Supply Chain Management PDF

Supply Chain (upstream and downstream activities) All the activities associated with the flow and transformation of products from raw materials through delivery to the end customer Marketing channel (distribution channel) A part of supply chain, the downstream activities The aggr...

Supply Chain (upstream and downstream activities) All the activities associated with the flow and transformation of products from raw materials through delivery to the end customer Marketing channel (distribution channel) A part of supply chain, the downstream activities The aggregate of all individuals and organisations that direct the flow of products from producers to customers Referred to as 'place' in the marketing mix Marketing logistics (physical distribution) are the tasks involved in the physical flow of materials and final goods from points of origin to points of consumption in order meet customer requirements at a profit Marketing channel: The interrelated organisations and individuals involved in the process of making a product or service available to end users Channel management Managerial activities used to distribute product in the right quantities to the right locations at the right time Marketing intermediaries Individuals or organisations that act in the distribution channel between the producer and the end user Marketing channel management, affects other aspects of marketing Fulfilling delivery promises Meeting customer expectations Reliant on an efficient supply chain and distribution channel Marketing channels: Effective marketing channels achieve the following ○ Time utility: making products available at the time the consumer wants to purchase them  ○ Place utility: making products available in the locations the consumer wants them ○ Possession utility: making it easier to acquire ○ Form utility: customising products to the consumers particular needs ○ Exchange efficiencies: making transactions as simple and cheap as possible by establishing and managing efficient exchange process Fulfilling delivery promises Meeting customer expectations Why use intermediaries? Using intermediaries (indirect distribution) carries several advantages ○ Manufacturers may lack financial resources to carry out direct distribution ○ Manufacturers may earn a greater return by focusing on their core business ○ Involving intermediaries makes distribution more efficient for producers and consumers ○ Intermediaries match supply and demand Disadvantages ○ Lack of control Marketing channel functions Information: gather and distribute information (e.g. market research) Promotion: develop and spread persuasive communication Facilitating exchange: ○ Contact: finding and communicating with prospective buyers ○ Matching: customising the offer to the buyers needs ○ Negotiation: reach agreement involving factors such as price, payment, service Physical distribution (logistics): transporting and sorting goods Financing: acquiring and using funds to cover costs Risk taking: assuming the risks of distribution Two critical roles for intermediaries: Sales specialists for suppliers ○ Experience ○ Information ○ Promotion ○ Negotiation ○ Financing ○ Sharing risk ○ Storing products ○ Create assortments Purchasing agents for customers ○ Anticipate wants ○ Subdivide ○ Create assortments ○ Store and transport ○ Product readily available ○ Guarantee product Balance to discrepancy of quantity and discrepancy of assortment Channel strategy: Channel strategy involves three key decisions: ○ Select the most effective distribution channel (number of levels) ○ The most appropriate level of distribution intensity ○ The degree of channel integration 1. Number of channel levels ○ A channel level is a layer of intermediaries who perform some work in bringing the product and its ownership closer to the final buyer The number of intermediary levels indicates the length of a channel ○ A direct marketing channel has no intermediary levels ○ And indirect marketing channel contains one or more intermediary levels  Channel levels ○ Multichannel distribution systems A multichannel distribution system occurs when a single firm sets up two or more marketing channels to reach one or more marketing segments Marketers using such multichannel: Gain sales with each new channel Also risk offending existing channels 1. Distribution intensity: (market coverage) number of intermediaries at each level 1. Channel integration ○ A conventional marketing channel consists of one or more independent producers, wholesalers and retailers, each a separate business seeking to maximise its own profits, perhaps even at the expense of profits for the system as a whole Vertical - combining two or more stages/levels of the marketing channel under one management Horizontal - combining organisation at the same level of operation under one management  Channel leadership (administered) ○ Channel captain - the dominant leader of a marketing channel or a supply chain ○ Channel power - the ability of one channel member to influence another members goal achievement Franchising (contractual) ○ An approach to business in which one party (a franchiser) licenses the business model to another party (a franchise) Channel cooperation ○ Speeds up inventory replenishment ○ Improves customer service ○ Cuts the cost of bringing products to the consumer ○ Is vital to the success of the channel ○ Leads to greater trust among channel members ○ Improves the overall functioning of the channel Channel conflict ○ Occurs when self-interest creates misunderstanding about role expectations ○ End result is frustration and conflict for whole channel ○ Multiple channels driven partly by new technology have increased the potential for conflict within the channel Channel behaviour ○ Conflict: when one channel member perceives another member to be acting so as to prevent the first member from achieving its objective, disagreements Horizontal - firms at same level (retailer vs retailer) Vertical - firms at different levels of the channel (manufacturer vs wholesaler) Retailing and retailers: All activities involved in selling goods or services directly to final consumer for their personal, non-business use Retailers, businesses whole sales come primarily from retailing, can vary dramatically Types of retailers: Amount of service offered (e.g. self-service, limited service and full service) Product line sold (length and breadth of their product assortments; 'product line' can be a service Relative prices charged How they are organised (corporate chains, voluntary chains, retailer cooperatives, franchise organisations) Strategic issues in retailing: Store image/atmosphere ○ Important factor in attracting customers ○ Establishing retail position Consumers want more individualised experiences Need to integrate technology Power shift away from retailers to customers Webrooming Research online go to the store Price comparisons (lowest price) Compare products Showrooming Go to the store for research buy online Experience products in person Find the lowest price Ask staff questions Boom rooming Research online, check out product in-store, find cheapest price online Future of retail: New formats/concepts Experience Technology ○ Non-store retailing ○ Omni-channel retailing involves creating a seamless cross-channel buying experience that integrates in-store, online and mobile shopping  ○ Integrates distribution, promotion and communication channels ○ A company gives access to their products, offers and support services to customers or prospects on all channels, platforms, and devices Retail design