Discuss new technology and emerging Discuss channels and distribution Identify the special problems and
Learning Objectives continued Learning Objectives continued
9 9
Di t
h l
d i
Di t
h l
d i
9. 9. Discuss new technology and emerging
Discuss new technology and emerging trends in supply chain management.
trends in supply chain management.
12 12
10. 10. Discuss channels and distribution
Discuss channels and distribution decisions in global markets.
decisions in global markets.
p ter
11. 11. Identify the special problems and
Identify the special problems and opportunities associated with distribution
opportunities associated with distribution
c ha
p
opportunities associated with distribution opportunities associated with distribution
in service organizations.
in service organizations.
5
c
Learning Objective
1
Learning Objective
Explain what a marketing channel Explain what a marketing channel
is and why intermediaries are needed. is and why intermediaries are needed.
is and why intermediaries are needed. is and why intermediaries are needed.
6
Marketing Channels
1
Marketing Channels
Marketing Channel
A set of interdependent organizations that ease the transfer of ownership as
products move from producer to
Channel
products move from producer to business user or consumer.
Supply Ch i
The connected chain of all the business entities, both internal and external to the
th t f
t th
Chain
company, that perform or support the logistics function.
7
Marketing Channel Functions
1
Marketing Channel Functions
Specialization and Specialization and
Division of Labor
Channels Channels
Fulfill Three
Overcoming Di
i Important
Functions Discrepancies
Providing Contact Efficiency
8
y
Specialization and Di i i
f L b
1
Division of Labor
z
Provides econom ies of scale
z
Aids producers w ho lack resources t o p
m arket direct ly
z
Builds good relat ionships w it h cust om ers
9
Overcoming Discrepancies
1
Overcoming Discrepancies
Discrepancy of
The difference between the amount of product produced and the
Quantity
Discrepancy
p p
amount an end user wants to buy.
The lack of all the items a
Discrepancy of
Assortment
The lack of all the items a customer needs to receive full
satisfaction from a product or products
products.
10
Overcoming Discrepancies
1
Overcoming Discrepancies
Temporal Discrepancy
A situation that occurs when a product is produced but a
Discrepancy
p p
customer is not ready to buy it.
The difference between the
Spatial Discrepancy
The difference between the location of a producer and the
location of widely scattered markets
scattered markets.
11
Contact Efficiency
1
Contact Efficiency
Zenith Sony
RCA Toshiba
Zenith Sony
RCA Toshiba
Circuit City Circuit City
12
Learning Objective
2
Learning Objective
Define the types of channel Define the types of channel
intermediaries and describe their intermediaries and describe their
functions and activities. functions and activities.
13
Channel Intermediaries
2
Channel Intermediaries
Retailer
A channel intermediary that sells mainly to customers.
Merchant Wh l
l
An institution that buys goods from manufacturers, takes title
t d
t th
Wholesaler
to goods, stores them, and resells and ships them.
Agents and Brokers
Wholesaling intermediaries who facilitate the sale of a product by
representing channel member.
14
p g
Channel Intermediaries
2
Channel Intermediaries
Retailers Retailers
Take Title to Goods Take Title to Goods
Merchant Merchant
Wholesalers Wholesalers
Take Title to Goods Take Title to Goods
Agents Agents
Take Title to Goods Take Title to Goods
Agents Agents
and and
Brokers Brokers
Do NOT Take Title to Goods Do NOT Take Title to Goods
15
Channel Functions P f
d b I t di i
2
Performed by Intermediaries
ContactingPromotion
Negotiating
Risk Taking
Transactional Functions
Risk Taking
Logistical
Physically distributing
Logistical Functions
Storing
Sorting
Facilitating
Researching
16
g Function
Financing
Logistics
2
Logistics
Th f
The process of st rat egically m anaging t he
ff fl
d efficient flow and st orage
of raw m at erials, in- process invent ory, and
finished goods from point of origin t o point of
consum pt ion.
17
Learning Objective
3
Learning Objective
Describe the channel structures Describe the channel structures
for consumer and for consumer and
business business--to
to--business products business products
and discuss alternative and discuss alternative
channel arrangements. channel arrangements.
