final logistic project

8/4/2019 Final Logistic Project

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Meaning of Distribution Channel

A channel of distribution or trade channel is defined as the path or route

along which goods move from producers or manufacturers to ultimate

consumers or industrial users.

Distribution channels move products and services from businesses to

consumers and to other businesses. Also known as marketing channels,

channels of distribution consist of a set of interdependent organizations

such as wholesalers, retailers, and sales agents involved in making a

product or service available for use or consumption. Distribution channels

are just one component of the overall concept of distribution networks,

which are the real, tangible systems of interconnected sources anddestinations through which products pass on their way to final consumers.

As Howard J. Weiss and Mark E. Gershon noted in Productionand

OperationsManagement, a basic distribution network consists of two parts:

1) A set of locations that store, ship, or receive materials (such as

factories, warehouses, retail outlets); and

2) A set of routes (land, sea, air, satellite, cable, Internet) that connect

these locations.

In short, distribution describes all the logistics involved in delivering a

company's products or services to the right place, at the right time, for the

lowest cost. In the unending efforts to realize these goals, the channels of

distribution selected by a business play a vital role in this process. Well-

chosen channels constitute a significant competitive advantage, while

poorly conceived or chosen channels can doom even a superior product or

service to failure in the market.

Therefore, the channel serves to bridge the gap between the point of

production and the point of consumption thereby creating time, place and

possession utilities.


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A channel of distribution consists of three types of flows:-

Downward flow of goods from producers to consumers

Upward flow of cash payments for goods from consumers to

producers Flow of marketing information in both downward and upward direction

i.e. Flow of information on new products, new uses of existing

products, etc from producers to consumers.

Selecting a Distribution Channel for your Business

Customers are what you need to make your money. If your customers dont

come to you, then you have the following options for getting your product or

service to them:

Retail stores

Wholesalers

Cash-and-carry outlets

Internet and mail order

Door-to-door selling

Party-plan selling Telephone selling

Consider these factors when choosing channels of distribution for your

particular business:

Does it meet your customers needs?

Can the product itself survive?

Can you sell enough this way?

Is it compatible with your image?

How do your competitors distribute?

Is the channel cost-effective?

Is the mark-up enough?


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These channels of distribution are broadly divided into four types:-

Producer-Customer: - This is the simplest and shortest channel in

which no middlemen is involved and producers directly sell their

products to the consumers. It is fast and economical channel ofdistribution. Under it, the producer or entrepreneur performs all the

marketing activities himself and has full control over distribution. A

producer may sell directly to consumers through door-to-door

salesmen, direct mail or through his own retail stores. Big firms adopt

this channel to cut distribution costs and to sell industrial products of

high value. Small producers and producers of perishable

commodities also sell directly to local consumers.

Producer-Retailer-Customer: - This channel of distribution involvesonly one middleman called 'retailer'. Under it, the producer sells his

product to big retailers (or retailers who buy goods in large quantities)

who in turn sell to the ultimate consumers. This channel relieves the

manufacturer from burden of selling the goods himself and at the

same time gives him control over the process of distribution. This is

often suited for distribution of consumer durables and products of

high value.

Producer-Wholesaler-Retailer-Customer: - This is the most

common and traditional channel of distribution. Under it, two

middlemen i.e. wholesalers and retailers are involved. Here, the

producer sells his product to wholesalers, who in turn sell it to

retailers. And retailers finally sell the product to the ultimate

consumers. This channel is suitable for the producers having limited

finance, narrow product line and who needed expert services and

promotional support of wholesalers. This is mostly used for the

products with widely scattered market.

Producer-Agent-Wholesaler-Retailer-Customer: - This is thelongest channel of distribution in which three middlemen are involved.

This is used when the producer wants to be fully relieved of the

problem of distribution and thus hands over his entire output to the

selling agents. The agents distribute the product among a few

wholesalers. Each wholesaler distributes the product among a


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number of retailers who finally sell it to the ultimate consumers. This

channel is suitable for wider distribution of various industrial products.

An entrepreneur has to choose a suitable channel of distribution for

his product such that the channel chosen is flexible, effective andconsistent with the declared marketing policies and programmes of

the firm.

