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
instructors to use to deliver the content.
• Lecture (for large sections) on page 5
• Company Clips (video) on page 7
• Group Work (for smaller sections) on page 8
Review and Assignments begin on page 10
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 23
Chapter 13: Supply Chain Management and Marketing Channels
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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
13-2 Discuss the concepts 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
13-3 Identify the eight key processes of excellent supply chain management and discuss
how each of these processes affects 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,
13-4 Understand the importance of sustainable supply chain management to modern
business operations
13-5 Discuss how new technology and emerging trends are impacting the practice of
supply chain management
Chapter 13: Supply Chain Management and Marketing Channels
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Several emerging trends are changing the job of today’s supply chain manager. Some of the
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
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
13-8 Discuss omnichannel and multichannel 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
Chapter 13: Supply Chain Management and Marketing Channels
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© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
omnichannel operations, every customer receives equal and efficient service.
Key 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
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
Public-private
partnerships (PPPs)
Chapter 13: Supply Chain Management and Marketing Channels
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Lesson Plan for Lecture
Brief Outline and Suggested PowerPoint Slides
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 and
Marketing Channels
2. Learning Outcomes
3. Learning Outcomes (continued)
4. Supply Chain and Supply Chain
Management
5. Supply Chain and Supply Chain
Management
6. 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
7. Supply Chain Integration
8. Supply Chain Orientation and Supply
Chain Integration
9. Characteristics of Leading Supply
Chain-Oriented Firms
10. Demand-Supply Integration (DSI)
11. External Supply Chain Integration
12. External Supply Chain Integration
(continued 1)
13. External Supply Chain Integration
(continued 2)Supply Chain
Integration
LO3 Identify the eight key processes of excellent
supply chain management and discuss how
each of these processes affects the end
customer
13-3 The Key Processes of Supply Chain
Management
14. Key Processes of Supply Chain
Management
15. Key Business Processes in Supply
Chain Management
16. Customer Relationship Management
17. Customer Service Management
Process
18. Demand Management Process
19. Order Fulfillment Process
20. Manufacturing Flow Management
Process
Chapter 13: Supply Chain Management and Marketing Channels
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Learning Outcomes and Topics
PowerPoint Slides
21. Supplier Relationship Management
Process
22. Product Development and
Commercialization Process
23. Returns Management Process
LO4 Understand the importance of sustainable
supply chain management to modern
business operations
13-4 Sustainable Supply Chain Management
24. Sustainable Supply Chain
Management
25. 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
26. Trends in Supply Chain Management
27. Outsourcing Logistics Functions
28. Public-Private Partnerships (PPPs)
29. Electronic Distribution
30. Benefits of 3DP
31. Global Supply Chain Management
32. Risks of Moving Operations Offshore
33. 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
34. Marketing Channels and Channel
Intermediaries
35. Marketing Channel
36. Marketing Channel (continued)
37. Types of Utilities
38. Channel Intermediaries
39. Channel Intermediaries (continued)
40. Retailers
41. Channel Functions Performed by
Intermediaries
LO7 Describe common channel structures and
strategies and the factors that influence their
choice
13-7 Channel Structures
42. Channel Structures
43. Exhibit 13.2: Marketing Channels for
Consumer Products
44. Exhibit 13.3: Channels for Business
and Industrial Products
45. Alternative Channel Arrangements
Chapter 13: Supply Chain Management and Marketing Channels
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Learning Outcomes and Topics
PowerPoint Slides
46. Alternative Channel Arrangements
(continued)
47. Digital Channels
48. Factors Affecting Channel Choice
49. Levels of Distribution Intensity
50. 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
51. Omnichannel versus Multichannel
Marketing
52. Multichannel Marketing
53. Omnichannel Marketing
54. Key Terms
55. Key Terms
56. Key Terms
57. Key Terms
58. Summary
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, which you can do in class while watching the
video, and that you can assign students to complete on their own after watching the video.
During the viewing portion of the teaching notes, stop the video periodically where appropriate
Chapter 13: Supply Chain Management and Marketing Channels
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to ask students questions or to 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 answers
while viewing the segment. In this way, students will be engaged in active rather than passive
viewing.
Pre-Class Prep For Your Students
• 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
Teaching Method
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 ask
them to be prepared to answer the questions 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 website (www.walmart.com) and read the
“Suppliers” pages. Does selling to Walmart seem worth the
effort? Why or why not?
Solutions for Viewing Activities
Chapter 13: Supply Chain Management and Marketing Channels
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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
2. How does Geoffrey B. Small manage its supply chain?
Geoffrey B. Small manages its supply chain through small partnerships with select luxury
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 comparisons and selections 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 inches by 36 inches by 60 inches,
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 inches by 24 inches by 48 inches, 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 inches gears that are needed at a plant 300 miles away for a customer’s
machine that has broken down and stopped an assembly line.
Chapter 13: Supply Chain Management and Marketing Channels
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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 inches by 18 inches by 12 inches 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 inches by 4 inches by 1 inches 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 this occurs
and lists companies involved (if possible), locations, and transportation modes used. The student
should then 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 13
Review Questions
1. Discuss the benefits of supply chain management. How does the implementation of
supply chain management result in enhanced customer value?
Students’ answers will vary. Supply chain management is a key means of differentiation
for a firm and a critical component in marketing and corporate strategy. Some of the
2. Discuss the concept of supply chain integration. How does it result in better customer-
Chapter 13: Supply Chain Management and Marketing Channels
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related outcomes?
Students’ answers will vary, but it 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 seamlessly linked to one another in
3. What are the possible outcomes of a firm’s failure to embrace one or more type of
supply chain integration?
Students’ answers will vary. When individual companies act in isolation rather than
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 management, customer service management, demand
5. Go to the World Trade Organization’s website at www.wto.org. What can you learn
at the site about how globalization affects channel management and other aspects of
Chapter 13: Supply Chain Management and Marketing Channels
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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?
Students’ answers will vary. The computer components should be transported with the
2. Visit the website of Menlo Logistics at https://web.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.
Students’ answers will vary. The major reason why you need to restructure your supply
chain is obvious; you cannot meet the sudden increased demand for your product. As
© 2018 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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-term growth goals are. However, given that the current
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 are tightly connected, with linked processes across and between
Students’ answers will vary in response to whether these same rules apply to customers.
Chapter 13: Supply Chain Management and Marketing Channels
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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 several alternatives. The most common is to sell to a specialty
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 storyboard 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
Chapter 13: Supply Chain Management and Marketing Channels
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must then 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 must write letters or make
telephone calls to companies located out of state. In a typical class, a wide range of the products
are covered: t-shirts, La-Z-Boy chairs, Goodyear tires, microwave rice, Coors beer, McDonald’s
Big Macs, bananas, Pizza Hut pizza, Folgers’s coffee, and Nekoosa paper. In most cases, the
students receive cooperation from the business people that they interview. Occasionally, a
company does not want to name their suppliers, even then they are willing to give the name of
the city and state where the suppliers are located.
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 has given them, and they are able to
relate many of the concepts presented in the 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