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Chapter 13 ♦ Supply Chain Management and Marketing Channels 1
CHAPTER 13 Supply Chain Management and Marketing Channels
This chapter begins with the learning outcome summaries, followed by a set of lesson plans for you to use to
deliver the content in Chapter 13.
• Lecture (for large sections) on page 3
• Company Clips (video) on page 5
• Group Work (for smaller sections) on page 7
Review and Assignments begin on page 7
Review questions
Application questions
Application exercise
Ethics exercise
Video Assignment
Case assignment
Great Ideas for Teaching Marketing from faculty around the country begin on page 17
2 Chapter 13 ♦ Supply Chain Management
LEARNING OUTCOMES
13-1 Define the terms supply chain and supply chain management, and discuss the benefits of
supply chain management
Management coordinates and integrates all of the activities performed by supply chain members into a seamless process
from the source to the point of consumption. The benefits of supply chain management include reduced inventory,
transportation, warehousing, and packaging costs; greater supply chain flexibility; improved customer service; and
higher revenues.
13-2 Discuss the concept of internal and external supply chain integration and explain why each of
these types of integration is important
In the modern supply chain, integration can be either internal or external. Internally, the very best companies
develop a managerial orientation toward demand-supply integration. Externally, five types of integration are sought
by firms interested in providing top-level service to customers: relationship integration, measurement integration,
technology and planning integration, material and service supplier integration, and customer integration.
13-3 Identify the eight key processes of excellent supply chain management and discuss how each
of these processes impacts the end customer
The key processes that leading supply chain companies focus on are (1) customer relationship management, (2)
customer service management, (3) demand management, (4) order fulfillment, (5) manufacturing flow management,
(6) supplier relationship management, (7) product development and commercialization, and (8) returns management.
When firms practice excellent supply chain management, each of these processes is integrated from end to end in the
supply chain.
13-4 Understand the importance of sustainable supply chain management to modern business
operations
Sustainable supply chain management involves the integration and balancing of environmental, social, and economic
thinking into all phases of the supply chain management process.
13-5 Discuss how new technology and emerging trends are impacting the practice of supply chain
management
Several emerging trends are changing the job of today’s supply chain manager. Some of the business trends affecting
supply chain management include outsourcing logistics, public-private partnerships, electronic distribution, maintaining
a secure supply chain, and new analytics tools. While these changes exert pressure on managers to change the way their
supply chains function, they also help make supply chain management more integrated and easier to track.
13-6 Explain what marketing channels and channel intermediaries are and describe their functions
and activities
A marketing channel is a business structure of interdependent organizations that reach from the point of production to the
consumer. Intermediaries negotiate with one another, buy and sell products, and facilitate the change of ownership
between buyer and seller. Retailers are those firms in the channel that sell directly to consumers.
13-7 Describe common channel structures and strategies and the factors that influence their choice
When possible, producers use the direct channel to sell directly to consumers. When one or more channel members are
small companies, an agent/broker channel may be the best solution. Most consumer products are sold through
distribution channels similar to the retailer channel and the wholesaler channel. Dual distribution may be used to
distribute the same product to target markets, and companies often form strategic channel alliances to use already-
established channels. Managers must decide what role distribution will play in the overall marketing strategy. In
addition, they must be sure that the channel strategy chosen is consistent with market factors, product factors, and
Chapter 13 ♦ Supply Chain Management and Marketing Channels 3
producer factors. Organizations have three options for intensity of distribution: intensive distribution, selective distribution,
or exclusive distribution.
13-8 Discuss multichannel and omnichannel marketing in both B-to-B and B-to-C structures and explain
why these concepts are important
Many companies have begun employing multichannel marketing strategies, whereby customers are offered information,
goods, services, and/or support through one or more synchronized channels. While it can promote better consumer
behavior, the multichannel design also creates redundancy and complexity in the firm’s distribution system. Selling
through multiple channels is typified by multiple parallel supply chains, each with its own inventory, processes, and
performance metrics. Many companies are transitioning to omnichannel distribution operations that support their
multichannel retail operations and unify their retail interfaces. With omnichannel operations, every customer receives
equally efficient service.
