Supply Chain: Logistics and Marketing

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By CPA Michael Nzule

Let Logistics Be Part of Your Marketing Game Plan and Win

Traditionally, marketers and accountants have challenging conversations and managerial conflicts regarding approvals of expenditures. It doesn’t matter whether these expenditures are capital expenditures or operating expenses. Justification of the spend is where divergence occurs. However, it is expected that both clearly understand terms like return on investment (RoI), investing ahead to drive brand equity, customer churn, and all that lingua used to justify the spending. There is then logistics, which is mainly concerned with service or product delivery. This makes a trio alliance necessary in serving customers. The marketer must market to the accountants while working together and collaborating with logistics counterparts to serve customers and consumers. 

Let us try to focus on the logistics and marketing interface. Let us explore and understand the differences and alignment between marketing and logistics, knowing that these links with overall supply chain activities are also good. With this in mind, alignment between marketing and logistics becomes more accessible in the overall management of operations, particularly the execution of marketing strategies.

Let us try to focus on the logistics and marketing interface. Let us explore and understand the differences and alignment between marketing and logistics. And, of the essence, it is good to know that these links with overall supply chain activities. With this in mind, alignment between marketing and logistics becomes more accessible in the overall management of operations, particularly the execution of marketing strategies.

The logistics industry is vital in delivering goods and services to customers and consumers. So, it is expected to conclude that customer satisfaction is an end goal in the logistics industry. To give this, the logistics industry is heavily involved in the “movement” of goods (cargo) and attendant services, as well as all enabling consultancy or advisory services. Logistics delivers support to businesses to deliver profitable supply chains. This covers, by extension, decisions on product pricing (for profit margin growth, preservation or protection) and cost management (cost reduction, elimination or avoidance). Effective business strategies should always have logistics at their core. Businesses have a huge desire and focus to drive customer satisfaction. Satisfied customers lead to earning business revenues and, ultimately, profits. By now, we must be getting the drift to where marketers come in. Marketers are known to be obsessed with customer satisfaction. This is what delights and excites them. It is clear that logistics and marketing are conjoined and are critical strategic fronts of businesses. 

Logistics is concerned with fulfilling customer needs and wants, the ultimate goal being customer satisfaction. Marketers are intimate with all that scope, which leads to understanding customer needs and designing products and services to fulfil specific needs. 

Marketers consistently keep in touch with ever-changing customer behaviours. This makes it possible to align and realign the selling efforts with the customer at the core. Marketers help in building customer loyalty. With this, it is easy to connect to what is often referred to as logistics marketing. Logistics marketing is all about customer satisfaction, which is linked to the definition of cutting-edge marketing strategies for companies.

With advancements in technology, customers continuously purchase goods and services remotely. Physical purchase locations are now being rendered redundant. Customers care more about the product’s quality and delivery times; even product feature trials are done online to make purchase decisions. Therefore, the interaction space is now primarily online, and the logistics of delivering the products are now subjected to more visibility.Customers are more empowered and may have more rights to cancel orders, even when the orders are being processed. This has put more pressure on the supporting logistics to deliver orders in full, on time, and with the promised quality and standards. The risk of unfulfilled customer orders and poor customer satisfaction has grown enormously. 

It is a fact that one dissatisfied customer may ruin a product easily due to its powerful online presence. Marketers must play hard on these platforms, too. Customers now look to see value added to every purchase. Logistics and marketers must work together to deliver this. They must know the service and product from the lens of value delivered to the customer.

Digital marketing strategies must be deployed consistently by marketers. When customers are satisfied, companies ultimately grow value and returns for their stakeholders. Communication is, therefore, critical to delivering the product promise and the value proposition behind each product or brand. The good thing is that customers are more enlightened and appreciate the value delivered, and their positive feedback is an excellent catalyst in marketing and driving value. A good service will always be rewarded.

So, how do we make marketers work together with logistics? Essentially, the two are intertwined in every decision and execution activity. It is an unavoidable symbiosis, and neither party should be left behind. Logistics helps qualify most of the marketing strategies and plans – from innovation to selling and after-sales, and, most recently, use data analytics throughout the processes. It is possible for some excellent and well-visioned marketing strategies to be rendered useless when the logistics angle is brought to the table.

