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Marketing Channels and Logistics

Executive summary

Marketing channels and logistics are very essential for the survival and success of any business organization. This is because they are the corner stones in supply chain when carrying out business activities. The Saturn Corporation has its own supply chain that involves production as well as sale and delivery of the finished products to the final customers. The Saturn Corporation just like any other business corporation it has achieved its own benefits from the supply chain activities while on the other side it has faced it share of challenges. The different challenges faced by the corporation in its logistics and marketing activities include issues to do with the damages reported in the corporation, the high service costs incurred, customer services and special orders problems as well as determining the best delivery method for retailers. These are among the main challenges and there solutions and strategies are discussed thereafter since they are issues that can be solved.

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Introduction

Marketing channels and logistics are two main parts in any business organization that plays a very important role in the survival of the business organization and its business operations. In most cases these two important factors in the business organization if not checked on properly may bring in a lot of problems and failure in the operations of the business organization(Gibson &Wilson).

Saturn Corporation was formed by general motors and was a subsidiary of general motors; since it was formed under general motors it was given its independence such that it could run out its own operations. The main objective and mission of the corporation was “to market vehicles that were developed and manufactured n the united states that are world leaders in quality, cost and customer satisfaction through integration of people, technology and business systems.” From the analysis of the corporations mission it is clear that most of the activities and operations were surrounding the marketing and logistics operations since the products had to be marketed and in addition to marketing there is movement of the marketers as well as the of the products before they reach the targeted customers (Gibson &Wilson).

Logistics is an essential part in the supply chain since it involves movement of the raw materials from the supply to the production until the final product reaches the final customer. The process is accompanied by many other activities that help to ensure that the customers get the best from the manufacturers or the business organizations. Secondly through the supply chain the two important people to the operations of the business are connected to the business. The supplier of the materials or the products and the final customer to the products, as a corporation Saturn has faced its own challenges that go together with marketing and logistics part of a business organization .

Marketing and logistics challenges faced by the corporation

There are certain factors that have contributed a lot to the success of the corporations operations especially under marketing and logistics departments. The first factor is the use of just-in-time strategy whereby the products are ordered and produced just in time. This has helped the corporation to reduce warehousing costs and to avoid high lead time that affects business operations negatively. The other major factor is the way kind of the link they have established with the customers that gives them a direct connection with the customers hence being in a position of meeting the customers needs perfectly hence sustaining the customers. (Bemowski, 1995)

Though the corporation has achieved high achievements through its innovative strategies it has put in place in regards to logistics and marketing there are still many more challenges that the corporation continues to face in its daily operations that in one way or another affect the operations of the corporation in a negative manner. Some of the major challenges that are faced by the Saturn Corporation in its operations include the following;

High Damage rates

This is one of the major challenges that have been faced by the corporation; this is because when the rate of damages is high it means that it is an added cost to the business organization. In most cases the damages that are experienced in the corporation are as a result of logistical problems. The corporation uses two methods of transportation of its products to the customers. The first method is use of trucks that is road transportation and the second one is the use of rail. The problem does not originate from the mode of transportation used but what happens before the products are loaded in the trucks for transportation (Gibson &Wilson).

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Based on the case delivery process which is part of transportation process starts after the product has been finished. This is when the order record for that vehicle is sent to the GM’s logistics information. It is from here that the proper mode for transportation of the product is indentified and the route for retail delivery. Based on the case it is clear that the corporation seems to have limited QAT drivers since the truck delivery planning focuses on the anticipated availability of the drivers (Bemowski, 1995).

This shows that in most cases the drivers are not given enough time to rest since they are needed to transport the products to the retailers. Lack of enough drivers may be a major contributing factor to the increased damage rates of the products on transportation. This is because in most cases when the drivers are tired it means that they may not drive the trucks carefully hence careless driving resulting to many of the vehicles being damaged during transportation (Gibson &Wilson).

The other contributing factor is the issue of minimizing costs, at times costs are minimized at the expense of damaged products. In cases where they opt for multiple stop loads in aid of economical delivery combinations they contribute much to the increased high rates of damages of the vehicles before they reach the retailers or even the customers. Multiple stop loads means that the vehicles are stationed in many areas to deliver some of the products. As some of the products are uploaded from the trucks to the retail stations there is a very high probability of damaging other products that are left in the truck, this is because the more there are stop over’s the more some of the vehicles are damaged in the process (Winter, 1994).

