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Making and Delivering Value
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Generic Value Chain
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Supply Chain Management
Software programs help to manage the supply chain
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Supply Chain Management
The supply chain includes all the firms that engage in activities that are necessary to convert raw materials into a good or service and put it in the hands of the consumer or business customer Supply chain management is the management of flows among the firms in a supply chain to maximize total profitability
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Supply Chain
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What is a Distribution Channel?
Series of firms or individuals that facilitate the movement of a product from the producer to the final customer Direct Indirect
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Functions of Distribution Channels
Time, place, and ownership utilities Logistics functions Transportation and storage functions Efficiency creation Facilitating functions Repair and maintenance functions Risk-taking Communications and transaction functions
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Supermarkets as Channel Members
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Creating Efficiencies
Breaking bulk - channel members purchase large quantities from manufacturers and sell smaller quantities to many different customers Creating assortments - channel members provide a variety of products in one location
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Reducing Transactions
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The Internet Even small firms with limited resources can enjoy competitive advantages by making products available to customers around the globe at a very low cost Disintermediation - process by which traditional intermediaries are eliminated as companies question the value added by layers in the distribution channel
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Types of Wholesaling Intermediaries
Wholesaling intermediaries are firms that handle the flow of products from the manufacturer to retailer or business user Independent Manufacturer owned
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Independent Intermediaries
Merchant wholesalers Full-service Limited-service Cash-and-carry wholesalers Truck jobbers Drop shippers Mail-order wholesalers Rack jobbers Merchandise Agents or Brokers Manufacturers’ agents Selling agents Commission merchants Merchandise brokers
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Rack Jobbers
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Wholesalers
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Manufacturer-Owned Intermediaries
Sales Branches Sales Offices Manufacturers’ Showrooms
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Independent Intermediaries
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Types of Distribution Channels
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Types of Distribution Channels
Consumer channels Direct Manufacturer-retailer-consumer Manufacturer-wholesaler-retailer-consumer Business-to-business channels Manufacturer-industrial distributor-business customer
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Consumer Channels
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B2B Channels
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Dual Distribution Systems
Multiple channel usage Example: pharmaceutical industry sells to hospitals, clinics, and organizational customers directly and to consumers indirectly through drug retailers
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Dual Distribution Systems
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Steps in Distribution Planning
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Vertical System
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Vertical Marketing Systems
Administered Corporate Contractual
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Contractual VMS Wholesaler-Sponsored Retailer-Cooperative
Franchise Organizations
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Distribution Intensity
Decision Factors: Company, Customers, Channels, Constraints, and Competition Intensive, Exclusive, or Selective Distribution
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Exclusive Distribution
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Selective Distribution
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Selective Distribution
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Intensive Distribution
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Managing the Channel Selecting channel partners
Managing the channel of distribution Channel leader is the dominant firm that controls the channel Channel leaders have some form of power relative to other members Economic Reward Legitimate
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Logistics Process of designing, managing, and improving the movement of products through the supply chain purchasing manufacturing storage transport
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Logistics and Customer Satisfaction
Traditionally, logistics was thought of as physical distribution order processing, warehousing, materials handling, transportation, and inventory control objective to deliver product at lowest cost Now, customers’ goals become the logistics provider’s goals
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Logistics Functions Order Processing Materials Warehousing Handling
Inventory Control Transportation
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Transportation Mode Considerations
Dependability Cost Speed of Delivery Accessibility Capability Traceability
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Modes of Transportation
Water Internet Pipeline Truck Rail Air
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Water Transportation Water transportation is best for large, bulky,
nonperishable goods
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