While selecting a distribution channel, the entrepreneur should

compare the costs, sales volume and profits expected from

alternative channels of distribution and take into account the

following factors:-

Product Consideration:- The type and the nature of productsmanufactured is one of the important elements in choosing the

distribution channel. The major product related factors are:-

Products of low unit value and of common use are generally

sold through middlemen. Whereas, expensive consumer goods

and industrial products are sold directly by the producer

himself.

Perishable products; products subjected to frequent changes in

fashion or style as well as heavy and bulky products follow

relatively shorter routes and are generally distributed directly to

minimize costs.

Industrial products requiring demonstration, installation and

after sale service are often sold directly to the consumers.

While the consumer products of technical nature are generally

sold through retailers.

An entrepreneur producing a wide range of products may find it

economical to set up his own retail outlets and sell directly to

the consumers. On the other hand, firms producing a narrow

range of products may their products distribute through

wholesalers and retailers.

A new product needs greater promotional efforts in the initial

stages and hence few middlemen may be required.


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Market Consideration: - Another important factor influencing the

choice of distribution channel is the nature of the target market. Some

of the important features in this respect are:-

If the market for the product is meant for industrial users, thechannel of distribution will not need any middlemen because

they buy the product in large quantities. short one and may as

they buy in a large quantity. While in the case of the goods

meant for domestic consumers, middlemen may have to be

involved.

If the number of prospective customers is small or the market

for the product is geographically located in a limited area, direct

selling is more suitable. While in case of a large number of

potential customers, use of middlemen becomes necessary.

If the customers place order for the product in big lots, direct

selling is preferred. But, if the product is sold in small quantities,

middlemen are used to distribute such products.

Other Considerations: - There are several other factors that an

entrepreneur must take into account while choosing a distribution

channel. Some of these are as follows:-

A new business firm may need to involve one or more

middlemen in order to promote its product, while a well

established firm with a good market standing may sell its

product directly to the consumers.

A small firm which cannot invest in setting up its own

distribution network has to depend on middlemen for selling its

product. On the other hand, a large firm can establish its own

retail outlets.

The distribution cost of each channel is also an important factor

because it affects the price of the final product. Generally, a

less expensive channel is preferred. But sometimes, a channel

which is more convenient to the customers is preferred even if it

is more expensive.


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If the demand for the product is high, more number of channels

may be used to profitably distribute the product to maximum

number of customers. But, if the demand is low only a few

channels would be sufficient.

The nature and the type of the middlemen required by the firmand its availability also affect the choice of the distribution

channel. A company prefers a middleman who can maximize

the volume of sales of their product and also offers other

services like storage, promotion as well as after sale services.

When the desired type of middlemen is not available, the

manufacturer will have to establish his own distribution network.

All these factors or considerations affecting the choice of a distributionchannel are inter-related and interdependent. Hence, an entrepreneur must

choose the most efficient and cost effective channel of distribution by taking

into account all these factors as a whole in the light of the prevailing

economic conditions. Such a decision is very important for a business to

sustain long term profitability.

Distribution is important because:

Firstly, it affects sales - if it's not available it can't be sold. Most customers

won't wait.

Secondly, distribution affects profits and competitiveness since it can

contribute up to 50 percent of the final selling price of some goods. This

affects cost competitiveness as well as profits since margins are squeezed

by distribution costs.

Thirdly, delivery is seen as part of the product influencing customer

satisfaction. Distribution and its associated customer service play a big part

in relationship marketing.


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Red Eagle Shipping Agencies

The winds of change were blowing through the Indian subcontinent. The

year was 1995.

Trade was on the rise, and industry was looking at new horizons.

But with this change came transportation bottlenecks. And a severe lack of

infrastructure and expertise.

It was against this backdrop that Red Eagle came into being. To assist

exporters and importers. With a comprehensive range of transportation,

freight forwarding, shipping and logistics solutions.

About Red Eagle

Red Eagle Shipping Agencies (RESA) was started with

a clear focus of offering its clients integrated bulktransportation, freight forwarding, vessel management

and logistics management services, and to be a single

window logistics solution provider in the country.