Since the general motors gave Saturn Corporation independence it should have been fully such that it organizes and runs all its activities without interference of the general motors management. This is not the case because the logistics activities are operated by the general motors central logistics operations. This means that in the cases of transportation of the products to the final customer rests in the hands of the general motors company which is the parent company to the corporation. This has also contributed to the damages of the products during transportation; this is because at times since they are not on the seen it is possible to indentify the channel to be used for transportation of the vehicles that is not appropriate since they are not within the production area (Winter, 1994).

When a wrong transportation mode is selected for a product in most cases the product is not transported well and in the best way possible to prevent damages, when the opposite happens then the products being transported are exposed to risks of damages. Lack of proper involvement of the people on the site i.e. the corporation staff in the logistics process contributes a lot to the damages. This is because these are the people who understand the products clearly hence the need of being involved in the logistics department (Winter, 1994).

Though the corporation carries out inspection of the vehicles before they are released for transportation to the destined retailers, this is not enough prevention of damages of the products. The best way to prevent the issues of damage of the vehicles is to ensure that the whole supply chain process is investigated in order to ensure that any problems are identified from production on products. This at least will show exactly where the different damages are recorded hence a better way to minimize the damages is developed for the whole supply chain process (Bradley, 1993).

The flow of the vehicles from the production point within the Saturn Corporation is carried out by several organizations that offer different services to the corporation. The more participants in the supply chain the more responsibilities increase and the higher the probability of increased problems experienced and damages. Tracing the point at which the damage occurred might be a challenge in such a situation (Bradley, 1993).

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Determining the best delivery method for the products to retailers

Determining the best choice or alternative for delivering the products to the retailers is another major challenge to the corporation’s management. This is because the corporation deals with different retailers who have there various needs. The different retailers present their customers requirements that have to be worked on based on their given specifications (Bradley, 1993).

Since the products produced for one retailer might be different because of the different specifications of the customers the delivery methods for the products brings a problem to the management. This is because each and every vehicle should be delivered to the customer in the original condition when it is not damaged. This means that is one customer wanted a lorry and another one a personal car they all need delivery and transportation means that will deliver them in the original condition (Transport Topics, 1993).

This has been a challenge for the management and since it has only two transportation modes truck and rail it has continued to weigh the best method among the two for transportation and delivery of the vehicles to the retailers in the best condition. Because of the problem of delivery in most cases the goals of the retailers are not met perfectly by the corporation hence this is seen as failure on the part of the corporation’s management. Development of the strategies and methods that best meet the needs of the retailers and the customers is a challenge for the corporation (Transport Topics, 1993).

This is because the corporation operates in a just-in-time strategy such that the materials for the manufacture of a vehicle are assembled the time that order is obtained. This is usually a challenge since the materials might delay or fail in one way or another; this definitely causes delay in the rest of the process hence affecting negatively the delivery process since it will not follow the scheduled order. Though the just-in-time strategy is good at times it has its disadvantages and this affects the delivery and transportation process negatively (Transport Topics, 1993).

The other factor that might cause problems in delivery is the limited number of drivers; this is because whenever there are no enough drivers it means that there is certain time that is wasted anticipating for the drivers in order to be assigned the delivery duty. These results to delay in the delivery and transportation process, these kinds of delays they not only affect the corporation but also the customer since he or she does not get the product at the expected time. These also contribute a lot in increasing the transportation and delivery lead time (Williams, 1994).

Maintenance of cost of services

For a business organization to achieve profitability the first thing that is fought against is the costs that are incurred. The lower the costs the higher the profits that the business organization gains. Saturn Corporation just like any other corporation strives to gain profits in its operations through maintenance of low costs of its operations. However focus of a business organization mainly on costs in one or another affects other essential aspects of the business (Williams, 1994).

In the case of Saturn Corporation it is highly focused on minimization of costs incurred by all means in order to gain profits but this has a negative impact on the corporation. In the first place the corporation engages in certain activities that have negative impacts on the corporation operations. For instance in the case whereby the management decides to put multiple loads in one truck that have different destinations in the name of minimizing cost of transportation the impacts are negative. This is because in most cases when some of the vehicles are offloaded there are those that are damaged in the process. The cost of damaged vehicle is higher than the cost that might have been incurred when different delivery modes are used for the products in different destinations (Williams, 1994).

In some cases the more the corporation wants to reduce the cost of operations the more cost is increased on the services. The other issue in regards to cost is the way in which the different costs incurred are identified and analyzed. For the truck delivery the costs incurred are easily identified and analyzed but when it comes to rail delivery it is a challenge to calculate the costs that are incurred since there are many companies that are involved in the process. The calculation of the costs in terms of the vehicles might be a great challenge to the corporation. This is because calculating the cost incurred by one vehicle is tedious hence the need for the cost to be calculated together either based on delivery level or any other suitable method (Joseph, 1991).