TERMS
agents and brokers
fourth-party logistics
company (4PL or logistics
integrator)
retailer
big data
gray marketing channels
returns management process
business processes
intensive distribution
reverse channels
channel members
Internet of Things (IoT)
selective distribution
cloud computing
manufacturing flow
management process
strategic channel alliance
customer relationship management
(CRM) process
marketing channel
(channel of distribution)
supplier relationship management process
customer service management
process
M-commerce
supply chain
demand management process
merchant wholesaler
supply chain agility
demand-supply integration (DSI)
nearshoring
supply chain analytics
digital channels
nontraditional channels
supply chain integration
direct channel
offshoring
supply chain management
drop and shop
order cycle time
supply chain orientation
dual distribution (multiple
distribution)
order fulfillment process
sustainable supply chain management
electronic distribution
outsourcing (contract
logistics)
third-party logistics company (3PL)
exchange utility
place utility
three-dimensional printing (3DP)
exclusive distribution
product development and
commercialization process
time utility
form utility
LESSON PLAN FOR LECTURE
Brief Outline and Suggested PowerPoint Slides:
Learning Outcomes and Topics
PowerPoint Slides
4 Chapter 13 ♦ Supply Chain Management
Learning Outcomes and Topics
PowerPoint Slides
LO1 Define the terms supply chain and supply chain
management, and discuss the benefits of supply chain
management
13-1 Supply Chains and Supply Chain Management
1: Supply Chain Management
2: Learning Outcomes
3: Learning Outcomes
4: Learning Outcomes
5: Supply Chains and Supply Chain Management
6: Supply Chain
7: Supply Chain Management
8: Benefits of Effective Supply Chain
Management
LO2 Discuss the concepts of internal and external supply
chain integration and explain why each of these types of
integration is important
13-2 Supply Chain Integration
9: Supply Chain Integration
10: Supply Chain Integration
11: Internal Integration
12:External Supply Chain Integration
13: Supply Chain Integration
14: Supply Chain Integration
15: Supply Chain Integration
LO3 Identify the eight key processes of excellent supply
chain management, and discuss how each of these
processes impacts the end customer
13-3 The Key Processes of Supply Chain
Management
16: Key Processes of Supply Chain Management
17: Key Business Processes
18: Customer Relationship Management
19: Customer Service Management
20: Demand Management
21: Order Fulfillment
22: Manufacturing Flow Management
23: Supplier Relationship Management
24: Product Development and Commercialization
25: Returns Management
LO4 Understand the importance of sustainable supply chain
management to modern business operations
13-4 Sustainable Supply Chain Management
26: Sustainable Supply Chain Management
27: Sustainable Supply Chain Management
LO5 Discuss how new technology and emerging trends are
impacting the practice of supply chain management
13-5 Trends in Supply Chain Management
28: Trends in Supply Chain Management
29: Trends in Supply Chain Management
30: Outsourcing Logistics Functions
31: Public-Private Partnerships
32: Electronic Distribution
33: Global Supply Chain Management
34: Supply Chain Analytics and Technology
LO6 Explain what marketing channels and channel
intermediaries are and describe their functions and
activities
13-6 Marketing Channels and Channel
Intermediaries
35: Marketing Channels and Channel
Intermediaries
36: Marketing Channel
37: Marketing Channel Functions
38: Specialization and Divisions of Labor
39: Utility
40: Channel Intermediaries
41: Channel Intermediaries
42: Factors Suggesting Type of Wholesaling
Intermediary to Use
43: Retailers
44: Channel Functions Performed by Intermediaries
Chapter 13 ♦ Supply Chain Management and Marketing Channels 5
Learning Outcomes and Topics
PowerPoint Slides
LO7 Describe common channel structures and strategies and
the factors that influence their choice
13-7 Channel Structures
45: Channel Structures
46: Exhibit 13.2: Marketing Channels for
Consumer Products
47: Exhibit 13.3: Channels for Business and
Industrial Products
48: Alternative Channel Arrangements
49: Digital Channels
50: Factors Affecting Channel Choice
51: Market Factors
52: Product Factors
53: Producer Factors
54: Levels of Distribution Intensity
55: Levels of Distribution Intensity
56: Emerging Distribution Structures
LO8 Discuss omnichannel and multichannel marketing in both
B-to-B and B-to-C structures and explain why these
concepts are important
13-8 Omnichannel versus Multichannel Marketing
57: Omnichannel and Multichannel Marketing
58: Multichannel Marketing
59: Omnichannel Marketing
60: Chapter 13 Video
Suggested Homework:
• The end of this chapter contains assignments for the Geoffrey B. Small video.
