Ranked #9: Proximity to Major

¶ … Ranked #9: Proximity to Major Market" focuses on discussing the elements that have the greatest influence on companies' logistical strategy. The most important of these elements seems to be by far the customer itself (Cranmer & Wegfahrt, 2006). But things were not always like this, as the elements of great impact on logistics and locations have changed over time.

Therefore, closeness to markets is now one of the decisive factors taken into consideration when deciding on a company's new location. Proximity to major markets is now ranked No.9. However, this factor is handled in different manners in accordance with the function or facility type being located, as the article also states. For example, for manufacturing facilities, proximity to major markets represents a close physical to the consumer, for distribution facilities proximity refers to closeness to certain shipping ports, while for office facilities proximity means the same time zone for delivering service-oriented activities. It all depends on the nature of the facility.

Currently, the most important element that has a significant influence on companies' decisions regarding location and logistics strategy is represented by customers. From the marketing concept perspective, the main objective of the logistics system is represented by ensuring logistics services in conformity with the consumers' and users' requirements. Basically, the general idea is to ensure as many logistics utilities at a lower cost, so that the level of customers' needs satisfaction is as high as possible from the product's logistics point-of-view. Customers are interested in acquiring the products exactly when they need them, as much as they need, where they need them, and also at the required quality. In addition to this, customers want to benefit from a very easy and efficient system for placing orders, returning used goods, and others. Satisfying these logistics needs in conditions of efficiency and continuous demand motivation represents a complex objective. For reaching this objective it is necessary to conduct a complex marketing research activity and logistics operations.

As the article says, "it is really the customers who establish broad location strategy" (Cranmer & Wegfahrt, 2006). In other words, logistical planning is based on the conditions imposed by customers. Logistics planning includes a series of steps. The first of them refers to customers and consists in identifying the clients' requirements regarding distribution services level. The projection of any distribution system starts with analyzing the needs and buying behavior of customers composing the target market. This orientation is due to the marketing concept implemented by the company. Knowing clients' expectations regarding services' level allow the company to choose the most profitable and efficient distribution methods.

The main services of a marketing channel consist in: spatial easiness (the measure in which the marketing channel allows easy access to clients in the spaces where products are offered, and diminishes transportation needs, as well as product search costs); batch's size (the number of product units that the client can buy each time); waiting time (the medium time interval before placing an order by the client and receiving the products by the client); products variety (the dimensions of the offered range of products).

Obviously, the distribution services level is higher when spatial access is easier, when the batch's size is smaller (in order to diminish products storage needs and expenses for the client), when the necessary time for obtaining the products is smaller, or when there are more products choice possibilities. Besides these basic services, the following can be taken into consideration: credit offering, installing and maintaining product's quality, offering information, establishing deliveries, and others.

Therefore, most companies prefer to establish their business models based on customers' desires, needs, requirements, expectations, and preferences. These requirements that must be met by companies' business models are related to product cost, quality, and delivery time. Some of the changes made by companies in their logistics systems in accordance with this aspect include: "several major retailers may demand that suppliers ship directly to store locations rather than to the retailers' distribution centers" (Cranmer & Wegfahrt, 2006).

One of the issues needed to be taken into consideration when deciding to establish a company's logistics strategy on customers' preferences is the fact that these customer preferences also change over time, so the company will have to continuously change its logistics strategy and adapt it to the changing customer preferences.

Other than this, the channel strategy is significantly influenced by customers' knowledge regarding the products, their price sensitivity in the product category, the way they make their purchase decisions, their logistics and customer service needs, and comfort using technology to meet their needs (Betman, 2000).

Nowadays, it is a true fact that customers drive location strategy. The main objective for any company that manufactures or sells products or services is customer satisfaction. If customers are satisfied, this will increase their loyalty degree towards the company, which will ensure the company's well-functioning and further success.

The logistics strategy must now adapt to the customer, to meet his requirements, in order to keeping him loyal to the company. Before the current period, companies' logistics strategy was established in accordance with the company's needs only, putting customers on the second place. But this condition has changed in the meanwhile, and the customer is the number one aspect that needs to be taken into consideration when establishing a company's logistics strategy, especially the part concerning location. As mentioned above, customers' preferences change over time and the location strategy must also change and adapt to them. For example, "the old-school model used for manufacturing included the need to inventory raw materials and sub-assemblies at the manufacturing site. Manufacturers did not rely on the supplier's ability to re-stock inventories on a short-term basis" (Cranmer & Wegfahrt, 2006).