18
Direct C
hannel
3
Direct Channel
A d
is tr
ib u
ti o
n c
h a
n n
e l
in
w h
ic h
p ro
d u
c e
rs s
e ll
d ir
e c
tl y
t o
c o
n s
u m
e rs
.
y
19
Channels for Consumer Products
3
Channels for Consumer Products
Wholesaler Wholesaler
Channel Channel
Retailer Retailer
Channel Channel
Direct Direct
Ch l
Ch l
AgentBroker AgentBroker
Ch l
Ch l
Producer Producer
Producer Producer
Channel Channel
Channel Channel
Channel Channel
Channel Channel
Agents or Brokers
Wholesalers Wholesalers
Retailers Retailers
Retailers
20
Consumers Consumers
Consumers Consumers
Channels for Business-to- Business Products
3
Business Products
AgentBroker AgentBroker
Industrial Industrial
Direct Direct
Direct Direct
AgentBroker AgentBroker
Producer Producer
Producer Producer
g g
Channel Channel
Distributor Distributor
Channel Channel
Producer
Channel Channel
g g
Industrial Industrial
Channel Channel
I d t i l
I d t i l
Agents or Brokers
Agents or Brokers
Industrial Industrial
Industrial Industrial
Industrial Distributor
Industrial Distributor
Government
21
Industrial User
Industrial User
Industrial User
Industrial User
Government Buyer
Alternative Channel Arrangements
3
Alternative Channel Arrangements
M lti l Ch l
Multiple Channels
Different Different
Channels Channels
Nontraditional Channels
May be Used May be Used
Adaptive Channels
Strategic Channel
22
g Alliances
Learning Objective
4
Learning Objective
4
Define supply chain management Define supply chain management
and discuss its benefits. and discuss its benefits.
23
Supply Chain Management
4
Supply Chain Management
4
A m anagem ent syst em t hat coordinat es and
int egrat es all of t he act ivit ies perform ed by
supply chain m em bers
int o a seam less process, from t he source t o t he
point of consum pt ion.
24
p p
Supply Chain Management
4
Supply Chain Management
4
Focus on Innovative Solutions
Competitive with focus on Customer Satisfaction
Results Results
of of
Supply Chain Supply Chain
Synchronized Flow
Supply Chain Supply Chain
Management Management
Customer Value
25
Role of Supply Chain Management
4
Role of Supply Chain Management
4
Communicator of customer demand from
point of sale to supplier
R l f
R l f
R l f
R l f
point of sale to supplier
Role of Role of
Supply Chain Supply Chain
Management Management
Role of Role of
Supply Chain Supply Chain
Management Management
Physical flow process that engineers the
Management Management
Management Management
that engineers the movement of goods
26
Supply Chain Management A ti iti
4
Activities
4
Determine channel strategy and
M l ti
hi gy
level of distribution intensity
Manage relationships in the supply chain
Manage the logistical components of the supply chain
Balance the costs of the supply chain with the service level demanded by customer
27
y
Benefits of S
l Ch i M t
4
Supply Chain Management
4
Reduced Costs
Improved Service
Common Benefits Common Benefits
of Supply Chain of Supply Chain
Management Management
Enhanced Revenues
28
Learning Objective
5
Learning Objective
5
Discuss the issues that Discuss the issues that
influence channel strategy. influence channel strategy.
29
Channel Strategy Decisions
5
Channel Strategy Decisions
Issues that Influence Ch
l St t
5
Channel Strategy
Factors Factors
Factors Factors
Affecting Affecting
Channel Channel
Choice Choice
Levels of Levels of
Distribution Distribution
Intensity Intensity
Market Factors Choice
Choice
Intensive Distribution y
y
Producer Factors Product Factors
Exclusive Distribution Selective Distribution
30
Producer Factors Exclusive Distribution
Market Factors
5
Market Factors
Customer Profiles
5
Customer Profiles
C I d
t i l Consumer or Industrial
Customer
Market Factors Market Factors
That Affect That Affect
Size of Market That Affect
That Affect Channel
Channel Choices
Choices Geographic Location
31
Product Factors
5
Product Factors
Product Complexity
5
Product Complexity
Product Price
Product Factors Product Factors
That Affect That Affect
Product Life Cycle
at ect
at ect
Channel Channel
Choices Choices
Product Delicacy
32
Producer Factors
5
Producer Factors
5
Producer Resources
Number of Product Lines
Producer Factors Producer Factors
Producer Factors Producer Factors
That Affect That Affect
That Affect That Affect
Channel Channel
Choices Choices
Desire for Channel Control
33
Levels of Distribution Intensity
5
Levels of Distribution Intensity
5
Intensity Level Intensity Level
Objective Objective
Number of Number of
Intermediaries Intermediaries
y y
jj Intermediaries
Intermediaries
Intensive
Achieve mass market selling
Many selling.
