Making and Delivering Value 1 Generic Value Chain

Making and Delivering Value 1

Generic Value Chain 2

Supply Chain Management Software programs help to manage the supply chain 3

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 4

Supply Chain 5

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 6

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 7

Supermarkets as Channel Members 8

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 9

Reducing Transactions 10

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 11

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 12

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 13

Rack Jobbers 14

Wholesalers 15

Manufacturer-Owned Intermediaries Sales Branches Sales Offices Manufacturers’ Showrooms 16

Independent Intermediaries 17

Types of Distribution Channels 18

Types of Distribution Channels • Consumer channels – Direct – Manufacturer-retailer-consumer – Manufacturer-wholesaler-retailerconsumer • Business-to-business channels – Direct – Manufacturer-industrial distributorbusiness customer 19

Consumer Channels 20

B 2 B Channels 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 22

Dual Distribution Systems 23

Steps in Distribution Planning 24

Vertical System 25

Vertical Marketing Systems Administered Corporate Contractual 26

Contractual VMS Wholesaler-Sponsored Retailer-Cooperative Franchise Organizations 27

Distribution Intensity Decision Factors: Company, Customers, Channels, Constraints, and Competition Intensive, Exclusive, or Selective Distribution 28

Exclusive Distribution 29

Selective Distribution 30

Selective Distribution 31

Intensive Distribution 32

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 33

Logistics • Process of designing, managing, and improving the movement of products through the supply chain – purchasing – manufacturing – storage – transport 34

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 35

Logistics Functions Order Processing Materials Handling Inventory Control Warehousing Functions Transportation 36

Transportation Mode Considerations Dependability Cost Speed of Delivery Accessibility Capability Traceability 37

Modes of Transportation Water Pipeline Rail Internet Truck Air 38

Water Transportation Water transportation is best for large, bulky, nonperishable goods 39