics such as weight, bulk related to value and perishability, all of which