Convenience goods.
Work with selected i t
di i Many
Selective
intermediaries. Shopping and some
specialty goods. Several
Exclusive
intermediary. Specialty Work with single
intermediary. Specialty goods and industrial
equipment One
34
equipment.
Learning Objective
6
Learning Objective
6
E l i
h l l
d hi
E l i
h l l
d hi
Explain channel leadership, Explain channel leadership,
conflict, and partnering. conflict, and partnering.
35
Managing Channel Relationships
6
Managing Channel Relationships
Channel Power
6
Channel Control Channel Power
Channel Leadership Channel Control
Social Social
Dimensions Dimensions
of Channels of Channels
Channel Conflict Channel Leadership
of Channels of Channels
Channel Partnering Channel Conflict
36
g
Channel Power, C
t l d L
d hi
6
Control, and Leadership
Ch l
A channel member’s capacity to
6
Channel Power
A channel member s capacity to control or influence the behavior
of other channel members
Channel C
t l
A situation that occurs when one marketing channel member
i t ti
ll ff
t th
Control
intentionally affects another member’s behavior.
Channel Leader
A member of a marketing channel that exercises authoritypower over
the activities of other members.
37
Channel Conflict
6
Channel Conflict
6
A clash of goals and m et hods bet ween dist ribut ion channel
bet ween dist ribut ion channel
m em bers.
H i
t l Horizontal
Conflict
Occurs among channel members on the same level
Vertical Conflict
Occurs among channel members at different levels
38
Channel Partnering
6
Channel Partnering
6
The j oint effort of all channel m em bers t o
channel m em bers t o
creat e a supply chain t hat serves cust om ers and
serves cust om ers and creat es a com pet it ive
advant age advant age.
39
Transaction- vs. P t
hi B d Fi
6
Partnership-Based Firms
Transaction Transaction--Based
Based Partnership
Partnership--Based Based
6
Short-term relationships
Multiple suppliers Long-term relationships
Few suppliers p
pp
Adversarial relationships Price dominates
pp
Cooperative partnerships Value-added services dominate
Price dominates
Minimal supplier investment
Minimal information sharing Value added services dominate
High supplierbuyer investment
Extensive information sharing Minimal information sharing
Firms are independent Minimal functional
Extensive information sharing
Firms are interdependent Extensive functional
40
area interaction area interaction
Learning Objective
7
Learning Objective
7
D ib th l
i ti l
t D
ib th l i ti
l t
Describe the logistical components Describe the logistical components
of the supply chain. of the supply chain.
41
7
Chain
Sourcing Procurement
7
g
Production Scheduling S
ystem
Order Processing Customer Service
Supply Supply
Chain Chain
rmation S
Inventory Control
Team Team
tics Info r
Warehouse Materials Handling
Transportation Logis
t
42
a spo tat o
Sourcing and Procurement
7
Sourcing and Procurement
Plan
7
Develop S
ifi ti
Purchasing Strategies
Select S
li Specifications
Role of Role of
Purchasing Purchasing
Departments Departments
Negotiate P i
Suppliers
Departments Departments
Negotiate Ser ice Le els
Price
43
Service Levels
Production Scheduling
7
Production Scheduling
7
Traditional Focus Traditional Focus Customer Focus
Customer Focus
PushPull Strategy
Push
Start of Pull
Customer Order Start of
Production
M f
t i
Inventory-Based
M P
d ti
Customer-Order Based
M C
t i
ti Manufacturing
Mass Production Mass Customization
44
Just in Time Manufacturing
7
Just-in-Time Manufacturing
7
A process t hat redefines and sim plifies
m anufact uring by reducing invent ory levels
and delivering raw
m at erials j ust when t hey are needed on t he
product ion line.
