The right delivery service for each product

The strategy of the functional logistics area determines, in particular, the structure of the delivery services. In the process, economic, technical and legal parameters must be observed. In addition, the product being offered plays a key role in the choice of delivery service. On one hand, companies offer various consumer goods to private customers; on the other, they offer productive goods in the B2B area.

Different delivery services for different products

Functional strategies outline the impact of overarching corporate strategies and business strategies on the functional areas of a company in detail. In manufacturing companies, the delivery service Delivery service offered to the customer is of particular interest in the logistics functional area.

Delivery service for consumer goods

Consumer goods can be classified into four categories based on consumer behavior [1]:

Convenience goods
Shopping goods
Specialty goods
Unsought goods

Each type of goods places special demands on the delivery service Delivery service . A poor delivery service will impact the sales of retailers and manufacturers to different degrees. In the case of regular purchases and needs-based purchases, manufacturers are especially interested in guaranteed availability of the goods as customers would choose substitute goods from other manufacturers. The situation is similar for goods purchased upon external impulse. If the immediate availability of the goods cannot be guaranteed, a need aroused by something like an advertising campaign cannot be satisfied. In the case of spontaneously purchased goods, both manufacturers and traders have a special interest in the availability of the goods as out-of-stock goods will mean sales losses for both. The significance of the delivery service is more difficult to gauge in the case of goods that are sought and compared. In “intra-shop” comparisons, it is more important for the manufacturer. In “inter-shop” comparisons, it is more important for the retailer [2, 3].

	Readily purchased products Readily purchased products are used repeatedly by customers. When the preferred item is out of stock or in short supply, available goods are purchased in its place. This means that retailers are able to enhance the delivery service in such cases by offering acceptable substitute goods. Because the unavailable good results in a revenue loss only for the manufacturer, the delivery service becomes a top-priority factor for him.
	Spontaneously purchased products With spontaneously purchased products, the existence and the form of presentation trigger purchasing decisions. As a result, a consumer spontaneously makes additional purchases of available goods when he sees the product or replaces sold-out items with available ones. For these goods, the delivery service is a particularly critical factor for both the retailer and the manufacturer because both suffer lost sales when the product is not available.
	Urgently needed products No particular brand loyalty is associated with urgently needed products. Rather, the buyer has little interest in comparable products because he needs the item immediately. As a result of this urgent need, the consumer will select from the available goods when the preferred item is out of stock. In terms of such items, the retailer is in a position of increasing the delivery service by having acceptable substitute items on sale. Because the unavailable good results in lost revenues only for the manufacturer, the delivery service becomes a top-priority matter for him.
	Sought-after or comparison products For sought-after or comparison products, the consumer makes a purchasing decision after carefully weighing various products’ strengths and weaknesses. Two approaches can be taken in this process: “inter-shop” and “intra-shop” comparisons. In “inter-shop” comparisons, the consumer visits several stores. In “intra-shop” comparisons, he focuses on a single store that has a concentrated assortment of products. The chances that a manufacturer will lose sales are smaller in “inter-shop” comparisons than in the “intra-shop” approach. This is because the consumer who likes to search for products is likely to find an item that is unavailable in one store someplace else. As a result, the role of the delivery service is smaller for the manufacturer in the first instance. It remains the same for the individual retailers in both cases.
	Specialty products Specially purchased products are characterized by highly distinct product features and strong brand loyalty. To the consumer, the product is so unique that he is willing to put off his purchase when the item is out of stock and wait until a new delivery is made. The delivery service has little significance for such products.
	Unsought goods In externally initiated purchases, the consumer knows nothing about the products, or he is acquainted with them but has no intention of buying them. Marketing efforts are the primary approach to selling such goods. Delivery service is also very important. The products must be immediately available once advertising campaigns or personal buying considerations have prompted the consumer to make a purchase. Otherwise, the awakened demand cannot be satisfied.

Delivery service for consumer goods

Delivery service for productive goods

Product and business typologies that allow insights into the significance of the delivery service Delivery service can also be defined for productive goods Productive goods , that is, for goods that are offered by companies for companies. A distinction can be made between unspecific, supplier-specific, customer-specific and relationship-specific productive goods [4]. The requirements of the delivery service differ accordingly. Short delivery times play a key role for nearly all productive goods - the only exception being customer-specific productive goods. Another important factor is the delivery quality of unspecific or relationship-specific goods, in particular. In addition, the delivery reliability Delivery reliability is of high importance for the delivery service of customer- and relationship-specific productive goods. In the case of customer-specific goods, the delivery flexibility Delivery flexibility is another key factor. If a supplier fails to satisfactorily fulfill his requirements, a switch of suppliers may take place. This can take place on short notice in the case of unspecific productive goods, but only over a longer term in the case of supplier-, customer- and relationship-specific goods [3].

