Marketing Management

MKTG 6170: Module II: Supply Chain Management/ Distribution

  Supply Chain ◦ An alignment of firms/exchanges  Exchange perspective Supply Chain in Reality – A Network   Major flows in a supply chain Purpose: ◦ Satisfy customer needs and meeting individual member goals

Supply Chain Management

  The Institute for Supply Management ◦ “the design and management of seamless (aka supply chain

integration), value-added processes across organizational boundaries to meet needs of end customers”.

Council of Supply Chain Management Professionals (Council of Logistics Management until Dec 2004): ◦ “integration of key business processes from end user through original

suppliers that provides products, services, and information, that add value for customers and other stakeholders”.

….SCM

       Objectives: Value Profitability

Importance:

Complexity Efficiencies Competencies

….SCM



SCM v/s Logistics v/s Distribution

◦ Domain ◦ Objective   1.

2.

3.

Framework for Understanding SCM Components:

Network Business Processes Management Components

Distribution

◦

Connection between individuals/firms that contributes to the occurrence of an exchange

◦

Basic function

: create customer value/add value to customer by reducing spacial separation – physical and time distance – between point of production and point of consumption  Place and time utility

Value Addition

          Contactual efficiency Routinization Categorizing Assembly/assortment Breaking bulk/accumulating bulk Transportation Processing/storage Risk reduction Service/repairs Reverse logistics

Distribution Design Decisions

 Level 1(governance structure): direct distribution v/s conventional v/s vertical marketing systems.

◦ Corporate ◦ Contractual ◦ Administered

..design decisions: Level 2-

Intensity of Distribution

Distribution Strategies

 Two fundamental distribution strategies: ◦ Items can be directly shipped from the supplier or manufacturer to end customer ◦ Use intermediate points

Direct Shipment Distribution Strategies

 Advantages: ◦ expenses of operating a distribution center ◦ Lead times.

 Disadvantages: ◦ Risk-pooling effects ◦ Manufacturer and distributor transportation costs

Intermediate Inventory Storage Point Strategies 

Strategies

: ◦ ◦ ◦ Traditional warehousing strategy Cross-docking strategy Centralized pooling and transshipment strategies

Traditional Facilities

 factors ◦ Centralized vs. Decentralized Management ◦ Central vs. Local Facilities 

Centralized vs. Decentralized Management

Central vs. Local Facilities   Centralized facilities ◦ Employ both fewer warehouses and distribution centers ◦ Facilities are located further from customers. ◦ ◦ ◦ Other factors: ◦

Safety stock.

◦

Overhead.

◦

Economies of scale Lead time. Service. Transportation costs.

Cross-Docking

 Popularized by Wal-Mart  Warehouses function as inventory coordination points rather than as inventory storage points.  Goods spend very little time in storage at the warehouse

Transshipment

  Shipment of items between different facilities at the same level in the demand chain to meet some immediate need Occurs mostly at the retail level ◦ advanced information systems ◦ Reasonable shipping costs ◦ Integrated supply chain

Distribution-system Performance and customer-facing capabilities   Performance evaluation on two dimensions: ◦ Level of customer service ◦ Cost of providing customer service Capabilities ◦ Responsiveness ◦ efficiency