• This chapter’s online study tools include flashcards, visual summaries, practice quizzes, and other resources that can
be assigned or used as the basis for longer investigations into marketing.
LESSON PLANS FOR VIDEO
Company Clips
Segment Summary – Geoffrey B. Small
Geoffrey B. Small, a super-luxury fashion designer, discusses how he sources the materials needed to develop his
clothing lines. He also discusses how he makes distribution decisions based on his micro production process and global
distribution channels.
These teaching notes combine activities that you can assign students to prepare before class, that you can do in class
before watching the video, that you can do in class while watching the video, and that you can assign students to
complete on their own after watching the video in class.
During the viewing portion of the teaching notes, stop the video periodically where appropriate to ask students the
questions or perform the activities listed on the grid. You may even want to give the students the questions before
starting the video and have them think about the answer while viewing the segment. That way, students will be engaged
in active rather than passive viewing.
PRE-CLASS PREP FOR YOU:
PRE-CLASS PREP FOR YOUR STUDENTS:
6 Chapter 13 ♦ Supply Chain Management
• Preview the Company Clips video segment for
Chapter 13. This exercise reviews concepts for
LO1–LO5.
• Review your lesson plan.
• Make sure you have all of the equipment needed to
show the video to the class, including the DVD
and a way to project the video.
• You can also stream the video HERE
• Send students to www.geoffreybsmall.net. Ask
them to explore the site and determine where
Geoffrey B. Small sells its clothing. Do stores
carry full lines of Geoffrey B. Small clothing?
VIDEO REVIEW EXERCISE
ACTIVITY
Warm Up
Briefly discuss students’ findings from the Pre-Class Prep activity. Are there many
retailers? Do they carry full lines of Geoffrey B. Small clothing?
In-class Preview
• Discuss the business logistics functions. Include in your discussion a
clarification of “push” and “pull” systems.
• Review the Company Clips questions with students and have them be ready to
answer them after watching the video segment.
Viewing
(Solutions below.)
1. How does Geoffrey B. Small decide what materials to use to make new
products?
2. How does Geoffrey B. Small manage his supply chain?
Follow-up
• Divide students into groups of three to five and have them describe how
Geoffrey B. Small handles the eight key processes of supply chain
management. For components that aren’t specifically addressed by the video,
have them conjecture based on what they know about the company and the
website.
• Go to Walmart’s Web site (www.walmart.com) and read the “Suppliers” pages.
Does selling to Walmart seem worth the effort? Why or why not?
Solutions for Viewing Activities:
1. How does Geoffrey B. Small decide what materials to use to make new products?
Geoffrey B. Small has to examine his supplier relationships, and determine who meets his company beliefs,
2. How does Geoffrey B. Small manage its supply chain?
Small partners with select luxury retailers all over the world to sell one or two pieces of his collections. He then
Chapter 13 ♦ Supply Chain Management and Marketing Channels 7
LESSON PLAN FOR GROUP WORK
Class Activity 1 – Modes of Transportation
In this exercise students will learn how to select a mode of transportation.
Divide the class into small groups and randomly assign each group to a product and a customer location. The groups
must research and compare two or three different modes of transportation for the product. If two or three viable modes
are not available, students will need to explain why. They need to secure quotes on costs and time (if possible from more
than one carrier) and consider other factors such as availability, reliability, accessibility, and traceability. They should
present to the class their comparison and selection in a simple chart form. The freight costs will be quite a surprise for
most students.
Students should assume that the shipments are made from the town in which your school is located.
Here are some suggestions:
1. Twenty-four air compressors, each in a shipping crate 36" by 36" by 60", weighing 400 pounds each, to a
customer 1,000 miles away. Choose a city relevant to your location.
2. The same air compressors, but to a customer 75 miles away, within the same state.
3. Two crates of rare orchids, 12" by 24" by 48", each weighing 27 pounds, to a florist in New York City (if you
are in the west) or Los Angeles (if you are in the east). The orchids can be without refrigeration for only twelve
hours.
4. Two 12-ounce, 4" gears that are needed at a plant 300 miles away for a customer’s machine that has broken
down and stopped an assembly line.
5. Six classic cars purchased by an eccentric, wealthy customer in a state 1,200 miles away. The buyer plans to
spend the next year restoring these Corvettes from the early 1960s. The cars are not currently running.
