Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998 Gilbert A. Churchill, Jr. J. Paul Peter Chapter 15 Wholesaling and Physical Distribution Marketing

Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998 Ways Wholesalers Can Create Value Slide 15-1 Table 15.1 For Producers For Retailers For End Users Reducing monetary costs by efficiency and expertise contributed to channel Providing information about industries and products Providing greater ability to reach buyers Providing information about buyers Reducing potential losses by assuming risks Improving product selection by providing information to retailers about the best products to offer end users Reducing monetary, time and activity costs by providing a variety of goods Reducing monetary costs through greater efficiency and/or knowledge Reducing monetary costs through greater efficiency and/or expertise

Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998 Major Types of Wholesalers Slide 15-2 Full Service Limited Service Agents/MFR’s Representatives Brokers General Merchandise Merchant Wholesalers Wholesalers Agents and Brokers Specialty Service Merchandisers Cash-&-Carry Wholesalers Drop Shippers Truck Jobbers

Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998 Marketing Strategies for Wholesalers Slide 15-3 Figure 15.1 Marketing Strategy to Attract Sellers Marketing Strategy to Attract Buyers Retailers and Other Resellers WholesalersProducers

Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998 Wholesaler receives goods and stores them in warehouse. Records inventory in computer and pays invoice. The Physical Distribution Process Slide 15-4a Figure 15.2 Manufacturer receives order, creates invoice, deducts inventory and ships goods. Wholesaler orders goods via phone, mail, FAX or computer. Manufacturer stores finished goods and records inventory in computer. Warehousing Inventory Management Order Processing Order Processing Inventory Management Transportation Warehousing Inventory Management Order Processing

Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998 Retailer receives goods and puts them on shelves. Records inventory in computer and pays invoice. Slide 15-4b Figure 15.2 Wholesaler receives order, creates invoice, deducts inventory and ships goods. Retailer orders goods via phone, mail, FAX or computer. Order Processing Order Processing Inventory Management Transportation Inventory Management Order Processing The Physical Distribution Process

Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998 Slide 15-5 Figure 15.3 Proportion of Goods Carried for Each Mode of Transportation* Railroads (38.1%) Pipelines (18.4%) Water (15.1%) Trucks (28.1%) Airlines (.4%) *as measured in ton-miles Source: US Department of Commerce, Statistical Abstract of the United States, 115th ed. (Washington, D.C.; U.S. Government Printing Office, 1995) p. 626.

Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998 Slide 15-6 Managing Physical Distribution Key areas of interest in physical distribution management: Looking for ways to increase the speed and reliability of physical distribution without increasing costs. Value driven physical distribution Linking responsibility for the various aspects of physical distribution across departments, rather than merely within individual departments. Cross-functional decision making

Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998 Slide 15-7 Trends in Physical Distribution Management System integrationtreating physical distribution as a system, rather than a series of discrete functions. Just-in-time inventory managementa system of holding little inventory and requiring suppliers to provide the exact quantity needed according to a precise schedule. Electronic Data Interchangea communication system that allows direct electronic transfer of information among companies. Decision-making softwaresoftware that helps users select the optimal solution to a complex problem.