A Case Study of Marketing Effects on Global Distribution Logistics Development

The mutual interaction of marketing and logistics has been widely described in academic articles. For almost a century, many scholars and practitioners have recognised the close relationship between marketing and logistics activities in a marketing channel. Business philosophies such as JIT, QR and ECR implicitly emphasise this relationship as well. However, there is often a gap between marketing and logistics in theory and in practice. This separation results in problems. In logistics especially, the significance of marketing has been occasionally ignored. This is a single case study of distribution logistics development. The case company is a medium-sized high-tech consumer goods producer and distributor. The company has a few production plants and distribution centres and a number of warehouses all over the globe. The marketing function sets demands for logistics concerning product availability in local warehouses and the variety of product mix etc. From the logistics point of view those demands are quite expensive to fulfil. On the other hand, marketing provides important information for logistics. For example, the quality of forecasts and the feasible length of order cycle are dependent on marketing. The goal of the study is to analyse and find out what are the development possibilities and potential within the case when the scope and measures are: i. strictly limited to logistics ii. a combination of logistics and marketing At the beginning, the distribution network was described and appropriate data – sales of different products, forecasts, lead times, replenishment rules and transport costs etc. – were gathered. The network was analysed and development needs and issues were identified. A simulation model was created as a comparison tool of different development steps and scenarios. The development potential of logistics alone and of marketing and logistics together was established by means of simulation. The results indicate that major development potential derives from the co-operation of marketing and logistics, which is conformable with current theories.