6. Canned green beans, 600 cases, each 18" by 18" by 12" and weighing 25 pounds, to a customer on the east
coast (or west coast, whichever is farther).
7. Two non-emergency seal kits, each 4" by 4" by 1" and weighing 8 ounces, for a customer 250 miles away.
Class Activity 2 – Selection of a Channel or Distribution
The purpose of this exercise is to get students to evaluate how the marketplace moves raw materials to manufacturers and
then on to the consumer.
Ask each student to select one product and trace it through every step of its distribution journey. This should be an out-
of-class project in which the student actually researches how that occurs and lists companies involved (when possible),
locations, and transportation modes used. The student should present this in a diagram, showing the structure of the
channel and the linkages.
Encourage students to use products with which they are familiar or to which they have access, perhaps through a family
business or present or former employer. Other students may choose products that require them to do research and make
phone calls or write letters to obtain the necessary information.
REVIEW AND ASSIGNMENTS FOR CHAPTER 1
REVIEW QUESTIONS
1. Discuss the benefits of supply chain management. How does the implementation of supply chain management
result in enhanced customer value?
Supply chain management is a key means of differentiation for a firm and a critical component in marketing and
2. Discuss the concept of supply chain integration. How does it result in better customer-related outcomes?
Students’ answers will vary but should reflect an understanding of supply chain integration. Supply chain
integration occurs when multiple firms in a supply chain coordinate their activities and processes so that they are
3. What are some of the likely outcomes of a firm’s failure to embrace one or more supply chain integration
types?
Students’ answers will vary. When individual companies act in isolation rather than working together, some
4. What are the key processes in supply chain management, and who performs them? How does each process
lead to increased satisfaction on the part of the customer?
The key processes of supply chain management include customer relationship management, supplier relationship
5. Go to the World Trade Organization’s Web site at www.wto.org. What can you learn at the site about how
globalization affects channel management and other aspects of business?
Student’s answers will vary.
APPLICATION QUESTIONS
1. Assume that you are the supply chain manager for a producer of expensive, high-tech computer components.
Identify the most suitable method(s) of transporting your product in terms of cost, transit time, reliability,
capability, accessibility, and traceability. Now, assume you are the supply chain manager for a producer of
milk. How does this change your choice of transportation?
Chapter 13 ♦ Supply Chain Management and Marketing Channels 9
Students’ answers will vary. The computer components should be transported with the highest reliability, quick
2. Visit the Web site of Menlo Logistics at www.menlolog.com. What logistics functions can this third-party
logistics supplier provide? How does its mission fit in with the supply chain management philosophy?
Students’ answers will vary.
3. Your family runs a specialty ice cream parlor, Scoops. It manufactures its own ice cream in small batches
and sells it only in pint-sized containers. After someone not affiliated with the company sent six pints of your
ice cream to a popular talk-show host, she proclaimed on her national TV show that it was the best ice cream
she had ever eaten. Immediately after the broadcast, orders came flooding in, overwhelming your small-batch
production schedule and your limited distribution system. The company’s shipping manager thinks she can
handle it, but you disagree. List the reasons why you need to restructure your channel of distribution.
The major reason why you need to restructure your supply chain is obvious: you cannot meet the sudden increased
4. Building on question 1, determine a new channel structure for Scoops. Write a proposal to present to your
key managers.
Students could build a good case for any of the structures described in the chapter, depending on what Scoops’ long-
5. Working with another student in the class, decide when it would be most advantageous for large companies
like Procter & Gamble, IBM, and/or Ford Motor Company to develop integrated relationships with smaller
suppliers. Would the same rules for integrated relationship development also apply to customers? Why or
why not?
Integrated relationships are at the high end of the connection spectrum. Organizations with this type of relationship
10 Chapter 13 ♦ Supply Chain Management
6. You have been hired to design an alternative channel of distribution for a firm specializing in the
manufacturing and marketing of novelties for college student organizations. In a memo to the president of the
firm, describe how the channel operates.
Although students’ answers will vary, they should address some of the following points. Answers should suggest
7. Decide which distribution intensity level—intensive, selective, or exclusive—is used for the following
products, and why: Piaget watches, Land Rover sport utility vehicles, M & M’s, special edition Barbie dolls,
Crest toothpaste.
