Supply Chain Management PDF

Marketing Management Chapter 12: Managing Marketing Channels, Logistics, and Supply Chain What does Supply Chain Management mean to you?  The value chain portrays a synthesis of primary and support activities utilized by an organization to desi...

Marketing Management Chapter 12: Managing Marketing Channels, Logistics, and Supply Chain What does Supply Chain Management mean to you?  The value chain portrays a synthesis of primary and support activities utilized by an organization to design, produce, market, deliver, and support its products. The Value Chain A supply chain represents all organizations and Supply that supply a firm, the members of its channels of distribution, and its end-user consumers and Chain business users. Supply chain management is the coordination of these value-adding flows among the entities that maximizes overall value delivered and profit realized. Exhibit 12.1 Porter’s Generic Value Chain What is a Supply Chain? The Role of Logistics in Supply Chains  Channels and Intermediaries A channel of distribution consists of interdependent entities that are aligned for the purpose of transferring possession of a product from producer to consumer or business user. Channels have a variety of intermediaries that play a role between producer and consumer. Merchant intermediaries take title to products and agent intermediaries do not. Major Types of Intermediaries Intermediaries play a role in the exchange process between producer and consumer. Middleman Wholesaler Merchant middleman Jobber Agent Facilitating agent Manufacturer’s agent Retailer Distributor Exhibit 12.4 Generic Price–Quality Positioning Map Disintermediation and E-Channels Disintermediation, or the shortening or collapsing of marketing channels due to the elimination of one or more intermediaries, is common in the electronic channel. Outsourcing or third-party logistics (3PL): Many firms outsource to a 3PL so they can focus on the core business. Fulfilled by Amazon (FBA) is an important service to entrepreneurs and business start-ups. Vertical Marketing Systems A vertical marketing system (VMS) consists of vertically aligned networks behaving and performing as a unified system. A corporate VMS has a channel member that uses backward or forward integration to have a controlling interest in other intermediaries. A contractual VMS is made of entities that are bound together by legal contracts. 12 Channel Behavior: Conflict and Power Channel power is the degree to Channel conflict can occur in which which any member of a marketing channel members experience channel can exercise influence over disagreements and their relationship can the other members of the channel. become strained or even fall apart. Exhibit 12.6 Sources of Channel Power 15 Channel Control and Adaptability Marketing managers must take into account: Selecting Channel Approaches: Push and Pull Prioritization of Channel Functions A push strategy means that much of the intensive promotional activities take place from the manufacturer downward through the channel of distribution. A slotting allowance or shelf fee are two incentives wholesalers use to get distribution. A pull strategy focuses much of its promotional investment on the end-user consumer. Logistics Aspects of SCM: Physical Distribution Physical distribution, or logistics, is the integrated process of moving input materials to the producer, in- process inventory through the firm, and finished goods out of the firm through the channel of distribution. Outbound logistics: from producer to end user. Inbound logistics: sourcing materials and knowledge inputs. Reverse logistics: returns due to spoilage, excess inventory, damaged goods, customer dissatisfaction, or overstocks. 20  Logistics Aspects of SCM: Orders Order Processing. Stock-outs. Enterprise resource planning (ERP) systems software. Warehousing and materials handling. Inventory Management. JIT. Firms open IT systems for data sharing for better inventory management. Transportation costs may be 10% of COGS. Exhibit 12.7 Comparative Attributes Reputation for Delivering Reliability Flexibility Undamaged across Low Cost 1. Pipeline Speed 1. Air of Delivery 1. Pipeline of Delivery 1. Motor Goods 1. Pipeline Different 2. Water 3. Rail 2. Motor 3. Rail 2. Air 3. Motor 2. Rail 3. Air 2. Water 3. Air Transportation 4. Motor 5. Air 4. Pipeline 5. Water 4. Rail 5. Water 4. Water 5. Pipeline 4. Motor 5. Rail Modes Legal Issues in SCM Exclusive Dealing Intermediary cannot handle competitive products. Legal when exclusivity is essential for strategic reasons like brand management or when production is limited (e.g., high fashion). Exclusive Territories Legal when it doesn’t restrict competition. Tying Contracts Requires the purchase of supplementary goods. Illegal but contracts are written to circumvent laws. Retailing Retailing is any business activity that creates value in the delivery of goods and services to consumers for their personal, non-business consumption and is an essential component of the supply chain. Electronic Commerce (E-Commerce) Traditional brick-and-mortar retailing is migrating online through manufacturers’ websites or via Amazon or other similar sites. Electronic commerce refers to any action using electronic media to communicate with customers, facilitate the inventory, exchange, and distribution of goods and services, or facilitate payment. Electronic retailing (e-retailing, e-tailing) is the communication and sale of products or services to consumers over the Internet. E-Retailing: Omnichannel Omnichannel retailing uses channels including physical stores, online stores, mobile stores, mobile app stores, telephone sales, and any other method of transacting with a customer. The greatest success in e-retailing is with products where convenience and price are the key drivers of the purchase decision. E-Retailing Advantages Disadvantages Extensive selection Customers walk away easily Information available for Reduced ability to sell product research and features and benefits evaluation Build product communities Security of personal data Individualized customer experience