978-1337407588 Chapter 13 Solution Manual Part 1

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Chapter 13: Supply Chain Management and Marketing Channels

Review and Assignments for Chapter 13

Review Quesons

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 benefits

of supply chain management are lower inventory; transportation, warehousing, and

2. Discuss the concept of supply chain integration. How does it result in better

customer-related outcomes?

Students’ answers will vary, but they 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

an effort to satisfy the customer. In the practice of world-class supply chain management,

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

Chapter 13: Supply Chain Management and Marketing Channels

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

business?

Applicaon Quesons

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

highest reliability, quickest transit time, and highest traceability. The cost of 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?

Chapter 13: Supply Chain Management and Marketing Channels

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

awareness grows of your delicious ice cream, the demand will continue to increase. The

reasons why any small business should restructure a rudimentary distribution system are as

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

business is very small, Scoops is likely to use an agent/broker channel and do the

5. Working with another student in the class, decide when it would be most

Chapter 13: Supply Chain Management and Marketing Channels

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

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)

Land Rover SUVs: exclusive distribution (expensive, exclusive image)

Chapter 13: Supply Chain Management and Marketing Channels

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

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

Not only must students identify on their posters the various participants (by company name)

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

Diamonds sold by a local jewelry store—purchased directly from diamond wholesalers in

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

Chapter 13: Supply Chain Management and Marketing Channels

Students seem to be fascinated by the presentations and often ask their fellow students to further

This results in a decidedly different perspective for our students from which to view the rationale

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

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?

Students’ answers will vary. There are really two issues relative to the new distribution

channel. First, opening the channel to distribute the vitamin-enriched cookie is ethical and

Chapter 13: Supply Chain Management and Marketing Channels

If Wholesome opens the channel, distributes the vitamin-enriched cookie, and shortly

thereafter begins marketing unhealthy snacks in countries where malnutrition is prevalent,

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.

Students’ answers will vary. The AMA statement of Ethics has a specific section that

relates to distribution. One point in this section prevents “manipulating the availability of a

Video Assignment: Georey 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.

1. By moving to Italy to work closely with fabric creators, Geoffrey B. Small is working to

achieve_____.

a. planning integration

b. supply chain integration

c. strong product development processes

d. integrated logistics

Chapter 13: Supply Chain Management and Marketing Channels

2. Which type of external integration does Geoffrey B. Small have with Piacenza and Luigi

Parisotto?

a. Relationship integration

b. Measurement integration

c. Technology and planning integration

d. Customer integration

3. Which trend in supply chain management is Geoffrey B. Small most interested in?

a. Outsourcing logistics functions

b. Supply chain security

c. Electronic distribution

d. Sustainable supply chain management

4. What type of production schedule does Geoffrey B. Small use?

a. Build-to-stock

b. Build-to-order

c. Postponement

d. Leagile production

5. By making products highly exclusive and “less available,” Geoffrey B. Small is focusing

on which of the business processes in supply chain management?

a. Customer relationship management

b. Customer service management

c. Demand management

d. Manufacturing flow management

Chapter 13: Supply Chain Management and Marketing Channels

6. When Geoffrey B. Small takes into consideration the customers at stores that sell his

clothing, he is using customer service management.

a. True

b. False

7. Which type of external supply chain integration reflects Small’s ability to offer

long-lasting, distinctive, value through his clothing?

a. Customer integration

b. Material and service integration

c. Planning integration

d. Measurement integration

8. Based on what you know about Geoffrey B. Small’s work, which of the following

transportation criteria do you think would be most important to him?

a. Cost

b. Transit time

c. Capability

d. Reliability

Case Assignment: Chipotle Mexican Grill

Chipotle, the popular burrito chain known for serving high-quality, fresh ingredients, has been

Chapter 13: Supply Chain Management and Marketing Channels

Then, they experienced a string of foodborne illnesses. They had a norovirus outbreak in

“Having three outbreaks over the course of two to three months is highly unusual,” said

A second wave of E. coli caused five additional illnesses in December. And then just a

Chipotle’s use of fresh meat and produce is one of the company’s greatest competitive

“With the degree of in-store food preparation of all incoming items, I think it’s potentially

With several food contamination issues over the course of just a few months, many

customers have been scared away, despite Chipotle’s efforts to make improvements. Early in

The company also announced the hiring of James Marsden in March 2016. He is an

Chipotle pledges to become the “safest restaurant to eat at,” said Steve Ells, Chipotle

Chapter 13: Supply Chain Management and Marketing Channels

Sources: A. Griswold, “Free Burritos Haven’t Solved Chipotle’s Problems,” Quartz, March 15,

2016, accessed October 19, 2016,

Went Wrong at Chipotle? Food Safety Expert Trevor Suslow Breaks It Down,” Los Angeles

Times, March 17, 2016, accessed October 19, 2016,

Chipotle Having So Many Food Safety Issues?” BuzzFeed News, November 4, 2015, accessed

October 19, 2016,