Ppt Chapter 16

Principles of MarketingMKT3010

Chapter 16Supply Chain and

Channel Management

Patricia Knowles, Ph.D.

Associate ProfessorClemson University 1

2Principles of MarketingMKT3010 2

Supply Chain and Channel ManagementThese are the learning objectives guiding the chapter and will be explored in more detail in the following slides.

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.

LO1

LO2

LO3

LO4

33

Supply Chain Management Why would a supply chain be more efficient with a distribution center rather than simply delivering directly to stores? The distribution center serves as a place to accumulate merchandise from many vendors and then allocate it to stores in the quantities they need. Imagine the congestion if every vendor had to deliver to every store.


44

Marketing Channels Add Value


How does supply chain management reduce inventory levels? What effect does supply chain management have on sales? An efficient supply chain can lower overall inventory in the system because merchandise is delivered when it is needed (just-in-time). By having an efficient supply chain, the retailers stay in stock, and sales increase.

Reduce number of transactions

Increase value for consumers

More efficient and effective ©Brand X Pictures/PunchStock

55

Marketing Channel Management Affects Other Aspects of Marketing


Customers expect to have their goods delivered and services performed on time. What happens when the supply chain breaks down? Imagine you order a textbook from Amazon, which promises to deliver it by Saturday, before your classes start on Monday. What happens in terms of your satisfaction with Amazon if some link in the supply chain breaks down and you don’t receive your book until Tuesday?

Fulfilling delivery promises

Meeting customer expectations

Reliant on an efficient supply chain

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

66

Designing Marketing Channels


There are no intermediaries between the buyer and seller in a direct marketing channel. In indirect marketing channels, one or more intermediaries work with manufacturers to provide goods and services to customers.

77

Types of Vertical Marketing Systems


In essence, cooperation is naturally greater in a corporate system than in an independent supply chain.

Administered vertical

marketing system

Corporate vertical

marketing system

Contractual vertical

marketing system

88

Managing Marketing Channels and Supply Chains Through Strategic Relationships


Strategic RelationshipsMutual Trust

Open Communications

Common Goals

Interdependence

Credible Commitments

99Principles of MarketingMKT3010

Check Yourself

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?


Making Information Flow Through Marketing Channels Each step requires the collection and dissemination of information.

1111

Data Warehouse


Why would Macy’s want to access the information by vendor? By month? What would they do with the data? The retailer wants to know what designer men’s suits are selling the most so they can order more or see if that designer has other products – perhaps shirts and ties that they could carry. Retailers are always interested in slow months – perhaps if they could be identified for a certain item, say handbags, then the retailer could run a promotion that month.

1212

Electronic Data Interchange


The growth of EDI systems has allowed for advanced tracking of information. Each system can seamlessly integrate with others, which creates value for both customers and the firm.

Cycle time

Quality of communications

Easily analyzed and used

Phot

o by

Cab

ela’

s


Vendor-Managed InventoryVendor-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.

DH Kong/Plush Studios/Getty Images

1414

Pull and Push Supply Chain


What kinds of items are better for pull? They will realize new products might do better using a pull strategy as would seasonal items. For push, items such as milk, eggs, and basic underwear work well.

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

1515

Check Yourself


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?

1616

Making Merchandize Flow Through Marketing Channels


Supply chains enable the flow of not just information but also goods. Keeping goods flowing is not a simple task. Under what circumstances might a manufacturer deliver directly to stores (flow 2) rather than to a distribution center (flow 1)? (1) Because the retailer demands it. (2) Because merchandise is bulky (furniture) or needs to be delivered daily (tortillas).

1717

The Distribution Center


1818

Check Yourself


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?

1919

Glossary


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

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

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

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

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.

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.

2020

Glossary


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.

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.