Distribution & Logistics Management (EDL 321)-Semester 3

Distribution & Logistics Management (EDL 321)-Semester 3
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1st block assessment
Case Study
A dabbawala is a person, who is part of a delivery system that collects hot food in lunch boxes from the residences of workers in the late morning, delivers the lunches to the workplace utilizing various modes of transport, predominantly bicycles and the railway trains, and returns the empty boxes to the customer’s residence that afternoon. They are also made use of by prominent meal suppliers in Mumbai where they ferry ready, cooked meals from central kitchens to the customers and back.
It all started about 125 years back when this Parasi banker wanted to have home cooked food regularly in office and gave this responsibility to the first ever Dabbawala. Other people also liked the idea and the demand for Dabba delivery soared.It was all informal and individual effort in the beginning, but visionary Mahadeo Havaji Bachche saw the opportunity and started the lunch delivery service in its present team-delivery format with 100 Dabbawalas. In 1890 Bombay, Mahadeo Bhavaji Bachche started a lunch delivery service with about a hundred men. In 1930, he informally attempted to unionize the dabbawallas. Later, a charitable trust was registered in 1956 under the name of Nutan Mumbai Tiffin Box Suppliers Trust. The commercial arm of this trust was registered in 1968 as Mumbai Tiffin Box Supplier’s Association. And as the city grew, the demand for dabba delivery grew too. The current president of the association is Raghunath Medge. In 1998, Forbes Global magazine conducted an analysis and gave them a Six Sigma rating of efficiency.
The journey of Mumbai Dabbawalas has been a fascinating one, where they have proved their mettle over and over again. Every day, battling the traffic and crowds of Mumbai city, the Dabbawalas, also known as Tiffinwallahs, unfailingly delivered thousands of dabbas to hungry people and later returned the empty dabbas to where they came from. The Dabbawalas delivered either home-cooked meals from clients’ homes or lunches ordered for a monthly fee, from women who cook at their homes according to the clients’ specifications. The Dabbawalas’ service was used by both working people and school children. In 1998, Forbes Global magazine, conducted a quality assurance study on the Dabbawalas’ operations and gave it a Six Sigma efficiency rating of 99.999999; the Dabbawalas made one error in six million transactions. That put them on the list of Six Sigma rated companies, along with multinationals like Motorola and GE. Achieving this rating and that too without the use of any technology or paperwork, and that most of them were illiterate or semiliterate is indeed has been a herculean task. Apart from Forbes, the Dabbawalas have aroused the interest of many other international organizations, media and academia. It has very well survived the threats from todays business environment but has manage to survive through and that too has done it very well.
A collecting dabbawala, usually on bicycle, collects dabbas either from a worker’s home or from the dabba makers. As many of the carriers are of limited literacy, the dabbas (boxes) have some sort of distinguishing mark on them, such as a colour or group of symbols. Lunch boxes are usually marked in several ways: (1) abbreviations for collection points, (2) colour code for starting station, (3) number for destination station and (4) markings for handling dabbawala at destination, building and floor. The dabbawala then takes them to a designated sorting place, where he and other collecting dabbawalas sort the lunch boxes into groups. The grouped boxes are put in the coaches of trains, with markings to identify the destination of the box. The markings include the railway station to unload the boxes and the destination building delivery address. At each station, boxes are handed over to a local dabbawala, who delivers them. The empty boxes are collected after lunch or the next day and sent back to the respective houses. Dabbawallas tend to belong to the Varkari sect of Maharashtra and consider Tukaram’s teachings of helping each other to be central to their efficiency and motivation. The service is almost always uninterrupted, even on the days of severe weather such as monsoons. Since 1890, when the dabbawalas formally came into existence, none of them had ever gone on strike until 2011 when the members decided to head towards Azad Maidan to support Anna Hazare in his campaign against corruption. Each dabbawala, regardless of role, is paid around 8,000 rupees per month (about US$131 in 2014). Between 175,000 and 200,000 lunch boxes are moved each day by 4,500 to 5,000 dabbawalas, all with an extremely small nominal fee and with utmost punctuality.
Question 1
Founder of Dabbawala system

Parsi Banker

Mahadu Havaji bacche

Dhondiba Medge

Marathi banker

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Question 2
Dabba system started—————years ago

