Distribution and Logistics

Customers now have much more latitude in choosing the logistics and methods of distribution to fit their specific requirements. They can determine where, when, and how they want goods to be delivered; they can even specify the manner in which they want goods to be handled before and after delivery. Gilmore and Pine (1997) refer to this as "representation" requirements.

Especially in industrial markets, where many firms are working in a just-in-time (JIT) environment, suppliers have to become more flexible in terms of distribution and logistics. Volvo Europe Truck (VET) in Belgium has moved to replace its push supply system with a pull system, which means supplies and raw materials are stocked and delivered only after a specific demand from a production division. Customized distribution and logistics solutions therefore have to be provided by VET's suppliers.

To attain distribution flexibility, companies may use multiple channels. Depending on the customer's product knowledge, service needs, and price sensitivity, one channel may be more appropriate than another. Customers who are looking for lower prices and are very knowledgeable about product features may prefer to buy from a direct mail catalogue. Less knowledgeable customers with bigger pocketbooks may prefer specialty stores that can provide the necessary information and support. Using a multiple channel system, companies can offer the best customized solution on the basis of each customer's needs. Then, as customers learn more over time, they may opt for another distribution channel.

When it comes to aspects of logistics, such as transportation and inventory, a firm has the same two options as with distribution: customize or be customized. Using such modern technology as EDI (electronic data interchange), customers can continuously monitor and adjust orders, delivery schedules, places of delivery, and so on. To guarantee this flexibility, firms often work with multiple partners, some of whom may be specialized in logistics within the firm's industry. Faxion, for instance, offers complete logistics services, such as unpacking and storage labeling, to the fashion industry. Moreover, with choices such as electronic shopping, consumers too may become more powerful in determining where and how they want goods to be delivered.