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Logistics distribution service refers to a service operation where a small number of items are delivered to a large number of customers in a state of chaotic traffic.

Logistics and distribution services

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Logistics distribution service refers to a service operation where a small number of items are delivered to a large number of customers in a state of chaotic traffic.

Chinese name

Logistics and distribution services

Condition

Traffic jam

Classification basis

Business form, distribution subject

Classification

Sales and distribution, supply and distribution, etc.

Types of logistics and distribution services

Distribution can be divided into a variety of basic forms, depending on the type of operation, the subject, type, amount of time, and degree of specialization of delivery. ^[1]

The operation process of the logistics distribution service will be described in detail below. ^[1]

For logistics companies, the basic purpose of logistics and distribution services is to obtain benefits by providing customers with strategically required logistics and distribution services under the condition of reducing costs; for customer enterprises that obtain distribution services, logistics and distribution services On the one hand, it can reduce the circulation cost of the enterprise, and more importantly, it can make the customer enterprise improve the customer service level. ^[2]

Logistics distribution service is a logistics activity that directly connects end users. Compared with production enterprises, the distribution center network has a large coverage, a large amount of information and fast delivery, advanced logistics methods, complete facilities, and a high degree of professionalism. Its service to customers has become Indispensable support and guarantee for production enterprises in a modern economy. With the support of logistics distribution, production enterprises can organize the batch production of raw materials, auxiliary materials, parts, etc. according to the production needs of the enterprise, and distribute them regularly and quantitatively according to the plan, reduce the enterprise inventory, or achieve zero inventory, which can not only be a production enterprise Cost savings also relieved the worries of production enterprises. With the support of logistics and distribution services, retailers can replenish products in a timely manner according to the sales status of the store, ensuring continuous stocks and zero inventory. With the support of logistics and distribution, small and medium-sized customers can organize joint purchases and common distributions, so as to obtain benefits of economies of scale.

The effect of logistics and distribution services on production enterprises is often reflected in the marketing process of products. In order for a company's marketing activities to be successful, from the customer's perspective, the products and services provided by the manufacturing company must be available. In other words, customers can easily get the products they need whenever they need them. In order to promote the sales of enterprise products, on the one hand, production enterprises must locate enterprise resources on the products that customers consider to be the core, and on the other hand, they must conveniently and timely deliver products to customers, which will make the operation of the enterprise complicated and busy . At this time, the production enterprise can introduce logistics and distribution services to solve the dilemma that the enterprise cannot take into account both product production and distribution.

Examining the effectiveness of logistics distribution services from the perspective of marketing mix is a basic method of examination. A marketing mix is a collection of marketing activities designed to attract customers while achieving corporate goals. The key to forming an effective marketing mix is to combine the resources undertaking these activities with the greatest impact on customers. As already mentioned, the logistics distribution service is a process to widely satisfy customers' time utility needs and location utility needs. Simply put, logistics and distribution services can ensure that customers' inventory needs are fixed and scheduled, and other related activities are satisfactorily performed. Therefore, the output of logistics activities is customer service.

Generally speaking, the impact of logistics and distribution activities on customers is a positive impact, because logistics and distribution provide a variety of alternative product delivery methods, and the provision of multiple methods enables sellers to determine different levels of inventory and Expected order lead time. In addition, the service capability of logistics distribution is also an effective method to attract consumers, because the distribution service can meet consumers' requirements for the time and space attributes of products when they purchase products.

In the specific operation of the enterprise, the various environments that can make the logistics and distribution services form core capabilities are often different. The evolution of the service benefits of logistics and distribution services to manufacturing enterprises has evolved mainly with the evolution of the enterprise product life cycle. Therefore, in order to further clarify the service benefits of logistics distribution services to its customers, it can be obtained by analyzing the different logistics distribution services required at different stages of the product life cycle of an enterprise.

The typical product life cycle can be divided into four phases, namely the introduction phase, growth phase, mature phase and decline phase.

The introduction period refers to the period when new products have just been put on the market. At this time, customers do not understand the product, only a few customers who are pursuing novelty may buy, and the sales volume is very low. In order to expand sales, a large amount of promotional costs are needed to advertise the product. At this stage, due to technical reasons, the product cannot be produced in large quantities, so the cost is high, and the sales growth is slow. Not only can the company not get profit, it may lose money. The product also needs to be further improved.

