marketing project: supply chain

Supply Chain Management

Supply Chain Management

The relationships among marketing channel

members that reduce inefficiencies, costs and

redundancies and develop innovative

approaches to satisfy customers

 Optimizes costs throughout the whole channel for

efficiency and service

 Includes all entities that facilitate product distribution

and benefit from cooperative efforts

 Arises from the need to achieve a more competitive

position

Links in the Chain

 All the goods, products, services and raw

materials required to deliver a finished

product to the consumer.

 materials

 parts

 transportation

 logistics

 inventory management

Marketing Channels

Marketing Channel

A group of individuals and organizations directing products from producers to customers

 some degree of interdependency

 Reduce the overall costs of market exchanges

 Reduce search costs for customers

 Maintain order in the marketplace

 Efficiencies can be “compounded”

Marketing Intermediary

 An intermediary linking producers to other

intermediaries or to ultimate consumers

through contractual arrangements or through

the purchase and resale of products

Direct ChannelDirect Channel ProducerProducerProducer CustomerCustomerCustomerProducerProducerProducer CustomerCustomerCustomer

Indirect ChannelIndirect Channel

ProducerProducerProducer CustomerCustomerCustomerIntermediaryIntermediaryIntermediaryProducerProducerProducer CustomerCustomerCustomerIntermediaryIntermediaryIntermediary

Channel Member Value

 Market intelligence

 Supporting end users

 Promotion

 Customer prospecting

 Need based selling

 Matching needs to channel activities

 Negotiation

Traditional View of Exchanges

Does this view

still apply to

today’s SCM?

Typical Marketing Channels for

Consumer Products

Typical Marketing Channels for

Business Products

Channel Behavior

 Channel captain

 the key actor in the channel

 Channel power

 the degree to which any member can influence the

channel

 Strategic alliances

 two or more firms providing mutual benefits

 Channel conflict

 may occur at many levels and over a number of

issues

Channel Captain

 A dominant member (producer,

wholesaler, or retailer) of a marketing

channel or supply chain

 Establishes channel policies and coordinates

development of the marketing mix

Channel Power

 The ability of one channel member to

influence another member’s goal

achievement

 may influence pricing, distribution and

product decisions

 power may be regional or product line

specific

 manifested in both tangible and intangible

outcomes

Channel Conflict

Sources of Channel Conflict

 Disagreements arising among channel members

 Communication difficulties jeopardizing coordination

 Increased use of multiple distribution channels by

manufacturers creating conflicts with distributors and

retailers

 Intermediaries diversifying into and offering

competing products

 Producers attempting to circumvent intermediaries

and dealing directly with retailers

Conflict Levels

 Horizontal

 among channel members functioning at the

same level

 territory infringement

 product allocation

 Vertical

 among members functioning at different

levels

Channel Cooperation

 Improving Channel Cooperation

 Unifying channel to maintain market order

 Agreeing to direct efforts toward common

objectives

 Precisely defining each channel member’s

tasks

Channel Integration

Vertical Channel Integration

 Two or more stages of the marketing channel are

under one management.

 Channel members coordinate their efforts to reach a

target market.

Vertical Marketing System (VMS)

 A marketing channel managed by a single channel

member to achieve efficient, low-cost distribution

 Corporate VMS

 Administered VMS

 Contractual VMS

Channel Integration

 Horizontal Integration

 Organizations at the same level of operation

are combined under one management.

Physical Distribution

Physical Distribution (Logistics)

 Activities used to move products from producers to consumers and other end users  Order processing

 Inventory management

 Material handling

 Warehousing

 Transportation

Outsourcing

 The contracting of physical distribution

tasks to third parties with specialized

logistics skills who do not have

managerial authority within the marketing

channel

Inventory Management

Developing and maintaining adequate

assortments of products to meet internal or

external requirements

 Objective is to minimize inventory costs yet have on

hand a sufficient supply of goods to satisfy

customers

 Stockouts—inventory-related shortages of products

 Reorder point= (Order Lead Time x Usage Rate) + Safety

Stock

Just-in-Time

 An inventory management in which supplies

arrive just when needed for production or

resale

 minimizes warehousing

 lower carrying costs

 increases efficiencies

 requires a high level of integration and coordination

Materials Handling

The physical handling of products in

warehousing operations and the transportation

from points of production to points of

consumption

 Unit loading—one or more boxes of product are

placed on a pallet and handled by mechanical

means (e.g., forklift)

 Containerization—consolidation of many small items

into a single large container providing increased

handling efficiency and security in shipping

Cross Docking

Truck

Truck

Truck

Truck

Truck

Truck

Truck

Truck

ContainerContainer

Container

STORAGE

Coordinating Transportation

Intermodal Transportation  An integrated transportation approach in which two

or more transportation modes are used in combination  Containerization: piggyback, fishyback, birdyback modes

Freight Forwarders  Organizations that consolidate shipments from

several firms into efficient lot sizes

Megacarriers  Freight transportation firms that provide several

modes of shipment