mgnt. 106 (1)

LOGISTICS AND SUPPLY CHAIN MANAGEMENT

LEARNING OBJECTIVES

1.1. Explain what a marketing channel is and Explain what a marketing channel is and why intermediaries are needed.why intermediaries are needed.

2. 2. Define the types of channel Define the types of channel intermediaries and describe their intermediaries and describe their functions and activitiesfunctions and activities..

LEARNING OBJECTIVES (CONTINUED)

3. Describe the channel structures for 3. Describe the channel structures for consumer and business-to-business consumer and business-to-business products and discuss alternative channel products and discuss alternative channel arrangements.arrangements.

4.4. Define supply chain management and Define supply chain management and discuss its benefits.discuss its benefits.

5. 5. Discuss the issues that influence Discuss the issues that influence channel strategy.channel strategy.


6. 6. Explain channel leadership, conflict, and Explain channel leadership, conflict, and partnering.partnering.

7.7. Describe the logistical components of Describe the logistical components of the supply chain.the supply chain.

8.8. Discuss the concept of balancing Discuss the concept of balancing logistics service and cost.logistics service and cost.


9.9. Discuss new technology and emerging Discuss new technology and emerging trends in supply chain management.trends in supply chain management.

10.10.Discuss channels and distribution Discuss channels and distribution decisions in global markets.decisions in global markets.

11.11. Identify the special problems and Identify the special problems and opportunities associated with opportunities associated with distribution in service organizations.distribution in service organizations.

LEARNING OBJECTIVE 11

Explain what a marketing channel Explain what a marketing channel is and why intermediaries are needed.is and why intermediaries are needed.

MARKETING CHANNELSMARKETING CHANNELS11

MarketingChannel

MarketingChannel

SupplyChain

SupplyChain

A set of interdependent organizations that ease the transfer of ownership as

products move from producer to business user or consumer.

A set of interdependent organizations that ease the transfer of ownership as

products move from producer to business user or consumer.

The connected chain of all the business entities, both internal and external to the

company, that perform or support the logistics function.

The connected chain of all the business entities, both internal and external to the

company, that perform or support the logistics function.

MARKETING CHANNEL MARKETING CHANNEL FUNCTIONSFUNCTIONS

Specialization andDivision of Labor

Specialization andDivision of Labor

ChannelsFulfillThree

ImportantFunctions

ChannelsFulfillThree

ImportantFunctions

OvercomingDiscrepanciesOvercoming

Discrepancies

Providing ContactEfficiency

Providing ContactEfficiency

11

SPECIALIZATION AND DIVISION OF SPECIALIZATION AND DIVISION OF LABORLABOR

Provides economies of scale

Aids producers who lack resources to market directly

Builds good relationships with customers

11

OVERCOMING DISCREPANCIESOVERCOMING DISCREPANCIES

Discrepancyof

Quantity

Discrepancyof

Quantity

Discrepancyof

Assortment

Discrepancyof

Assortment

The difference between the amount of product produced and the

amount an end user wants to buy.

The difference between the amount of product produced and the

amount an end user wants to buy.

The lack of all the items a customer needs to receive full satisfaction from a product or

products.

The lack of all the items a customer needs to receive full satisfaction from a product or

products.

11

OVERCOMING DISCREPANCIESOVERCOMING DISCREPANCIES

TemporalDiscrepancy

TemporalDiscrepancy

SpatialDiscrepancy

SpatialDiscrepancy

A situation that occurs when a product is produced but a

customer is not ready to buy it.

A situation that occurs when a product is produced but a

customer is not ready to buy it.

The difference between the location of a producer and the

location of widely scattered markets.

The difference between the location of a producer and the

location of widely scattered markets.

11

CONTACT EFFICIENCYCONTACT EFFICIENCY

ZenithZenith SonySony RCARCA ToshibaToshiba

ZenithZenith SonySony RCARCA ToshibaToshiba

Circuit CityCircuit CityCircuit CityCircuit City

11


Define the types of channel Define the types of channel intermediaries and describe their intermediaries and describe their

functions and activities.functions and activities.

CHANNEL INTERMEDIARIES

RetailerRetailer

MerchantWholesalerMerchant

Wholesaler

Agents andBrokers

Agents andBrokers

A channel intermediary that sells mainly to customers.

