International-Business-Dr-R-Chandran-E-book

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International Business- Dr. R. Chandran
price. This applies to many food products as well as technical products such
as mobile phones and personal computers. Sony, Hitachi and Samsung are
very strong in adding value through low cost of distribution.
The role of depots and warehouses
Companies like Sony, Johnson & Johnson, Asian Paints, HP and Sansui
have succeeded through establishing depots and warehouses wherever they
operate. There are many reasons why depots and warehouses are required;
the main reasons are given below:
• To keep down production costs by allowing long productions runs, thus
minimising the time spent on machine set-ups.
• To match demand and requirements with production capabilities, to
smoothen the flow and assist in operational efficiency.
• To enable large seasonal demands to be catered for more economically.
• To provide good customer service.
• To allow trade off with the transport systems
• To facilitate order assembly.
In addition, it should be noted that there are a number of different types of
depots each of which might be considered in the planning of the physical
distribution structure. These might include:
• Finished goods depots/ warehouses – these hold the stock from the
factories.
• Distribution centers which might be central, regional or national or local
depots – all of these will hold stock to a greater or lesser extent.
• Transshipment depots or stockless, transit or cross decking depots –by
and large, these do hold stock but act as intermediate points in the
distribution operations and selected orders to customers.
• Seasonal stock holding depots.
• Overflow depots.
Asian Paints emerged as a market leader in India by setting up warehouses
all over the country, which led to effective distribution. Other well-known
companies like ICI, Berger, Shalimar, Nerolac etc. compete with Asian
Paints.
Cost relationships
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