120

130

135

125

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Question 3
Sis sigma perfformance is

95.99

99.99

97.99

98.99

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Question 4
Technological back of Dabawala

to some extent

nil

full backup

as and when desired

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Question 5
Food is delivered from

home to office

home to home

mess to office

home or mess to office

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Question 6
Lunch boxes are usually marked in several ways:

“only abbreviations for collection points, and colour code for starting station, ”

only number for destination station

“markings for handling dabbawala at destination, building and floor”

all are correct

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Question 7
Tukaram s teachings matra was

God is one

believe in God

helping each other

believe in humanity

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Question 8
Dabbawallas tend to belong to the ——————sect of Maharashtra

Varkari

valmiki

varkai

none of the above

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Question 9
Dabba system is highly ..

unbaised

efficient

sufficient

none of the above

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Question 10
Means of transport is mainly ..

train and bicycle

car

bus

none of the above

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2nd Block Assessment
Case Study
Distribution systems may evolve over time as a business grows and changes. Consider a small one-store family restaurant named Alice’s, with delicious, unique, homemade salad dressings (e.g., Pomegranate Vinaigrette, Rum-Raisin-Orange Ranch, Blue Cheese Catalina). Initially, the dressings were only available to customers eating at Alice’s. Then customers begin requesting bottles to buy. Initial sales and distribution of Alice’s Salad Dressings were from the restaurant to walk-in customers. The product was packaged in a 32-ounce canning jar with a handmade label.
New distribution channels cause packaging and pricing changes. Then Alice’s Dressings were sold to a local grocery store at a discounted wholesale price, 28 percent less per ounce than the retail restaurant price, packaged in a smaller, 26-ounce bottle. As local demand grew, Alice decided to have the dressings made in an independent packing facility and sold to other stores in the area, which initially raised the cost of making the dressings. Alice’s husband, brothers, and a sister-in-law divided up initial sales responsibilities to call on local and regional stores in their spare time.
The popularity of Alice’s Dressings caused Alice to consider the possibility of selling large pallet quantities to distributors in other states. The distributors needed another 25 percent discount from wholesale price, along with free shipping. Sales brokers were also recommended, at 5 percent commission on net distributor sales, since the family could no longer call on everyone. A separate company would have to be set up to market the salad dressings; an enterprise requiring full-time management
Distribution channels are key to pricing and packaging decisions. In this case, a separate business, new distribution channels and sales representation grew out of Alice’s initial one-store restaurant. Alice’s restaurant was initially able to sell the salad dressings at $5.00 per 32-ounce jar (15.6 cents per ounce) directly to customers. However, once a decision was made to sell Alice’s Dressings as a shelf-stable item in grocery stores, the bottles changed to a standard 26-ounce size to compete with other dressings sold in this size.
Alice was concerned that grocery consumers, unfamiliar with the restaurant, would not pay over $3.99 retail per 26-ounce bottle when competing brands ranged from $1.29 to $2.69 for the same 26-ounce size. Wholesale prices were 28 percent less than retail, at $2.89 per bottle. However, the cost of ingredients was substantially more than competing brands, at $1.00 per bottle, and packaging and processing costs added another $0.50 per bottle. Profits were reduced from restaurant sales per bottle, but still acceptable (i.e., from $3.50 a bottle, or 11 cents per ounce, to $1.39 per bottle, or five cents per ounce), since the total amount of sales and profits were expected to be substantially greater through grocery sales.
Further research with marketing experts in the industry and sales brokers indicated a further 40 percent reduction in delivered distributor price (including brokerage commissions and shipping costs). Alice would net $1.73 per bottle at delivered distributor price with brokerage commissions of 5 percent, leaving an unacceptable gross margin of only 23 cents per bottle (13 percent), even at the higher retail price of $3.99 per bottle.
Alice finally decided to upgrade the bottle and label to a unique, tall, triangular, Italian glass bottle and cork, with gold and black labels and recipe hang-tags by a local design studio. She sold the dressings directly to upscale specialty and grocery stores. Distributors would not be used. Specialty brokers were hired to aid in selling directly, at a 10 percent commission on net sales. The premium pricing was also retained in this non-elastic, low-price- sensitivity market segment, with the new bottles retailing at $4.99 each. Final net factory sales per bottle were $2.69 after deducting 10 percent brokerage commissions, with net factory profits of $1.10/bottle. Specialty food stores took a 40 percent gross margin, but paid for shipping.
Packaging and pricing decisions are intimately related to distribution and sales force decisions: Alice’s restaurant could have made several different distribution decisions, with different packaging and pricing results:
Sell the salad dressings only from the restaurant in 32-ounce jars with handmade black and white labels at $5.00 each. This distribution and sales decision requires the least amount of extra resources, spending, and risk. This also provides the smallest potential sales return.
Sell the dressings directly to all consumers through mail order or other marketing channels with family members handling both marketing and sales. This distribution and sales decision is a variation on selling only from the restaurant and may require additional resources to manage and grow, but it delivers better returns than selling only to local restaurant customers.
Sell through DSD (Direct Store Delivery) distributors. This distribution and sales decision requires financial resources, management time, personnel, higher margins, and spending support, but may be the fastest way to grow the business.
Hire brokers for store and/or distributor sales. This sales decision depends upon scope of operations and geographic and distribution channel expansion plans.
Combine several distribution channels simultaneously. This distribution and sales decision calls for the largest amount of resources, time and personnel, with the objective of growing the business as fast as possible.
License the formulas and restaurant name to another manufacturer and receive a 4 percent to 5 percent royalty on net sales. This distribution and sales decision is also low-risk, with low-resource requirements. The long-term potential return is much higher than selling out of a single restaurant.
Sell a different size bottle or jar directly to stores only, as Alice finally decided to do. This distribution and sales decision preserves higher gross margins and eliminates discounts to distributors and possibly sales commissions to brokers, but requires more financing, management personnel and time.
Question 1
” Pricing interacts with a supply chain in many ways. For instance, transportation rate structures are adjusted by the carrier based on:”

