Global Supply Chain Management INTRODUCTION 15 1 Global

Global Supply Chain Management INTRODUCTION 15 -1

Global Supply Chain Management • The Global 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 15 -2

Figure 15. 3: Supply Chain 15 -3

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 15 -4

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 15 -5

Supermarkets as Channel Members 15 -6

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 15 -7

Figure 15. 4: Reducing Transactions 15 -8

Channel Member Functions 15 -9

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 15 -10

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 15 -11

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 15 -12

Rack Jobbers 15 -13

Wholesalers 15 -14

Manufacturer-Owned Intermediaries Sales Branches Sales Offices Manufacturers’ Showrooms 15 -15

Independent Intermediaries 15 -16

Figure 15. 5: Types of Distribution Channels 15 -17

Types of Distribution Channels • Consumer channels – Direct – Manufacturer-retailer-consumer – Manufacturer-wholesaler-retailerconsumer • Business-to-business channels – Direct – Manufacturer-industrial distributorbusiness customer 15 -18

Consumer Channels 15 -19

B 2 B Channels 15 -20

The Internet as Distribution Channel 15 -21

Dual Distribution Systems • Multiple channel usage • Example: – pharmaceutical industry sells to hospitals, clinics, and organizational customers directly and to consumers indirectly through drug retailers 15 -22

Dual Distribution Systems 15 -23

Figure 15. 6: Steps in Distribution Planning 15 -24

Cooperatives 15 -25

Marketing Systems Conventional Vertical Horizontal 15 -26

Vertical System 15 -27

Vertical Marketing Systems Administered Corporate Contractual 15 -28

Contractual VMS Wholesaler-Sponsored Retailer-Cooperative Franchise Organizations 15 -29

Distribution Intensity Decision Factors: Company, Customers, Channels, Constraints, and Competition Intensive, Exclusive, or Selective Distribution 15 -30

Exclusive Distribution 15 -31

Selective Distribution 15 -32

Selective Distribution 15 -33

Intensive Distribution 15 -34

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 Legitimate Reward 15 -35

Need for Inventory Control 15 -36

Logistics • Process of designing, managing, and improving the movement of products through the supply chain – purchasing – manufacturing – storage – transport 15 -37

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 15 -38