A question of price - DHL Logistik

It’s all a question of price

Just like procurement logistics, the conditions governing the shipment of goods play a critical role in distribution logistics. Within the framework of condition strategy, one question arises: Where does the logistics span of control for the parties involved in the transaction begin and end? One other important factor is a company’s liability and discount strategy from a distribution-logistics point of view.

Location and quantity make the difference

Relationships between terms and conditions, and distribution logistics Distribution logistics arise primarily through price. Additional logistical cost considerations must be made in two areas of price policy: geographic price differentiation and volume-based price differentiation.

Geographic price differentiation

One question related to the issue of geographic price differentiation concerns the extent to which the cost of product delivery is included in the price. If the delivery is made “free carrier,” the supplier will bear the entire cost and risk of the shipment. If the price is “ex works,” the customer will generally add the additional costs incurred to the price in his procurement calculation. In international business transactions, these issues are frequently regulated in standardized clauses - the so-called incoterms Incoterms [1].

Volume-based price differentiation

“Buy three parts and pay for only two.” A practice that is common to consumers of new articles is also well-known to companies as well - but on a larger scale. Using bulk discounts, the best possible purchasing conditions are to be achieved. For instance, a bulk discount is offered on the purchase of 1,000 screws. Distribution logistics Distribution logistics will have a problem if the packaging for screws is optimized for standard sales lots of 800 screws.
The supplier must always try to keep distribution logistics Distribution logistics in mind in his discount strategy. The demands placed on transport, handling, storage and packaging as a result of the order size or concentration of sales lots should mesh with the capabilities of the logistics system [1].

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