cost to unload

the size of the shipment

local currency rates

the logistics costs concept
Question 2
The total logistics cost factors need to be balanced against the:

supply chain managers total experience

total expected transportation needs

customer service factors

lead time expectations
Question 3
The benefits of marketing channels are__

Cost saving

Time saving

Financial support given

All of above
Question 4
“___ were hired to aid in selling directly, at a 10 percent commission on net sales by Alice”

Middle man

Specialty brokers

adviser

local boys
Question 5
what distribution approach(es) would you use if you Alice s was your company

Wholesaler

Sole selling agent

Direct marketing channel

Semi-wholesalers
Question 6
What is the full form of CIS

Channel information system

Channel induced system

Channel informal system

Channel incorporated system
Question 7
“The work of setting up objectives for selling activities, determining and scheduling the steps necessary to achieve these objectives is known as .and should be used by Alice”

Selling

Sales policy

Sales programme

Sales planning
Question 8
The difference between transactional selling and relationship selling is

“In transaction, selling buyers must pay cash relationship selling, sellers work to provide value to their customers”

“In transaction selling, sellers provide greater service ”

“In relationship selling, buyers and sellers must be related”

“In relationship selling, sellers work to provide value to their customers”
Question 9
________________ is a marketing channel that has no intermediary levels proposed by alice

direct marketing channel

indirect marketing channel

forward channel

hybrid channel
Question 10
” A distribution channel moves goods and services from producers to consumers. It overcomes the major time, place, and ______________ gaps that separate goods and services from those who would use them.”

