978-0077729028 Chapter 16 Slides

Chapter 16 – Supply Chain Managementand Channel Management Marketing 5th

Powerpoint Slides With Teaching Notes

Power Point Slide Teaching Notes

16-1: Supply Chain Management

16-2: Learning Objectives Ask students: How has Walmart aligned its

systems.

The opening vignette describes distribution

efficiencies through technology innovations.

16-3: Amazon Ask students: How has Amazon aligned its

systems.

The opening vignette describes distribution

efficiencies through technology innovations.

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Chapter 16 – Supply Chain Managementand Channel Management Marketing 5th

16-4: The Importance of Marketing

Channel/ Supply Chain

Management

Students of marketing often overlook or

underestimate the importance of place in the

marketing mix, simply because it happens

behind the scenes.

Yet marketing channel management adds value

because it gets the products to them efficiently,

quickly and at low cost.

16-5: Supply Chain Management Ask students: Why would a supply chain be

more efficient with a distribution center rather

than simply delivering directly to stores?

Answer: The distribution center serves as a

place to accumulate merchandise from many

vendors and then allocate it to stores in the

quantities they need.

Imagine the congestion if every vendor had to

deliver to every store.

16-6: Behind the Scenes at Costco This clip looks behind the scenes at Costco and

evaluates their supply chain and approach to

logistics.

Note: Please make sure that the video file is

located in the same folder as the PowerPoint

slides.

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Chapter 16 – Supply Chain Managementand Channel Management Marketing 5th

16-7: Supply Chains Add Value Without supply chain management, firms

would face significant complications in getting

their goods to consumers where they want

them.

Group activity: Each member of the group

represents a supply chain link (e.g.,

manufacturer, retail distribution center, retailer,

transporter, end customer).

Remove one link and attempt to move an object

like a pen from one end to the other.

Experiment with removing different links.

What happens?

16-8: Supply Chains Streamline

Distribution

Ask students: How does supply chain

management reduce inventory levels? What

effect does supply chain management have on

sales?

Answer: An efficient supply chain can lower

overall inventory in the system because

merchandise is delivered when it is needed

(just-in-time).

By having an efficient supply chain, the

retailers stay in stock, and sales increase.

This is a classic FedEx ad with John Moscitta,

the fast talking guy, which reinforces the

importance of distribution.

16-9: Supply Chain Management

Affects Marketing

Customers expect to have their goods delivered

and services performed on time.

Ask students: What happens when the supply

chain breaks down? Imagine you order a

textbook from Amazon, which promises to

deliver it by Saturday, before your classes start

on Monday.

What happens in terms of your satisfaction with

Amazon if some link in the supply chain breaks

down and you don’t receive your book until

Tuesday?

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Chapter 16 – Supply Chain Managementand Channel Management Marketing 5th

16-10: Designing Marketing Channels There are no intermediaries between the buyer

and seller in a direct marketing channel.

In indirect marketing channels, one or more

intermediaries work with manufacturers to

provide goods and services to customers.

16-11: Managing the Marketing Channel

and Supply Chain

Managing a supply chain is similar to managing

your personal relationships. When conflict

occurs, it is best to try to come to a resolution

through negotiations:

Group exercise: Divide the class into group

dyads: one a manufacturer and one a retailer.

Make each group have a dominant member.

So, one group would be Wal-Mart (dominant),

while the other group would be a small vendor.

Another group would be P&G (dominant),

while the other group would be a small grocery

chain.

Have the groups negotiate a sale.

Then have the group’s report what transpired.

It will be interesting to see how the dominant

group used their power.

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Chapter 16 – Supply Chain Managementand Channel Management Marketing 5th

16-12: Managing Supply Chains Through

Vertical Integration

Control in a supply chain varies depending on

the type of relationships.

You might compare supply chain relationships

to more personal relationships familiar to

students, such as a group of their friends versus

a professional networking association to which

they belong.

Ask students: How does the formality of your

relationships in each group affect your

influence over other members or other

members’ influence over you?

The more formal the relationship, the more

control one member has over the others.

16-13: Types of Vertical Marketing

Systems

Group exercise continued: Have students

describe which type of supply chain channel

they are in.

Explain how cooperation is fostered through

more formal supply chain relationships.

In essence, cooperation is naturally greater in a

corporate system than in an independent supply

chain.