	Unspecified productive goods For suppliers of unspecified productive goods like standard parts and assorted raw materials, high logistics capabilities are an extremely important factor in addition to low prices - particularly in terms of delivery times and nature of goods. Because industrial customers stockpile these products in small amounts or not at all, a short delivery time, e.g., of 24 hours or even the availability of the items in a consignment warehouse is expected to be provided. If a supplier cannot fulfill these service expectations, the result can be an immediate change of suppliers and, thus, lost revenues for the previous supplier.
	Supplier-specific productive goods Supplier-specific productive goods with special features are offered by only one company. These items include catalogue products that do not meet a sector standard. Because the customer has closely linked his production processes to these goods and cannot spontaneously change suppliers, poor service will not immediately result in lost revenues. But if the service level remains low over an extended period of time, the customer will look for replacement suppliers with similar specifications.
	Customer-specific productive goods Customer-specific productive goods are used by only one user, and they must meet particular specifications. Such goods include parts and components that are specially made to meet customers’ needs. They usually have a relatively long production period. Because the share of the dispatch time within the overall delivery time is rather small, the requirements placed on the delivery time of these goods are also rather limited. Important factors that go into the selection of a supplier are deliver reliability and flexibility. This is because the supplier’s deliveries are integrated into customer’s processes.
	Relationship-specific productive goods Typical characteristics of relationship-specific productive goods are repeated orders over a specific period of time, and high demands are placed on delivery reliability and the nature of the goods. As a result of long-range requirements planning, delivery times are short. A high level of delivery reliability and certainty is particularly required for items with assembly- or application-synchronized “just-in-time” delivery. In the short term, problems with the delivery service generally result in contractual penalties. Over the middle term, inadequate logistics performance can mean that the supplier will not be considered as a future partner for new delivery components.

Delivery service for productive goods

Leeway for the structuring of the delivery service

Efforts to achieve low logistics costs and a high-level delivery service Delivery service are just two factors in logistical efficiency orientation. The economic, technical and legal parameters must be considered as well [2].

Economic parameters

The economic parameters of the delivery service Delivery service aim to ensure a minimum level of service provided by all suppliers. Even if tangible goods are of a high quality or extremely cheap, they cannot be sold if they do not meet minimal service-quality standards [5].
Delivery service policy can be conducted only in a service operational area that provides more than minimum service. As delivery service increases, the costs of the delivery service also rise. This means that only a delivery service whose costs are lower than revenues is economically justifiable [3].

Service level

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Technical parameters

The technical parameters of the delivery service Delivery service result from the physical product features of the goods that are the subject of logistical services.
Here, the requirements of the delivery service initially draw on natural product features such as physical, chemical and biological features - including sensitivity to jolting, temperatures, radiation and warehousing conditions. Added to this must be requirements of external product features such as size and weight [3].

Legal parameters

The legal parameters that must be observed in the formulation of a delivery service strategy are particularly complex. First of all, they include the general requirements of the law of obligation - such as the aspect of delay of performance under Section 280 II of the German Civil Code and its legal consequences [6]. Added to this must be a multitude of special norms covering transports. Examples include the delivery deadlines laid down in Article 27 COTIF/CIM for international rail transportation and the delivery deadlines set by German regulations on national truck transportation. In addition, the entire field of environmental liability law places special requirements on the reliability and nature of deliveries [3].

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References

[1] Marketing-Management | Kotler / Keller / Bliemel/ Keller 2007
[2] Konzept und Leistungspotential der Marketing-Logistik | Havinghorst 1980
[3] Logistikmanagement | Pfohl 2004
[4] Strategisches Beschaffungsmanagement | Large 2006
[5] Leveraging Logistics / Distribution Capabilities: The Effects of Logistics Servcie on market Share | Daugherty / Stank / Ellinger 1998. In: Journal of Business Logistcis 19(1998)2
[6] Pflichtverletzungen im Schuldrecht. Die Anspruchs- und Rechtsgrundlagen des neuen Schuldrechts | Wilmowsky 2002. In: Beilage zur Juristischen Schulung (2002)1