With the liberalization of the Indian economy and the consequent spurt in

trade, the lack of port and logistics infrastructure was greatly felt. At the

same time there were no companies catering to this requirement. RESA

stood up to this challenge and a modest beginning was made in May 1995

with the incorporation of the company managed by a core team of

professionals.

Over the years, RESA has quickly become a leader in

logistics management services. Headquartered in New

Delhi, RESA has its own offices in various Indian cities.

With a wide global and domestic network of offices and


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professional agents, RESA is able to offer a large menu of services,

including:

International Freight Forwarding by Air and Sea

Vessel Agency Services at Indian Ports Break Bulk Services

Domestic Distribution within India

Consultancy in Contract Logistics

The Management team at Red Eagle consists of professionals who have

been associated with the shipping and transportation industry for the last

25 years. Our rich and varied experience in dealing with all aspects of this

complex industry has enabled us to provide innovative solutions to the

most complex of logistics problems. It also ensures that we stay ahead.

While providing distribution services, RESA integrates its

work process with the clients' supply chain cycle using a

combination of Implants and EDI to provide a seamless

pipeline for the movement of goods. This enables clients

to focus on their core business whilst RESA handles the

movement of raw materials and finished goods - quickly

and efficiently. This backward integration has helped alarge number of our clients to free resources within their

organization and re-deploy them elsewhere.

On the Horizon

From its inception, RESA has extensively relied on Information Technology

in all aspects of its key processes, to deliver superior products at a low

cost. RESA is constantly upgrading its IT capability to retain a leading edge

in this highly competitive world.

RESA is poised to be one of the few Indian logistics companies to offer a

comprehensive booking and tracking system on the Internet coupled with

EDI capability.


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Keeping in mind the spurt in e-commerce, RESA is now establishing tie-

ups with Internet sellers, who need to have a virtual distribution network in

India for the movements of their goods.

Freight Forwarding Services

With our global and domestic network of offices and

professional agents, backed by years of experience,

RESA is able to provide a comprehensive range of

value added distribution services for export and import

shipments, Air or Ocean, Less than Container Loads (LCL) or Full

Container Loads (FCL).

All shipments irrespective of size are handled equally efficiently and with

utmost care and dispatched in the shortest possible time. We also offer

customized, tailor-made solutions based on specific

client needs.

Our clients include individuals, tourists, small and trans-

global corporations. To obtain a quotation, please fill the

relevant Quote Request Form and we shall get back to

you within 24 hours.

After this, you may place a booking with RESA from

anywhere in the world. Within 24 hours after we contact your supplier, you

will be advised the status of your shipment, expected shipping date and

expected arrival at your destination. RESA also arranges for door

pickups/door deliveries and customs clearance of your shipments-

One Step for Your Entire Logistic Requirement in INDIA.

Right from the time when RESA receives a booking, until such time it is

delivered at its destination, shipments can be continually tracked.

On request, we can also arrange for a Quality Inspection

of your shipments - whether to check for correctness in


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packing, marking, labeling, or whatever. More stringent Quality checks can

also be carried out on request.

Once a booking is placed with RESA, you can rest assured your shipment

will be delivered within the specified time limit.

Moving Mountains?

Import & Transportation of Over-Dimension Project Machinery

A leading manufacturer of French fries had imported project machinery

which included over-dimension shipments. The team at RESA was

assigned the daunting task of moving these structures by road from

Bombay to New Delhi. To complicate matters, the shipments had to clear

customs at New Delhi as per the requirements of the customer.

Such a requirement had never been met before, and it was only after

RESA convinced the Bombay Customs officials was this made possible.

The 1500 Kms journey from Bombay to New Delhi was further complicated

as we could transit cities only during the night due to the size of the

shipments. However, the movement was completed successfully in the

shortest possible time much to the satisfaction of our client.

Logistic Management

Consultancy in all areas pertaining to inventory management, and

movement of goods and materials.