possession

profit

image

psychological

3rd Block assessment
Case Study
Shri Om Logistics was started by Mr Mukesh Chatwal in 1989 and has grown from a one truck operation to a 150 tractor-trailer fleet serving shippers in western zone of India. Company serves the automotive industry by providing inbound transportation to the assembly plants. It has strategic alliance relationship with three large automakers and is the exclusive trucking company for a number of auto suppliers. Mr Mukesh Chatwal is willing to adopt new equipment technology, computer systems, and management techniques. As he was about to call strategic planning meeting with his top executives, he was mulling over recent trends in the logistics field. He also knew that to retain current enviable position in market, he must continue to be innovative and provide the services customers need. During recent past three years, he has witnessed increased competition. The other logistics companies that provide rush deliveries have made significant inroads in the market where just-in-time management system mandate minimal raw material inventories, guaranteed deliveries and vendor penalties for late deliveries.
The perplexing trend to Mr Chatwal is the growing vertical integration of trucking companies into other logistics services. A number of other companies have started warehousing divisions to provide sorting, kitting( putting pieces together to make up a kit), and cross-docking (moving freight across a dock to a waiting truck). Other carriers are adding third party logistics divisions to manage a shipper/receiver’s transportation and storage activities. Finally a few trucking companies have started air carrier divisions, freight forwarding services and logistics information services. He also recognizes that this vertical integration of trucking companies is a result of customer demands. In addition, shippers are reducing number of vendors in transportation suppliers, being used and asking the few vendors to provide a wider range of products and value added services.
After considerable thought, his decides that only viable long term strategy for Shri Om Logistics is to become a full service logistics provider. If current status of company is continued , it will greatly impair the growth and profit potentials of the company. The only question remaining for Mr Chatwal is what other logistics services are appropriate for the company in long run?
Question 1
“To retain current enviable position in market, he must continue to be”

quality assurance

stratigic decision

innovative and provide the services customers need.

none of the above

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Question 2
A company’s channel decisions directly affect every ________.

marketing decision

customer’s choices

employee in the channel

competitor’s actions

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Question 3
logistics companies that provide rush deliveries have made significant inroads in the market because of

JIT

kanban

cycle time

none of the above

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Question 4
Intermediaries play an important role in matching ________.

dealer with customer

information and promotion

supply and demand

product to region

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Question 5
warehousing divisions was provide

“sorting, ”

kitting

cross-docking

all of the above

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Question 6
“A channel consisting of one or more independent producers, wholesalers or retailers that are seeking to maximize their own profits even at the expense of profits for the channel as a whole is a ________.”

administered vertical marketing system

conventional distribution channel

vertical marketing system

vertical distribution structure

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Question 7
An advantage of a channel of distribution over selling direct to consumers is that each channel member plays a ________ in the channel.

time-saving part

decisional role

disciplinary role

specialized role

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Question 8
Mr Chatwal was thnking to improve company profitability by introducing

other logistics services appropriate for the company in long run

other logistics services appropriate for the company in short rrun

inbound logictic

outbound logistic

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Question 9
“From the economic system’s point of view, the role of marketing intermediaries is to transform the assortment of products made by producers into the assortment of products wanted by ________.”

manufacturers

consumers

marketers

distributors

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Question 10
Do you agree that logical strategic thrust for Mr Chatwal is to

horizontal integrate and provide other logistics services

horizontal integrate

vertically integrate and provide other logistics services

none of the above

4th Block Assessment
Case Study
In the store house of a steel plant, the material is received through railways and by road. There are 30,000 moving items. On an average, 20 trucks of loads are received every day in the receiving store house of the central stores department. In the central stores department, the materials are received centrally. The receiving house is divided into 6 bays named Monday, Tuesday, Wednesday, Thursday, Friday and Saturday. There are 50 stores personnel to receive the consignments and to unload them in respective bays.
After unloading the materials, a store collection report is prepared by a store man. He also records the details of the receipts, commercial invoices and related purchase orders in the ‘Day Book’. A stores receipts voucher is prepared having the details of the materials received including nomenclature/ description of the materials, catalogue number and quantity received, challan/commercial invoice number, railway receipts/consignment note number and other important information. SRV is handed over to the inspection unit for checking the quality (physical/chemical) to ensure that the material has been received as per purchase order terms. If the material is found correct, the same is handed over the respective custody storehouse meant for storing different types of material before issue. The custody storekeeper checks the material as per SRV and keeps in the marked bin.
The SRV is signed by the custody storekeeper and handed over to receiving storekeeper. There are six copies of this voucher for the following:
Purchase department
Receiving storehouse
The indentor of the material
Accounts department
The supplier
These copies are distributed to the above-mentioned. The supplier submits the bill along with the SRV to the accounts department of the company for the payment.
It is taking average 15 days to take the material into charge form the date of receipt to the material. Sometimes, the material is lying in the receiving bay but due to ignorance the indentor is making emergency purchase’. The supplier is getting his payment against the supplies in average of 30-days.
The management wants to reduce the time for taking materials into charge from 15-days to 3-days, eliminate emergency purchases’ and also reduce the payment time of the supplier to average of 3-days.
Question 1
“Store man records the details of the receipts, commercial invoices and related purchase orders in the .”