There is a case of one failed strategy of product launch that was based purely on geographical distance as read from readings only. This had not factored in actual physical terrain barriers and climate (heavy equatorial rains with no access roads) in the target market. When a logistics team was brought into the picture, the whole plan was found not to be cost effective and would have led to massive transport losses, trying to use alternative means for delivery of inbound supplies, and possibly product quality issues. The planned market storm activities also failed!

Marketing and logistics relationships are exemplified more in the selling process. This however, does not undermine the behind-the-scenes marketing strategy definition process. Marketing strategy definition is the foundation of successful sales execution. It is therefore critical that logistics teams are involved at the concept and design stages. This makes the execution stages (the selling process) easier. All the loops must remain connected. At the design stage, marketers are concerned with ensuring that all information about the product is available. Logistics plays the critical role of quantifying and qualifying data required to support all activities like promotion and communication to bring clarity and shared understanding. If this is missed out, execution strategies are bound to fail.

It is relatively easy to connect the execution of the actual selling process to the logistics side of the business. This is where the congruence is more visible. The logistics team connect the moves to storage, returns, outlet planning and designs, inventory levels, order and re-order levels, channels, delivery times, packaging and all activities leading to the final customer. It is, therefore, critical that all these logistics parameters are communicated. The quality of the logistics services is affected by the visibility and communication of the information about the desired moves to be made about products to the target customers.

After the sale, marketers worry about whether the customer has been satisfied. Customers may give positive feedback about the product and even place new orders if satisfied. There are also expected logistics interfaces, either by returns made (say of packaging or rejected products) and the trigger of the ring account receivables process. After all, the climax of selling is qualified through customers paying for the good or service. The logistics team can, at this time, trigger the connection to accountants. Remember the story of returns on investment in marketing and that cash is king? Logistics now plays a critical role in initiating or even finalising the accounting processes.

Product returns and refund processes may be triggered if customers are unsatisfied with the delivery. Marketers would be keen to understand this as a missed outcome. This may be caused by many factors, e.g., product quality, late delivery, wrong product and wrong pack sizes. The causes of customer dissatisfaction can be attributed to both marketers and the logistics team. Hence, there is a need for another convergence in the continuum of chasing customer satisfaction, which ultimately leads to better profit returns. Realignment is critical to picking lessons, improving the next selling process, or even redesigning marketing strategies.

Upon making a successful sale, the next move should be to make another successful one. Then, grow on scale by building on customer loyalties. The success should drive customers to make the company product a top-of-mind choice. The iterations should be based on continuous learning and improvement. Logistics and marketing synergies should be encouraged and nurtured. Excellence in customer service can only be achieved when the two work together. Customers will be willing to pay for real value created and added to them

As seen, companies must recognise and uphold the symbiotic relationship that exists between logistics and marketing. Management must ensure that these critical functions are integrated. Effective collaboration between the two functions creates great harmony and delivery of exceptional customer satisfaction. A dysfunctional relationship will definitely result in dire negative outcomes. These present themselves as chaos. No one would like to be in the mode of crisis management, which manifests itself as stock outs, lost sales, late deliveries to customers, extra shipping costs, high operational costs like storage costs arising from poorly planned and executed warehousing, overtime costs, and production re -works including defects management. 

The ultimate undesired outcome is loss of customers and profits. All these can be avoided by ensuring that logistics teams work in a deliberate and collaborative manner with marketing teams. Execution of marketing strategies becomes easier as a result of this collaboration.

Luckily, with advancements in technology, data analytics support collaboration of different functions in companies. Data is now a key resource and enabler in strategic planning and execution. Logistics teams and marketers would benefit more from enhanced visibility of activities and monitoring of product quality parameters like expiries, temperature controls and inventory levels. Deploying technology for data exchange and real time engagement with customers enhances customer satisfaction. 

When marketers link up with logistics teams, facing accountants or the gatekeepers of marketing plans becomes a walk in the park. The trio can make things work easier. Most importantly, customers will be happy, and they will be satisfied. And the investors and shareholders will enjoy optimised returns on investment. So, let logistics be part of your marketing game plan. And win! 

Views expressed here are personal.

The writer is the Finance & Strategy Director of Mitchell Cotts Freight Kenya Limited and a member of ICPAK. Email: [email protected]; [email protected] or [email protected]


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