Complete Logistics Solutions (CLS) was set up to offer

hands-on and conventional consultancy in contract

logistics. To any organization that requires to movegoods and materials on a regular basis. Be it a

manufacturing or a marketing concern. Involved in International or domestic

trade.

RANGE OF SERVICES OFFERED

Total Supply Chain Management


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From procuring raw materials to delivering finished goods.

Just-in-time Materials Management

Precision logistics for zero inventories.

3rd Party Logistics

Where we take care of logistics, while you focus on your corebusiness.

Import/Export Logistics

The overseas component of the supply chain.

Reverse Logistics

For the efficient disposal/return of rejected goods.

Carrier Management

To optimize cost and efficiency.

Inventory and Warehouse ManagementHandling Special Commodities

Including oversized/odd-sized cargo and refrigerated commodities.

We conceptualize and implement optimized solutions in logistics and

supply chain management. Keeping in mind current regulatory

requirements, while exploiting the evolving technology in material handling

and information processing.

Handling Bio-Technological ProductsComplete logistics management of highly perishable Lab reagents which

arrive weekly at the New Delhi airport from USA is being cleared, delivered

and warehoused by us.

We at Red Eagle treat logistics solutions as a three phase exercise.

In the first phase, we begin by gathering information -

over phone or E-mail. (At your discretion, this can be

followed by a month of free consulting and electronic

reporting with no obligation.) This allows us to get a

second feed of data from your existing carrier/s to begin

analysis, without making any changes to your current


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shipping or payment operations. Our analysis will focus on the key areas

effecting distribution costs, system efficiency, and reliability.

The next stage would see us presenting our findings along with our

proposed solutions. Solutions aimed both at bridging the existing gaps inperformance, and on tapping any opportunities that may arise in the

distribution system.

The implementation stage would be the final step. We can take direct

responsibility for implementing all our solutions. And monitoring the

outcome for any fine-tuning that may be required. To ensure that you get

the maximum benefit from our association.

Domestic Distribution

Managing distribution within India using air, rail and road transport.

Distribution of goods within India has always been a

challenge to Logistics Companies - primarily due to the

large distances, inhospitable terrain, poor highway

infrastructure, an over-stretched Railway network and

a myriad of State and Central Excise Laws.

Companies relied on conventional truckers to move their

goods from one point to another. Reliability and consistency

were rare and unheard of. Inefficiencies were built into the

distribution process and over a period of time these

inefficiencies became a part of the process and were taken for granted. Not

only was the delivery cycle sometimes long, but expensive, unreliable and

completely unfocussed on meeting customer needs.


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Express Train to Madras

Export of Garments having a delivery deadline

A leading garment manufacturer had to dispatch an urgent shipment to theUSA which had a delivery deadline.

The shipment had to catch a sailing from the port of Madras and we

had only 48 hours to accomplish this.

Our team went into action and with a lot of innovation - we booked the

cargo in a Super Fast Express to Madras which took 32 hours. At Madras,

we had a team waiting which rushed this cargo to the off dock for customs

clearance, containerizing and transportation to the port where it caught thesailing in time, much to the relief of the exporter.

His buyer had warned him that if he failed to catch the sailing, he would

have had to air freight the goods at his own cost.

RESA entered the market at this time. With our

experience in International Distribution which is very

customer focused and driven by customer requirements,

RESA went about setting up a Domestic DistributionNetwork in India, which relies on strategic alliances with

top of the class service providers (rail, truck and

warehousing) who are committed to work as per

performance standards set by RESA.

Complex distribution models were created and studied

using multimodal means of transportation - a

combination of Truck, Rail and Air coupled with thetraditional Hub and Spoke System - to achieve the right

balance between cost and reliability.

The improvement process is a continuous one and will never cease

as we still have a long way to go.


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Domestic Distribution Services Offered:

Consultancy in reviewing current distribution processes

Management of distribution networks of companies

Bulk ServicesArranging for the transportation of large quantity cargoes like oil, coal, etc.

through conventional vessels.

RESA's break bulk division arranges for the

transportation of cargoes through conventional

vessels.

These might be bulk cargoes such as coal andfertilizers, bagged cargoes, over dimensional shipments, heavy lifts, steel

coils, oil pipes etc.