A channel intermediary that sells mainly to customers.

An institution that buys goods from manufacturers, takes title

to goods, stores them, and resells and ships them.

An institution that buys goods from manufacturers, takes title

to goods, stores them, and resells and ships them.

Wholesaling intermediaries who facilitate the sale of a product by representing channel member.

Wholesaling intermediaries who facilitate the sale of a product by representing channel member.

22

CHANNEL INTERMEDIARIES

RetailersRetailersRetailersRetailers

Merchant Merchant WholesalersWholesalersMerchant Merchant

WholesalersWholesalers

Agents Agents andand

BrokersBrokers

Agents Agents andand

BrokersBrokers

Take Title to GoodsTake Title to GoodsTake Title to GoodsTake Title to Goods

Take Title to GoodsTake Title to GoodsTake Title to GoodsTake Title to Goods

Do NOT Take Title to GoodsDo NOT Take Title to GoodsDo NOT Take Title to GoodsDo NOT Take Title to Goods

22

CHANNEL FUNCTIONS PERFORMED BY INTERMEDIARIES

Contacting/Promotion

Negotiating

Risk Taking

FacilitatingFunction

FacilitatingFunction

TransactionalFunctions

TransactionalFunctions

Logistical Functions

Logistical Functions

Researching

Financing

Physically distributing

Storing

Sorting

22

LOGISTICS

The process of strategically

managing the efficient flow

and storage of raw

materials, in-process

inventory, and finished

goods from point of origin

to point of consumption.

22

LEARNING OBJECTIVE

Describe the channel structures Describe the channel structures for consumer and for consumer and

business-to-business products business-to-business products and discuss alternative and discuss alternative channel arrangements.channel arrangements.

33

DIRECT CHANNEL

A distribution channel in

which producers sell

directly to consumers.

33

CHANNELS FOR CONSUMER PRODUCTS

Producer Producer Producer Producer

Consumers Consumers Consumers Consumers

Retailers Retailers Retailers

Wholesalers Wholesalers

Agents orBrokers

WholesalerWholesalerChannelChannel

RetailerRetailerChannelChannel

DirectDirectChannelChannel

Agent/BrokerAgent/BrokerChannelChannel

33

CHANNELS FOR BUSINESS-TO-BUSINESS PRODUCTS

Producer Producer Producer Producer

IndustrialUser

IndustrialUser

IndustrialUser

IndustrialUser

IndustrialDistributor

IndustrialDistributor

Agents orBrokers

Agents orBrokers

Agent/BrokerAgent/BrokerChannelChannel

IndustrialIndustrialDistributorDistributor


Producer

GovernmentBuyer


Agent/BrokerAgent/BrokerIndustrialIndustrialChannelChannel

33

ALTERNATIVE CHANNEL ARRANGEMENTS

DifferentDifferentChannelsChannels

May be Used May be Used

Multiple Channels

Adaptive Channels

Strategic ChannelAlliances

NontraditionalChannels

33

LEARNING OBJECTIVE

Define supply chain management Define supply chain management and discuss its benefits.and discuss its benefits.

44

SUPPLY CHAIN MANAGEMENT

A management system that

coordinates and integrates

all of the activities

performed by supply chain

members into a seamless

process, from the source to

the point of consumption.

