Transcript Output Management AG BM 460

Output Management
AG BM 460
Introduction
• What is you relationship with your
customer?
• Do you come to market without warning
and take the price of the day?
• Do you have a contract for six month’s
business?
• Something in between
Supply Chain Management
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Making plans works better with information
Knowing how many units you can sell
Knowing what the price is
Having a planning horizon consistent with
the order horizon
• Hanover Foods – 95% of a year’s
production contracted
Types of Relationships
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Ownership of customer
Contracts
Joint partnership
Working agreement
Long-term customers
No agreement
Dairy Farmers of America
• Producer cooperative
• Joint agreements with processors
• In some cases joint agreements with
processor’s customers
• Offer contracts with farmers for forward
pricing
• Sometimes jointly run processor
Seltzer’s Lebanon Bologna
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Long-term customers
Predictable demand
Can plan accordingly
Some contracts
For its sources, long-term understanding
of what meat they need and what
relationship price bears to market
WalMart
• Its preferred suppliers get scanner data
• Automatic reordering
• All the information WalMart has about
sales, inventories, etc.
• For that part of their business (the
supplier) few surprises
Superior Products or Service
• Customer relations key
• Explicit understanding of issues
• Communication about what customer
really wants and what it is worth to them
• “I can provide you with x tons of superior
feed, keeping your bin full, and for that you
will pay me Y”
The Consumer
• If you sell to the consumer, you need to
understand the consumer as well
• Why do they buy your product?
• What makes you special?
• How faithful are they?
Yuengling
• Now a premium product, esp., beyond
core area
• So do you cut price?
• How do you advertise?
• Who is your target customer?
• Who is your competition? If it is microbreweries (porter) that defines strategy
Increased Emphasis
• Service
• Value
• Knowing the customer
Decreased Emphasis
• Price
• Volume
• Cherry-picking
McDonald’s
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Customer focused
Understanding who wants what
Value meals
Happy meals
Breakfast
Healthy choices
TA Seeds
• Seed company in Avis, PA
• Produces corn seed
– Lots of varieties
– GMO and otherwise
• Buys other seed to broaden product line
– Organic seed
– Other crops
TA Seeds
• Need to anticipate market needs
• System of distributors
– Don’t want to run short
– Don’t want too much extra either
– Need to be aware of new science
• How do you figure out what to produce?
• How do you decide what to grow yourself
and what to buy?
Concluding Comments
• Take it or leave it sales won’t do
• Producing and then looking for a customer
won’t do
• Must have a marketing plan
• Must have a supporting production plan
• Mistakes are very costly
• Lost sales, unsellable product, loss of
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