Chapter 13
Supply Chain Management and Markeng
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
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 focus of businesses has
shifted to determining how products and services are being “pulled” into the marketplace by
customers. 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 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
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 its 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 affects the end customer
The key processes that leading supply chain companies focus on are (1) customer relationship
management, (2) customer service management (CRM), (3) demand management, (4) order
fulfillment, (5) manufacturing flow management, (6) supplier relationship management, (7)
product development and commercialization, and (8) returns management. The CRM process
includes customer segmentation by value and subsequent generation of customer loyalty for the
most attractive segments. The CRM process presents a multi-company, unified response system
to the customer whenever complaints, concerns, questions, or comments are voiced. Demand
management seeks to minimize the costs of serving multiple types of customers who have
variable wants and needs. The order fulfillment process is a highly integrated process, often
requiring persons from multiple companies and multiple functions to come together and
coordinate to create customer satisfaction at a given place and time. Firms with flexible
manufacturing have the ability to create a wide variety of goods and/or services with minimized
costs associated with changing production techniques. The CRM process and supplier
relationship management provide structural support for developing and maintaining relationships
with suppliers. Designing a new product with the help of suppliers and customers can enable a
company to introduce features and cost-cutting measures into final products. 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. A
common misconception surrounding both environmental and social sustainability is the practice
that increases supply chain costs disproportionately, and therefore should be enacted only when
business leaders are willing to act altruistically or for the purposes of good public relations.
13-5 Discuss how new technology and emerging trends are impacting the practice of
supply chain management
Several technological and business 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. Outsourcing or contract logistics is a rapidly growing initiative in which a manufacturer or
supplier turns over an entire logistical function. When problems common to both emerge, a
number of successful PPPs have been formed to diminish the negative impacts of potentially
hazardous supply chain situations. Electronic distribution includes any kind of product or service
that can be distributed electronically, whether over traditional forms such as fiber-optic cable or
through satellite transmission of electronic signals. Globalization has brought about great
uncertainty for modern companies and, specifically, their supply chains. Big data is a colloquial
term for the explosive availability of data that has traditionally been hard to capture, store,
manage, and analyze.
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 in the course of
moving finished goods from the manufacturer into the hands of the final consumer. Marketing
channels attain economies of scale through specialization and division of labor by aiding
upstream producers. Retailers are those firms in the channel that sell directly to consumers.
Transactional functions involve contacting and communicating with prospective buyers to make
them aware of existing products and to explain their features, advantages, and benefits.
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 producer factors. Organizations have three options for intensity of
distribution: intensive distribution, selective distribution, or exclusive distribution.
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
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 an omnichannel distribution operation
that supports their multichannel retail operations and unifies their retail interfaces. With
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)
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.
During the viewing portion of the teaching notes, stop the video periodically where appropriate
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 You Pre-class Prep for Your Students
Preview the Company Clips video
segment for Chapter 13. This exercise
reviews the concepts for LO1–LO5.
Review your lesson plan.
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 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
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, including proximity, ability to use only natural and sustainable materials,
and who can produce the amount of material needed to produce the number of garments
specified by Geoffrey B. Small.
2. How does Geoffrey B. Small manage its supply chain?
Geoffrey B. Small manages its supply chain through small partnerships with select luxury
retailers all over the world selling one or two pieces of his collections. He then visits as
many of those retailers as he can to determine what his customer is looking for and to see
how these retailers sell his clothing.
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 12 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.
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 currently not 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.