Day book

cash book

note book
Question 2
“A stores………………………….. is prepared having the details of the materials received including nomenclature/ description of the materials, catalogue number and quantity received, challan/commercial invoice number, railway receipts/consignment note number and other important informatio”

cash voucher

bill

receipts voucher

payment voucher
Question 3
The market logistic decision concept originated in ____________.

Marketing

Operations

Logistics

Production
Question 4
Market logistic decision requires following prerequisites ____________.

“Order processing, warehousing, inventory and transportation”

Flow of goods

Buying and selling

Purchasing of raw materials
Question 5
The purpose of logistic decision is ____________.

Provide customer satisfaction

Improving quality of a product

Integrating supply and demand management

Increasing production
Question 6
SVR record describes

Supply value record

Service record

transpotation record

sale voucher
Question 7
Retailing operation which is operated and owned by manufacturer and carries surplus orirregular goods is classified as ____________.

Warehouse

Factory club

Factory outlets

Wholesaler those take titles of marketing offering independentl
Question 8
The management wants to reduce the time for taking materials into charge

“from 10-days to 3-days,”

“from 11-days to 3-days,”

“from 15-days to 3-days,”

“from 9-days to 3-days,”
Question 9
The management wants to reduce the payment time of the supplier to average of

3-days.

2-days.

1-days.

5-days.

Question 10
Companies manage their supply chains through _____________.

Transportation modes

The internet

Competitors

Information

5th Block Assessment
Case Study
Tasty – Food Products established in 1980, distributes a 100 item product line of canned vegetables, fruits, condiments and specialty items (such as pappads, fruit jams and pickles) to wholesalers in several states of South India.
Tasty – Food Products introduced a new customer-order policy to improve its service to its wholesalers and also the effectiveness of its sales representatives.
Two important features of this program are:
Sales people are free from the work of order taking, and
Orders received from wholesalers on a predetermined schedule.
The company’s sales representatives are no longer to process customer orders. Earlier practice was to accumulate wholesale orders until they had enough volume to make up a truck load and then send the orders to the head office. Under the new program, wholesalers are to e-mail their orders directly to the head office as per a fixed schedule (say once in a month or so). If the wholesalers miss their fixed date they have to wait for the next fixed date as per schedule.
These procedures are designed to increase the number of sales calls the sales people could make to their customers. The assumption is that sales people would spend more time determining the sales patterns and the effect of sales promotions if they are relieved of the task of order taking and transmitting the consolidated orders to head office. By this, each sales person could do more of a sales job rather than the order taking job.
But, unfortunately many wholesalers failed to follow a predetermined order schedule. They were not used to the system where some one would have to tell them when to order. Some wholesalers complain against fixed schedules and lack of flexibility. Others were so much dependent on sales persons to determine what their requirements are and felt that the new program meant more work for them.
If the orders do not reach the head office according to the schedule, the wholesalers has to wait for two weeks to place the next order. If a wholesaler misses a fixed scheduled date for ordering, he would run the risk of having a stock out which would cause a loss of 20-30 percent of sales of tasty-food’s product. But due to this only tasty-food products company suffered because the wholesalers and retailers carried several product lines of competitors and when Tasty-Food’s brands were out-of-stock, they sold other brands.
Tasty-Food Products has no integrated logistics department to deal with its distribution activities. In the past, three salespersons were made responsible for arranging transportation. When they accumulated orders worth rupees 3 lacks (nearly a truck load) they would send the orders to the head office of shipment. To expedite shipment for wholesalers who have urgent need, a sales person in one area would try to combine his orders with another sales person of the adjoining area to meet the requirement of a full truck load. However, in the new practice, the head office would ship according to a fixed schedule and arrange the shipment with the wholesalers even if the order totaled to less than rupees 3 lacks.
Question 1
“Tasty – Food Products established in 1980, distributes a —————-item product line ”

200

150

100

110

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Question 2
As per company new policy sales people are free from the work of

order delivery

unloading

order taking

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Question 3
A ______________ is a set of interdependent organizations involved in the process of making a product or service available for use of consumption by the consumer or business user.

retailer

wholesaler

distribution channel

middleman

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Question 4
How can an organisation reduce its market uncertainty?