The product enters the growth stage after the introduction period. At this time, the customer was already familiar with the product, a large number of new customers began to buy, and the market gradually expanded. The products are produced in large quantities, the production costs are relatively reduced, the sales of enterprises are rising rapidly, and profits are also rapidly increasing. When competitors see profitability, they will enter the market to participate in competition, which will increase the supply of similar products, the price will drop, and the growth rate of corporate profits will gradually slow down, and finally reach the highest point of life-cycle profits.

After that, it will enter the mature period of the product life cycle. At this time, market demand tends to be saturated, there are few potential customers, and sales growth is slow until it declines.

At this stage, competition has gradually intensified, product prices have fallen, promotion costs have increased, and corporate profits have fallen. After experiencing the introduction period, growth period, and maturity period, finally entering the decline period of the product life cycle. With the development of science and technology, the emergence of new products or new substitutes will change the consumer habits of customers and switch to other products, so that the sales and profits of the original products will rapidly decline, and the products will gradually withdraw from the market.

(1) Logistics distribution service during product introduction period

First, the introduction of new products into the market requires the support of logistics and distribution services. In the new product introduction stage, a high degree of product availability and flexibility in logistics and distribution are required. Since the initial goal of introducing new products is to gain a foothold in the market, it is of paramount importance to meet consumer demand for "stock availability". When formulating a logistics distribution support plan for a new product, a manufacturing company must also consider whether the logistics distribution service company has the ability to provide product replenishment quickly and accurately. In fact, because the company is in the introduction stage of new products, the company lacks reliable historical data on the logistics and distribution of the product. The data that the company has at most is a prediction of the environment. Therefore, no matter what kind of distribution plan the company adopts, it means that Product replenishment programs will be very important.

Secondly, the advertising and product promotion activities of the new product introduction stage also need the support of logistics and distribution services. During the introduction phase of new products, a large amount of advertising and promotional activities are usually required to let potential customers understand the various attributes of the product and convince them to make the initial purchase decision. For example, a retail chain may agree to reserve a new product on a trial basis, but is only willing to do so under the conditions of providing promotional discounts or granting sales subsidies. If the product is approved by the customer, it will need to be replenished quickly. During this critical period, if there is a shortage of inventory or unstable delivery, it is possible to offset the results of the marketing strategy.

If the product is not recognized by customers (this is often the case during the introduction of new products), logistics activities will play a more important role in integrated marketing. This is because the market position of new products is not guaranteed, and manufacturers and In order to avoid and end products that are likely to be unsaleable and return them, its customers tend to ship small-scale shipments and the order frequency is unstable, which may be accompanied by return logistics. Accordingly, the cost of logistics activities during the introduction of new products is generally high.

Now, with the change of new product development methods, logistics and distribution services also play an increasingly important role in the development of new products, which is reflected in the following three aspects.

The more emphasis is placed on the importance of new product development, the more it means that the design of future logistics distribution systems must adapt to changes in the storage and transportation attributes of new products. For production enterprises, specific requirements for handling, transportation, and packaging will expand with the expansion of product categories, and therefore require greater flexibility in logistics and distribution systems. The expansion of product categories will require special equipment, such as refrigerated trucks or tank trucks, making the task of logistics more complex.

The sales channels of new products are increasingly diversified, and new products serve many different markets through multiple channels, which has become an increasing demand for enterprises. As the market expands, various products become more specialized and are sold to a shrinking customer base. Therefore, if an enterprise wants to extend its business activities to these specialized markets, it means that it must provide services to customers through various marketing channels. Cost control is less likely and the control process becomes more difficult.

Since not all new product development can be successful, it also increases the difficulty of logistics and distribution services. According to the survey, more than half of the new products introduced to the market did not enjoy a long enough life to cover their development costs. From the perspective of logistics distribution services, it is difficult to identify which product will be the winner or which product will fail. Therefore, production enterprises must be extra careful in the logistics and distribution of new products, and do not make product failures worse by canceling the support of logistics and distribution services during product introduction. On the other hand, hoarding inventory and arranging logistics and distribution activities according to expected sales that will never be achieved will pay a high price. In this regard, during the introduction of new products, the logistics distribution service of new products is a balancing act between fully providing logistics services and avoiding excessive support or burden.

