Marketing Logistics Interface in RS Components Company - Case Study Example

Marketing logistics interface Section A Since launching http rswww.com in 1989, RS components has seen over 50% of sales achieved over the Internet. Critically evaluate digital technologies and software developments have improved front and back office integration for the benefit of RS customers, and ultimately RS Components profitability. RS Components is a company which is specialized in distribution of electronic, electrical, electromechanical and industrial components all over the world and was founded in 1937. Its worldwide business is facilitated by more than one million engineers. Thus the company has its operating companies based in twenty five countries including highly industrialized countries such as France, Italy, Germany and Denmark. The company is a catalogue based distributor in nature. Thus it deals with professional customers worldwide. After 1989 the company took various initiatives in order to increase the revenue and profitability. In the process the company has adopted many strategies such as battery replacement for recycling of waste batteries and the innovation of introducing Eco wire-Environment Friendly techniques (www.rswww.com). RS Components has achieved 50% of the sales from the UK internet sales in the year 1989, due to the fact that the company succeeded in increasing the awareness and the importance of the RS website including the latest electronics, electrical and industrial products. In addition to that it is basically because of the continual adoption of innovative products and also introducing the new innovative production packages online in the RS website. This new package involves a host of benefits to the customers of RS components such as easy identification of packaging format, set the required quantity, check the levels of live stock, place orders online and also fast delivery system. According to the Nik Patel, Marketing Manager e-commerce at RS commented on the success of online sales is that it could achieve basically because by listening to the RS customers and innovative investing new technology in its website. In fact they could make online ordering and valuable information sourcing in a simple and easy manner in order to attract more customers to its range of products. RS Componenents is mainly focusing on meeting the customer's demand by a rare combination of value, choice and service through innovating in pricing, product marketing and first initiative moves. The UK market for electronic and electrical goods has become so strategically competitive and RS' is focused on this market segment with more and more orientation towards meeting customers' ever changing demand patterns. The retail store as against the e-retailing offers a variety of goods and services on the spot while, the latter offers an equally diverse and complex mixture of products for later delivery (Murphy, & Poist, 1992). Its current product launching strategy is associated with making use of niche markets that exist in many parts of Britain, including e-retailing. For instance its recent product launches in Britain were highly successful due to the suddenness and the associated surprise. Customers were caught unawares by these very attractive offers. Thus RS' has adopted a strategy of launching products in cities where consumers were little or no used to such windfall bargains before. RS' developed its advanced search and navigation engine in online stores so as to save the time of the electronic and maintenance engineers, reduce their purchase cost, selecting and ordering products and improve the efficiency of the service (Lynch, & Whicker, 2008). Thus the clarity of the website allows its employees to implement host of new services in an efficient and effective manner and also customers would benefitted from free product information advices from the technical staff of the RS and accessing to about 110, 000 datasheets while ensuring the customer satisfaction. Thus according to the Marketing Manager e-commerce, supply chain management strategy at RS was extremely successful due to the foresight of the management. What it emphasized was that the reduction of costs, satisfaction of the customer and improvement of the product offerings with service quality. RS Components has been able to achieve a growth rate equal to approximately 60% over the years due to its strategic and tactical back office functional integration of communications, competitor related feedback, seamless integration of marketing and logistics tasks across a range of organizational activities and above all its focus on supply chain related strategic functional integration of a critical sub set of tasks such as procurement, storage, and release. This kind of approach has naturally helped the organization to achieve a series of positive synergies directly related to its back office routine functions in addition to the organizations' critical competency management success. RS Components has invariably been influenced by the parametric growth trajectory directly associated with its sub functional task integration process which in turn is based on an otherwise difficult-to-achieve elemental process related goals such as combined marketing plus logistics operations at the strategically important level of organizational performance. The top management of the company has also been concerned about the degree of competition related difficulties arising from either process related efficiencies or operations related strategic motivation. The company's success is rooted basically in the first parameter though strategic variations also have contributed in some considerable measure to this final outcome. The company has been focused on the former to such an extent that back office function based process integration in to seamless communication technology has helped the company to chalk up marvelous growth paths that have little parallel elsewhere among competitors in the industry. 