16-14: Power Power in a marketing channel exists when one

firm has the means or ability to dictate the

actions of another member at a different level

of distribution.

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Chapter 16 – Supply Chain Managementand Channel Management Marketing 5th

16-15: Managing Supply Chains Through

Strategic Relationships

Continue with the personal example developed

above.

Explain how, like supply chain relationships,

like personal relationships are stronger when

there is mutual trust, open communication,

common goals, and credible commitments.

Have students provide specific examples.

16-16: Relationship of supply chain

members

The National Milk Processor Board is the

originators of this ad campaign.

Helping fuel growth in consumption due to

increased competition by other drinks.

Increase in milk consumption favors the

processors, the farmers, the distributors and the

retailers – many members of the supply chain.

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Chapter 16 – Supply Chain Managementand Channel Management Marketing 5th

16-17: Check Yourself 1. There are no intermediaries between the

buyer and seller in a direct marketing

channel. In indirect marketing channels, one

or more intermediaries work with

manufacturers to provide goods and

services to customers.

2. In an administered vertical

marketingsystem there is no common

ownership or contractual relationships, but

the dominant channel member controls or

holds the balance of power. In contractual

vertical marketing systems independent

firms at different levels of the marketing

channel join together through contracts to

obtain economies of scale and coordination

and to reduce conflict. In a corporate

vertical marketing system, the parent

company has complete control and can

dictate the priorities and objectives of the

marketing channel because it owns multiple

segments of the channel, such as

manufacturing plants, warehouse facilities,

and retail outlets.

3. Successful strategic relationships require

mutual trust, open communication, common

goals, and credible commitments.

16-18: Information Flows Each step requires the collection and

dissemination of information.

Group exercise: List the information that each

member of the supply chain hopes to gain from

each flow.

Now list the information each member

disseminates during each flow

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Chapter 16 – Supply Chain Managementand Channel Management Marketing 5th

16-19: Electronic Data Interchange The growth of EDI systems has allowed for

advanced tracking of information. Each system

can seamlessly integrate with others, which

creates value for both customers and the firm.

Ask students: Exactly how does EDI increase

value for end customers?

Answer: Since EDI facilitates information, it

makes it easier for retailers to plan their

deliveries (advance shipping notice) and plan

their inventories (CPFR). Other information is

handled through EDI as well. The bottom line

is the retailer has the merchandise the customer

wants when he/she wants it, and in the

quantities that are demanded.

16-20: Vendor-Managed Inventory Vendor-managed inventory (VMI) is an

approach for improving supply chain efficiency

in which the manufacturer is responsible for

maintaining the retailer’s inventory levels in

each of its stores.

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Chapter 16 – Supply Chain Managementand Channel Management Marketing 5th

16-21: Check Yourself 1. Flow 1 (Customer to Store) , Flow 2 (Store

to Buyer), Flow 3 (Buyer to Manufacturer),

Flow 4 (Store to Manufacturer) , Flow 5

(Store to Distribution Center), Flow 6

(Manufacturer to Distribution Center and

Buyer)

2. As shown on the horizontal axis, data can

be accessed according to the level of

merchandise aggregation—SKU (item),

vendor, category (e.g., dresses), or all

merchandise. Along the vertical axis, data

can be accessed by level of the company –

store, divisions or the total company.

Finally, along the third dimension, data can

be accessed by point in time – day, season,

or year.

3. Electronic data interchange (EDI) is the

computer-to-computer exchange of business

documents from a retailer to a vendor and

back.

4. Although it is a more advanced level of

collaboration than simply using EDI and

sharing information, retailers cannot use

VMI blindly. Whereas the manufacturer

coordinates the supply chain for its specific

products, it does not know what other

actions the retailer is taking that might

affect the sales of its products in the future.

5. In a pull supply chain —orders for

merchandise are generated at the store level

on the basis of sales data captured by POS

terminals. In a push supply chain, the

merchandise is allocated to stores on the

basis of forecasted demand.

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Chapter 16 – Supply Chain Managementand Channel Management Marketing 5th

16-22: Making Merchandise Flow Remind students that supply chains enable the

flow of not just information but also goods.

Keeping goods flowing is not a simple task.

Ask students: Under what circumstances might

a manufacturer deliver directly to stores (flow

2) rather than to a distribution center (flow 1)?

