978-1259446290 Chapter 15 PowerPoint Slides Part 2

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15-1: 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 marketing system,

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.

15-2: Making Information Flow

through Marketing Channels

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

15-3: Data Warehouse 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.

15-4: 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.

15-5: 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.

15-6: Making Merchandise Flow

through Marketing Channels

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)

15-7: Bakery with a Conscience This video shows Dancing Deer’s 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.

15-8: How Does Dell’s Merchandise Flow Students may know that Dell sells through retailers

but also directly to end consumers.

15-9: 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.

15-10: The Distribution Center Group Project: Ask students to draw out the

distribution center for a pair of Nike shoes that are

at a Foot Locker distribution center.

For each stage, ask them to list 3 things that will

happen to the item and 1 thing that might go wrong!

15-11: Inbound Transportation Buyers and planners are much more involved in

coordinating the physical flow of merchandise to

the stores.

15-12: 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 an RFID tag.

15-13: 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

15-14: 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?

15-15: 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 forecasts that are more

accurate.

Customers get the merchandise they want, when

they want it.

15-16: 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.

15-17: 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.

15-18: Check Yourself 1. Manufacturing – Distribution Center (optional)

– Store – Customer

2. JIT leads to reduced lead time, increased

product availability, and lower inventory

investment.

Additional Teaching Tips

This chapter introduces the student to supply chain management. Instructors should tie in the

role of the supply chain to value creation and its contribution to the marketing effort. Students

can understand how a product gets from point A to the end delivery point but may not understand

the role of the intermediaries in transport and the responsibility to the marketing effort that the

intermediaries contribute to. These factors should be addressed in teaching the chapter.

Students can find this chapter difficult to fully understand. Showing the DVD for this chapter

titled “New Balance: Managing Supply from U.S. and Overseas” may clarify the role of supply

chain management in the marketing effort.

Instructors may want to assign students to roles in the distribution channel (manufacturer,

warehouse distributor, truck driver or transport person, wholesale, retailer) and various

intermediaries with the assignment given to them as follows: How does your role add to the

marketing effort? This exercise gets students to think about the connection to “Place,” one of the

elements of the Marketing Mix to the overall marketing strategy.

Similar to the last chapter, the instructor may want to review the vocabulary of the chapter by

having students complete story problems surrounding the vocabulary words presented in this

chapter.