2. (i) Critically evaluate the RS Component Operation and identify the types of system linkages that the Marketing and Logistics functions would utilize to ensure the Synchronous delivery of product at the customer point of product usage. Over the years RS component has developed there marketing and sales strategies to reach the customer and increase their margin of profitability. The company has been more initiative than the competitors who are in the same business. One element that the company has put more effort to identify the customer's requirement through the analysis of historical data the company has been maintained over the years. Scanning the ordering previous patterns the company can have a good knowledge about the actual customer requirements regarding the components and thus the areas in which the customer prefers to place the order. The company is maintaining a database obtained from their internet based marketing function. Customers can place their orders with their preferences (Rinehar, Cooper, & Wagenheim, 1989). Thus it is highly personalized and it allows the customer satisfaction and to maintain the relationship. The marketing website of RS Components plays a huge role in increasing the sales turnover. This pattern of marketing enables the company to link with their customers and to strengthen the relationship with the objective of increasing sales turnover. RS Company has direct contact with the customer with continuous filed visiting and post-sales marketing activities. In the field, RS Components has got an efficient and pleasant sales staff to maintain friendly customer relations and to inform customers of products that maybe of interest to complement their main order. This initiative increased customer satisfaction of the RS products and the strategy boosted the overall efficiency of the handling, packaging and shipping functions. Another strategy the company adopts to meet customer requirements is the inventory planning system, e.g. advanced inventory planning systems like MRP system (Gay, et al 2007). In the process of inventory planning the control elements are designed to plan and manage manufacturing processes that drive the production in keeping with efficient process management and reduce the wastage to minimize damages to the inventory. The system ensures the products are delivered to the customers on time. Another fact is that maintaining the lowest possible inventory has provided greater functional efficiency to RS Components to reduce the cost on inventory such as insurance, cost of physical damages and security cost on the inventory. The effective marketing strategies adopted by the company to meet customer expectations have boosted their sales to a greater extent and that has reduced the inventory turnover ratio of the company. Efficient manufacturing planning activities and delivery schedules through a reliable service has increased the goodwill of the company among its existing customers and that's the secret of success of RS Components all over the world. RS Component is the first company in the UK to introduce an internet marketing channel with a catalogue in CD format to its customers. With this innovative idea the company is now in a stronger position with selling 245,000 electronic and digital products online (Kim, & Forsythe, 2010). The advantage of online marketing strategy is that it certainly reduces the inventory level because there is no need for maintaining showrooms to sell these products. Thus the company can carry out customer services by providing product data sheets and technical references. Another advantage of internet based marketing is that it enables the expansion of the business to various areas such as after sales services and new market penetration (Brassington, & Petitit, 2003.) After the introduction of e-marketing the company has gained many new customers, majority of whom are foreign distributors and whole sale dealers of electronic and digital equipments. Simultaneously marketing strategies of Rs components not only increasing the customer satisfaction but also the profit margin of the company also have gone up in recent years. (ii) What would be the effect, impact and critical outcome of an out of stock product scenario to RS Components Marketing Operation with regard to their immediate customers Many retailers, customers, suppliers are often faced with the problem of out of stock products. In fact every company wants to eliminate the out of stock word in their logistics department, because there is no company which wants to experience a decrease in sales velocity problem. The problem of out of stock products means unavailability of regular products on the customers' preference list, and those are not on the shelf. If a company has 8% out of stock ratio in their logistics department it means one product is not available out of every twelve products that the customer wants to purchase (Gimenez, & Ventura, 2005). This scenario causes many problems to every company such as huge losses of sales, decrease of goodwill of the company due to failures in distribution and loss of faith in the company. Thus it increases the unhappiness among customers towards the product or service. RS Components Company is a multinational company which has a huge global network across the world. Thus the company has its existing customers ranging over one million in the countries where it sells and markets its products. Customer order processing, execution of delivery schedules and shipments to various countries, should be carefully managed in order to avoid the dissatisfaction of customers. Out of stock of products occurs due to various reasons such as inaccurate forecasting or ordering system of materials, such as delays in carrying inward bound materials. Various manufacturing issues such as inaccurate process, delays due to labor issues like strikes and power failures have a direct impact on the out of stock products in the logistics. Another reason for out of stock can be stated as failures in distribution centers. A multinational company like RS Components has many locations in various countries and agents to distribute the products for order processing. Due to unavoidable circumstances in those centers there can be shortcomings in the process. As indicated above RS Components' customer loyalty is much stronger than the competitors' who are dealing in digital and electrical products. If the company is unable to supply the customer's requirements due to out of stock issue it will badly affect its entire market distribution network. Since the company's market strategy depends on e-marketing, the customer chooses and purchases the product by accessing web site. After considering quotations and other factors customers tend to place the order with a high expectation of receiving the needs on the date. So in this process if the company fails to deliver the ordered goods within the time schedule the whole image of the company will be lost and the sales volume that the company has improved over the years within a short period of time. As a result of the competition, customers may turn in to a company in order to fulfill their requirements while RS Company is experiencing a shortage of stocks. As a result company may suffer a huge loss and there is the possibility of customers taking legal action against the company by the customers especially international customers. So there is a risk associated with poor inventory control systems. In order to avoid this greater risk the company should improve the logistics control with adopting advanced stock control methods and should strictly execute the forecasting and order processing procedures. Section B (i) Automotive retailing The automotive retailing market in UK has been characterized by a number of significant factors including emergence of major retailers with