Wholesalers, to remain successful in the future, must... 4 Form strategic alliances 4 Maximize the use of relevant new technologies 4 Maintain an appropriate service package 4 Adapt quickly to anticipated changes in the marketplace

Retailers The third major player in many consumer goods and services supply chains are retailers. They also come in many sizes and shapes, each looking for a niche to best service the needs and wants of their target market(s).

Retailing and its importance 4 Retailing consists of all business activities concerning the sale of goods and services to ultimate consumers. 4 Retailing includes obvious businesses like department and specialty stores, but also hotels, movie theatres, restaurants, and professional sports.

Retailing and its importance 4 Retailing institutions = over 1,500,000 in the USA 4 Retail Sales 1.8 to 3.0 trillion (US) [ problem of definitions] 4 Personnel working in retailing exceeds 18,000,000

Classifying Retailers: Conventional Titles 4 Specialty stores 4 Department stores 4 Supermarkets 4 Convenience stores 4 Mass merchandisers 4 Big box retailers/Power retailers/category killers 4 Hypermarkets 4 Manufacturer’s outlets 4 Direct mail & catalogues 4 Electronic shopping (QVC) 4 Internet shopping 4 Door-to-door retailing 4 Vending machines 4 Retailers are constantly changing their marketing mix in response to consumers and environmental changes.

Classifying retailers: A more useful approach High Margin Low Margin High Turnover Low Turnover X = Lazarus Y = Wal-Mart Z = United Dairy Farmers X Y Z

Classifying retailers: A more useful approach Deep Shallow Wide Narrow X = Lazarus Y = Wal-Mart Z = United Dairy Farmers X Y Z

Classifying retailers: A more useful approach Low Service High Service High Price Low Price X = Lazarus Y = Wal-Mart Z = United Dairy Farmers X Y Z

If we could combine the above three charts, we could accurately describe any type of retailer Margin Turnover Depth Breadth Service Price In-store Non-store

Retail Evolution 4 How do we explain the current and evolving mix of retail institutions in the United States, or any other country in the world? –Wheel of Retailing –The Dialectic process –The G-S-G Theory –The Darwinian Theory –The Institutional Life Cycle Theory

The Future of Retailing 4 Consolidation 4 Integration 4 Strategic alliances 4 Diversification 4 Internationalization 4 Transformation

The Final Dimension of the Supply Chain Manufacturer Wholesaler Retailer LOGISTICS &PHYSICAL DISTRIBUTION

Logistics & Physical Distribution

4 Logistics 4 Logistics Management 4 Materials Management 4 Systems Concepts 4 Total Cost Concept 4 Organizational Materials flows 4 Physical Distribution 4 Warehousing subsystems 4 Material-handling sub systems 4 Inventory control subsystems 4 Order-processing subsystems 4 Transportation subsystems –Motor vehicles –Trains –Airplanes –Pipelines –Ships –Combinations

Logistics Logistics management Materials management Physical distribution Total cost concept Customer services

DEFINITIONS 4 LOGISTICS: the entire process of moving raw materials and components into the firm, in-process inventory through the firm, and finished goods out of the firm 4 LOGISTICS MANAGEMENT: planning, implementing and controlling the efficient flow of both inbound materials and outbound finished products 4 MATERIALS MANAGEMENT: concerned with bring raw materials and supplies to the point of production and moving in-process inventory through the firm 4 PHYSICAL DISTRIBUTION: the broad range of activities concerned with efficient and effective movement of finished goods from the end of the production line to the buyer.

Customer Services 4 Product availability 4 Speed / JIT 4 Consistency 4 Reliability 4 Accuracy 4 Quality 4 Information / Communication 4 Convenience 4 History 4 Facilitating services, such as... –Palletization –Pre-ticketing –Advanced Shipping Notices 4 Financial stability 4 Leading edge thinking and technology

TOTAL COST CONCEPT 4 Not interested in individual components per se. 4 Concerned with the bottom line total cost for a set level/package of services 4 Because of system interactions, minimizing each individual cost often does not minimize the overall costs 4 Must study the impact of each function on all the others to determine the best mix 4 Computer simulations and dynamic programming are being used to measure these interactions 4 Trade off analysis studies the service/cost implications of system interactions: –Larger ships reduce transportation costs, but increase warehousing, shortage and risk of obsolescence

PHYSICAL DISTRIBUTION ACTIVITIES CUSTOMER ORDER ORDER ENTRY INVENTORY MANAGEMENT STORAGE & MATERIAL HANDLING AT WAREHOUSE PACKAGING & SHIPPING OUTBOUND TRANSPORTATION INBOUND TRANSPORTATION FROM SUPLIERS