(2) Logistics distribution service during product growth period

In the growth stage of the life cycle, the product has achieved a certain degree of market recognition, and the sales volume has become more or less clear. The focus of logistics distribution services has changed from providing the required services at any cost to more balanced service and cost performance. Business commitments to customer service have been planned to achieve profitable goals. At this point, the key for an enterprise is to achieve a balanced sales volume as much as possible, and then expand its market coverage. Now that the product is gaining more and more customer acceptance, it is possible for distribution services to achieve higher levels of profitability in this stage of growth. In this stage, the market penetration of products is continuously expanding, and the sales terms and conditions have been adjusted accordingly, mainly reflected in quantity discounts and promotional incentives, in order to maximize the benefits.

In the growth stage, the challenge for marketing is to sell at the rate of demand growth. Enterprises in this growth cycle have the greatest opportunity to design logistics operations for profit. In this stage, the marketing activities are mainly specific logistics distribution services, and there are no special requirements. The channels for marketing success are relatively simple and clear. For example, products are generally sold only through limited and traditional distributors. These traditional sales channels usually sell products based on increasing sales volumes, thus providing the greatest opportunity for achieving economies of scale in logistics activities.

If you want to support market development from logistics distribution, you must consider how to maintain an appropriate level of customer service, which is a more complex issue. Providing high levels of product availability and the ability to respond quickly and consistently to customer orders are costly. Facts have proved that the cost of increasing the customer service level is gradually faster than the actual expanded service level. Therefore, companies that provide high-level customer service are likely to face high total logistics costs.

(3) Logistics distribution services during product maturity

The product is in a mature stage of saturation, and competition among manufacturing enterprises becomes fierce. The swarm of alternative products has forced companies to adjust the prices of their products, and expect to retain or compete for more buyers through better customer service. At the product maturity stage, competitors will adjust their basic service commitments to provide unique value-added services, so that logistics and distribution services become highly selective. At this time, the company hopes to create a loyalty atmosphere among the main customers through the efforts, so the company will allocate more expenses to logistics and distribution activities to ensure that it provides comprehensive services to key customers.

For marketing activities at the maturity stage, marketing channels tend to diversify. For example, on the one hand, a manufacturing company directly sells its own products by opening a specialty store, and on the other hand, sells the product to a wholesaler through a traditional method. The wholesaler sells the product to a retailer. Sell products directly through the Internet.

The diversification of marketing channels at the product maturity stage places higher requirements on logistics and distribution services. The finished product may reach its destination through multiple logistics arrangements provided by wholesalers, distributors, temporary workers, assemblers, etc., or it may be shipped directly from the manufacturer to the retailer; and in some cases (such as products sold online) , Products bypass the traditional retailer and ship directly to customers homes. Such changing shipping and delivery activities require a lot of adjustments through the logistics distribution service system. In order to establish multiple sales channels at the mature stage of the product life cycle, many manufacturers have established distribution warehouses. The purpose of their warehouse network is to be able to meet the needs of various distribution services from many different channels.

In addition, it is precisely because of the diversification of channels that product distribution in the mature stage is usually completed by several different distribution schemes. In this way, the product flow to a certain location will be reduced, and special services need to be provided to special customers. These conditions indicate that the competition in the mature stage has increased the complexity of logistics distribution services and increased the flexibility of operation requirements. The role of logistics distribution services for enterprises is also obvious.

(4) Logistics distribution services during product decline

When a product enters a complete recession phase, the product will be withdrawn from the market, and the decision of the company's management department is to sell the product or continue to produce the product to a limited extent. Therefore, on the one hand, the enterprise's logistics distribution service must be positioned to continue to maintain the corresponding delivery business; on the other hand, when the product is removed, it should not take too much risk. At this time, as a company's goal, how to minimize the risk is more important than minimizing the cost of logistics and distribution services.

Summarizing the analysis of the above stages, we know that the introduction of new products requires a high level of logistics and distribution services to adapt to the rapid changes in the material flow plan. In the growth stage and saturation maturity stage of the life cycle, the focus shifts to the rationalization of services and costs ; In the period of complete recession, manufacturers need to position logistics distribution services to minimize risks.

The product life cycle is used as a method of product life division and problem analysis in marketing management. We use it to analyze the differences in demand for logistics and distribution services at each stage of the product life cycle. Different benefits at every stage of the life cycle. In fact, for logistics and distribution services, strategic adjustments need to be made in accordance with market competition in order to achieve better benefits at all stages of the product life cycle.