• Piaget watches: exclusive distribution (expensive, exclusive image)
APPLICATION EXERCISE
Purpose: For students to experience through their own investigation the complexity of supply chains.
Setting It Up: This works best as an individual assignment. If you have a small class, you can do as described below and
have students submit a detailed story board depicting the supply chain they researched. Alternatively, you can have
students submit textual descriptions on regular paper if your class is larger.
John L. Beisel, Pittsburg State University
IDENTIFYING CHANNELS OF DISTRIBUTION
Students in my Distribution Management class are required to pick a product of their choice and to trace the channel(s)
of distribution for that product as far back as is feasibly possible. They then must draw the structure of the channel on a
large poster and give a five-minute presentation of their findings in class, utilizing the poster as a visual aid. All products
researched must be approved in advance by the instructor in order to prevent more than one student giving a presentation
of the same product.
Not only must students identify on their posters the various participants (by company name) involved in moving the
product from the producer down to the final buyers, but they must also show the various sources (names and locations)
of the component parts of the product, if any. The methods of transportation (UPS, railroad, ship, truck, etc.) must also
be identified at each stage.
Examples of interesting products that have been researched by students include:
• Bricks produced by a local brick manufacturer—the kiln from a company in Germany; the clay from an open pit
mine in Weir, Kansas; the water from Baxter Springs, Kansas; the sand from Kansas City; the manganese sulfate
and iron oxide from Springfield, Missouri; and the color additives from St. Louis.
• Diamonds sold by a local jewelry store—purchased direct from diamond wholesalers in the Netherlands; bought
by wholesalers from diamond cutters in South Africa; brought out of mines owned by a company in South
Africa.
Students often choose to research a product whereby they can have easy access to information—one of their parents or
other relatives who can give them details relating to their business, or even a present or former employer who is willing
to cooperate. Not only must the student personally interview the retailer or producer of the product, but many times they
Chapter 13 ♦ Supply Chain Management and Marketing Channels 11
must write letters or make telephone calls to companies located out of the state. In a typical class, the products covered
ranged from t-shirts to LaZboy chairs to Goodyear tires to microwave rice to Coors beer to McDonald’s Big Macs to
bananas to Pizza Hut pizza to Folgers’s coffee to Nekoosa paper. In most cases, the students receive cooperation from
the business people that they interview. Occasionally, a company does not want to name the suppliers, but even then they
are willing to give the name of the city and state where the suppliers are located.
The students seem to be fascinated by the presentations and often ask their fellow students to further explain the details
of the channel presented. There usually are many comments made by students regarding the positive learning experience
that the project gave them, and they are able to relate many of the concepts presented in class lecture to the projects
presented by themselves and their classmates.
This results in a decidedly different perspective for our students from which to view the rationale and concepts of
international trade. These “new countries” are still larger than most European countries, but we now must cope with
multiple languages, cultures, infrastructure, monetary systems, communication modes, legal systems, and tariffs.
Students readily grasp that international marketing would have been an inevitable result of this alternative history. It
becomes obvious that each area would take advantage of its natural resources, climate, the special talents, competence
and skills of its people, and all of the other factors that make international trade so important to the rest of the world.
This map also illustrates why the USA was relatively slow to enter the world trade arena.
ETHICS EXERCISE
Wholesome Snacks, Inc., the maker of a variety of cookies and crackers, has just created a new vitamin-packed cookie.
The new cookie has the potential to combat many of the health problems caused by malnutrition in children throughout
poverty-stricken areas of the world. To date, however, many of the larger developing markets have resisted opening
distribution channels to Wholesome’s products. Wholesome realizes that its new cookie could also help open the door
for the company to sell its less nutritious products in these markets. Therefore, the company is offering the new cookie at
a low cost to government relief programs in exchange for the long-sought distribution channels. The company feels the
deal is good for business, but the countries feel it is corporate bullying.
1. What do you think about Wholesome’s idea for opening a new distribution channel?
There are really two issues relative to the new distribution channel. First, opening the channel to distribute the
vitamin-enriched cookie is ethical and laudable. As the scenario indicates, the cookie would be beneficial to the
2. Does the AMA Statement of Ethics address this issue? Go to www.marketingpower.com and review the
statement. Then, write a brief paragraph on what the AMA Statement of Ethics contains that relates to
distribution channels in developing nations.
The AMA statement of Ethics has a specific section that relates to distribution. One point in this section prevents