own brands, large size of stores, greater degree of retailer concentration, an increasing demand for one-stop shopping, electronic point of sales, introduction of loyalty card system and wide range of choices. All these changes have a direct impact on the increasing power of the automotive retailers in the UK compared to the manufacturers. In fact most of the manufacturers have to deal with the most powerful retailers in the UK market where the latter's penchant for innovation, product diversification, consistent product quality, short and frequent deliveries with reliable supply and regular price reductions have forced the former to rethink their strategy. However it is obvious for the automotive retailers that there should be a proper mechanism which would enable them to develop world class practices by using integration of marketing and logistics in the automotive service process (Stank, Daugherty, & Ellinger, 1999). Thus it is being increasingly accepted and used in automotive industry in the UK in particular in order to improve the organization's reliability while delivering customer satisfaction and competitive advantage. The structure of the automotive retail industry are determined by a host of endogenous and exogenous variables such as supply chain, geographical imbalances, the availability and the relative mobility of resources like labor, comparative and absolute advantages, globalization, industrial or employee relations and a host of other factors (Ealey, & Mercer, 1998). Despite a fast changing environment in the global automated industry, a series of a priori and a posteriori factors have been persistently present in orienting and reorienting the marketing and logistics within it. In the first place, a few automotive giants like Toyota, Nissan, Honda, Ford, BMW, Daimler-Benz, Fiat and Hyundai have been dominating the scene thus effectively preventing smaller companies from influencing the innovative marketing techniques and logistics in a substantial way. In the first instance the current automotive industry operations include a very competitive and expansive market in UK regions with its multiple retail stores (Mentzer, Stank, & Esper, 2008). Thus it has developed its market with nation's popular automotive brands. Their current marketing strategy associated with purchasing, distribution, transport, storage, procurement, selling, marketing coordination, quality testing, and after sales services. For instance automotive industry in the UK is highly successful due to the marketing associated surprises. Customers were caught unawares by these very attractive offers. Customers in the automotive industry are more concentrating about the innovative changes and best experience from the automated products. Thus automated retailers need to focus its attention about the convenience showroom shopping, online browsing, ordering and payments, customer relationship management in order to achieve a highest growth in the industry. In today's competitive environment, automated retail industry has become more customer oriented and product driven. Thus with the changing trends in behavior and shopping patterns by the consumers, automated service providers need to focused on multi channel marketing approach to target the market to enhance their shopping experience and to increase sales. Thus automated retailers can categorized their existing customers as their store visitors and online shoppers (Engel, Blackwell & Miniard, 1995). In fact automated retailers could be able to provide customized automated information for its customers over the internet and drive customers to make a purchase over the physical stores. The potential customer's profile in the automated retail market includes such characteristics as price variabilities and income variabilities. Price related differences in the average customer profile are determined by the fact that the underlying customer preferences for customized automotives are based on the modern technology, new features and its price. New technologies are in demand in this industry but the price plays a pivotal role. On the other hand logistics can be identified as the art and science of processing the orders of potential customers; managing the information and distribution network; controlling inventories; packaging; and arranging related transportation services. Logistics is very important because potential customers need to be taken care of on a number of accounts such as efficiency in delivering an order, providing information at the first inquiry itself, reducing delays caused by coordination among sales team and processing orders on the basis of priority. Most of the retailers in the automotive industry are considering on integration of marketing and logistics and reduce supply chain cost and service efficiency in order to satisfy the customer and compete against the competitive automated retailers in the industry (Ellinger, 2000). Automotive industry in the UK has successfully adopted inbound logistics services in its supply chain management network in which supplies are sourced within a certain geographical limit to minimize costs. Similarly they are procured from a core group of very competitive bidders. Low operational cost at automotive industry has particularly been associated with break-up of operations into manageably smaller sizes. Outbound logistics involve such activities as the delivery of the final product and other associated processes. In other words, effective outbound logistics involves storing, transporting and distribution to potential customers. Marketing and sales have to be pitched higher in order to create awareness among potential customers and automotive industry retailers have done both remarkably well (Chaffey, et al 2003). After sales services and other associated services with product delivery at automotive industry have gone a long way to reducing inventory and supply chain costs in order to compete sufficiently in retail activities. Procurement of supplies involves a lot of planning activities. Automotive retailers in the UK successfully have been procuring quality supplies at much lower prices for a long time though rivals are not far behind. Modern technology matters not only in fast service delivery but also in communication practices. Technology advantage of automotive industry lies in its strength and the retailers have acquired a good reputation for it. The automotive industry in the UK has been negatively affected by the global economic downturn highlighted by a number of significant factors such as integrated marketing logistics operations in a highly competitive environment (Andraski, & Novack, 1996). Therefore automotive retailers in the industry require constantly incorporate changes in marketing logistics strategies to their business so as to stay ahead with their competitors in the automated retail industry. 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