Marketing Management MKTG 6170: Module II: Supply Chain Management/ Distribution

1. Marketing ManagementMKTG 6170: Module II: Supply Chain Management/ Distribution • Supply Chain • An alignment of firms/exchanges • Exchange perspective • Supply Chain in Reality – A Network • Major flows in a supply chain • Purpose: • Satisfy customer needs and meeting individual member goals

2. Supply Chain Management • The Institute for Supply Management • “the design and management of seamless (aka supply chain integration), value-added processes across organizational boundaries to meet needs of end customers”. • Council of Supply Chain Management Professionals (Council of Logistics Management until Dec 2004): • “integration of key business processes from end user through original suppliers that provides products, services, and information, that add value for customers and other stakeholders”.

3. ….SCM • Objectives: • Value • Profitability • Importance: • Complexity • Efficiencies • Competencies

4. ….SCM • SCM v/s Logistics v/s Distribution • Domain • Objective • Framework for Understanding SCM • Components: • Network • Business Processes • Management Components

5. Distribution • Connection between individuals/firms that contributes to the occurrence of an exchange • Basic function: create customer value/add value to customer by reducing spacial separation – physical and time distance – between point of production and point of consumption • Place and time utility

6. Value Addition • Contactual efficiency • Routinization • Categorizing • Assembly/assortment • Breaking bulk/accumulating bulk • Transportation • Processing/storage • Risk reduction • Service/repairs • Reverse logistics

7. Distribution Design Decisions • Level 1(governance structure): direct distribution v/s conventional v/s vertical marketing systems. • Corporate • Contractual • Administered

8. ..design decisions: Level 2-Intensity of Distribution

9. Distribution Strategies • Two fundamental distribution strategies: • Items can be directly shipped from the supplier or manufacturer to end customer • Use intermediate points

10. Direct Shipment Distribution Strategies • Advantages: • expenses of operating a distribution center • Lead times. • Disadvantages: • Risk-pooling effects • Manufacturer and distributor transportation costs

11. Intermediate Inventory Storage Point Strategies • Strategies: • Traditional warehousing strategy • Cross-docking strategy • Centralized pooling and transshipment strategies

12. Traditional Facilities • factors • Centralized vs. Decentralized Management • Central vs. Local Facilities • Centralized vs. Decentralized Management

13. Central vs. Local Facilities • Centralized facilities • Employ both fewer warehouses and distribution centers • Facilities are located further from customers. • Other factors: • Safety stock. • Overhead. • Economies of scale • Lead time. • Service. • Transportation costs.

14. Cross-Docking • Popularized by Wal-Mart • Warehouses function as inventory coordination points rather than as inventory storage points. • Goods spend very little time in storage at the warehouse

15. Transshipment • Shipment of items between different facilities at the same level in the demand chain to meet some immediate need • Occurs mostly at the retail level • advanced information systems • Reasonable shipping costs • Integrated supply chain

16. Distribution-system Performance and customer-facing capabilities • Performance evaluation on two dimensions: • Level of customer service • Cost of providing customer service • Capabilities • Responsiveness • efficiency