The services provided include:

Booking space on a vessel calling at the Port (for

Exports from India)

Negotiating freight rates

Chartering a vessel for larger quantities (shiploads) Pickup/Delivery of shipments from factories/warehouses anywhere in

India

Transportation to/from any port in India

Arranging for Customs Clearance

Completion of Export Documents

Vessel Handling

Handling all activities and eventualities associated with vessels calling on

any Indian Port.

For Vessel Owners and Charterers who have their

vessels calling on any Indian Port, RESA offers a


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comprehensive menu of shipping agency services, which include:

Entry Inwards and Outwards

Crew Change

Hull and Engine repairs at all Indian Ports

Supply of Bunkers Carrying out of Statutory Surveys

Survey of Cargo - Quantity and Quality

Cargo Canvassing

Sludge Disposal

Councilor Work

Our dedicated team of employees assigned to this

division is skilled to handle all eventualities associatedwith vessels calling any Indian Port. With our close

association with Port Authorities all over India, we are

able to advise owners on the factual conditions

prevailing at any Indian Port.

Oil and Gas (Offshore)

RESA is involved in providing fully integrated solutions

to clients involved in setting up offshore oil platforms

and rigs. Backed by a wide global network, the support

activities for oil and gas operations include:

Marine Services for arriving Principal's vessels (including

Government Clearance).

Purchasing stores and supplies locally and delivering to offshore rigs.

Crew Welfare.

Super intendance for vessels arriving at Indian Ports with equipmentfor the offshore sites.

Clearing, forwarding and warehousing of equipment/ spares.

Heavy lift/ project logistics.

Chartering of OSVs (Offshore Supply Vessels), tugs and barges.


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The Indian ScenarioIndia is currently the 6th largest consumer of oil & gas,

with an annual growth in demand of 5.9% and 6.8%

respectively as against the world average of 1.6% and

2.6%.

In India, many overseas companies have been contracted by Indian

companies to set up oil wells and rigs. Such companies that are involved in

E&P (Exploration and Production) require a wide range of services and

innovative solutions to handle their offshore oil and gas operations.

While the infrastructure on the West Coast - Bombay

High - is well developed, the facilities on the East Coastare still at a nascent stage. Most of the activities on the

East Coast are based out of small ports like Kakinada.

Imports are handled either via Chennai or Vizag from

where equipment is transported to the smaller ports and

loaded on to Offshore Supply Vessels.

Our Network

Red Eagle, with its headquarters in Gurgaon, has

offices in Delhi, Ludhiana, Cochin and Mumbai, and is

headed by professionals with high levels of

experience.


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Questionnaire asked to the company by us

1) When Red Eagle was established?

Ans. Red Eagle was established in the year 1995.

2) What type of freight forwarding services is provided?

Ans. We provide cargo consolidation and Customs House brokering to our

exporting and importing clients.

3) How you handle special commodities?

Ans. Special products like refrigerated products should be handled with

care to prevent from spoiling.4) What is the total supply chain management?

Ans. The supply chain is:-

Seller Buyer Forwarder Customs.

5) What mode of transport do you prefer the most?

Ans. We mostly use airways and waterways as the mode of transport.

6) How 3rd party logistics is managed in your company?

Ans. It is managed with the help of overseas agent.

7) Where you store your goods?

Ans. We dont have our private warehouse we store our goods in

government or public warehouse.

8) What is the crisis in your business?

Ans. We cannot predict any type of crises it can come at time.

9) Do you have your own vessel?

Ans. We dont have our own vessel we transport goods on public vessel.


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10) How you handle bio-technological products?

Ans. Highly perishable Lab reagents which arrive by airways outside India

is being cleared, delivered and warehoused by us.

11) How the domestic distribution of goods is done?

Ans. If suppose a buyer order goods from us and the buying and selling

activity is within India so we us Roadways or Railways as the mode of

transport.


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Advantages of a Distribution Channel

When a customer is considering buying a product he tries to access its

value by looking at various factors which surround it. Factors like its

delivery, availability etc which are directly influenced by channel members.

