Output Management AG BM 460

Introduction What is you relationship with your customer? Do you come to market without warning and take the price of the day? Do you have a contract for six month’s business? Something in between

Supply Chain Management Making plans works better with information Knowing how many units you can sell Knowing what the price is Having a planning horizon consistent with the order horizon Hanover Foods – 95% of a year’s production contracted

Types of Relationships Ownership of customer Contracts Joint partnership Working agreement Long-term customers No agreement

Dairy Farmers of America Producer cooperative Joint agreements with processors In some cases joint agreements with processor’s customers Offer contracts with farmers for forward pricing Sometimes jointly run processor

Seltzer’s Lebanon Bologna Long-term customers Predictable demand Can plan accordingly Some contracts For its sources, long-term understanding of what meat they need and what relationship price bears to market

WalMart Its preferred suppliers get scanner data Automatic reordering All the information WalMart has about sales, inventories, etc. For that part of their business (the supplier) few surprises

Superior Products or Service Customer relations key Explicit understanding of issues Communication about what customer really wants and what it is worth to them “I can provide you with x tons of superior feed, keeping your bin full, and for that you will pay me Y”

The Consumer If you sell to the consumer, you need to understand the consumer as well Why do they buy your product? What makes you special? How faithful are they?

Yuengling Now a premium product, esp., beyond core area So do you cut price? How do you advertise? Who is your target customer? Who is your competition? If it is micro- breweries (porter) that defines strategy

Increased Emphasis Service Value Knowing the customer

Decreased Emphasis Price Volume Cherry-picking

McDonald’s Customer focused Understanding who wants what Value meals Happy meals Breakfast Healthy choices

TA Seeds Seed company in Avis, PA Produces corn seed –Lots of varieties –GMO and otherwise Buys other seed to broaden product line –Organic seed –Other crops

TA Seeds Need to anticipate market needs System of distributors –Don’t want to run short –Don’t want too much extra either –Need to be aware of new science How do you figure out what to produce? How do you decide what to grow yourself and what to buy?

Concluding Comments Take it or leave it sales won’t do Producing and then looking for a customer won’t do Must have a marketing plan Must have a supporting production plan Mistakes are very costly Lost sales, unsellable product, loss of image