Answer: 1. Because the retailer demands it. 2.

Because merchandise is bulky (furniture) or

needs to be delivered daily (tortillas)

16-23: Bakery with Conscience This video shows Dancing Deers’ CSR

initiatives but at the same time offers many

views of the production, packaging and

shipping of their product.

Note: Please make sure that the video file is

located in the same folder as the PowerPoint

slides.

16-24: How does Dell’s Merchandise Flow Students may know that Dell sells through

retailers but also directly to end consumers.

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Chapter 16 – Supply Chain Managementand Channel Management Marketing 5th

16-25: Distribution Center vs. Direct Store

Delivery

Distribution centers are not best if the retailer

has few outlets and/or the stores are

consolidated.

The following list are some advantages of

having a distribution center:

more accurate sales forecasts due to many

stores

lower inventory in each story therefore

lower overall inventory costs

overstock and under-stock is less of a

problem

it is less expensive to store in a remote

warehouse then expensive retail location.

16-26: The Distribution Center Group Project – Ask student to draw out the

distribution center for a pair of Nike shoes that

are at a Footlocker distribution center.

For each stage, ask them to list 3 things that

will happen to the item and 1 thing that might

go wrong!

This YouTube video (check link before class) is

a segment on ABC news on a Walgreens

warehouse where 40% of their employees are

disabled.

This video is a nice way to link CSR and

supply chain.

16-27: Inbound Transportation Buyers and planners are much more involved in

coordinating the physical flow of merchandise

to the stores.

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Chapter 16 – Supply Chain Managementand Channel Management Marketing 5th

16-28: Receiving and Checking After goods arrive at their destination, the

recipient must account for them.

RFID has the potential of tracking merchandise

throughout the supply chain. Items wouldn’t

have to be physically checked.

A distribution center or a store could know

exactly where and how many of an item it has

because each item has an RFID tag.

Some are concerned, however, about consumer

privacy—being able to track a consumer that is

wearing apparel with and RFID tag.

16-29: Storing and Cross-Docking Remind students that one of the most important

functions of the supply chain is to hold

merchandise until the next link in the chain is

ready for it.

But many firms strive to hold merchandise a

minimum amount of time because holding

merchandise in a distribution center is

expensive and the merchandise is not available

for sale. So cross-docking distribution centers

are part of just-in-time delivery systems.

Ask students: Which type of distribution

center is best for minimizing inventory in the

supply chain?

Answer: cross-docking

16-30: Getting Merchandise Floor-Ready Many firms now require that manufacturers

ship floor-ready merchandise, which shifts the

burden of ticketing and marketing to the

manufacturer.

Ask students: What cost implications do these

requirements have for manufacturers and

retailers?

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Chapter 16 – Supply Chain Managementand Channel Management Marketing 5th

16-31: Shipping Merchandise to Stores Technology facilitates shipments to stores by

tracking item sales and thus triggering

replacement orders.

Ask students: How do automatic ordering

systems benefit manufacturers, retailers, and

customers?

Answer: Manufacturers can plan their

production schedules. Retailers get more

accurate forecasts. Customers get the

merchandise they want, when they want it.

16-32: Inventory Management Through

Just-In-Time Systems

Inventory management systems track goods

throughout stores, warehouses, and DCs.

As its name implies, just-in-time inventory

management ensures goods get delivered only

when they are needed.

This web link is for the Zappos tour mentioned

in the textbook.

16-33: Benefits of JIT Systems Because they use smaller but more frequent

shipments, JIT systems reduce stock-out

situations which in turn increase customer

satisfaction.

Ask students: Can you think of any potential

problems with this inventory management

approach?

Answer: The systems can be expensive and the

supply chain partners must be committed to

accurate data or they won’t work. Also, if the

system isn’t working properly, out-of-stocks

can occur.

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Chapter 16 – Supply Chain Managementand Channel Management Marketing 5th

16-34: Check Yourself 1. Manufacturing – Distribution Center

(optional) – Store – Customer

2. Management of inbound transportation,

Receiving and checking using UPC and

RFID, Storing and Cross-Docking, Getting

Merchandise Floor Ready, Preparing to

ship, Shipping to store

3. JIT leads to reduced lead time, increased

product availability, and lower inventory

investment.

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