Goals of the Logistics System

Some of companies state their logistics objective since providing maximum customer service at the least cost. Unluckily, no logistics system may maximize customer service and minimize distribution costs both. Maximum customer service implies quick delivery, big inventories, liberal returns policies, flexible assortments, and other services-all of which raise distribution costs. By contrast, minimum distribution costs imply smaller inventories, slower delivery and bigger shipping lots-which represent a lower level of total customer service.

The goal of the marketing logistics system should give a targeted level of customer service at the least cost. A company has to first research the significance of various distribution services to its customers and then set wanted service levels for each segment. The company in general will desire to offer at least the similar level of service as its competitors do. But the aim is to maximize profits, not sales. then, the company has to weigh the benefits of providing higher levels of service against the costs. Some companies offer less service than their competitors and charge a lower price. Other companies present more service and charge greater prices to cover higher costs.