Year of Graduation
Determining the optimal level of logistic service depending on the product life cycle
Dmitry A. Kuzin
Over time products pass various stages of product life cycle. In accordance, peculiarities of demand and customer needs are changing. And quality of delivery and costs also should vary while increasing maturity of the product and its production technology.Changes in demand and requirements define the indicator - logistics services. For the successful functioning of the organization it is necessary to balance between the level of logistics service and the cost of its implementation in dependence of customer's expectations at a particular stage of the product life cycle.Despite the considerable research in the spheres of marketing and logistics there are insufficient number of papers devoted to interconnection of these sides of business in terms of costs.The object of the work is logistics service level on the stage of the life cycle of the product. As a subject of the study, logistics service level on the example of the company "Complex Bar" will be considered.The purpose of this study –is to match the level of logistics service of one of the stages of product life cycle at minimum cost and maximum customer satisfaction.Therefore, to achieve this goal, the following tasks should be addressed:1. to conduct theoretical analysis of the literature on the interaction of logistics and marketing activities in the company;2. to identify consistency between logistics service and product life cycle;3. to analyze the existing procurement activities of the company;4. to carry out the analysis of key indicators used in further research;5. to calculate basic indicators using methodologies of Stanford University’s scientists;6. to compare the results with the practicable;7. to draw the conclusion concerning the effectiveness of the resulting application of the proposed method.Methodology of the study consists of the following instruments:1. observation and analysis of the scientific literature;2. study and generalization of foreign experience;3. study of documentation;4. employment of the methodology proposed by Stanford University’s scientists;5. comparison, analysis and statistical approaches.Information data base of analysis is presented as accounting and statistical reports of "Complex Bar " for 2012 - 2014 years.While conducting the research, it was found that the logistics and marketing are inextricably linked with each other because their activities are focused on the needs of customers. That's why the planning and organization of activities must vary in accordance with the expectations of consumers.The main problem of the company "Complex Bar " is in violation of procurement. The reason is incorrectly designed organizational structure and procurement that is not determined by consumer demand.Moreover the financial documents relating to the number of products sold (syrup MONIN) during the study period, the cost of procurement unit price and selling were discussed. Conclusions concerning the life-cycle stages of the investigated product were drawn.First of all, the recommendations regarding the operation of the company " Complex Bar " is to use a method of calculating the optimum level of logistics service, depending on demand for the product; improvement of the organizational structure in order to function more effectively throughout the organization; more detailed analysis of demand; reducing the time of delivery; extension of the maturity stage, as the most profitable stage of the product life cycle. Economic effect of the increase in profit for the period up to 23 months in the amount of 609,91 thousand rubles, or 29 percent.