45
p
Benefits of JIT
7
Benefits of JIT
7
z
Reduces raw m at erial invent ories
z
Short ens lead t im es
z
Short ens lead t im es
z
Creat es bet t er supplier relat ionships
z
Reduces product ion and st oreroom cost s
z
Reduces paperw ork
46
Electronic Data Interchange
7
Electronic Data Interchange
7
I nform at ion t echnology t h t l
t hat replaces paper
docum ent s t hat b
i accom pany business
t ransact ions.
47
Inventory Control System
7
Inventory Control System
7
A m et hod of developing and m aint aining an
adequat e assort m ent of m at erials or product s t o
p m eet a m anufact urer ’s or
a cust om er ’s dem and. a cust o
e s de a d
48
Warehouse and M t i l H
dli
7
Materials-Handling
7
Receive goods into g
warehouse
Id tif
t d
Functions Functions
of of
Identify, sort and label goods
Materials Materials
Handling Handling
Dispatch the goods to temporary storage
Recall, select, or pick the goods for shipment
49
goods for shipment
Transportation
7
Transportation
Cost
7
Cost
Transit Time
Reliability
Capability
Criteria Criteria
for for
T t ti
T t ti
Accessibility
Traceability
Transportation Transportation
Mode Mode
Choice Choice
50
Traceability
Criteria for Ranking M d
f T t ti
7
Modes of Transportation
7
Highest Highest
Lowest Lowest
Relative Cost
g g
Air Water
Pipe Rail
Truck
Transit Time
Reliability
Water Rail
Pipe Truck
Air
Pipe Truck
Rail Air
Water
Reliability
Capability
Pipe Truck
Rail Air
Water
Water Rail
Truck Air
Pipe
Accessibility
T bilit
Truck Rail
Air Water
Pipe
51
Traceability
Air Truck
Rail Water
Pipe
Learning Objective
8
Learning Objective
8
Di th
t f Di
th t f
Discuss the concept of Discuss the concept of
balancing logistics service and cost. balancing logistics service and cost.
52
Logistics Service
8
Logistics Service
8
I nt errelat ed act ivit ies perform ed by a m em ber
perform ed by a m em ber
of t he supply chain t o ensure t hat t he right
ensure t hat t he right product is in t he right
place at t he right t im e place at t he right t im e.
53
Logistical Competencies
8
Logistical Competencies
8
Devise logist ics service st rat egies as a
z
Devise logist ics service st rat egies as a m eans of com pet it ive different iat ion
z
I nt egrat e m em bers of supply chain t o achieve operat ing excellence
z
Respond quickly t o changing logist ical requirem ent s
q
z
Const ant ly m onit or all aspect s of t he supply chain
54
supply chain
Learning Objective
9
Learning Objective
9
Discuss new technology Discuss new technology
and emerging trends in and emerging trends in
l h i
t l
h i t
supply chain management. supply chain management.
55
Trends in S
l Ch i M t
9
Supply Chain Management
9
Advanced Computer Technology
Trends Trends
Affecting the Affecting the
Trends Trends
Affecting the Affecting the
Outsourcing of Logistics Functions
Affecting the Affecting the
Logistics Logistics
Industry Industry
Affecting the Affecting the
Logistics Logistics
Industry Industry
Electronic Distribution
y y
y y
56
Learning Objective
10 10
Learning Objective
10 10
Di h
l d di t ib ti
Di h
l d di t ib ti
Discuss channels and distribution Discuss channels and distribution
decisions in global markets. decisions in global markets.
57
Channels and Distribution D
i i f
Gl b l M k t
10 10
Decisions for Global Markets
10 10
Channel structure differs
Channel types differ
Global Channel Global Channel
Development Development
yp
“Gray” marketing channels
Development Development
Global Supply Global Supply
Awareness of trade legalities
Global Supply Global Supply
Chain Management Chain Management
Transportation Infrastructure
58
Learning Objective
11 11
Learning Objective
11 11
Id tif th
i l bl
d Id
tif th i l
bl d
Identify the special problems and Identify the special problems and
opportunities associated with opportunities associated with
distribution in service organizations distribution in service organizations
distribution in service organizations. distribution in service organizations.
59
Channels and Distribution D
i i f
S i
11 11
Decisions for Services
11 11
Mi i i i it ti
Minimizing wait times
Managing service capacity
Areas of Focus Areas of Focus
for for
Improving delivery for
for Service Distribution
Service Distribution p
g y
through new channels
60