Distribution management
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Distribution Management. Hugo van Zyl. Representative – SA Druggist, Knoll, Roche Product and Brand Manager - Roche Senior Marketing and Sales Manager – AstraZeneca General Manager – Bausch & Lomb Director – Knowledge Warehouse Managing Director – Hugo van Zyl & Associates. Housekeeping.

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Distribution Management

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Distribution management

Distribution Management

Marketing 2B

Distribution Management


Hugo van zyl

Hugo van Zyl

  • Representative – SA Druggist, Knoll, Roche

  • Product and Brand Manager - Roche

  • Senior Marketing and Sales Manager – AstraZeneca

  • General Manager – Bausch & Lomb

  • Director – Knowledge Warehouse

  • Managing Director – Hugo van Zyl & Associates

Marketing 2B

Distribution Management


Housekeeping

Housekeeping

  • Cell phones switched off.

  • Being on time is a matter of choice

  • Lecture structure

    • 10min – Quiz on previous week’s lecture (Points to count for semester mark)

    • 50min lecture

    • 10min break

    • 50min lecture

  • Text book – Distribution management – Strydom, Grove et al. Second edition

  • Van Schaik!!

Marketing 2B

Distribution Management


Lecture program

Lecture program

Marketing 2B

Distribution Management


Distribution management1

Distribution Management

Marketing 2B

Distribution Management


Distribution management2

Distribution Management

Getting the right product to the right place in the right quantity with the right quality at the best possible price in order to present it to customers where they want when they want it.

Marketing 2B

Distribution Management


Chapter 1 supply chain value chain and distribution

Chapter 1 – Supply chain, Value chain and Distribution

2.Value Chain analysis

3.Typical Distribution channel

1.Supply Chain

Distribution

6.Distribution Structure decisions

5.Trends / Issues

4.Intermediaries

Marketing 2B

Distribution Management


Chapter 1 supply chain

Chapter 1 – Supply chain

  • What is a Supply chain?

  • What is Supply chain Management?

Marketing 2B

Distribution Management


Chapter 1 supply chain primary decisions

Chapter 1 – Supply chainPrimary decisions

Sourcing

Development

Planning

Transport logistics

Inventory

Production

Marketing 2B

Distribution Management


Principles of scm

Principles of SCM

1. Communication

  • Raw material to End-product flow is critical in SCM

    • The info flow that support this is the basis of success

    • Sharing of “demand data” between suppliers and producers

  • Dell Direct model

  • Most efficient path to customer

  • Single point of accountability

  • Build to order

  • Low cost leader

  • Standards based technology

Marketing 2B

Distribution Management


Distribution management

Marketing 2B

Distribution Management


Principles of scm1

Principles of SCM

2. Flexibility, Inventory and Customer service.

  • Customer satisfaction

    • Typically measured in “fill rate”, “ on time delivery” and “not delivered on time”

  • Inventory

    • Inventory is dead money.

  • Flexibility

    • Ability to respond to changes in the environment

    • Flexibility buffer = Safety Stock

      So…… it’s a trade off between keeping customers happy and the cost involved

Marketing 2B

Distribution Management


Distribution management

Marketing 2B

Distribution Management


Principles of scm2

Principles of SCM

3. Decision making

Decision are made on 3 levels:

  • Strategic – Long term decisions

    • Location, production, transportation and inventory

  • Tactical – Medium term decisions.

    • Demand forecasts, Distribution planning, production planning and materials requirement

  • Operational level – Day to day decisions

    • Changes in internal environment – e.g. staff shortages

Marketing 2B

Distribution Management


Distribution management

Telecoms giant BT has joined the growing band of Western firms to transfer call centre operations to India, at a cost of 2,000 UK jobs.

The firm has said it is to open two Indian call centers - in Bangalore and Delhi - employing 2,200 people by 2004.