44

SUPPLY CHAIN MANAGEMENT

ResultsResultsofof

Supply ChainSupply ChainManagementManagement

ResultsResultsofof

Supply ChainSupply ChainManagementManagement

Focus on Innovative SolutionsFocus on Innovative Solutions

Competitive with focus onCustomer Satisfaction

Competitive with focus onCustomer Satisfaction

Synchronized FlowSynchronized Flow

Customer ValueCustomer Value

44

ROLE OF SUPPLY CHAIN MANAGEMENT

Physical flow process that engineers the

movement of goods

Physical flow process that engineers the

movement of goods

Communicator of customer demand frompoint of sale to supplier

Communicator of customer demand frompoint of sale to supplier

Role of Role of Supply ChainSupply ChainManagementManagement

Role of Role of Supply ChainSupply ChainManagementManagement

44

SUPPLY CHAIN MANAGEMENT ACTIVITIES

44

Manage relationships in the supply chain

Manage relationships in the supply chain

Manage the logistical components of the supply chain

Manage the logistical components of the supply chain

Determine channel strategy and level of distribution intensity

Determine channel strategy and level of distribution intensity

Balance the costs of the supply chainwith the service level demanded by customer

Balance the costs of the supply chainwith the service level demanded by customer

BENEFITS OF SUPPLY CHAIN MANAGEMENT

Common BenefitsCommon Benefitsof Supply Chainof Supply Chain

ManagementManagement

Common BenefitsCommon Benefitsof Supply Chainof Supply Chain

ManagementManagement

Reduced Costs Reduced Costs

Improved ServiceImproved Service

Enhanced RevenuesEnhanced Revenues

44

LEARNING OBJECTIVE

Discuss the issues that Discuss the issues that influence channel strategy.influence channel strategy.

55

CHANNEL STRATEGY DECISIONS

Issues that InfluenceChannel Strategy

Issues that InfluenceChannel Strategy

Producer FactorsProducer Factors

Product FactorsProduct Factors

Market FactorsMarket Factors

Factors Factors Affecting Affecting Channel Channel ChoiceChoice

Factors Factors Affecting Affecting Channel Channel ChoiceChoice

Exclusive DistributionExclusive Distribution

Selective DistributionSelective Distribution

Intensive DistributionIntensive Distribution

Levels ofLevels ofDistributionDistribution

IntensityIntensity

Levels ofLevels ofDistributionDistribution

IntensityIntensity

55

MARKET FACTORS

Market FactorsMarket FactorsThat Affect That Affect

ChannelChannelChoicesChoices

Market FactorsMarket FactorsThat Affect That Affect


Customer ProfilesCustomer Profiles

Consumer or IndustrialCustomer

Consumer or IndustrialCustomer

Size of MarketSize of Market

Geographic Location

55

PRODUCT FACTORS

Product FactorsProduct FactorsThat Affect That Affect


Product FactorsProduct FactorsThat Affect That Affect


Product Complexity Product Complexity

Product PriceProduct Price

Product Life CycleProduct Life Cycle

Product DelicacyProduct Delicacy

55

PRODUCER FACTORS

Producer FactorsProducer FactorsThat Affect That Affect


Producer FactorsProducer FactorsThat Affect That Affect


Producer Resources Producer Resources

Number of Product LinesNumber of Product Lines

Desire for Channel ControlDesire for Channel Control

55

LEVELS OF DISTRIBUTION INTENSITY

55

Intensity LevelIntensity LevelIntensity LevelIntensity Level ObjectiveObjectiveObjectiveObjective Number of Number of IntermediariesIntermediaries

Number of Number of IntermediariesIntermediaries

IntensiveIntensive

SelectiveSelective

ExclusiveExclusive

Achieve mass marketselling.

Convenience goods.

Achieve mass marketselling.

Convenience goods.

Work with selected intermediaries.

Shopping and some specialty goods.

Work with selected intermediaries.

Shopping and some specialty goods.

Work with singleintermediary. Specialty

goods and industrial equipment.

Work with singleintermediary. Specialty

goods and industrial equipment.

ManyMany

SeveralSeveral

OneOne


Explain channel leadership, Explain channel leadership, conflict, and partnering.conflict, and partnering.

MANAGING CHANNEL RELATIONSHIPS

Channel PartneringChannel Partnering

Channel ConflictChannel Conflict

Channel LeadershipChannel Leadership

Channel ControlChannel Control

Channel PowerChannel Power

Social Social Dimensions Dimensions of Channelsof Channels

Social Social Dimensions Dimensions of Channelsof Channels

66

CHANNEL POWER, CONTROL, AND LEADERSHIP

ChannelPower

ChannelPower

ChannelControl

ChannelControl

Channel Leader

Channel Leader

A channel member’s capacity to control or influence the behavior

of other channel members

A channel member’s capacity to control or influence the behavior

of other channel members

A situation that occurs when one marketing channel member intentionally affects another

member’s behavior.

A situation that occurs when one marketing channel member intentionally affects another

member’s behavior.

A member of a marketing channelthat exercises authority/power over

the activities of other members.

A member of a marketing channelthat exercises authority/power over

the activities of other members.

66

CHANNEL CONFLICT

A clash of goals and methods between

distribution channel members.

