Supply Chain Management Overview

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Questions and Answers

What is the primary focus of supply chain management?

Maximizing product variety

Minimizing operational costs

Enhancing customer engagement

Coordinating value-adding flows (correct)

Merchant intermediaries do not take title to products.

False

What is disintermediation in the context of marketing channels?

The elimination of one or more intermediaries from the marketing channel.

A __________ marketing system (VMS) consists of vertically aligned networks behaving as a unified system.

vertical Signup and view all the answers

Match each type of intermediary to their description:

Wholesaler = Buys in bulk and sells to retailers Agent = Facilitates sales without taking ownership Retailer = Sells goods directly to consumers Distributor = Purchases products to sell to various channels Signup and view all the answers

What is a common reason for firms to utilize third-party logistics (3PL)?

To focus on core business activities Signup and view all the answers

Fulfilled by Amazon (FBA) primarily benefits large corporations.

False Signup and view all the answers

What is the difference between merchant and agent intermediaries?

Merchant intermediaries take title to products, while agent intermediaries do not. Signup and view all the answers

What is a key characteristic of a contractual VMS?

It consists of entities bound by legal contracts. Signup and view all the answers

Channel conflict refers to the harmony and cooperation among channel members.

False Signup and view all the answers

What are the two main strategies for selecting channel approaches?

Push and Pull Signup and view all the answers

A pull strategy focuses its promotional investment on the __________ consumer.

end-user Signup and view all the answers

Which of the following best describes inbound logistics?

Sourcing materials and knowledge inputs. Signup and view all the answers

Match the types of logistics with their descriptions:

Outbound logistics = Moving goods from producer to end user Inbound logistics = Sourcing materials and knowledge inputs Reverse logistics = Returns due to spoilage or excess inventory Signup and view all the answers

Transportation costs can amount to 5% of the Cost of Goods Sold (COGS).

False Signup and view all the answers

_________ allowances or shelf fees are incentives used by wholesalers for distribution.

Slotting Signup and view all the answers

Which mode of transportation is not typically associated with goods delivery?

Marine Signup and view all the answers

Exclusive territories in legal issues in supply chain management are always illegal.

False Signup and view all the answers

What is the primary purpose of retailing?

To create value in the delivery of goods and services to consumers. Signup and view all the answers

_________ refers to any action using electronic media to facilitate the exchange of goods and services.

Electronic Commerce Signup and view all the answers

Match the following terms with their definitions:

Exclusive Dealing = Intermediary cannot handle competitive products Tying Contracts = Requires purchase of supplementary goods Retailing = Business activity creating value for consumer goods E-Commerce = Conducting business electronically Signup and view all the answers

Which of the following is NOT mentioned as a mode of transportation?

Foot Signup and view all the answers

Using tying contracts is always legal in supply chain management.

False Signup and view all the answers

What is a characteristic of traditional retailing as it transitions online?

It is migrating to electronic platforms, such as manufacturers' websites or Amazon. Signup and view all the answers

What does a push strategy primarily focus on?

Intensive promotional activities from the manufacturer downward. Signup and view all the answers

Which of the following best describes channel power?

The degree to which any member can influence others. Signup and view all the answers

What is the primary function of outbound logistics?

Moving finished goods out to the end user. Signup and view all the answers

Which aspect does reverse logistics NOT usually address?

Sourcing material inputs. Signup and view all the answers

What key component is part of effective inventory management?

Real-time data sharing through IT systems. Signup and view all the answers

Which strategy primarily emphasizes the promotion aimed at the end-user consumer?

Pull strategy. Signup and view all the answers

Which term refers to the financial incentives that wholesalers use to gain distribution?

Slotting allowance. Signup and view all the answers

What distinguishes inbound logistics from outbound logistics?

Inbound logistics focuses on sourcing materials and knowledge inputs. Signup and view all the answers

What is the primary objective of supply chain management?

To maximize overall value delivered and profit realized Signup and view all the answers

Which of the following describes a merchant intermediary?

An intermediary that buys and sells products at a profit Signup and view all the answers

What does disintermediation primarily refer to in marketing channels?

The shortening or collapsing of marketing channels Signup and view all the answers

Which type of vertical marketing system utilizes backward or forward integration?

Corporate VMS Signup and view all the answers

What role do facilitating agents serve within a marketing channel?

They facilitate the exchange but do not own the products Signup and view all the answers

What is a primary reason companies choose to outsource to third-party logistics providers?

To reduce operational costs and focus on core business functions Signup and view all the answers

In the context of supply chain management, what is the value of a channel of distribution?

It represents interdependent entities for transferring possession of products Signup and view all the answers

What common outcome is associated with disintermediation in e-channels?

More direct sales between producers and consumers Signup and view all the answers

Which mode of transportation is characterized by its ability to move liquid goods over long distances?

Pipeline Signup and view all the answers

What is a legal condition for exclusive dealing in supply chain management?

It is necessary for brand management. Signup and view all the answers

Which of the following retailing methods is primarily performed online?

E-commerce Signup and view all the answers

Tying contracts in supply chain management are considered illegal because they force a purchase of what?

