Transcript Logistics and Supply Chain Management

Logistics and Supply
Chain Management
Chapter 16
with Duane Weaver
Marketing Channel
Logistics Building Blocks
• Inventory Management
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Holding costs
Reducing inventory
Pseudo inventory reduction
Real inventory reduction
• Fulfillment and Transportation
– The Essentials
– Third-Party Logistics Providers
• Orders, Invoices, and Payments (Audit Control)
Origin and Practices of
Supply Chain Management (SCM)
• Supply Chain:
– set of entities that “collectively” manufactures a
product and sell it to an endpoint (the ultimate
customer).
– Value-Added chains that include ONLY players that
add value in Production and Distribution.
• Effective unification of product flows in SCM
requires:
– Market orientation
– Effective Channel Management
– Effective Logistics
SCM techniques - ECR
• Efficient Consumer Response (ECR):
– Category Management and Efficient Promotions
• Stock product category as a whole (vs. brand or individual product)
• ABC (activity based costing) helps to manage by category
• Good for commodity categories (diapers, toothpaste…)
– Continuous Replenishment Planning (CRP)
• Replace stock based on speedy knowledge of consumer
“withdrawals”
• Integrates push systems (stocking to forecast) with pull system
(consumer withdrawals – Point of Purchase systems)
– Obstacles
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Stock coding agreements in the channel.
EDI choices and channel integration
Trusting other channel members
Opportunism degrades the cooperation and thus ECR success
SCM techniques - QR
• Rapid Response (QR):
– Originated in Fashion industry (‘80s)
– Consumer drives channel – ship quickly on demand, like ECR
– Involves keeping manufacturing flexible as to what and how much
to make.
– More common when “consumers don’t know what they need until
they ‘try it’”. Often needed for perishables (fashionables) that
require consumer reactions vs. ECR for commodities
(toothpaste).
What is the right supply
Chain?
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Physical Efficiency vs. Market Responsiveness
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Functional Brand (predictable volumes) or Innovative Brand
(unpredictable volumes)?
See Figure 16.4, page 521
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What enables successful Supply Chain Management:
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2.
3.
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5.
6.
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Pressure from market changes such as NAFTA and EEU
Industry EDI standardization (codes, templates, software...)
Heavy IT and EDI investment
Excellent cost accounting
Internal management incentives for system gains
Culture of cross-functional integration
Effective channel management fostering: trust, relationships,
design, and judicious use of power
Group Discussion
• P. 525,
– Question 1
– Question 2
– Question 3
Have a Great Day!