HorizontalConflict

HorizontalConflict

Occurs among channel members on the same level

Occurs among channel members on the same level

VerticalConflictVerticalConflict

Occurs among channel members at different levels

Occurs among channel members at different levels

66

CHANNEL PARTNERING

The joint effort of all

channel members to create

a supply chain that serves

customers and creates a

competitive advantage.

66

TRANSACTION- VS. PARTNERSHIP-BASED FIRMS

Transaction-Based Transaction-Based Transaction-Based Transaction-Based

Short-term relationshipsShort-term relationships

Multiple suppliersMultiple suppliers

Adversarial relationshipsAdversarial relationships

Price dominatesPrice dominates

Minimal supplier investmentMinimal supplier investment

Minimal information sharingMinimal information sharing

Firms are independent Firms are independent

Minimal functional area interaction Minimal functional area interaction

Partnership-Based Partnership-Based Partnership-Based Partnership-Based

Long-term relationshipsLong-term relationships

Few suppliersFew suppliers

Cooperative partnerships Cooperative partnerships

Value-added services dominateValue-added services dominate

High supplier/buyer investmentHigh supplier/buyer investment

Extensive information sharingExtensive information sharing

Firms are interdependent Firms are interdependent

Extensive functionalarea interactionExtensive functionalarea interaction

66

LEARNING OBJECTIVE

Describe the logistical components Describe the logistical components of the supply chain.of the supply chain.

77

INTEGRATED LOGISTICAL COMPONENTS OF THE SUPPLY CHAIN

Sourcing & ProcurementSourcing & Procurement

Production SchedulingProduction Scheduling

Order Processing & Customer ServiceOrder Processing & Customer Service

Inventory ControlInventory Control

SupplySupplyChainChainTeamTeam

SupplySupplyChainChainTeamTeam

Warehouse & Materials HandlingWarehouse & Materials Handling

TransportationTransportation

Lo

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tics

Info

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mL

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isti

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ati

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Sys

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77

SOURCING AND PROCUREMENT

NegotiateService Levels

NegotiateService Levels

NegotiatePrice

NegotiatePrice

SelectSuppliers

SelectSuppliers

DevelopSpecifications

DevelopSpecifications

Plan Purchasing Strategies

Plan Purchasing Strategies

Role ofRole ofPurchasingPurchasing

DepartmentsDepartments

Role ofRole ofPurchasingPurchasing

DepartmentsDepartments

77

PRODUCTION SCHEDULING

Push/Pull Strategy Push/Pull Strategy

Traditional FocusTraditional Focus Traditional FocusTraditional Focus

PushPush

Start of ProductionStart of Production

ManufacturingManufacturing

Inventory-BasedInventory-Based

Mass ProductionMass Production

Customer FocusCustomer Focus Customer FocusCustomer Focus

PullPull

Customer-Order Based

Customer-Order Based

Mass CustomizationMass Customization

77

JUST-IN-TIME MANUFACTURING77

A process that redefines

and simplifies

manufacturing by reducing

inventory levels and

delivering raw materials

just when they are needed

on the production line.

BENEFITS OF JIT

Reduces raw material inventories

Shortens lead times

Creates better supplier relationships

Reduces production and storeroom costs

Reduces paperwork

77

ELECTRONIC DATA INTERCHANGE77

Information technology

that replaces paper

documents that accompany

business transactions.

INVENTORY CONTROL SYSTEM77

A method of developing

and maintaining an

adequate assortment of

materials or products to

meet a manufacturer’s or a

customer’s demand.

WAREHOUSE AND MATERIALS-HANDLING

77

FunctionsFunctionsofof

Materials Materials HandlingHandling

Receive goods into warehouse

Dispatch the goods totemporary storage

Recall, select, or pick the goods for shipment

Identify, sort and label goods

TRANSPORTATION

CostCost

Transit TimeTransit Time

ReliabilityReliability

CapabilityCapability

AccessibilityAccessibility

TraceabilityTraceability

Criteria Criteria forfor

Transportation Transportation ModeMode

ChoiceChoice

Criteria Criteria forfor

Transportation Transportation ModeMode

ChoiceChoice

77

CRITERIA FOR RANKINGMODES OF TRANSPORTATION

77

Relative Cost

TransitTime

Reliability

Capability

Accessibility

Traceability

HighestHighest LowestLowest

Air WaterPipeRailTruck

Water Rail Pipe Truck Air

Pipe Truck Rail Air Water

Water

Truck

Rail Truck Air Pipe

Rail Air Water Pipe

Air Truck Rail Water Pipe

LEARNING OBJECTIVE

Discuss the concept of Discuss the concept of balancing logistics service and cost.balancing logistics service and cost.

