1. Supply Chain, Channel, and Category Management
Unit 5
Supply Chain, Channel, and Category Management

2. What is a “supply chain”
The sequences and processes of producing and distributing a product or service
Involves those inside and outside a firm!
(Operations + Suppliers) + Logistics + (Marketing + Intermediaries)

3. A sample supply chain process from NPD to End
Design
Order processing
Purchasing
Materials management
Production
Inventory management
Quality testing
Storage or Distribution
Return logistics
Scrap rework or redesign

4. Information flow from NPD to End
Consumer feedback (or needs analysis)
Customer forecasting
Supplier relationships and discounts
Inbound logistics
Scheduling and customer prioritization
Stock levels
Customer inspection
Logistics integration
Customer feedback
Market feedback

5. Distribution channels and strategy
“Channel”: means the path finished good takes from finished inventory to end consumer “Distribution channel” = “Marketing channel” = “Channels to market” “Channel strategy” means both how it gets there and who is involved

6. Channels Intermediary type Characteristics Value added
Wholesaler (“merchant wholesaler”)
Takes title to goods
Buys, breaks bulk
Market information (demand, preferences, buying behaviour)
Promotion
Finding buyers and negotiating prices and terms
Finance distribution and sales (trade credit)
Product assortments
Transportation and warehousing
Agents & brokers
Does not take title to goods
Often limited to matching buyers and sellers

7. Channels Intermediary type Characteristics Value added Retailer
Brings together many product lines and suppliers
Showcase products
Differentiate value
Consumer convenience
Occasion
Product assortments
Transportation and warehousing
Non-store retailing
No physical store
Convenience
Comparison shopping
personal selling door to door or in a home
kiosks or vending machines
direct mai
home shopping
Internet

8. POPCO’s EU channel strategy could be…
EU Grocery channel
Sales Accounts
Tesco
Carrefour
Metro
Regional store managers
POPCO
Global accounts
Toys ‘R Us
Walmart
End consumer
POPCO
Independent retail sales agents in EU countries
EU country wholesalers
EU toy retailers
End consumer

9. Distribution strategy
Intensive: sell everywhere Selective: sell in specific places (by product type, occasion, customer segment) Exclusive: sell in only a few places (brand-specific, reputation-specific)

10. Products
Product identification = SKU Product line = similar products differ in minor way Product extension = + to line (flavour, design, occasion) Product format = same product but different delivery format (packaging) Product depth = many products in each line Product range = many lines Product family = lines related by customer experience Product mix = all the different product lines sold by one company (suggesting different lines, families) Product portfolio = same as product mix, but usually refers to brands sold by the company

11. Managing Product Line/Mix
Product Mix
…a group of similar products that differ only in relatively minor characteristics.
…all the products a firm offers for sale.

12. Managing Product Line/Mix
Ways to improve
Change existing product (modification)
Delete a product
Develop a new product

13. Coca cola: one brand, many products
The company operates a franchised distribution system dating from 1889 where The Coca-Cola Company only produces syrup concentrate which is then sold to various bottlers throughout the world who hold an exclusive territory.

14. Coca Cola: wide range in beverage

15. Category management Turnover & profitability of category
Role in store for category or sub categories
Compete for space, promotion, profile
Targets, retail strategies, promotion activities
Know buying behavior!
Negotiate based on price, advertising support, reputation, sales promotion support
of competitive market information for a producer’s sales team and for sales agents.

16. The rise of packaging

17. Packaging Functions
Protects Product Adds Consumer Convenience Regulatory compliance PROMOTES THE PRODUCT DIFFERENTIATES THE PRODUCT
Design Considerations
Cost
Single/multiple units
Product Family packaging: consistency
Needs of intermediary
Environmental responsibility
Regulations

18. The rise of packaging

19. Systems that support the supply chain
Objective: rely less on human knowledge & experience Order processing and fulfillment Computer Automated Design (CAD) -> computer-aided design Computer-Aided Manufacturing (CAM) -> computer-controlled machine process Computer-Aided Process Planning (CAPP) -> computer-assisted process planning: routing and step by step work instructions, assembly drawings Computer-Integrated Manufacturing (CIM) -> all of the above for production

20. ERP Systems
Enterprise Resource Planning (ERP) -> for every aspect – Finance, Operations, Sales & Marketing
Supports the full supply chain, inside the company and outside, integrated
Strive for 100% efficiency (optimized)
ERP I - tracks all resources (grey)
Labor
Cash
Raw materials
Capacity
ERP II – enables communication (green)

21. ERP Examples: SAP, Oractle, SAP, Sage, Microsoft
Financial accounting: General ledger, fixed asset, payables, receivables, cash management, financial consolidation
Management accounting: Budgeting, costing, cost management, activity based costing
Customer relationship management: Sales and marketing, commissions, service, customer contact, call center support
Manufacturing: Engineering, bill of materials, work orders, scheduling, capacity, workflow management, quality control, manufacturing process, manufacturing projects, manufacturing flow, product life cycle management
Supply chain management: Supply chain planning, supplier scheduling, order to cash, purchasing, inventory, product configurator, claim processing
Project management: Project planning, resource planning, project costing, work break down structure, billing, time and expense, performance units, activity management
Human resources: Recruiting, training, payroll, benefits, 401K, diversity management, retirement

22. Systems and the supply chain
Modular approach Still requires human input Training is essential Integration cost is high “Lights out” factory?