Similarly, a marketer too while choosing his distribution members must

access what value is this member adding to the product. He must compare

the benefits received to the amount paid for using the services of this

intermediary. These benefits can be the following:

Cost Saving

The members of distribution channel are specialized in what

they do and perform at much lower costs than companies trying torun the entire distribution channel all by itself.

Time Saving

Along with costs, time of delivery is also reduced due to

efficiency and experience of the channel members. For example if a

grocery store were to receive direct delivery of goods from every

manufacturer the result would have been a chaos. Everyday

hundreds of trucks would line up outside the store to deliver products.

The store may not have enough space for storing all their products

and this would add to the chaos. If a grocery wholesaler is included in

the distribution chain then the problem is almost solved. This

wholesaler will have a warehouse where he can store bulk

shipments. The grocery store now receives deliveries from the

wholesaler in amounts required and at a suitable time and often in a

single truck. In this way cost as well as time is saved.

Customer ConvenienceIncluding members in the distribution chain provides customer

with a lot of convenience in their shopping. If every manufacturer

owned its own grocery store then customers would have to visit

multiple grocery stores to complete their shopping list. This would be

extremely time-consuming as well as taxing for the customer. Thus


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channel distribution provides accumulating and assorting services,

which means they purchase from many suppliers the various goods

that a customer may demand. Secondly, channel distribution is time

saving as the customers can find all that they need in one retail store

and the retailer

Customers can buy in small quantities

Retailers buy in bulk quantities from the manufacturer or

wholesaler. This is more cost effective than buying in small quantities.

However they resell in smaller quantities to their customers. This

phenomenon of breaking bulk quantities and selling them in smaller

quantities is known as bulk breaking. The customers therefore have

the benefit of buying in smaller quantities and they also get a share ofthe profit the retailer makes when he buys in bulk from the supplier.

Resellers help in boosting sales

Resellers often use persuasive techniques to persuade

customers into buying a product thereby increasing sales for that

product. They often make use of various promotional offers and

special product displays to entice customers into buying certain

products.

Customers receive financial support

Resellers offer financial programs to their customers which

makes payment easier for the customer. Customers can buy on

credit, buy using a payment plan etc.

Resellers provide valuable information

Manufacturers who include resellers for selling their products

rely on them to provide information which will help in improving the

product or in increasing its sale. High-level channel members often

provide sales data. On all other occasions the manufacturer can

always rely on the reseller to provide him with customer feedback.


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Disadvantages of including intermediaries in the

distribution channel

Revenue lossThe manufacturer sells his product to the intermediaries at costs

lower than the price at which these middlemen sell to the final

customers. Therefore the manufacturer goes for a loss in revenue.

The intermediaries would never offer their services to the

manufacturer unless they made a profit out of selling his products.

They are either made a direct payment by the manufacturer, for

instance shipping costs or as in the case of retailers by selling the

product at costs higher than the price at which the product was

bought from the manufacturer (also known as markup). The

manufacturer could have sold at this final price and made a greater

profit if he had been managing the distribution all by himself.

Loss of Communication Control

Along with loss over the revenue the manufacturer also loses

control over what message is being conveyed to the final customers.

The reseller may engage in personal selling in order to increase the

product sale and communicate about the product to his customers.He might exaggerate about the benefits of the product this may lead

to miscommunication problems with end users. The marketer may

provide training to the salespersons of retail outlets but on the whole

he has no control on the final message conveyed.

Loss of Product Importance

The importance given to a manufacturers product by the

members of the distribution channel is not under the manufacturers

control. In various cases like transportation delays the product loses

its importance in the channel and the sales suffer. Similarly a

competitors product may enjoy greater importance as the channel

members might be getting a higher promotional incentive.


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Bibliography

www.google.com

www.redeaglegroup.com

303, Hermes Atrium,

Plot No 57, Sector - 11, C.B.D. Belapur,

Navi Mumbai - 400614

Phone: (+91-022) 27565742 / 47
http://www.google.com/http://www.redeaglegroup.com/http://www.redeaglegroup.com/http://www.google.com/