By offering more products and services.

By reducing the number of products and services it offers.

By broadening its view of what marketing channels can and should do for it.

By forming dyadic relationships with intermediaries.

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Question 5
____ involves the acts by which channel entities obtain products and services.

Procurement

Requisition

Solicitation

Acquisition

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Question 6
Tasty-Food Products has no ..department to deal with its distribution activities.

Fianance

operation

integrated logistics

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Question 7
The new system introduce by Tastey-Food was————————-

inefficient

efficient

none

sufficient

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Question 8
“Through their contacts, experience, specialization, and scale of operation, ______________ usually offer the firm more than it can achieve on its own.”

manufacturers

producers

direct marketers

intermediaries

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Question 9
Independent firms at different channel levels integrate their programs on a contractual basisto achieve systemic economies and increased market impact are known as .

Corporate vertical marketing systems

Contractual vertical marketing systems

Administered vertical

None of the above

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Question 10
What is the full form of VMS?

Velocity moving system

Vertical marketing system

Vertical moving system

Very moveable system
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Full syllabus Assessment
Case Study
“Your Choice” Fashion Apparel company is a very successful merchandiser of contemporary fashion apparel for both men and women. The company publishes a high quality product catalog and sends it to prospective customers, who then place orders by mail or by telephone calls. The customer base consists mostly of young couples with two incomes and no children. These customers receive catalogs from competitor fashion apparel companies as well.
The catalog business a highly competitive and growing. It has become an alternative means of shopping for people who are just too busy to shop in retail stores.
The company has developed an Internet based capability, “Your choice.com” that provides full catalog and ordering services for “on line” customers. The company’s website offers a new and effective way to interact with customers.
“Your choice” Fashion Apparels is regarded as the company that offers the best product assortment, product quality and customer service. Two critical customer service elements at “Your Choice” are that (i) the company receives, packs and ships orders in a timely manner, and (ii) the product returns procedures are customer friendly. But the company’s product return practice is expensive and the top management is highly concerned about this.
“Your Choice does not produce any of the merchandise it sells. It contracts with manufacturers in India, Korea, Taiwan, China and Singapore to meet its largely seasonal product line needs. The company ships container loads of labeled and pretagged merchandise by intermodal transportation services to a centralized distribution centre in Dallas, Texas, subsequent movements to individual customers are made by UPS and Federal Express.
“Your Choice” executives consider themselves to be in “logistics business”. They consider that the company’s logistical capabilities are a key to its excellent reputation in the market place. However, managers at “Your Choice” are worried that customer tastes and company product preferences are beginning to change very quickly, sometimes in the middle of a selling season. Only a continued ability to react quickly to changing market place needs will distinguish market leaders from others.
Question 1
Transporting and storing goods is part of which of the following marketing channel functions?

negotiation

physical distribution

contact

matching
Question 2
The benefits of marketing channels are ..

Cost saving

Time saving

Financial support given

All of above
Question 3
“With respect to a channel of distribution, the number of intermediary levels within the channel indicates the ____________ of a channel.”

width

depth

length

similarity
Question 4
Your Choice does not produce any of the ——————————–it sells.

merchandise

customer

choice

ready to eat
Question 5
“””Your Choice executives consider themselves to be in ..”

real state

banking

logistics business

e-commerce
Question 6
Only a ..to changing market place needs will distinguish market leaders from others

strategy

lower price

just in time

continued ability to react quickly
Question 7
Your choice.com is a company that provides

full catalog and ordering services

delivery services

ready to make

assembelling
Question 8
Your Choice company have only ———————- customer

off line

walk in

physically present

online
Question 9
Which is not a strategic role of sales management?

Tracking

Reporting

Delivery

Optimizes distribution
Question 10
Many firms use environmental scanning to assess their external environment. Environmentalscanning should be used to

Identify future threats and opportunities

Determine personnel performance

Allocate financial resources

Assist with service delivery

Distribution & Logistics Management (EDL 321)-Semester 3

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