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Customer service and special orders

The operations and activities within the corporation are based on providing the best customer services and meeting the special orders that are requested by the customers. Satisfaction of the customers is the satisfaction of the business corporation since when customers do not get the best they may shift to other companies. The issue of satisfying the customers and meeting their special orders has been a challenge to the management given the different pressures surrounding the business environment. The operations are in such a way that the customers provides instruction on how they want their vehicle modified and this means that the vehicles are produced immediately the order is made (Joseph, 1991).

Most of the information on the customer’s orders is usually based on the retailers since they are the ones who interact with them. The management has problem with this since their efficiency on providing the customers with the best and efficient services is affected by issues like delay of materials. Also provision of special orders is also a problem since in most cases delivering the special orders at the agreed time might be affected hence not satisfying the needs of the customers efficiently (Joseph, 1991).

Solutions / strategies

Soluitons to increased damage rates

The corporation should adopt damage prevention measures to the problems rather that engaging in inspection of the damages. This is because it seems like the corporation values highly inspection of the damages than prevention of the damages and yet it should be the opposite. “Inspection only serves to pinpoint who caused the damage to the vehicle” but not on the ways of preventing the damages (Julie and Martin, 1992).

There are disadvantages that rise as a result of inspections of the damages instead of prevention of the damages. The first disadvantage is that the person or people who should pay for the damages are identified but not what caused the damages. These people might pay for the damages but this does not solve the problem since the cause of the problem is not indentified hence no future prevention measures that are put in place (Julie and Martin, 1992).

The people or the staff that handles the vehicles from production department until the vehicles reach the retailers should be subjected to through teachings on how to handle the vehicles. This is because handling of the products is one essential factor in the supply chain since the way in which the products are handled determines the security or safety of the products. In addition to this there should be special equipments that are used for loading and offloading of the vehicles, this is because the facilities used may ensure safety of the products or destruction. Product might have been secure through out the transportation process but be damaged during off loading if the people and machines handling the vehicles are not the best (Julie and Martin, 1992).

The channel of distribution used by the corporation should ensure that the numbers of intermediaries are limited as possible. This is because the more the vehicles are handled by many people the higher the like hood of destruction and damage of the vehicles. The vehicles should be transported directly from the corporation to the customer or the retailer from where the customer can easily get their vehicles from (Michael, 1990).

In order to solve the problem of increased damages of vehicles in transit there are several things that need to be done by the corporation. The first thing is to identify the main contributor to increased rates of damages which is transportation. The modes used for transportation need to be accessed to know whether the right modes are used or not. This will give insight to the major problems hence be in a position of coming up with better solutions. Since drivers seem to be less than needed the best solution is to increase the number of drivers such that every driver will have a humble time in his or her duty hence reducing the cases of careless driving that in one way might have contributed a lot to the increased damage rates (Michael, 1990).

The other factor towards minimizing the high rates of damages that are witnessed in the corporation could be to increase the number of trucks such that one truck does not have to carry different loads belonging to different retailers. This is because the more the number of stop over’s to deliver the products the higher the probability of damaging of some of the products. One truck should only carry load that is destined to reach a single retailer in order to avoid or minimize the high rates of damages to the products during transportation (Michael, 1990).

There should be full involvement of all the departments and the personnel in the different activities that take place in the corporation, this is because when they work together it is easier to indentify the different issues that in one way might have contributed to the increased damages then get a solution a team. When this is left to a single department in most cases it becomes challenging to identify the different problems that might rise in different departments that might contribute to the damages of the final products (James and Bernard, 1978).

For instance the problem would have originated form the inventories used to produce the products hence high product damage. If the departments work together identifying such problems and coming up with a solution becomes easier than when certain activity is done by a single department. Integration of departments is very essential and should be highly practiced by the Saturn Corporation in order to be easy to indentify the origin of problems and damages that are realized in the corporations products (James and Bernard, 1978).

The number of external participants in the transportation of the products to the final customers and retailers should not involve many external parties. This is because not all parties that clearly understand the different activities carried out hence reducing the external parties and encouraging more internal participation would solve some of the damages problems experienced by the corporation (Timmerman, 1986).