The shake-up is part of plans which will see BT's UK-based centers drop from about 100 to 31, with the number of workers falling from 16,000 to 14,000.

BT said no permanent UK employees would be made redundant as a result of the move, and there would be no compulsory lay-offs among agency staff.

Marketing 2B

Distribution Management


Principles of scm3

Principles of SCM

4. Metrics and Data collection

“Modern supply chains are to complex to make decisions without Data”

  • Back order reports

  • Cycle times

  • DPMO

  • Fill rate

  • Inventory accuracy

  • Inventory ABC

  • Inventory turns

  • On time delivery %

    www.supplychainmetrics.com

Marketing 2B

Distribution Management


Principles of scm4

Principles of SCM

4. Metrics and Data collection

Performance dimension 1 – Quality

  • Functionality

  • Conformance

  • Reliability

  • Durability

  • Safety

  • Serviceability

  • Aesthetics

  • Measure aspects that coincide with customer expectations or requirements

  • Measured by tools such as DPMO

  • Marketing 2B

    Distribution Management


    Principles of scm5

    Principles of SCM

    4. Metrics and Data collection

    Performance dimension 2 - Delivery

    • Speed

      • Time, from order receipt to delivery

    • Reliability

      • Deliver products in agreed time frame

    • Measured with:

      • Fill rate reports

      • Back order reports

    Marketing 2B

    Distribution Management


    Principles of scm6

    Principles of SCM

    4. Metrics and Data collection

    Performance dimension 3 – Flexibility

    • Mix flexibility

    • Change over flexibility

    • Design flexibility

    • Volume flexibility

    • Measured with

      • Inventory accuracy reports

      • Cycle time reports

    Marketing 2B

    Distribution Management


    Principles of scm7

    Principles of SCM

    4. Metrics and Data collection

    Performance dimension 4 – Cost

    • Supply chain or Distribution cost is part of P&L

    • Measures the effectiveness of the spend on the distribution function

    • Measure with:

      • Inventory turn reports

    Marketing 2B

    Distribution Management


    Principles of scm8

    Principles of SCM

    4. Metrics and Data collection

    Performance dimension 5 – After sales support

    • Especially important in high price goods, goods where ASS is sales tool and “upgradeable” products.

    • Effectiveness can be measured as part of Supply chain Management metrics

    Marketing 2B

    Distribution Management


    Supply chain management

    Supply chain management

    • Pitfalls in Inventory management

    • Globalization and the supply chain

    • Improving SCM

    Marketing 2B

    Distribution Management


    Value chain analysis

    Value - Chain analysis

    • The Supply chain is a value adding process.

    R2.50 / Kg

    R12.50 / Kg

    10c / Kg

    R35.00 / Kg

    R18.00 / Kg

    Marketing 2B

    Distribution Management


    Value chain analysis1

    Value-chain analysis

    9 Value creating stages - Porter

    • Primary activities

      • Inbound logistics

      • Operations goods

      • Outbound logistics

      • Marketing / Sales

      • Service

    • Support activities

      • Procurement function

      • Tech Development

      • Human resources

      • Infrastructure

    Marketing 2B

    Distribution Management


    The typical distribution channel

    The Typical distribution channel

    Selecting a distribution channel.

    • Customer satisfaction – Product availability, convenience, price

    • Marketing objectives of the company

    • Cost of the channel

    • Nature of the product – Perishables, electronics…

    • Intermediaries

    • Competitors

    • Legal / regulatory environment

    Marketing 2B

    Distribution Management


    The typical distribution channel1

    The Typical distribution channel

    Importer

    Producer

    Wholesaler

    Retailer

    Consumer

    Manufacturer

    Supplier

    Importer

    Producer

    Retailer

    Consumer

    Manufacturer

    Supplier

    Global company

    Local Manufacturer

    Local Wholesaler

    Local Retailer

    Local Consumer

    Marketing 2B

    Distribution Management


    Distribution channels for services

    Distribution channels for Services

    4 Characteristics of Services

    • Intangibility

    • Inseparability of Production and Consumption

      • Same time

      • Customer participation

    • Perishable nature.

