Basic chap016

16-1© 2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

C H A P T E R

Supply Chain and Channel Management

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Copyright © 2014 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

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L E A R N I N G O B J E C T I V E S

© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Understand the importance of marketing channels and supply chain management.

Understand the difference between direct and indirect marketing channels.

Describe how marketing channels are managed.

Describe the flow of information and merchandise in the marketing channel.

Supply Chain and Channel Management

LO1

LO2

LO3

LO4


Supply Chain Management


Marketing Channels Add Value

Reduce number of transactions

Increase value for consumers

More efficient and effective

©Brand X Pictures/PunchStock


Marketing Channel Management AffectsOther Aspects of Marketing

Fulfilling delivery promises

Meeting customer expectations

Reliant on an efficient supply chain

Courtesy Zara International, Inc. Courtesy Zara International, Inc.


Designing Marketing Channels


Types of Vertical Marketing Systems

Administered vertical

marketing system

Corporate vertical

marketing system

Contractual vertical

marketing system


Managing Marketing Channels and Supply Chains Through Strategic Relationships

Strategic RelationshipsMutual Trust

Open Communications

Common Goals

Interdependence

Credible Commitments


1. What are the differences between an indirect and a direct marketing channel?

2. What are the differences among the three types of vertical marketing systems?

3. How do firms develop strong strategic partnerships with their supply chain partners?

CHECK YOURSELF


Making Information Flowthrough Marketing Channels


Data Warehouse


Electronic Data Interchange

Cycle time

Quality of communications

Easily analyzed and used

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Vendor-Managed Inventory

DH Kong/Plush Studios/Getty Images


Pull and Push Supply Chain

Pull

• Orders based on sales data

• More accurate inventory

• Better when demand is uncertain

Push

• Merchandise allocated based on forecast

• Does not need sophisticated IS system

• Good for steady demand items


1. What are the marketing channel links associated with each information flow?

2. How do marketing channel members use data warehouses to make decisions?

3. What is EDI and how is it used?

4. Why do some marketing channels use VMI, while others do not?

5. What is the difference between push and pull supply chains?

CHECK YOURSELF


Making Merchandise Flow Through Marketing Channels


The Distribution Center

Shipping to store

Preparing to ship

Getting Merchandise Floor Ready

Storing and Cross-Docking

Receiving and checking using UPC and RFID

Management of inbound transportation


1. How does merchandise flow through a typical marketing channel?

2. What activities occur in a distribution center and what technologies facilitate those activities?

3. Why have just-in-time supply chain systems become so popular?

CHECK YOURSELF

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Merchandise cartons that are cross-docked are prepackaged by the vendor for a specific store.

Glossary

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Manufacturers can ship merchandise either directly to a store or to a distribution center, where it is then shipped to the store.

Glossary

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Electronic data interchange (EDI) is the computer-to-computer exchange of business documents from a retailer to a vendor and back.

Glossary

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Just-in-time inventory systems are inventory management systems designed to deliver less merchandise on a more frequent basis than traditional inventory systems.

Glossary

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Radio frequency identification (RFID) tags are tiny computer chips that automatically transmit to a special scanner all the information about a container’s contents or individual products.

Glossary

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A strategic relationship or partnering relationship involves the supply chain members being committed to maintaining the relationship over the long term and investing in opportunities that are mutually beneficial.

Glossary

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Supply chain management is a set of approaches and techniques firms employ to integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless operation in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time, as well as to minimize system wide costs while satisfying the service levels that their customers require.

Glossary

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Vendor-managed inventory (VMI) is an approach for improving supply chain efficiency in which the manufacturer is responsible for maintaining the retailer’s inventory levels in each of its stores.

Glossary