Transcript M A R K E T I N G CHAPTER 15

MARKETING
Real People, Real Choices
CHAPTER 15
Creating Value Through
Supply Chain Management:
Channels of Distribution,
Logistics, & Wholesaling
Chapter Objectives
• Understand the concept of the value
chain & elements in a supply chain
• Explain what a distribution channel is &
what functions distribution channels
perform
• Describe the types of wholesaling
intermediaries found in distribution
channels
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Chapter Objectives
• Describe the types of distribution
channels & the steps in planning
distribution channel strategies
• Explain how logistics is used in the
supply chain
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Supply Chain Management
• The supply chain includes all firms that
engage in activities that are necessary
to convert raw materials into a good or
service
• Supply chain management is the
management of flows among the firms
in a supply chain to maximize
profitability
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What Is a Distribution Channel?
• Series of firms or individuals that
facilitate the movement of a product
from the producer to the final customer
– Direct
• Manufacturer -> Customer
– Indirect
• Intermediaries: from wholesalers to
retailers
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Functions of Distribution Channels
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Time, place, & ownership utilities
Logistics functions
Transportation & storage functions
Efficiency creation
Facilitating functions
Repair & maintenance functions
Risk-taking
Communication & transaction functions
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Creating Efficiencies
• Breaking bulk – channel members
purchase large quantities from
manufacturers & sell smaller quantities
to many different customers
• Creating assortments – channel
members provide a variety of products
in one location
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Types of Wholesaling Intermediaries
• Wholesaling intermediaries are firms
that handle the flow of products from the
manufacturer to retailer or business
user
– Independent
• Work with lots of manufacturers
– Manufacturer owned
• Single manufacturer
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Independent Intermediaries
Merchant wholesalers
– Full-service
– Limited-service
– Cash-and-carry
wholesalers
– Truck jobbers
– Drop shippers
– Mail-order
wholesalers
– Rack jobbers
Merchandise Agents
or Brokers
– Manufacturers’
agents
– Selling agents
– Commission
merchants
– Merchandise
brokers
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Manufacturer-Owned Intermediaries
• Sales branches
• Sales offices
• Manufacturers’ showrooms
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Types of Distribution Channels
• Consumer channels
– Direct
– Manufacturer-retailer-consumer
– Manufacturer-wholesaler-retailerconsumer
• Business-to-business channels
– Direct
– Manufacturer-industrial distributorbusiness customer
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Distribution Intensity
Decision Factors:
Company,
Customers,
Channels,
Constraints, and
Competition
Intensive, Exclusive, or Selective Distribution
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Implementing the Value Chain
• Process of designing, managing, &
improving the movement of products
through the supply chain
– purchasing
– manufacturing
– storage
– transport
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Logistics and Customer Satisfaction
• Traditionally, logistics was thought of as
physical distribution
– order processing, warehousing,
materials handling, transportation, &
inventory control
– objective to deliver product at lowest
cost
• Now, customers’ goals become the
logistics provider’s goals
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Logistics Functions
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Order processing
Warehousing
Materials handling
Transportation
Inventory Control
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Modes of Physical Transportation
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Rail
Water
Truck
Air
Pipeline
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Transportation Mode Considerations
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Dependability
Cost
Speed of Delivery
Accessibility
Capability
Traceability
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