88

LOGISTICS SERVICE

Interrelated activities

performed by a member

of the supply chain to

ensure that the right

product is in the right

place at the right time.

88

LOGISTICAL COMPETENCIES

Devise logistics service strategies as a means of competitive differentiation

Integrate members of supply chain to achieve operating excellence

Respond quickly to changing logistical requirements

Constantly monitor all aspects of the supply chain

88

LEARNING OBJECTIVE

Discuss new technology Discuss new technology and emerging trends in and emerging trends in

supply chain managementsupply chain management..

99

TRENDS IN SUPPLY CHAIN MANAGEMENT

99

Electronic DistributionElectronic Distribution

Outsourcing ofLogistics Functions

Outsourcing ofLogistics Functions

AdvancedComputer Technology

AdvancedComputer Technology

Trends Trends Affecting the Affecting the

Logistics Logistics IndustryIndustry

Trends Trends Affecting the Affecting the

Logistics Logistics IndustryIndustry

LEARNING OBJECTIVE

Discuss channels and distribution Discuss channels and distribution decisions in global markets.decisions in global markets.

1010

CHANNELS AND DISTRIBUTION DECISIONS FOR GLOBAL MARKETS

Channel structure differs

Channel types differ

“Gray” marketing channels

Global Channel Global Channel DevelopmentDevelopment

Global Channel Global Channel DevelopmentDevelopment

Global SupplyGlobal SupplyChain ManagementChain Management

Global SupplyGlobal SupplyChain ManagementChain Management

Awareness of trade legalities

Transportation Infrastructure

1010

LEARNING OBJECTIVE1111

Identify the special problems and Identify the special problems and opportunities associated with opportunities associated with

distribution in service organizations.distribution in service organizations.

CHANNELS AND DISTRIBUTIONDECISIONS FOR SERVICES

1111

Areas of Focus Areas of Focus forfor

Service DistributionService Distribution

Areas of Focus Areas of Focus forfor

Service DistributionService Distribution

Minimizing wait times Minimizing wait times

Managing service capacityManaging service capacity

Improving delivery through new channels

Improving delivery through new channels

LEARNING OBJECTIVE

Discuss the concept of customer Discuss the concept of customer service.service.

CUSTOMER SERVICE CONCEPT

Customer service relates to the relationship between a

product or service provider and

those people who use or buy its products or

services.

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Identifying CustomersMost organizations will have more than one

type of customer. They will vary according to age, gender,

personality and economic and social position. They will also differ according to such

variables as their previous experience of dealing with the organization, the importance of the purchase to them, whether or not they are buying for themselves or their company and their existing level of knowledge about the products or services.

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Defining ServiceCustomer service behaviors include a huge

range of factors including efficiency, speed of response, attention to detail, listening, reassurance, providing information and following up.

Attitude is also important in terms of variables such as friendliness, respect, concern and authenticity.

The type and levels of service provided will depend on the ways customers interact with the organization and its employees.

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Type of Relationship“Customers” may be potential customers,

one-time customers, repeat customers or ex-customers.

Each will have specific needs for the business to address appropriately in terms of service.

Potential customers’ service needs may relate to raising awareness of features and benefits of the product or service and how and where it is available, as well as reassurance about organizational values and integrity.

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Training Every organization—regardless of its size or

nature of business—needs to have a clear framework for customer service, incorporating detailed policies, procedures and standards.

Organizations should provide regular customer service training for all so they understand the role they play in overall customer service within the organization and the specific behaviors and attitudes expected of them.

Refresh both service standards and procedures and training regularly to meet changing customer needs and competitor activities.

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Getting FeedbackGreat customer service depends on looking

at things from the customer’s perspective.Mystery shopping and regular customer

satisfaction surveys can be extremely helpful in pinpointing good and bad customer service, as can ongoing observation and supervision of customer service situations at a range of different levels.

Getting employees to focus on and discuss customer service issues on a regular basis is a good way of helping them improve standards and take ownership at an individual and team level.

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mgnt. 106 (1)

Business