    • Heterogeneity

    • Little need for logistical functions – Inventory, Transportation

    • Little need for Intermediaries – direct from supplier to consumer

    Marketing 2B

    Distribution Management


    Functions and activities of intermediaries

    Functions and activities of Intermediaries

    • Intermediaries = Wholesalers and Retailers

    • Resolve Discrepancies

      • Geographically dispersed Supply sources

      • Manufacturer volumes

      • Production timing

      • Quantity and assortment

      • Transferring ownership

    Marketing 2B

    Distribution Management


    Functions and activities of intermediaries1

    Functions and activities of Intermediaries

    • Close Gaps

      • Quantity

      • Assortment

      • Spatial

      • Knowledge

      • Ownership

    • Provide Utility

      • Form

      • Time

      • Place

      • Possession

    Marketing 2B

    Distribution Management


    Functions and activities of intermediaries2

    Functions and activities of Intermediaries

    • Distribution

      • Transactional – Buying, selling (Risk taking)

      • Operational - Warehousing, transporting, order processing

      • Financing, grading.

    • Specialization

      • Functional – Transport, warehousing, Order fulfillment.

      • Support – Financial, Information, Insurance.

    • Efficiencies of exchange

      • More efficient to have intermediaries involved in distribution than going directly to end consumer.

      • Or is it?

    Marketing 2B

    Distribution Management


    Trends and issues

    Trends and issues.

    • Social trends

      • A change in social trends impact the preference for products and the channels through which they are distributed.

    Marketing 2B

    Distribution Management


    Trends and issues1

    Trends and issues.

    • Economic environment

      • A change in the economic environment creates different demands on a existing distribution network.

    Marketing 2B

    Distribution Management


    Trends and issues2

    Trends and issues.

    • Competition in Distribution channels

      • Porter’s five forces:

    Substitute products

    Supplier power

    Competitive rivalry

    Buyer power

    Threat of Potential competitors

    Marketing 2B

    Distribution Management


    Trends and issues3

    Trends and issues.

    • Supply chain issues in SAF

      • High cost of Transport in SAF, due to being road based not rail based.

      • Mining generates more demand than other sectors due to weight

      • Geographical position of Steel industry related to harbors add cost

      • Geographic distribution of Agricultural sector adds complexity

    Marketing 2B

    Distribution Management


    Distribution and structure decisions

    Distribution and Structure decisions

    • Intensive distribution

      • Convenience products

      • Large number of locations

      • Many intermediaries

      • Strategy = low cost and high convenience

    • Selective distribution

      • Specialized products

      • Less locations

      • Few intermediaries

      • Differentiation strategy with medium to high cost.

    • Exclusive distribution

      • Specialized / exclusive products

      • Few locations

      • Strategy is focused on exclusivity

      • Sales support is important

    Marketing 2B

    Distribution Management


    Distribution and structure decisions1

    Distribution and Structure decisions

    • Cost leadership Strategy

      • Producing and distributing at very low per unit cost.

      • Focused on price sensitive consumers

      • Convenience products

    • Differentiation Strategy

      • Uniqueness

      • Non price sensitive consumers

    • Focus strategy

      • Focused on a particular segment of the market

    Marketing 2B

    Distribution Management


    Distribution and structure decisions2

    Distribution and Structure decisions

    • Innovative structures

      • Due to changes in demand in the traditional marketplace

    Marketing 2B

    Distribution Management


    Distribution and structure decisions3

    Distribution and Structure decisions

    • Vertical marketing system arrangements

      • Corporate VMS – Motor dealerships

      • Contractual VMS – Franchises

      • Alliance VMS – SPAR

      • Administered VMS – SAB-Miller and Liquor retailers

    Marketing 2B

    Distribution Management


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