Supplementary goods. Signup and view all the answers

In the context of legal issues in SCM, conditions for exclusive territories must not result in what?

Restriction of competition. Signup and view all the answers

Which statement best describes the transition of traditional retailing to e-commerce?

It creates new opportunities for customer communication. Signup and view all the answers

What aspect of supply chain management does electronic commerce NOT facilitate?

Face-to-face selling. Signup and view all the answers

Which transportation method is least likely to be utilized for moving bulk liquids?

Air Signup and view all the answers

Study Notes

Value Chain and Supply Chain

The value chain represents the activities an organization undertakes to design, produce, market, deliver, and support its products.
A supply chain encompasses all organizations that supply a firm, its distribution channels, and its end users.
Supply chain management aims to coordinate these value-adding flows among entities to maximize overall value delivered and profit realized.

Supply Chain

A supply chain comprises all organizations involved in providing a product or service to the final consumer, from raw material suppliers to retailers.

Logistics in Supply Chains

Logistics encompasses the planning, implementation, and control of the flow of goods, services, and related information from the point of origin to the point of consumption.
It plays a crucial role in supply chain management by ensuring the efficient and cost-effective movement of products.

Marketing Channels and Intermediaries

A channel of distribution comprises interdependent entities collaborating to transfer product possession from producer to consumer or business user.
Intermediaries, including merchants and agents, facilitate this process.
Merchant intermediaries take ownership of products, while agent intermediaries act as facilitators.

Major Types of Intermediaries

Middleman: Connects producers and consumers without taking ownership.
Wholesaler: Buys in bulk from producers and sells to retailers.
Jobber: Focuses on specific product categories like toys or hardware.
Agent: Acts on behalf of a producer or consumer without owning the product.
Manufacturer's Agent: Sales representative for a manufacturer, often handling multiple product lines.
Retailer: Sells directly to consumers.
Distributor: Handles multiple brands and products within a specific industry.

Disintermediation and E-Channels

Disintermediation refers to the reduction or elimination of intermediaries in a distribution channel.
E-commerce facilitates disintermediation by allowing producers to connect directly with consumers.

Outsourcing and 3PL

Outsourcing logistics functions to third-party logistics (3PL) providers enables firms to focus on core business activities.
Fulfilled by Amazon (FBA) is a popular 3PL service for entrepreneurs and start-ups.

Vertical Marketing Systems (VMS)

A VMS consists of vertically aligned networks acting as a unified system to achieve a common marketing objective.
Corporate VMS: One channel member controls other intermediaries through forward or backward integration.
Contractual VMS: Members are bound together by legal agreements.

Channel Behavior: Conflict and Power

Channel power: Ability of a channel member to influence other members.
Channel conflict: Disagreements and strained relationships amongst channel members.

Channel Control and Adaptability

Marketing managers must consider:
- Channel member roles and responsibilities.
- Power dynamics within the channel.
- Potential conflict and resolution strategies.
- Flexibility and adaptability to changing market conditions.

Selecting Channel Approaches: Push and Pull

Push Strategy: Focuses on promoting products from manufacturer to distributor to consumers.
Pull Strategy: Emphasizes promotional efforts toward the end consumer, pulling demand through the channel.

Logistics Aspects of SCM: Physical Distribution

Physical distribution (logistics) involves the coordinated movement of materials and finished goods through the supply chain.
Outbound logistics: Moving products from the producer to the end user.
Inbound logistics: Sourcing raw materials and knowledge inputs.
Reverse logistics: Handling returns due to various reasons.

Logistics Aspects of SCM: Orders

Order Processing: Steps involved in receiving, processing, and fulfilling customer orders.
Stock-outs: Situations where a product is unavailable to meet demand.
Enterprise Resource Planning (ERP) Systems: Software integrating business processes and data across an organization.
Warehousing and Materials Handling: Storage and management of goods.
Inventory Management: Balancing inventory levels to meet demand while minimizing costs.
Just-in-Time (JIT) Inventory: Minimizes inventory levels by receiving materials just before production.

Transportation Modes

Transportation choices impact cost, speed, reliability, flexibility, and delivery condition.
Pipeline: Economical for transporting liquids or gases over long distances, but inflexible.
Water: Relatively inexpensive for transporting bulky goods, but slow.
Rail: Efficient for long-distance transportation of large quantities, but inflexible routing.
Motor: Flexible for door-to-door delivery, but more expensive than other modes.
Air: Fastest mode, but most expensive and suitable for time-sensitive or perishable goods.

Legal Issues in SCM

Exclusive Dealing: A supplier restricts an intermediary from handling competitors' products.
Exclusive Territories: A producer grants an intermediary exclusive rights to sell in a specific geographical area.
Tying Contracts: A supplier requires a buyer to purchase supplementary products along with the primary product.

Retailing

Retailing involves activities that create value in delivering goods and services to consumers for personal use.
It's a critical component of the supply chain.

Electronic Commerce (E-Commerce)

Traditional brick-and-mortar retailers are shifting online.
E-commerce utilizes electronic media for customer communication, inventory management, exchange of goods and services, and payment processing.