Delivery process solutions

In order to solve the many challenges and problems experienced by the corporation in delivery process, the best thing that should be done is to select a delivery method that best suits the different retailers’ needs and the new retailers that come up. This is because the major problem here is caused by the number of new retailers that continue to increase and no delivery modes that are increased. This means that there are delays that are experienced in delivery of the vehicles to the retailers since the number of delivery modes do not match the number of retailers that need to be supplied with the vehicles (Timmerman, 1986).

When a new retailer is added in the supply chain management should set up strategies and methods to ensure that the needs of the retailer are met without affecting the other operations in the corporation. This will mean that for every additional retailer there is delivery method that is added to cater for his needs. Through this the problems and challenges of delivery process together with associated problems like wastage of time and increased lead time will be reduced (Timmerman, 1986).

Cost reduction solutions

The corporation should develop or implement better methods that help in minimizing the costs that are incurred in the logistics and marketing process of the corporation. This is because costs are very important and at one point or the other if not well monitored may be used in expense of quality and safety of the products as it is evidenced in the case. Also when the increased cost of transportation and delivery are incurred are transferred to the customers through the retailers. These acts to increase the cost of purchasing the vehicles and this may affect the operations of the corporation when the heavy burden is transferred to the customers (Peter, 1994).

Also in order to reduce the costs of services within the supply chain the number of external parties I.e. companies should be reduced. This is because the more the number of players in the supply chain the more the cost of delivering the products to the retailers and customers increases since all have to be paid for their participation in the logistics process (Peter, 1994).

Also the logistics activities should be left to the Saturn Corporation since it is easier to identify the various costs that are incurred then come up with ways to reduce the costs when operations are carried out within the same corporation the production takes place. When the logistical operations are carried out by the parent company it becomes a challenge to identify the different costs that are incurred in the process then come up with suitable ways to minimize these cost (Peter, 1994).

Customer service and special orders problems

Since meeting the customer services and special orders is a challenge to the management it should consider trying other methods that help in identification of the reason as to why the customer’s needs are not sufficiently satisfied. There are several strategies if tried can be appropriate for solving this problem. The first thing is practicing advanced shipping notification such the customers are notified when to expect their products. This helps to reduce most of the inconveniences that take place. In addition, should ensure that there is transit time consistency and shipment tracking capabilities, when these two are in place it becomes easier to track the time taken during transit hence being able to develop ways to minimize the transit time if it affects the corporations marketing and logistics activities (Peter, 1994).

Conclusion

Running marketing and logistics activities within a corporation has its benefits and its share of challenges especially to the managers. In order to succeed in supply chain business organizations should be careful on the kind of supply chain they put in place since it determines the success of logistical activities. Saturn Corporation just like any other business organization has its share of strengths that should be emulated by other business organization. On the other hand it has faced challenges in regard to marketing and logistics departments. The paper discusses the challenge sand provides viable solutions to the problems and challenges.

List of references

  1. Bemowski, K, 1995, “To Boldly Go Where So Many Have Gone Before”, Quality Progress, pp. 29-33.
  2. Bradley, P.1993, “Logistics Joins Links in Automotive Supply Chain”, Purchasing, pp. 57-59.
  3. Gibson B.J &Wilson J.W, Saturn Corporation: Improving the plant-Retail link in the auto industry supply chain.
  4. James R. S. and Bernard J. L, 1978, “The Purchasing Approach to Transportation Mode Selection”, Journal of Purchasing and Materials Management, pp. 2-5.
  5. Joseph L. C., 1991, “Picking a Supplier/Carrier: Science or Art?” Distribution, pp. 83-86.
  6. Julie J. G. and Martin T. F. 1992, “The Increasing Importance of Purchasing in Transportation Decision Making“, Transportation Journal, pp. 61-71
  7. Michael A. M. 1990, “The Relative Importance of Cost and Service in Freight Transportation Choice: Before and After Deregulation”, Transportation Journal, pp. 12-19.
  8. Peter Bradley P. 1994,”Transportation Report: What Really Matters“, Purchasing, pp. 66-71.
  9. Timmerman E, 1986, “An Approach to Vendor Performance Evaluation”, Journal of Purchasing and Materials Management, pp. 2-8.
  10. Transport Topics, 1993, “The Car That Logistics Built: Saturn and Ryder Have Created a New Shipper-Carrier Relationship”, pp. 8-9.
  11. Williams J, 1994, “Total Logistics – The Profit Driver”, Logistics Focus, pp. 20-24.
  12. Winter, D, 1994, “Saturn Turns 10″, Ward’s Auto World, (July 1995), pp. 67-71

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